A bogus bill
Imagine discovering a windfall error on your bank statement. You know the money’s not yours, but you spend it anyway. When the bank comes calling for its assets, you inform the institution that the money is gone, therefore the mistake must be “paid for” through targeted withdrawals from accounts other than yours.
Such reasoning would be preposterous, we know. But that’s exactly the argument House Democrats are making in refusing to pass alternative minimum tax relief that can clear the Senate and gain President Bush’s signature.
The AMT was enacted nearly 30 years ago to whack a select few ultra-wealthy families who were escaping the income tax by claiming every deduction available. But the law was never indexed to inflation, so this year the AMT’s income threshold will drop low enough to hit more than 20 million households, many of them middle-class filers.
The net gain to Congress because of this unintended tax hike: about $50 billion.
House Democrats have known since January that they have no legitimate claim to this revenue — it was a mistake that lawmakers would rectify by Christmas. But Congress went ahead and passed all sorts of new spending, much of it pork, that made the $50 billion vanish from the ledger. So if Republicans insist on preventing a tax increase that was never supposed to occur in the first place, Speaker Nancy Pelosi and Ways and Means Chairman Charlie Rangel are insisting that $50 billion in tax increases on the rich be enacted to “pay for” the AMT fix.
On Wednesday, the House passed AMT relief and an expansion of the child tax credit with $53 billion in tax increases on hedge fund executives. The bill is dead on arrival in the Senate, where the Republican minority can block it. President Bush has vowed to veto the bill if it makes it to the Oval Office.
Time is running short for the IRS, which is trying to get its computers programmed and forms printed in time for the opening of filing next month. Taxpayers are already facing delays on refunds as a result of congressional dawdling on the AMT.
“The Senate (has) one more chance to do the right thing and pass this critical tax relief without adding to the deficit,” Rep. Rangel said Wednesday.
An AMT fix would not add to the federal deficit — the spending that preceded it is putting taxpayers in the red!
Democrats’ foolish bluff has been called here. It’s incumbent upon them to “pay for” their mistake by reducing spending, not sticking taxpayers with a bogus bill.