‘Paying’ for tax relief

Congress is running out of time to spare millions of American households from the punishment of the alternative minimum tax. The legislative wrangling over how to provide this relief perfectly illustrates the differences in fiscal philosophies and priorities between Democrats and Republicans — and Nevada Sen. John Ensign is in the thick of the debate.

Sen. Ensign, a Republican, introduced legislation Wednesday to permanently abolish the AMT. That tax was enacted in 1969 to make sure a handful of super-wealthy families couldn’t escape paying income taxes by using all the deductions legally available to them. Because it was never indexed to inflation, and because rising mortgage payments, property taxes and state income taxes have boosted deductions on federal returns, the AMT will hit 27 million households this year unless Congress passes another one-year “patch.”

In addition to repealing the AMT, Sen. Ensign wants to make permanent the cuts on capital gains, dividends and income taxes that are scheduled to expire in 2011. These tax cuts have led to years of economic growth and record federal revenue collections.

“We will challenge the Democrats to join us in doing something good for the American taxpayer,” Sen. Ensign said.

The more money that remains in the pockets of the public, the better for the economy. And the AMT was never intended to hit millions of middle-class families, so the federal government has no business leaving it on the books, no matter how much revenue it’s expected to bring in.

Democrats, however, take the approach that tax cuts must be “paid for.” It’s another way of saying that the money you earn isn’t yours; it’s the government’s, and government gets to decide how much you’re allowed to keep.

On Friday, House Democrats passed their own AMT fix — with billions of dollars of tax increases on the rich. Because they can’t control their spending, eliminating one injustice requires creating another.

That proposal doesn’t have enough votes to clear the Senate. With the IRS anxiously waiting to publish forms and finalize its computer software for income tax filing season, somebody has to give — and Lord knows taxpayers are already giving enough.

The Senate should move Sen. Ensign’s bill forward, and let House Democrats ignore it at their own political peril.