WASHINGTON, DC – House Majority Leader Steny H. Hoyer (MD) spoke at an AMT Panel Discussion this morning hosted by the Committee for a Responsible Federal Budget and the New America Foundation. Below are his remarks as prepared for delivery:
“First, let me state the obvious: Without question, the Alternative Minimum Tax is not working as originally intended.
“The AMT – designed to ensure that about 150 wealthy families paid their fair share in federal incomes taxes when it was enacted in 1969 – today threatens to ensnare an estimated 23 million taxpayers, unless Congress acts to mitigate its effect.
“There is plenty of blame to go around for letting this AMT problem fester. But the bottom line is that we need a solution – not finger-pointing.
“As all of you know, the House passed legislation on November 9th to prevent the AMT from unfairly reaching into the pockets of middle-income families.
“And, let me assure you: the Democratic Majorities in Congress have every intention of enacting an AMT patch this year.
“The House bill, offered by Chairman Charlie Rangel, is a very good bill. In addition to protecting 23 million taxpayers from being hit with the AMT, this bill would:
• Provide 30 million homeowners with property tax relief.
• Help 12 million children by expanding the child tax credit.
• Help 4½ million families better afford college with the tuition deduction.
• Save 3.4 million teachers money with a deduction for classroom expenses.
• And, extend tax credits and deductions that will benefit a wide array of Americans and the American economy.
“Furthermore, this legislation helps to restore tax fairness and demonstrates the House Majority’s commitment to fiscal responsibility.
“Republicans, who claim that they are fiscally responsible, nonetheless complain that we pay for this legislation by closing tax loopholes. Their solution? Just add the costs of the AMT fix ($50 billion) to the deficit and national debt.
“I absolutely reject this fiscally irresponsible approach. And, as I have said many times, I will not vote for an Alternative Minimum Tax bill that is not paid for – even if I’m the only House Member to do so.
“We simply cannot keep pulling out the national credit card, and charging our bills to the national debt – thus forcing our children and grandchildren to pay this generation’s bills. Yet, over the last seven years, that is precisely what the Bush Administration has done.
“It has turned record budget surpluses into record deficits – and added more than $3 trillion to the national debt, after abandoning the pay-as-you-go budget rules adopted on a bipartisan basis in the 1990s.
“Now, it may be tempting to say, ‘What’s another $50 billion?’ But it’s simply irresponsible, and would require us to borrow even more money from foreign investors to pay our bills.
“This is why Democrats reinstated PAYGO in one of our first acts. And, PAYGO in fact has helped us make the tough decisions with respect to spending priorities. In the House, we have insisted that our bill be paid for by closing tax loopholes, and insisting that people pay their fair share.
“As it relates to one source of the suggested ‘pay fors,’ Harvard Economist Greg Mankiw – the Former Chair of the Council of Economic Advisors under President Bush – has written that ‘carried interest’ earned by venture capitalists and private-equity professionals should be taxed the same as other compensation for services, not capital gains.
“So, in the days ahead, I have every intention of insisting that our AMT patch be paid for – and Speaker Pelosi has expressed her strong commitment to a fiscally neutral AMT bill, as well.
“Now, I know that Congressman Ryan and many of his Republican colleagues have argued that we shouldn’t have to pay for the AMT because a patch simply prevents us from collecting revenues that we never intended to collect in the first place.
“But the fact is, the President’s budget has consistently called for a revenue neutral AMT fix.
“Furthermore, the then-Republican Congress and the Administration relied on the increased AMT revenues to offset part of the 2001 tax cuts.
“And both Congress and the White House relied on revenues from the AMT to get to a balanced budget by 2012.
“It is simply intellectually and fiscally dishonest to use the increased revenues from AMT to make the tax cuts appear more affordable and rely on those revenues to show a path to balance the budget – but then claim we don’t need to pay for legislation reducing those revenues because we weren’t supposed to collect them.
“If we are going to reduce the revenues from the AMT that were assumed in the plans to balance the budget by 2012, we need to either replace those revenues or reduce spending if we are serious about balancing the budget.
“Finally, let me say that I agree with those who argue that mitigating the effect of the AMT every year through a patch is not good policy. That is why I generally support Chairman Rangel’s ‘Tax Reduction and Reform Act.’ Among other things, that bill would permanently amend the AMT, provide tax relief to 90 million Americans and cut corporate tax rates to help American companies stay competitive internationally.
“In closing, I would observe that comprehensive revision of our tax structure is long overdue.
“However, as in 1986, it will take a strong bipartisan, White House-led effort to accomplish that objective.
“Frankly, I believe Secretary Paulson would have been interested in such an endeavor. It is clear his Administration and much of the Congress were not.
“If the AMT is not addressed this year or next in a comprehensive way, then modification of the AMT must be accomplished in a larger tax reform package that should be a priority of the next Administration and Congress.