Congress, admit error on AMT
Congress seldom admits to making mistakes, unless lawmakers learn they can squeeze a few extra dollars out of taxpayers by doing so. That, in a nutshell, explains the alternative minimum tax regulations.
So absurd is the AMT that the House of Representatives, in its tax reform bill, eliminated the measure. But the Senate, acting several days later, retained the AMT in its package.
Lawmakers meeting to reconcile the two bills are being urged to adopt the House plan to kill the AMT, with very good reason.
Twenty-six members of the House, including Bill Johnson, R-Ohio, have written to the conference committee, including members from both chambers, urging that the AMT be eliminated. Their focus is on job creation and retention.
Days after the Senate bill was passed, Murray Energy Corp. analysts discovered that, if enacted, it would increase the company’s taxes by about $60 million a year. Retention of the AMT was blamed in large measure.
As the representatives pointed out in their letter, tax “reform” harming coal companies would come at a terrible time for that embattled industry. “This tax hike will have far-reaching unintended consequences to an industry President Trump promised to help,” they noted.
If keeping the AMT is detrimental to Murray Energy, rest assured it would harm other coal companies and firms in other industries, too. For that reason alone, the AMT should go.
But the rule harms many individual taxpayers as well. About 3.9 million are caught in its web, forced to pay higher taxes than they would have otherwise, every year.
Why do we have an AMT? There was no such thing until 1982, when Congress was told too many taxpayers were making use of various tax deductions and exemptions written into law by — you guessed it — Congress. So the AMT was adopted to, as the Internal Revenue Service puts it, set “a limit on those benefits … to ensure that those taxpayers pay at least a minimum amount of tax.”
Ridiculous? Absolutely. But if the Senate provisions are allowed to stand, the AMT will remain in force.
This time around, Congress should admit and correct its own mistake in enacting the AMT.