US Treasury-big changes needed to fix AMT tax plan
WASHINGTON, March 23 (Reuters) - Fixing the parallel individual income tax system called the alternative minimum tax may require major changes in the U.S. tax code, the U.S. Treasury Department's second-in-command warned on Tuesday.
"Because of the revenues involved in any significant reform of the AMT, and the number of taxpayers affected, any long-term solution to the AMT could well require significant changes to the regular tax code as well," Deputy Treasury Secretary Samuel Bodman said in prepared remarks to a conference sponsored by the Tax Executives Institute.
The Treasury is in the midst of a review of possible options to overhaul the AMT, which requires upper-income and an increasing number of middle-income taxpayers to calculate their tax bills two different ways, and pay the higher bill. Congress created the AMT in 1969 as a way to ensure the wealthy paid some taxes. Congress acted after learning that 155 taxpayers with adjusted gross incomes of $200,000 in 1966 paid no federal income tax.
But the system is increasingly affecting middle-income taxpayers, with one estimate projecting 30 million taxpayers will be subject to the AMT within 10 years.
In February, Pam Olson, former Treasury assistant secretary for tax policy, said the Treasury was studying "long-term" solutions to the AMT, with an intent to have a report ready in time for the next year's federal budget submission to Congress. A temporary fix has been proposed for this year.
Bodman also said he expects the lagging job market to gain steam and warned against Democratic proposals to roll back tax cuts put in place for high-income workers.
"Higher tax rates are a powerful disincentive for growth, and would be the wrong medicine for our economy and its job-creating potential," he said.
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