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Monday, February 05, 2007
FY2008 Budget: Bush Proposes $60 bn. AMT Tax Hike
President Bush's FY2008 budget proposal includes a nearly $60 billion Alternative Minimum Tax (AMT) increase by apparently eliminating the patch that has held steady the number of taxpayers liable under AMT for the last several years.
The President's budget projects FY2008 revenue losses from the current patch at $47.9 billion -- a figure that has been slowly climbing in recent years as inflation exposes greater numbers of taxpayers to the AMT, which is not indexed for inflation.
Instead of a similar or larger revenue loss figure one would expect from the extension of the patch for FY2009, the President's budget projects an increase in AMT revenue for that year of $11.4 billion. The $59.3 billion revenue gain corresponds suspiciously closely to the amount that would be lost to a patch.
That's what President Bush calls a tax hike -- one we might otherwise expect him to veto. For details, see Table S—6. Effect of Proposals on Receipts.
At a time when there is a strong bipartisan commitment in Congress led by Ways and Means chair Charles Rangel (D-NY) to sharply rein in, and eventally eliminate, the AMT, a proposal Bush proposal to expand the tax is likely to be viewed not just as a tax policy paradox, but -- along with Bush's war cost projections -- as merely another desperate measure to justify his projections of a $61 billion budget surplus by 2012.
Posted by Dana Chasin
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