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Tuesday, February 06, 2007
Deficit Fix-ation: AMT = Allowing More Taxation?
President Bush's FY 2008 budget proposal provides numerous projections calculated to prove the plausibility of his overall goal of eliminating the deficit budget by 2012 -- the only problem being the implausibility of the projections themselves. We have highlighted in our commentary on the budget and elsewhere some of the more conspicuously convenient calculations regarding war spending and AMT reform.
CBPP expands upon the latter point in a paper released today, and relates it to a more plausibile assumption -- the extension of Bush's 2001 and 2003 tax cuts -- arguing that
it is not plausible that AMT relief will be allowed to end after 2007 and ultimately affect more than 40 million taxpayers," but "if [the administration prefers to assume that] AMT relief is allowed to expire, the AMT will take back more than a quarter of the President's tax cuts by 2010."
For this reason, the paper concludes:
[A]ssuming that AMT relief expires yields an estimate of the President's proposed policy that is artificially low, as it excludes the cost of the one-fourth of the tax cuts that would be cancelled out by the AMT. To avoid underestimating the cost of making the President's tax cuts permanent, it is necessary to include the cost of AMT relief.
Posted by Dana Chasin
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