“Governor Bush has advertised his tax plan as simple: ‘If you pay income tax, you get a tax cut.’  But the governor’s statements disagree with the facts regarding his tax plan.  The fact of the matter is millions of taxpayers will not receive any tax reduction from the Bush plan.  Millions and millions more will get less than they think because Bush decided to use the fine print of the AMT to reduce the cost of the reductions promised in the big print of his proposal,” said Rep. Rangel, who is Ranking Democrat on the House Committee with jurisdiction over all tax bills.  

The Bush tax cut reads “big” in terms of cutting income tax rates.  The plan replaces the current upper four tax rates of  28%, 31%, 36%, and 39.6% with two lower rates - 25% and 33%.  However, there are no reductions in the AMT rates or expansion in the AMT brackets or general exclusion.  Very few taxpayers and political commentators understand the consequence that many taxpayers would not get the full regular income tax rate reductions, because many taxpayers will be on the AMT, or will be put onto the AMT, by the Bush plan. 

“The Bush tax plan is like one of those mail advertisements that says, ‘you have already won the big prize.’  It’s only when you read the fine print that you find out you would get much less than is advertised.  The Joint Tax Committee’s objective analysis has magnified Bush’s fine print so that people now know that his promises are deceptive.”

In particular, the Bush fine print means that taxpayers in New York and other states with state income taxes will be paying more than they would expect based on Bush’s promises.  State and local taxes are not deductible from the AMT and the disallowance of those taxes accounts for over one-half of the adjustments that create minimum tax liability.  Under the Bush plan a great many taxpayers with incomes high enough to itemize their deductions, probably would be subject to the minimum tax and not able to deduct state and local taxes.  Therefore, these taxpayers would get much less than the Bush plan promises.  

“The difference between the Bush tax plan’s promises and reality would be even greater for New Yorkers.  The Bush plan effectively repeals the state and local tax deduction that New Yorkers and other representatives from states with income taxes worked so hard to preserve,” said Rep. Rangel, who represents New York’s 15th Congressional District.  “Apparently, Gov. Bush does not believe that tens of thousands of New York’s families count when he says his plan ‘would mean lower taxes for all Americans.’”

Rep. Rangel is a member of the Joint Committee on Taxation which consists of six Republicans and four Democrats from both the House and Senate.  Although the JCT is chaired on alternate years by the Ways and Means Chairman and Senate Finance Committee Chairman (both of whom are Republicans), its staff and estimates are widely considered non-partisan. 

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