“The Alternative Minimum Tax is a famous example of unintended consequences.  This odd section of U.S. tax law is a tax code unto itself – a parallel universe of taxation – and this year, the AMT is threatening to raise taxes on millions of American families and delay the refunds of millions more.

In 1969, Congress passed the AMT because it felt the system of income tax deductions and credits unfairly benefitted exactly 155 wealthy American tax filers.  The AMT was touted as a way to force those families to pay their fair share in federal income taxes, under a completely different set of rules.  Under the AMT, income is taxed at 26 and 28 percent, personal deductions are higher, but other itemized deductions are lost entirely.

If nothing is done at the 11th hour, the AMT will have traveled full circle from targeting 155 Americans to trapping over 4 million in 2006 to ensnaring an unfathomable 25 million this year.

Some of those subject to the AMT this year will be Americans reporting $50,000 or less in annual income. 

Why does the AMT grow so much each year?  Simply put, the AMT was never indexed for inflation.

In years past, Congress has passed an “AMT patch” – legislation that raises the income threshold of the tax to a level which has been adjusted for inflation.  As a result, millions of tax filers are saved from a substantial increase in their federal income tax liability.

This year, when Congress went to pass that same solution, the AMT patch was judged to save taxpayers $50 billion, but it was accompanied by $80 billion in tax increases.

I could not vote for such a misguided proposal. 

However, while Congressional leaders struggle to put an acceptable AMT patch together, none of the most-used forms for taxpayers can be published at the Internal Revenue Service.  Usually, the IRS begins to accept tax returns on January 14 - mostly from filers who want to put their paperwork in so they can get their refund check back as soon as possible.  Without knowing what will happen regarding the AMT, the first date for filing could be delayed until January 28, delaying 5.6 million refund checks totaling $17 billion.  If the filing date is pushed back to February 18, which is a distinct possibility, 32 million refunds totaling $87 billion would be affected.

Those refunds are expected to weigh in at an average of $2,291 per check.  That overpayment of taxes is money right off the top of the family budget, taken right out of our local economy.  When Congress idles and bureaucrats dither, real families in Southern Missouri are hurt by these delays.

But if we don’t fix the AMT temporarily or permanently, the IRS might see an easier solution for what happens to those refund checks that are going out now: Uncle Sam might just take them, too, via the AMT.  This section of our tax code could soon hang over the heads of one in five American taxpayers – it’s a prime example, like the Estate Tax, of how crippling changes in our tax code can be as well as how difficult it is to plan for the future when our complicated, burdensome tax code fluctuates so much from year to year.  The situation with the AMT is a perfect illustration of uncertainty: as of the second week of December, 21 million American families right now have no way of knowing their tax liability and 32 million don’t know how long it will take for their refunds to arrive.

If that’s not a call for reform, I don’t know what is.

I’m working hard to assure that taxes remain low and Congress follows through on its responsibility to American taxpayers.  This is a simple issue of fairness to taxpayers, one Congress must address immediately.”