Chuck Grassley: “Let's go back to the Joint Committee on Taxation analysis. If we then assume that the tax cuts of 2001 and 2003 are…”

“Let's go back to the Joint Committee on Taxation analysis. If we then assume that the tax cuts of 2001 and 2003 are repealed, alternative minimum tax revenue falls by an additional $302 billion, from $472 billion to $169 billion. That second drop attributable to the repeal of the Bush tax cuts reduces Federal revenue by only 27 percent. Thus, one should argue that failure to index is a greater cause of the alternative minimum tax problem--in other words, 59 percent versus 27 percent. If we had indexed, we wouldn't have this problem. Using logic similar to that undertaken above would also cause us to conclude that failure to index is responsible for 59 percent of the alternative minimum tax problem or, alternatively, that failure to index also nearly triples the size of the AMT problem. But simple logic suggests that the bipartisan tax relief cannot be responsible for 65 percent of the alternative minimum tax problem and failure to index responsible for 59 percent of the problem. The anomaly arises because there is overlap between variables being analyzed. Although the analysis fairly demonstrates the amount of alternative minimum tax revenue saved by making a particular change to the Federal tax system, it is inappropriate to represent that such analysis accurately isolates causation of the alternative minimum tax.”