Chuck Grassley: “I think it was 48 hours ago I opened a discussion with my fellow Senators on the alternative minimum tax. As I pointed…”

“I think it was 48 hours ago I opened a discussion with my fellow Senators on the alternative minimum tax. As I pointed out at that time, it is generally recognized that the alternative minimum tax is a policy failure. Created in 1969, in response to the discovery that 155 wealthy taxpayers--and let me emphasize that I am talking about 155 wealthy taxpayers--were able to eliminate their entire tax liabilities through legal means, the AMT has now evolved into a place where, because it wasn't indexed, it has captured more than 3 million middle-class Americans as of 2004. The AMT was never supposed to affect anyone except the very wealthy people. I am using 2004 numbers because 2004 is the most recent year we have completed data. Three million people in that year were hit by AMT, even though since 2001 we have had in place a tax policy that no additional people should be hit by the alternative minimum tax. At the time I was visiting with my colleagues 2 days ago, I cited the widespread observation that the most significant structural flaw afflicting the AMT is the failure to index its rates and exemptions for inflation. This failure, then--and I alluded to this a minute ago--has resulted in the gradual encroachment of the alternative minimum tax to hit middle-class taxpayers who were never intended to pay this tax.”