A House subcommittee met yesterday to examine the impact of the alternative minimum tax on individual taxpayers, particularly middle-income taxpayers who were never intended to be subject to the tax.
The House Ways and Means Subcommittee on Select Revenue Measures heard from a number of experts, including the incoming chairman of the American Institute of CPAs’ Individual Income Tax Technical Resource Panel, Joseph W. Walloch, and the president-elect of the New York State Society of CPAs, David A. Lifson.
Both Walloch and Lifson said their organizations supported the total repeal of the AMT, which was enacted in 1969 after the Treasury Department disclosed that approximately 155 rich families did not pay any income taxes. But estimates say that without congressional action, the AMT’s decades-old structure could have affected more than 23 million taxpayers in 2007.
Walloch told the subcommittee said the AICPA recognizes that eliminating the AMT would generate a new set of problems following the loss of tax revenue accompanying such a change. He presented a list of 13 recommendations from the institute aimed at relieving the AMT burden. Among those recommendations were eliminating personal exemptions, state income taxes, medical expenses and miscellaneous itemized deductions including job related costs as AMT preferences, as well as allowing all personal credits against the AMT.
Lifson presented the subcommittee with an overview of why the AMT has become such a problem, as well as a number of examples of middle-class individuals and families who could face the tax. Failing a total repeal of the AMT, Lifson said that increasing and indexing the tax’s exemption amounts to a much larger figure could remove many Americans from the “needlessly complex burden” of the current system.
“There are several ways to change the regular tax system to tax the same higher incomes in a more transparent way,” Lifson said. “People trust things -- even tax systems -- they understand. Our federal income tax system needs trust and fixing the AMT is an important step in restoring faith in the American tax system.”
The full NYSSCPA testimony can be read at www.nysscpa.org/fyi/lifsonAMTTestimony.pdf.
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