Congress is currently at work on legislation that includes, among other things, a two-year extension of dividend and capital gains tax cuts that were scheduled to expire at the end of 2008, and a one-year extension of alternative minimum tax relief.Without this relief, the AMT would cause higher taxes starting in 2006 for an estimated 16 million additional taxpayers to whom it was not intended to apply. Perhaps not surprisingly, House Republicans have sought to finalize the dividend and capital gains extension first, even though the AMT problem is much more immediate.

Democrats have criticized the Republicans' priorities, but, accepting that those are the priorities, the political moves make a lot of sense. Without relief, the AMT would affect a large number of typical families - some lower-income, but, more commonly, upper-middle-class two-earner families with children. These are not the extremely wealthy, and it would hit them even though they have not taken inordinate advantage of any tax-saving opportunities. No matter how bad the budget looks after the other tax cuts, and no matter what the cost, presumably the one year of AMT relief would be passed sooner or later.

Let average Americans feel some fear that they are going to have to pay higher taxes due to the AMT, and that should strengthen the support for ultimate repeal. It's much easier to sell if it's not just viewed as tax relief for the wealthiest.

The President's Advisory Panel on Tax Reform has come out in favor of elimination of the AMT. By starting 2006 without temporary relief in place, the AMT threat should get much more attention from middle-class taxpayers.

As Ways and Means chair Bill Thomas, R-Calif., reportedly asked back in November, "Might it not help to build momentum on tax reform if a few more people understood the impacts of the AMT?"

Presumably, retroactive temporary relief will be provided, for which Republicans will seek to claim credit.

Not surprisingly, AMT repeal has long been a goal of many Republicans. It seems likely that most who favor repeal do so not because of the AMT's complexity or because of its unintended effects on less-wealthy individuals. Rather, it is because, to at least some degree, the AMT does what it was supposed to: It causes some high-income taxpayers, who would otherwise pay little or no income tax, to pay more taxes.

Of course, it would be hard to say much good about the AMT in its present form. It is almost inconceivably complicated, it causes many troubling and probably unintended results, and it hasn't stopped taxpayers from finding other ways to circumvent the system. But instead of meaningful efforts to simplify it, permanently fix its flaws, and expand it so that it catches other potential tax avoidance, many tax-cut proponents would like to end it. Moreover, there are no serious proposals to replace it with some other mechanism aimed at stopping taxpayers from exploiting the opportunities that repeal would create.

Do we need it?

Some say that, with low tax rates, we wouldn't need the AMT. A common argument from those who seem to favor tax cuts at any cost is that, with lower marginal rates, taxpayers would stop trying to avoid taxes. But we don't need to speculate on that. Before the Internal Revenue Service improved its tax-shelter enforcement, we saw billions of dollars of tax-sheltering activity aimed at sidestepping capital gains taxes that would have been imposed at low rates, mostly at 20 percent. So, the pitch that lower rates are the answer certainly rings hollow.

How low would the rate have to be before taxpayers would stop trying to avoid paying taxes? And at such low rates, could we provide even the smaller government that many tax cutters say they want?

It is worth noting that since Republicans have been in control of the White House and Congress, discretionary spending - even ignoring defense and Hurricane Katrina - has increased dramatically. So any talk about lower taxes and smaller government is just talk. We have lower taxes and bigger government, with a rapidly growing national debt that threatens future generations.

Along with a variety of other future economic harm, this fiscal irresponsibility can be expected to be paid for through some combination of massive future spending cuts on things that matter to ordinary Americans, and huge future tax increases. With recent bills in both the House and Senate, those spending cuts are now just beginning.

And with major structural changes in the tax system - such as the movement away from taxing investment income and the planned repeal of the estate tax - future tax increases are likely to be shifted significantly toward typical working families.

The wealthiest taxpayers have far greater opportunity than most ordinary Americans to exploit the many nuances of the tax system. So, AMT repeal, with no functioning replacement, would further shift the burden away from the wealthy and onto ordinary Americans.

AMT repeal is frequently emphasized in the marketing of tax-reform proposals. Back when the flat tax was generating a lot of interest, part of the pitch was that it would end the AMT. The flat tax bills introduced during several years by then-House majority leader Dick Armey, R-Texas, and by Sen. Richard Shelby, R-Ala., each contained a section that would have repealed most of the income tax provisions in Chapter 1 of the code, including the AMT. And they also contained a separate section providing for repeal of the AMT, as if the AMT needed to be repealed two times.

So when flat tax proponents talked of driving a stake through the heart of the income tax, presumably they intended to kill the AMT twice, just to be on the safe side.

Nobody knows by how much AMT repeal would reduce the government's tax revenues. You can't simply look at how much AMT would have been paid for a given year. The hidden cost is in the tax-saving opportunities and potential use of deductions, exclusions and credits that the AMT has deterred, which could freely flourish if the AMT is repealed.

Much of the reason the AMT would impact so many taxpayers, if not for this temporary relief, comes from interactions with the other Bush tax cuts. There has been a debate in tax policy circles over how much of the expanding scope of the AMT has been caused by those tax cuts, and how much has been caused by the lack of inflation indexing in the AMT.

But putting aside the efforts to quantify causation, consider this: Given that the AMT was already in place and not indexed for inflation, enacting those massive tax cuts without providing AMT relief brought us to today's massive expansion. And instead of taking the fiscally responsible steps of showing the true costs of related AMT relief as part of the revenue estimates for those major Bush tax cuts, the inevitable AMT problem was deliberately ignored.

Providing AMT relief a little at a time helps advance the Republican agenda. It's not just because of the misleading cost estimates or because letting the AMT threaten more taxpayers will build broader support for its ultimate repeal. On top of this, each time Republicans enact some relief, they are able to show a direct link between that year's tax-cut legislation and many average Americans.

Moreover, AMT relief can be packaged in a bill with other tax cuts that many fiscally responsible members of Congress from both parties might otherwise oppose, and used as leverage to pass those other tax cuts.

The Bush administration says that the AMT is better dealt with as part of fundamental tax reform. But, of course, the massive tax cuts going far disproportionately to the wealthy, which gave rise to much of the need for AMT relief, didn't have to wait for fundamental tax reform.

So, every year or two, the AMT pops up as a threat to so many taxpayers to whom it was never intended to apply. They get to be used as pawns in the game to ultimately repeal the AMT and provide another giant tax break for the wealthiest Americans.

David J. Roberts is an associate professor of accountancy at DePaul University in Chicago.

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