November 09, 2007 

WASHINGTON, D.C. – A report requested by U.S. Rep. Bill Sali (R-ID) from the non-partisan Congressional Research Service (CRS) finds that for 2007 nearly 63,000 Idahoans will be subject to higher taxes under the Alternative Minimum Tax if Congress fails to act. That’s an increase of more than 443 percent.

At Sali’s request, CRS determined that 11,601 Idahoans paid the Alternative Minimum Tax (AMT) in 2006.  However, CRS projected that the number of Idaho taxpayers subject to the AMT for the current year will skyrocket to 62,954. That will mean a tax increase for more than 51,000 Idahoans next April, according to CRS’ data. CRS estimated that if the AMT law remains the same that by 2010, the number of Idahoans paying the tax will rise to 83,306.

“Thousands of ordinary, hardworking Idahoans are in for a real shock at tax time next year. They’re about to find out that the federal government suddenly considers them wealthy and that they owe a bigger share of their income to the government,” said Sali. “These Idaho taxpayers should be saved from this significant increase in their taxes. Congress must give them real tax relief, and Congress should do so without finding other ways to use the tax code to punish them.”

The Alternative Minimum Tax (AMT), added to the tax code in 1969, was supposed to prevent 155 wealthy taxpayers nationwide from exploiting loopholes in the tax code to escape paying taxes as all other Americans were.  It was an “alternative” to using the tax tables all other Americans used and it was a “minimum” which imposed even higher taxes than those calculated using the tax tables.  What may have made sense in 1969 has become a trap for American taxpayers today.  Because the AMT was never indexed for inflation, every year, thousands more taxpayers make enough money to pay the punitive penalties of the AMT. If Congress fails to act, close to 30 million taxpayers nationwide will face an automatic tax increase by 2010.

Today, the House of Representatives voted 216-193 in favor of H.R. 3396, which House Democrats are touting as a way to fix the AMT and prevent it from affecting more middle income Americans. This proposal, however, is nothing more than “sleight of hand” as the measure Congress adopted today as a temporary “fix” of the AMT imposes $82.5 billion of permanent tax increases, including re-instating a marriage tax penalty.
 
Sali is a cosponsor of a bill titled “The Taxpayers Choice Act,” which proposes to permanently repeal the AMT and would also provide far-reaching tax reform to help American families by providing a simplified tax option.