Middle-Class Alternative Minimum Tax Relief Act of 2004

Mr. Speaker, pursuant to House Resolution 619, I call up the bill (H.R. 4227) to amend the Internal Revenue Code of 1986 to extend to 2005 the alternative minimum tax relief available in 2003 and 2004 and to index such relief for inflation, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today the House will consider one of the most important bills from the standpoint of tax equity that we will consider this year, the Middle-Class Alternative Minimum Tax Relief Act, a bill to make sure that the tax cuts which allowed middle-class families to keep more of their income over the past 3 years will not be undermined by the Alternative Minimum Tax.

There is little dispute, certainly none outside of this Chamber, that the Republican tax cuts helped families cope with economic uncertainties and played a significant role in stimulating the economic growth that we are seeing today. But if we do not act now to give the taxpayers another year of reprieve, the AMT will suddenly reappear and 11 million taxpayers will be hit with an average tax increase of $1,520.

Mr. Speaker, by preventing middle-class Americans from claiming their rightful exceptions from tax liability, the AMT punishes families with children or those who live in high tax localities. If we do not act, married couples will see their AMT exceptions snap back from a threshold of $58,000 to $45,000. Single individuals will see their AMT exception drop from $40,250 to $33,750.

Mr. Speaker, let us be clear about this. These are not wealthy people. These are middle-class Americans who would be slapped with a steep tax hike that they would not know about until tax day, when they learn that the tax exemptions that they thought they could take, the same tax exemptions we intended for them to take and told them we were giving them, would no longer apply.

For example, a family of four with a household income of $58,000 would, in 2005, be hit with the AMT. I am sure that no one here would seriously argue that that family is wealthy.

Today, the House has the opportunity, indeed, the duty, to extend AMT relief for 1 year and to ensure that middle-class Americans are not faced with an increase in their tax liability; and we must do this without raising taxes someplace else and stifling growth and killing jobs.

Mr. Speaker, this is an important measure to buy us time to truly reform the AMT and, as I hope, to repeal this regressive tax entirely. I have taken it upon myself to work with a number of colleagues, including the gentleman from Louisiana (Mr. McCrery), a fellow member of the Committee on Ways and Means, to form a Zero AMT Caucus. We will have our day; but in order to get there, we need to pass this bill today on behalf of working families.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 15 seconds.

Mr. Speaker, I note that this issue has come up repeatedly before the Committee on Ways and Means. The Committee on Ways and Means has repeatedly worked its will on this issue and it has made very clear that it is committed to this kind of exemption. The Committee on Ways and Means is clearly in the loop in this.

Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr. Crane), a distinguished member of the Committee on Ways and Means.

Mr. Speaker, I yield 1 minute to the distinguished gentleman from Florida (Mr. Shaw), a member of the Committee on Ways and Means.

Mr. Speaker, it is a great privilege for me to yield 4 minutes to the gentleman from Connecticut (Mr. Simmons), the prime sponsor of this legislation and a real advocate for middle-class taxpayers.

(Mr. SIMMONS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself 15 seconds just to say to the gentleman what is fairly clear and Chairman Greenspan recently indicated to us before the Joint Economic

Committee that the tax cuts are working as a tonic for the economy. Clearly they are helping us to expand our tax base and move back toward a balanced budget, and that is fairly clear.

Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Sam Johnson), a member of the Committee on Ways and Means.

Mr. Speaker, I first yield myself 15 seconds to thank the gentleman from New York for his presentation. It was very thoughtful. I want to associate myself with his remarks. We appreciate his making this debate very bipartisan, and I welcome him to get involved in our Zero AMT Caucus and try to work on a bipartisan basis to deal with this problem.

Mr. Speaker, it is a great privilege for me to yield 5 minutes to another gentleman from New York (Mr. Houghton), who has put an extraordinary amount of time in on this issue, the chairman of the Subcommittee on Oversight of the Committee on Ways and Means, my colleague.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Michigan (Mrs. Miller).

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Herger).

Mr. Speaker, I yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn).

Mr. Speaker, I yield 2 minutes to the distinguished gentleman from New Hampshire (Mr. Bradley).

Mr. Speaker, I reserve the balance of my time with the right to close.

I presume, Mr. Speaker, that also means that we cannot mischaracterize them.

Mr. Speaker, I yield myself the balance of my time.

This has been a useful debate because I think in an odd way it has highlighted a couple of things. First of all there is a consensus in this Chamber behind the bill that the gentleman from Connecticut (Mr. Simmons) has put forward. There will be a substitute offered. I will have ample opportunity and grounds to criticize that substitute when it is offered, but for now I think what needs to be emphasized here is that in the end both parties are committed to at least moving forward on this very limited bill. I wish we were doing more today, but the fact is, this is probably the best we could agree on in the gridlock that exists in the institution right now.

I would like to use some of my time to respond to some of the points that were made by the other side. First of all, let us be clear. This bill is not about the war. It is not really about the deficit in the sense that I think it is fairly clear and I would hope people on both sides could agree that we do not need revenue from this source. We can come up with spending cuts, and we can come up with alternative revenue sources to deal with this.

We do not need the revenue applied from applying an AMT that was intended to be applied originally only to a very narrow band of very wealthy taxpayers, applying it to the middle class.

Some strange things have been said here and I would like to respond to them. First of all, this problem was not created by the Republicans. This was created back in 1986 when a tax reform passed when the other body controlled the Chamber, and in all the time that they controlled the Chamber afterward, they did nothing to deal with this problem. In fact, in 1993, they voted to actually increase the burden of the AMT. And we have heard from a number of speakers today who purport to be against the AMT, but actually who voted for that increase.

It has been said by the distinguished gentleman from Washington, my friend, that Republicans do not know what they are doing. I would submit to the Members when this AMT was put in place without any provision for how inflation would move and more taxpayers into AMT status, they knew what they were doing. They wanted the revenue. They wanted to apply a progressively higher tax burden to the American people and use that future revenue in order to justify a higher level of spending and an expansion of the welfare state.

We in this Chamber today are committed to moving forward to making sure that a new heavier tax burden is not applied to taxpayers next year and that next year taxpayers do not face a bait and switch on some of the key provisions that we have passed. That I would submit is really what the Republican Party is all about.

And as for Republican management of the economy, I am proud to associate myself with Republican management of the economy at a time when clearly responsible economists agree the tax policies enacted in this Congress supported by this administration are having the effect of lifting the economy, not as much as I would like right now in my district, but clearly turning around the slowdown that we had experienced that we inherited from the last administration and providing a significant prospect of new jobs and new economic growth and new dynamics that are going to provide opportunities for working families in the coming months. We recognize that we need to do more, and this Congress is clearly committed to doing that. And yet we need to agree at very least today to pass this provision.

I am very proud to support this bill as introduced by the gentleman from Connecticut (Mr. Simmons) that provides some relief to middle class taxpayers, to make sure that they have access to the relief that we promised them so that we can continue to grow the economy, that we can continue to create opportunities, that we can continue to provide some relief to families that have children and that are eligible and should be eligible for the tax credit that we have passed in this Chamber.

This is to me a critical issue of tax equity. We need to be prepared to guarantee to middle class families that they do not face a higher burden because of a stab in the back called the AMT, that they are not hit on tax day

with an unexpected tax burden, that they are not required to recalculate their taxes accordingly. We have an opportunity today to strike a real blow for tax equity for the middle class.

With that, I hope we pass this bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise to claim the time in opposition to the amendment in the nature of a substitute.

Mr. Speaker, I yield myself such time as I may consume.

This has been a fascinating debate today, and I particularly want to congratulate the gentleman for his contribution. The gentleman from Massachusetts, as with his customary eloquence, has laid out his position, and in the process perhaps subconsciously has drawn a striking contrast between the two parties and perhaps one that he had not intended. He characterizes, first of all, Republican tax relief as maniacal. I think that is an interesting choice of words, but as I look at it, it perhaps I think accurately captures the view on the other side of tax relief and a tax program that is already lifting the economy, that is creating jobs, that is creating opportunities throughout America, including for a lot of people who were not directly the beneficiary of as much tax relief as we would have liked.

Let me say in addition to that, there has been the procedural argument made here that this proposal before us today has not been adequately vetted. Mr. Speaker, to be very clear, this language is similar to what has been included in the tax bill that passed. This kind of language has been many times before the body. We have thoroughly debated within the Committee on Ways and Means the issue of the alternative minimum tax, and it is not clear that additional hearings would have provided a substantive additional agenda.

I am delighted to hear the gentleman come out in favor of full repeal because, as I said to the gentleman from New York earlier in our discussion, I invite the gentleman to join with me and other members of the zero AMT caucus to come together and to work through a proposal to get rid of this AMT.

The substitute that we have now risen to debate, though, was not I think adequately discussed in the gentleman's remarks, and perhaps there is where the contrast is clearest. Because in an effort to, as they put it, pay for the AMT relief that is included in the bill, what they have proposed doing is permanently putting in place an increase of corporate taxes in order to pay for 1-year relief to the individual AMT. That sounds like good politics, but at a time when our economy is struggling, at a time when even people on the other side of the aisle have conceded that corporate tax rates in our country and on our companies and workers are higher than those globally and are a clear competitive disadvantage to our companies who are seeking to keep jobs here in the United States, that the idea of permanently raising corporate taxes is one that I think is striking and I think uniquely ill conceived.

What they have proposed doing is generating revenue through the permanent implementation of something called the economic substance doctrine. Economic substance is a doctrine that our courts apply on a discretionary basis to situations which erode our rules-based tax system.

The substitute attempts to codify this judicial doctrine and expand its definition so the IRS can pick apart any ordinary business transaction and subjectively look for reasonable business purposes. The result is a new requirement for taxpayers to have yet another layer of IRS intervention and be burdened with restrictions in ways that the courts have not even considered. I realize that there are some who have embraced this on the Senate side, but no one on our side of the aisle here in the House of Representatives so far has done so. The result would be a new requirement for taxpayers and another layer of IRS intervention.

The proposal would then propose strict liability penalties on understatements of tax, which would not be limited to abusive transactions. The proposal, in our view, is far too broad and significantly expands common-law doctrines.

There is also no indication that the doctrine would be limited to abusive transactions. While we are currently debating a 1-year extension of tax relief for working families, let me make this clear again: this substitute levies a permanent tax increase on employers and ultimately on the labor of the workers that they employ.

The gentleman from New York (Mr. Rangel) has himself indicated support for lower corporate tax rates for our manufacturers in his own bill to replace the FSC/ETI regime. Here his proxy is insisting on raising their taxes by $15 billion.

In addition to a $15 billion tax increase, companies would now have to spend valuable time and resources managing the implications of the law, when they could be using these resources to expand their operations, invest in production lines, and create jobs. Instead, what this proposal effectively does is create jobs only in the legal profession.

Mr. Speaker, the House has voted repeatedly against this tax increase because it is bad tax policy, bad economic policy, and it further hinders

American competitiveness and does so permanently. I think it is fairly clear that what is being attempted here in this substitute is to take something that we really need to do, addressing the problem of the AMT, and attach to it something off of a wish-list from the left, which, frankly, has no place here at a time when we are trying to buoy the economy.

I think it is worth noting that the last time someone really aggressively proposed to raise taxes during a slowdown was Mr. Hoover, so there may even be some Republican genealogy in the proposal we are seeing offered on the other side. But the Republicans of today do not recognize this as a positive thing.

Let me summarize the bill of particulars against the Rangel substitute and specifically the economic substance doctrine.

First of all, it is a permanent tax increase. Although the AMT relief in the Democratic substitute is temporary, the tax increases are permanent.

In addition, the administration strongly opposes codification of the economic substance doctrine. They have looked at it, and they have found it wanting. Acting Treasury Assistant Secretary for Tax Policy, Gregory Jenner, has stated that codifying the economic substance doctrine could be counterproductive, as it would drive tax shelters even further underground. Assistant Secretary Jenner has stated that the most effective way to stop tax shelter transactions is to require increased disclosure. The administration's tax shelter proposal increases disclosure by levying substantial penalties on those who fail to disclose their transactions.

As I have noted, this proposal has been repeatedly rejected in the House, and it would also hurt jobs and investment. Codifying the economic substance doctrine would result in businesses foregoing job- creating investments because of concerns that the IRS would improperly apply the economic substance doctrine to legitimate transactions.

Finally, this proposal goes beyond accepted case law. The Democratic proposal requires that some transactions have at least a risk-free rate of return. This type of provision goes beyond what is required by either the Tax Code or common-law court doctrines. Furthermore, their proposal does not define a risk-free rate of return.

All things being equal, this is a very poor substitute; and we urge its rejection.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 10 seconds to thank the gentleman for his salute to the simplicity of the economic substance doctrine, and we look forward to the vote on the substitute.

Mr. Speaker, I yield 3 minutes to the gentlewoman from Connecticut (Mrs. Johnson), a member of the Committee on Ways and Means.

Mr. Speaker, I am delighted to yield 3 minutes to the gentleman from Florida (Mr. Foley), my distinguished colleague on the Committee on Ways and Means.

Mr. Speaker, I yield 3 minutes to the gentleman from Missouri (Mr. Akin).

Mr. Speaker, I yield 2 minutes to the gentleman from the State of Pennsylvania (Mr. Shuster).

Mr. Speaker, I yield 4 minutes to the gentleman from Arizona (Mr. Hayworth), a member of the Committee on Ways and Means (Mr. Hayworth).

Yes.

Mr. Speaker, I yield myself the balance of my time, and first of all, thank the gentleman for his contribution and take him up on his offer because we in the Zero AMT Caucus would like to work for permanent resolution of this problem. We would like to see a permanent repeal of the AMT; but unfortunately, in the current political climate, in the current climate of gridlock and recrimination that we have in Washington, nothing more elaborate than the current fix appears to be possible.

Let me say there are a couple of things that I need to correct at the outset.

It was suggested by the gentlewoman from Texas that our bill is a tax increase. It is very hard to understand how she would make that point; but to be clear, this provides critical tax relief for a significant portion of the middle class.

The gentleman from Long Island intimated that there was nothing in this bill to help these people. Well, as a practical matter, a place like Long Island would be one of the biggest beneficiaries of the underlying Republican bill because of the high taxes.

Let me say that the gentleman from Michigan talked about a tax train wreck. I come from a part of the world where we make locomotives, and we recognize their dynamics; and let me say that we recognize that the locomotive that was started, that is threatening, the train wreck was started back when the other party controlled the Chamber and did not deal with an underlying problem by making the AMT responsive to increases in the cost of living.

We have heard procedural arguments from the other side, that the committee has not looked closely enough at this issue; and I reject those because the committee clearly has been tracking this issue from the get-go.

What we have instead is the core issue, which is the substitute being offered today and which, on the other side, they are proposing to dramatically increase the complexity of the Tax Code and also significantly raise corporate taxes on a permanent basis in order to provide temporary tax relief. They congratulate themselves for doing that, but I do not think that they are entitled to a new chapter in ``Profiles in Courage.''

My feeling is that the substitute is inherently a bait-and-switch and increasing taxes at a time when we are experiencing, we are trying to come out of a slow-down. We are, in a sense, embracing Herbert Hoover economics.

I think that the substitute is very ill conceived. It, among other things, imposes a burden on the corporate community at a time when we worry about competitiveness; but that burden is far greater than the one simply indicated by the expected revenue. This is a burden which will permanently change behavior and affect legitimate business transactions. So the rhetoric of the gentleman from North Dakota that this only affects tax cheats is unfortunately not accurate. This is going to be an enormous burden for the corporate sector coming at a most unfortunate time.

Ultimately, I sense that the reason why the folks on the other side have not been as aggressive and certainly in many cases not as aggressive as the gentleman from Massachusetts to deal with this problem is that they want to spend the money. May I suggest, in the end, we get to the solution on reforming the corporate AMT, not by undercutting the tax bill, not by undercutting the tax program which is revitalizing America's economy today, but ultimately by controlling our spending. That is how we will in the context of a growing economy get back to a balanced budget and I think in the long run also have room to deal with this AMT.

Again, I invite our friends on the other side of the aisle to work with us on this issue. We have an opportunity to do this on a bipartisan basis. This is a part of the Tax Code that we agree on, but I think the solution starts today with a rejection of the ill conceived substitute that is being offered

by the other side and passage of the underlying legislation.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself 5 minutes.

Mr. Speaker, this is one of those days when we come out here and try to fix a problem the Republicans created for themselves. Ever since you have been in charge of this place, you did not want to have regular order. You wanted to run bills through the committees without having any witnesses come in and talk about them. You would not listen to what people said to you. And now you have a big problem on your hands and you want to come out again today and put one more Band-Aid on a program that you put a Band-Aid on last year, and you will be back next year and next year and next year because you never understood what you were doing.

Now, when this bill went into effect in 1987, it was designed to tax those people who made lots of money and paid not one penny. That is what it was about. It affected .1 percent of the payers in this country. And the same was true even with the adjustments that we made in 1993 when I was here. The numbers were essentially the same, around .2 percent of taxpayers. Today we are looking at 25 percent of the people in this country are having to figure their taxes twice, because the Republicans made all those tax cuts in 1997 and paid absolutely no attention to what was going on.

If you live in a high tax State like New York or like California or like a lot of the progressive States in this country, and you have a couple of kids, you cannot deduct the money you pay in State taxes. You cannot deduct the money you pay in local taxes. You cannot deduct the deductions for your children. That is why it is sweeping down into the middle class. Half of the households who will be paying this tax are making less than $100,000 a year and over a third of them will be paying between 50 and $75,000.

Now, consider we made these great big tax cuts, we gave $112,000 to people making more than a million and we gave $676 to people in the average income range in this country. And then we turn around and slap them with the AMT tax. Most Americans do not know what the AMT is. It is called, for those of you watching this on television including somebody at the White House maybe, alternative minimum tax. It means if you are not paying enough income tax, then you have to pay this alternative.

Now, what has happened because the Republicans messed it up so badly, they have now swept up about a quarter of the taxpayers in the country with it rising to a third if they do not do something about it, and they have done that while they were busily helping their friends at the top who were not paying taxes anyway.

Now, this bill is another, as I say, Band-Aid. We have an alternative which will be offered by one of my colleagues from Massachusetts which solves the problem in a much more reasonable way and gets the middle class out of this tax trap.

Mr. Speaker, the following is an article from the Seattle Post- Intelligencer which describes this whole program.

[From the Seattle Post-Intelligencer, Jan. 17, 2004]

Get Ready for the Alternative Minimum Tax

(By Mary Deibel)

Few Americans have heard of the alternative minimum tax,

but many taxpayers are about to find out that it's the

biggest financial setback they face, an IRS taxpayer advocate

says.

``Although the AMT was originally enacted to prevent

wealthy taxpayers from avoiding tax liability through the use

of tax avoidance techniques, it now affects substantial

numbers of middle-income taxpayers and will, absent a change

of law, affect more than 30 million taxpayers by 2010,''

taxpayer advocate Nina Olson said in her 508-page annual

report naming this parallel tax system taxpayer enemy No. 1.

Olson should know: State and local taxes pushed her into

the alternative minimum tax last year so now it is personal

as well as professional for her.

And it's about to get personal for lots of other taxpayers,

too. Absent action by Congress and President Bush, one in

four households will owe the alternative minimum tax by 2010.

Some 52 percent of them will be families making $100,000 or

less a year, including 73 percent of households making

$75,000 to $100,000 and 37 percent making $50,000 to $75,000.

Married couples--especially couples with lots of children--

are most apt to be hit by the alternative minimum tax, which

prohibits deductions for dependents along with write-offs for

mortgage interest, state and local taxes, medical expenses

and the like.

``It's a class tax that became a mass tax,'' says Urban

Institute economist Len Burman, who co-authored the study

projecting the future growth of the alternative minimum tax

unless the tax code is changed.

Congress enacted the tax in 1969 after being flooded with

mail protesting reports that 155 ultra-rich Americans gamed

the system to avoid paying a penny toward income tax.

The alternative tax has been on the books since then, never

indexed to inflation the way regular income taxes have been

since 1981.

The tax breaks President Bush and Congress enacted since

2001 expanding child tax credits, ``marriage penalty'' relief

and the like make it more likely taxpayers who try to claim

these write-offs will owe the alternative minimum tax.

The 2003 tax cut contains a temporary provision that will

help many families avoid the alternative minimum tax for just

one year.

Repealing the tax through 2010 would cost the Treasury $600

billion in revenue, according to the non-partisan Tax Policy

Center, a Washington think tank.

Meanwhile, taxpayer advocate Olson says taxpayers who might

owe the alternative minimum tax can expect to pay a higher

tax bill and spend an extra 12 hours preparing their 2003

taxes.

Many won't owe it, but they still must spend the extra

half-day on the paperwork, she says.

Mr. Speaker, the average citizen in this country is not aware what is happening; and the Republicans are out here today, the reason they do not want to have hearings in the committee is it might get on C-SPAN. Some people might find out what was really going on in the tax structure. But, no, we have to come out here, take it up to the Committee on Rules in the middle of the night, slip it down on the floor; and slam, bam, thank you, ma'am, it is out of here in an hour so that people will not know how badly you have messed it up for the middle class.

You have got to put these commercials on that say the middle class have benefited immensely from our tax cuts, and then you run out here to take the pain away that you are creating for them. And in my view, it could all be stopped if you simply would follow the regular order and allow this to be a debate in this House and about the issues that you are changing. To go from .1 percent of the taxpayers to 25 percent of the taxpayers, including people making between 50 and $75,000 without letting people ever, their representatives in the Congress, to have an opportunity to explain that to the American people, is absolutely unacceptable.

We will all vote for this bill, but it is another Band-Aid; and you will be back here next year. I bet you a month of my salary on that.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Mrs. Lowey).

Mr. Speaker, I yield 2 minutes to the gentleman from New Jersey (Mr. Pascrell).

Mr. Speaker, I yield myself 15 seconds.

The gentleman from Texas talks about this being a sneaky tax sneaking up on people. It is only sneaky because my colleagues would not have hearings. If they would have listened to us when they were passing these tax bills in 1997 and 1998 and 1999 and 2000, we told them over and over again, we offered these changes that were necessary then and it all happens now. They say we snuck up on them.

Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. Engel).

Mr. Speaker, I yield myself such time as I may consume.

I would say to my distinguished colleague, the gentleman from New York

(Mr. Houghton), we are going to miss the gentleman when he leaves Congress. It will be a loss for all of us. The gentleman said this is a tax that nobody wanted. Well, if we take the Democratic alternative and look at it in the Statement of Congressional Findings and Purposes, and mostly Members blow through these bills and never read that. I have a little bit of time, so I would like to say a few things about it.

In 1986, because of tax preferences on oil and gas depletion and a whole lot of things, there were a number of people in this country who made a lot of money who then could write it all off because they had these preferences on oil and gas exploration and so forth. So there was an agreement in this House to put in an alternative minimum tax, believing that every American ought to pay something. No matter how rich or how poor, we believe that each worker should put something in the pot. Here we had these people at the top who figured out how to get rid of it all. So we put the alternative minimum tax in.

Then came the 1990s and we had tax reform. We got rid of all of those preferences. Even when we did that, we still had less than 1 half of 1 percent of taxpayers who paid this alternative minimum tax. It never became a problem until 1997 when we took away the personal deductions and the deductions for kids, and we suddenly swept up a quarter of the people this year. If we look at the projections, we are going to have three-quarters of the people paying this thing at some point down the road.

We could have fixed it along the way, but most people did not want it in the first place, and so they said let us get rid of it. Those people on the top should not have to pay anything if they can figure out how to get out of it. So we have not fixed it.

I give you a tale of two taxpayers. There is one standing here, and I have a wife who works and the two of us make a nice living. We have good salaries. We do not have any children, and we do not pay the alternative minimum tax. And the other thing is I live in Washington State. We do not have a State income tax. A great State to live in. It wants folks to come and visit, but do not stop there and live. We do not have any problem with the AMT.

Mr. Speaker, I am not arguing for myself. I am arguing for these people behind me who live in the District of Columbia. One has two kids, one has four kids. They have to pay it on staff salaries in the House of Representatives. Tell me where is the fairness in that tax structure? How is it my wife and I benefit tremendously from this system, and we clobber the people in the middle class behind us? That is why we are here today.

Obviously, Republicans realize that the people out there are going to find things out when they do their taxes. They start through the form, and if you have an adjusted gross income of $58,000, you should begin to figure your taxes in a parallel fashion, the regular income tax form, the 1040, and then there is the alternative minimum tax. So there you are at $60,000, $70,000, and you have to figure your taxes twice.

If you ask the IRS, they put out a flyer that says it takes 3 hours and 56 minutes to figure the alternative minimum tax. Now people are filling out their tax forms making $70,000, a lot are not using accountants, that is their time. So we are putting them through the wringer twice to fill out their taxes because you would not listen.

Now this idea that we will repeal the alternative minimum tax, that is nice. That is a great idea. You know who that helps, well, it helps these people behind me a little bit, but it helps the people at the top. Again, it would be a give-away to the people on the top. I understand what the Republican Party is all about. I believe that is what your goal is. That is a major plank in your platform, is no one who has millions of dollars should pay anything, they know how to use their money, we should let them have it and they will invest it and we will have a lot of jobs.

Well, these tax cuts have not worked in the State of Washington. They have not worked in the State of Washington. We have more people unemployed today than we have ever had. It is the highest long-term unemployment we have ever had since the 1950s, and we are still waiting for the recovery. In February, there were 21,000 jobs created, all government jobs. So the tax cuts did not work except for people who had a lot of money. The next month, March, we had 306,000 jobs. Goodie, we are growing.

The fact is that economists say that it takes 250,000 new jobs every month to simply keep up with the growth in the labor force in this country. So 300,000 is just barely replacement, saying nothing about the 3.5 million that we have lost since President Bush has been in office.

This economy has been an absolute disaster for the middle class and the ordinary working people in this country. This tax structure Republicans have created is awful. We will vote for this today. There is no Member who is not going to vote to put a 1-year patch on it, but it is not being fixed. As a Member said, the way things are going, down the way, you are going to have half the people we are going to have to deal with, and at some point it is going to cost a lot of money.

The other side of the aisle would not fix it in 1997. We tried to tell them, but they were too smart and too full of their own ideas and ideology to look at what they were doing to people, and that is why we are here today. We certainly will all vote for it.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

One of the problems here in the House on an issue like this is that it is hard to have a real debate because we do not set it up as a debate. We really are having a bunch of 2-minute speeches, and nobody ever gets to answer anybody back and forth. The gentleman from Pennsylvania (Mr. English) is an honorable Member and, I think, is just wrong on this issue. I do not bear him any ill will, but one of the interesting things about this is one of the more recent Members who came out here was the gentleman from California (Mr. Herger). He went on about the fact that the Democratic alternative is going to cost $17 billion. This is a time at which the Republican management of the economy has developed the biggest deficits in a very long time. We are going to have to raise the Federal debt limit again. We are going to have to sell more bonds to the Chinese. We are going to have to sell more bonds around the world to keep our economy afloat than ever before.

The gentleman from California's complaint about the gentleman from New York (Mr. Rangel) is that the gentleman from New York has come in here and said, you know, I think we ought to pay for this bill. We ought to pay for it. The gentleman from Pennsylvania (Mr. English) and his colleagues are not interested in paying for it. They just want to throw it on the credit card, another $17 billion onto their kids and their grandchildren. I just had a grandchild born last August, so for the first time I am really thinking about grandchildren. I used to just think about my kids. But now I am looking two generations down the road. It is no problem for the gentleman from California and the gentleman from Pennsylvania and other Members to say, Hey, throw it to the kids. Let's not pay for it.

You have done that since 1996. The mess we are in is directly related to what you have done. When President Bush took over, we had some kind of surplus, I forget, $200 billion; and we are now going into the hole at least $400 billion or $500 billion every year. When the gentleman from New York comes out here and says I would like to pay for it, he gets criticized. That is called raising taxes. No, it is being fiscally responsible.

The gentleman from New York is no wild-eyed liberal. You think he is, but you have never looked at the proposal he made. He reached over across the hall here into another place and took a provision from the Finance chairman in the United States Senate. The provisions that he put in are offsets that are contained in the provisions of a tax abusive transactions bill from the Senate Finance Committee written by a Senator from over there. I cannot name him. The offsets are not tax increases. They are provisions designed to ensure that corporations cannot use aggressive tax shelter transactions to avoid the taxes they pay.

So the charge that the gentleman from New York is trying to raise taxes is simply misleading, to be very generous. I am sure we will see advertisements going all over, well, you know, the Democrats tried to raise taxes on you another $17 billion, and we stopped them. They are not going to tell you about what it is going to cost your kids and your grandchildren in terms of interest rates and what is going on in this economy.

The first group of offsets that the other body came up with are designed to curtail tax shelters by clarifying the economic substance doctrine. People back home, I am sure their eyes are crossed by now, but some of you people

ought to be thinking about it. Increased reporting and penalty provisions. The economic substance doctrine is a rule of law that denies artificial losses or other tax benefits from transactions that have no business purpose or profit motive. It is the usual shenanigans of tax attorneys. Even a Republican in the other body thinks that ain't right. But, no, people over here say, oh, no, we can't do that, we can't tighten up. Oh, no, no, no. All those tax attorneys will have to go out there and find another way to take it away from the middle class and give it to the rich. They apply to transactions with no substance other than tax avoidance.

That is what the gentleman from New York's bill does. He says, let's get people to pay their fair share. If we did, we could do this alternative minimum tax. In fact, we could do more. His bill actually says that if you have a combined adjusted gross income of $250,000, if you are less than that, you do not even have to look at this. That would take millions of people off the rolls. But the Republicans want to leave it so that everybody has to be at $58,000 and start into this alternative plan.

The IRS says the record-keeping for that is 19 minutes. Then they say it takes an hour and 14 minutes to read the law and understand it. This is the IRS telling the taxpayers: it is going to take you an hour and a quarter to read this law and figure it out. Then it takes an hour and 49 minutes to actually figure it. And then copying and assembling and sending the form takes another 34 minutes. That is where we get the 4 hours.

You are putting a half a day's work on the American public because you will not consider an alternative from the Democrats. You will not have a hearing to find out whether this is a better proposal or not, because all wisdom resides on that side of the aisle. And it is really wonderful to stand in the presence of people who know everything; but the problem, the reason you got into this mess is because you would not listen to anybody else and you are still in the mess because you will not listen to anybody else. The fact is that your own people, a guy from Iowa, my gosh, he is a wild liberal, right? Head of the Senate Finance Committee. He comes up with this, and you think it is no good.

The fact is that this is a big problem that we need to work on together. If there were any bipartisanship at all on the Committee on Ways and Means, we could get something done. But if it is going to be done all by one side, where the ideology is we have to give it all to the people at the top and we cannot worry about what happens to the middle class, then we are going to continue to have these kinds of deals. If, God forbid, you are still in charge next year, you will be out here with a bill just like this with a bigger problem and a bigger cost and more money into the deficit.

The question that really is sitting here today is, when is the Republican majority going to face up to the hole in the tax structure that you have dug and into which you have thrown all the people? You gave pittances, $676 average, for the average family and $112,000 for the people at the top. Do you think there is a millionaire in this country who needs $112,000? I mean, seriously. How could anybody come out here and support that, given the problems we have in this country right now? Spending $200 billion on a war that never should have happened in the first place, led into it by a President who stood right here and misled us, and you are throwing money out the door every way we can imagine; and you will not face what you are doing economically.

I really pray, I really do pray that the day never comes when Europe stands up or the Japanese or the Chinese stand up and say, we are not buying any more of that worthless paper from the United States.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I thank the gentleman from Georgia (Mr. Linder) for the time, and I rise today in opposition to the underlying bill and the closed rule providing for its consideration.

Once again, my friends on the Republican side have come to this floor in a restrictive manner stifling debate before it is even allowed to begin. The majority preaches fairness and inclusiveness while practicing and maintaining an agenda that divides and obstructs.

The gentleman from Georgia (Mr. Linder) previously suggested it is a fair rule because it allows for a Democratic substitute. With all due respect to the gentleman, this rule is anything but fair, and it is far from open. The rule does make in order an amendment offered by the gentleman from New York (Mr. Rangel), the ranking member on the Committee on Ways and Means. The Rangel substitute is far more encompassing than the Republican proposal, easier to understand, and most importantly, it pays for itself.

Despite making this amendment in order, the rule blocks the gentleman from Washington (Mr. Baird) from offering an amendment dealing with the deductibility of State income taxes or State sales taxes. Yesterday evening, the Baird measure came to the Committee on Rules. The gentleman from Washington asked that his amendment be made in order under the rule. In typical fashion, Republicans are blocking what they may not be able to defeat. Just like Shakespeare wrote, a rose by any other name would smell as sweet; a closed rule will always stink, and not even dozens of roses could blanket this stench.

The so-called Middle-Class Alternative Minimum Tax Relief Act that the House will consider later today is just another example of the majority's recklessly irresponsible tax agenda, not to mention creative naming practices. Even at first glance, this bill fails America's middle class. Folks, it raises taxes on the middle class. I do not know about the rest of my colleagues, but I have a pretty tough time making the argument in the district that I am proud to represent that a household income between $100,000 and $200,000 is middle class because in the district I represent, the average household income is barely $31,000.

In that district that I am proud to represent, $100,000 in household income is upper class by any definition; yet this is the income level that the majority continues to use as an example when making the case to eliminate the AMT.

The majority maintains that extending AMT exemptions help the middle class. I say it neglects America's real middle class. It raises their taxes. If Congress is serious about helping middle-class families, then it ought to use the $18 billion we are spending on the AMT extension this year alone and invest in the public schools which middle-class children attend. Congress should use the $18 billion and invest in health insurance for the 8.1 million uninsured middle-class Americans. Furthermore, 1-year fixes do not solve our problems. Over a 10-year period, this really will cost us $559 billion. It would be easier to eliminate the entire income tax. It would cost us less than what the Republicans are proposing under the AMT provisions that they offer.

Or if we really want to make a statement about our priorities, Congress should dedicate this $18 billion to the transportation reauthorization bill, a bill that a colleague of ours noted last week is currently stuck in a Republican legislative traffic jam. If we take this $18 billion and add it to the nearly $96 billion that we spent last week in eliminating the marriage tax, we have got ourselves more than 110 billion in

new dollars to invest in America's transportation and infrastructure. At the same time, we would be creating some 4.6 million new jobs. Congress could have the $375 billion transportation bill that America needs without any increase in the gas tax and avoiding a Presidential veto. Instead, the majority chooses to cut taxes at the expense of our national priorities.

Mr. Speaker, I do not know any tax cuts that can teach high school algebra. I certainly cannot recall ever meeting a tax cut that could build a road. But I do know the Bush administration tax cuts, that 3 years of those have stalemated this body to the point that we are unable to adequately address long-term unemployment, an increasing number of uninsured people, escalating costs for health care, the uncertainty of an aging Social Security program, and an inadequate transportation system in this great country of ours. Three years of the Bush administration tax cuts have resulted in the largest deficit in the history of America, the greatest decline in household income in nearly 40 years, and an economy that is showing no immediate signs of recovery to help the more than 8 million unemployed Americans. Most important, tax cuts affect our ability to provide for America's military.

Let me send a message to President Bush and his minions. We cannot have guns and butter and ice cream as they propose. Our country has serious needs. Mr. Speaker, the underlying resolution neglects all of them. For that reason and that reason alone, Members should stand up against the interests of a few at the expense of all. I urge my colleagues to oppose this closed rule and reject the underlying resolution.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Most respectfully, my friend from Georgia has misspoken. If he reads my comment, he will understand that I said the Baird measure was proposed before the Committee on Rules last night. I was there like the gentleman from Georgia was. I do know, as a matter of fact, the gentleman from New York (Mr. Israel) presented the measure, and it was not accepted by us.

Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Frost), the ranking member of the Committee on Rules.

(Mr. Frost asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I note that all of my Republican colleagues who have such great interest in this AMT are just showing up in great numbers to speak on this measure.

Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr. Cooper).

(Mr. Cooper asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I would urge our colleagues who are back in their offices and committees to come on down here and explain to the middle class in America why this AMT is not a tax increase on them.

Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee (Mr. Davis).

The name of the bill, Mr. Speaker, does not make it any more correct. The problem still exists.

Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Lampson).

Mr. Speaker, how much time remains on each side?

Mr. Speaker, I yield myself such time as I may consume.

Twenty-six minutes for those people who believe in this measure to come down here and prove to America that their provision on the AMT is not a tax increase on middle class America, yet they are not using that time.

Mr. Speaker, I yield three minutes to the gentleman from Texas (Mr. Stenholm), my good friend and good student of this process.

(Mr. STENHOLM asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, by continuing the exemption for another year, 1 year, Republicans are incrementally trying to postpone the day of reckoning with the AMT. At some point a decision will have to be made to, number one, repeal some of President Bush's tax cuts or, number two, index the AMT for inflation at a cost of roughly $370 billion or, number three, eliminate the AMT altogether at a cost of $600 billion without the Bush tax cuts, or $900 billion if President Bush's tax cuts remain beyond 2010.

What I just said is a part of inside baseball that at best we could feed to the goats the language that we employ here. The mythical Ms. Johnson and Jane and Joe Lunch Bucket understand only one thing and one thing only, that we need to have a debate on how it affects them. No one comes into my office talking about an AMT. But people come into my office talking about health care. People come into the office of our all of us talking about education. People come to our offices to talk about supporting the military in an adequate fashion. And countless, thousands, of Americans come to us talking about either being uninsured or needing to have incentives for small businesses. And yet we find ourselves unable to have a discussion in this House of Representatives that is meaningful as far as economics are concerned. What we get are campaign gimmicks and fancy names of things that do not become the law.

This measures has passed the House of Representatives before. If the American people wanted it to be law, they would be in our offices saying they want this to be the law. We cannot get ten people in most of our communities to write a decent paragraph on what the alternative minimum tax really is. I dare say we could not get a whole lot of Members of the House to do likewise.

With that in mind, it is a confusing set of circumstances that is a 1-year fix. If you think so much of it, why did you stay in your offices and not come down here and explain to the American public why the middle class will not experience a tax increase over the haul of 10 years? What you do is you reduce the income taxes, then you eliminate the AMT on one hand and you take from the right hand and give to the left hand.

To correct my friend from Georgia, who will have the last word on this subject, correctly so, because he and his Members are in the majority, let me give him a summary of the motion that he brought to the House of Representatives. It says ``Providing for Consideration of H.R. 4227, Middle-Class Alternative Minimum Tax Relief Act of 2004, Mr. Linder, from the Committee on Rules, submitted the following.''

I shall not read the entire report, but since he took it upon himself to say that the Baird measure was not before us, I shall only refer to the language of the motion offered by the gentleman from Texas (Mr. Frost) last night when the gentleman from Georgia (Mr. Linder) and I were in the Committee on Rules.

``Summary of motion: To make in order and provide the appropriate waivers for the amendment offered by Representative Baird.'' Do not challenge me when I say that that was what was brought to us. That measure was defeated six to five by the majority, and I say today we have a chance to remedy that problem if Members, particularly those from Florida, were to see my Republican colleagues from Florida come down here and say that this is not a sound measure when all we have is a sales tax and right up the street somebody else with an income tax can deduct it from their Federal tax offering and we are unable to do this so. Fair is fair. This measure is not fair.

Mr. Speaker, I will be asking Members to vote ``no'' on the previous question. If the previous question is defeated, I will offer an amendment to the rule that will allow the House to vote on the Baird sales tax equity amendment that was offered in the Committee on Rules last night but not allowed by the Republican leadership. I think Members deserve an opportunity to vote on this important amendment. I want to point out that this is not a partisan amendment. It has support from both sides of the aisle as was demonstrated in the Committee on Rules vote yesterday.

The Baird amendment would allow taxpayers who itemize their deductions the option to deduct their State income tax or sales taxes paid in a given year. The option for deduction of sales taxes was available to taxpayers until 1986 when it was eliminated. The gentleman from Georgia (Mr. Linder) said that the gentleman from Missouri's (Mr. Gephardt) name was on that. I remind him that it was signed by President Ronald Reagan. However, taxpayers in those States with a State income tax still retain the ability to deduct those taxes. The loss of the State sales tax option was particularly tough for taxpayers in States with no income tax like my own State of Florida.

As a result, people in my State and others similarly situated pay more taxes than people with identical taxable incomes in States that have a State income tax. It is very important that we equalize the tax relief for citizens in those States without the State income taxes.

Let me emphasize that a ``no'' vote on the previous question will not stop consideration of H.R. 4227, the Middle-Class Alternative Minimum Tax Relief bill. But it will allow the House to vote on reinstating the sales tax deduction option and correct the current tax inequity. But a ``yes'' vote will block Members from an up or down vote on this important tax relief.

Again, I urge a ``no'' vote on the previous question.

Mr. Speaker, I ask unanimous consent that the text of the amendment be printed in the Record immediately prior to the vote on the previous question.

Mr. Speaker, I yield back the balance of my time.

The material previously referred to by Mr. Hastings of Florida is as follows:

In the resolution strike ``and (3)'' and insert the

following:

``(3) the amendment printed in Sec. 2 of this resolution if

offered by Representative Baird of Washington or a designee,

which shall be in order without intervention of any point of

order, shall be considered as read, and shall separately

debatable for 30 minutes equally divided and controlled by

the proponent and an opponent; and (4)''

Sec. 2. The amendment referred to in (3) follows:

At the end of the bill insert the following new section:

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, I offer an amendment in the nature of a substitute.

Yes, Mr. Speaker.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the gentleman from Pennsylvania (Mr. English) is a good friend of mine. He is a member of the Committee on Ways and Means, and he really is a very decent guy, but he is really wrong in what he said earlier. To suggest that these tax cuts and this mania that we have witnessed now for tax cuts for the last 3 years has not had a substantial impact on the size of Federal deficit is to really put our heads in the sand. Let me remind Members of this House we are now fighting two wars with three tax cuts, and the mathematics are there for everybody to see.

An announcement this morning by Secretary Rumsfeld that 135,000 troops now are going to stay in Iraq for an extended tour of duty, well into the year 2005, and let us be honest with the American people, they are there for 2006 and 2007 and maybe through 2010. That is the reality that we confront. We are going to a $500 billion deficit this year after coming out of the Clinton years when we not only balanced the budget but projected surpluses for years to come.

I want to remind ``all is well'' that this proposal from the gentleman from Connecticut today has never even been vetted in the Committee on Ways and Means. Maybe I am mistaken, but I believe after having served in that committee for 12 years that the Committee on Ways and Means has a responsibility for tax revenue issues. So this is being brought to us by an individual who is not on the committee and indeed it has not been aired in the committee. There has been no public hearing on the proposal that we are going to vote on in an hour. So we find ourselves having this debate about alternative minimum tax.

And I want to say something. I think my hands are clean on this issue. I have heard them say that the Democrats put this in place in the reform of the Tax Act of 1986. That may well be the case, but let me tell the Members something. I am in favor of repealing it. I think there ought to be some intellectual honesty as it relates to AMT. It has outlived its usefulness. It has outlived its purpose, and now middle-income taxpayers are now being asked to carry its burden.

We have a game of kind of hocus-pocus here. The Republicans stand up and say, well, we are going to give AMT relief. They are not giving AMT to the number of people they could and should be giving AMT relief to, largely because it does not square with the tax cuts that the administration has proposed, and once again Republicans in this House go along with very few questions asked about any issue. The administration says it is so, they just go along with it, no questions asked, even if the evidence a few weeks, months,

years later turns a contrary conclusion.

Let me speak specifically, if I can, to this issue as it relates to this debate today. The alternative minimum tax was originally designed to make sure that everyone paid their fair share. Who among us can argue with that? The second notion of the proposal that we have offered today is that we want to grant some relief to the burden that the Republican Party has put on middle-income tax earners. If they, in fact, take advantage of certain credits in the Tax Code and they have a lot of children, they are penalized by their proposal. Do the Members know why? It is very simple, because the philosophy of the majority in of this body is that the only people in America that ought to have tax relief are the wealthy.

And to the credit of the wealthy 3 years ago, they were not even asking for tax relief. They wanted to pay down the debt, and public opinion polling concludes, once again, they still think that paying down the deficits are a far better use of taxpayer money than giving tax relief to even those who might benefit most from it.

They promised that they were going to do something about tax reform as it relates to AMT. But what they did not tell them was that they are going to give them tax relief on one hand and then if they sit down to do their tax forms, they are going to take it away from them if they have four or five children. If people desire to use the HOPE credit, they are going to take it away from them. If they try to take advantage of the child credit, they are going to take it away from them. So they give it to them on one hand and they take it back on the other. So in the end, there really is no tax relief as it relates to alternative minimum tax.

I want the Members to listen to this. Half, half of the promised benefits that we voted on last week under the marriage penalty bill, we were told we were going to provide relief to those folks as well, they are taken back to the Treasury by alternative minimum tax.

I have offered time and again, Mr. Speaker, a couple of very easy proposals in this body. Let us get rid of AMT. Let us scale back the size of the tax cuts the administration offered. Let us pay down the deficit. Let us pay for these two wars. Let us fix Social Security. Let us fix Medicare, as American people clearly desire. And let us give tax relief to middle-income Americans, particularly from alternative minimum tax.

I hope in the next few minutes as we engage this debate, we will have a chance to put the magnifying glass on the proposal that is before us today. And I have got to tell the Members, as a member of the oldest committee in this House, a committee that I believe is so desirable to sit on, a committee whose history is so profound as it relates to this Republic, they did not even have enough regard for the Committee on Ways and Means to hold a hearing on this proposal in the committee. This is the introduction to their proposal today on the House floor. Nobody has seen it until about an hour and a half ago.

So let us engage this debate. Let us have an opportunity to draw some attention to what it is that they are saying but, most importantly, to what it is that they are doing.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, anytime that we can ask those companies that have moved to Bermuda to avoid paying American taxes with 134,000 troops in Iraq to pay their share, I am happy to have my fingerprints on that issue.

Mr. Speaker, I yield 4 minutes to the distinguished gentleman from Maryland (Mr. Hoyer), the Democratic whip.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I remind the Republican Members a year ago in the Committee on Ways and Means they had a chance to vote for my AMT bill, which would have done exactly some of the things we are proposing to do today.

Mr. Speaker, I yield 3 minutes to the gentleman from Oregon (Mr. Blumenauer).

Mr. Speaker, I am just curious, and I would ask the gentleman from Pennsylvania (Mr. English) or perhaps the gentleman from Florida (Mr. Foley), since this was never aired in the committee, this proposal has not been brought up in front of the committee, will the author of this proposal, will he be taking his picture with the Committee on Ways and Means later on at 2 o'clock? Will we have him there for the photograph for history and posterity? I was just wondering, since we now have nonmembers of the committee bringing these proposals forward.

Mr. Speaker, I yield 3 minutes to the distinguished gentleman from Michigan (Mr. Levin).

(Mr. LEVIN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield for the purpose of making a unanimous consent request to the gentlewoman from Texas (Ms. Jackson-Lee).

(Ms. JACKSON-LEE asked and was given permission to revise and extend her remarks.)

Mr. Speaker, a quick reminder to the previous speaker. More than half of the promised benefits last week of the marriage tax penalty are taken back under alternative minimum tax.

Mr. Speaker, I yield 3 minutes to the gentleman from New York (Mr. Hinchey).

Mr. Speaker, I yield 3 minutes to the gentleman from New York (Mr. Israel).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I remind the gentleman you cannot fix this on a long- term basis without doing something about the tax cuts that the gentleman was heralding a couple of minutes ago.

Mr. Speaker, I yield 3 minutes to the gentleman from North Dakota (Mr. Pomeroy).

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from New York (Mr. Bishop).

Mr. Speaker, might I inquire as to how much time is left.

Is the gentleman prepared to close?

Mr. Speaker, I yield myself the time that is left.

Mr. Speaker, we have had this debate now in this House for a long period of time. For Members on the majority side to say, well, this was a Democratic proposal in 1986 and then to conveniently forget or suggest that during their 10 years that they have not had sufficient opportunity, working, by the way, with a willing minority to fix the issue, really does not make a great deal of sense. This issue is hanging out there. It is waiting for a solution. There ought to be an opportunity in a bipartisan manner to fix it.

I have said flatly I am in favor of repealing the alternative minimum tax. Let us get rid of it. There is a revenue gap to make up, $600 billion, that has to be found somewhere; but when we offer the suggestion, it goes nowhere, because it does not square, Mr. Speaker, with the tax cuts that the administration has offered and that the compliant Members of the majority have gone along with without ever, ever, ever asking a question.

Forbes magazine has suggested that the tax cuts that the Republican majority and the administration have offered only make the alternative minimum tax issue worse for middle-income Americans. We have heard today a suggestion that issues of war in the Middle East and in Afghanistan are irrelevant to these discussions. How are we going to pay for the troops, 134,000 that are in Iraq and 12,000 that are in Afghanistan, and support this war effort? How are we going to pay for, first, the Defense budget that goes to $421 billion at the conclusion of this session, $41 billion for homeland security? They are off by $140 billion in their prescription drug bill proposal; and the answer is, to all of this, tax cuts.

Mr. Speaker, we can fix the alternative minimum tax issue in a bipartisan manner. I am more than happy to offer my support to try to get that under way. Support the Democratic alternative today. It, in the end, is responsible tax policy, and show those people at Enron and show those people in Bermuda that they ought to pay like the rest of the American people.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, I thank my friend from Pennsylvania for yielding me the time.

I rise today in support of the Middle-Class Alternative Minimum Tax Relief Act of 2004, a bill that will prevent millions of middle-class, middle-income Americans from paying higher taxes next year.

Mr. Speaker, when the IRS's national taxpayer advocate Nina Olsen presented her annual report to Congress at the end of last year, she deemed the AMT, or the alternative minimum tax, as ``the biggest problem taxpayers face today.'' She did not say upper-income taxpayers. She did not say top tax brackets. She did not say wealthy taxpayers, but simply taxpayers. In fact, middle-class families with children are becoming increasingly liable to come under the AMT for several reasons.

First, the baseline exemptions in this tax were never exempted for inflation. So as more and more Americans have entered into the middle class over the past 25 or 30 years, they have outrun the exemption and, therefore, fallen into the AMT trap.

Secondly, the AMT has begun to fall especially hard on middle-class families with children, the very people we in this body have aimed to help, not hurt, with our tax laws. These Americans work hard, they play by the rules, they pay their taxes year after year and are now sending more of their earnings to the Federal Government because this tax does not allow them to take the standard deduction for married couples, and it does not allow them to enjoy individual exemptions for themselves and their children.

What is more, as my colleague from New York has indicated, high-tax States such as New York and Connecticut are much more likely to be caught because the State, local, and personal property taxes are not deductible. Connecticut is the most taxed State in the Nation; and this year, around April 15, I heard from many of my constituents about the AMT tax.

Just last week, on a radio call-in show, I heard from a constituent, Rose Curran. She called in to complain about the AMT. Rose and her husband, Dan, did not have to pay it this year, but they anticipate that if we do not act they will pay it in the next couple of years.

Rose is a retired State employee whose only income is Social Security. Dan is a Vietnam veteran, disabled, a retired sailor from the U.S. Navy who now works as a civilian at the submarine base in Groton. I do not consider Rose and Dan Curran what I would call wealthy or rich people. They do not either, and yet they are concerned that if Dan keeps working at the submarine base they will fall into this trap.

This is one of the reasons why I introduced the Middle-Class Alternative Minimum Tax Relief Act of 2004, to extend through 2005 the AMT relief provided in the 2003 law. This measure will ensure that taxpayers who are currently exempt from the AMT will continue to be protected because AMT will be indexed for inflation over the next year.

If this legislation is not enacted, Mr. Speaker, the number of working families affected by the AMT will increase from over 3 million this year to over 11 million in 2005. Here is a chart that illustrates what will happen. We will go from 3 million to 11 million. If we enact this legislation, we will remain at the 3 million.

Mr. Speaker, I urge all of my colleagues to join me today in support of middle-class Americans like Dan and

Rose Curran of Norwich, Connecticut. I urge their support for this legislation.

Mr. Speaker, I rise today to support my ``Middle-Class Alternative Minimum Tax Relief Act of 2004,'' a bill that will prevent millions of middle-class Americans from paying higher taxes next year.

In 1969, the Treasury Secretary testified before Congress that 155 individual taxpayers with incomes above $200,000 paid no Federal income tax on their 1967 tax returns by taking advantage of the many exemptions and deductions in the tax code. This revelation sparked an immediate backlash from the American people. That year Congress received more constituent letters regarding those 155 taxpayers than on the Vietnam War.

Following this outburst from taxpaying constituents, legislation was passed that created a minimum tax designed to ensure that wealthy individuals could not escape income tax liability. It was termed the alternative minimum tax or ``AMT,'' for short.

The AMT is a parallel tax system. You calculate your taxes under the normal tax system and again under the AMT. Whichever one yields a higher tax is the one you pay. The difference is that when calculating the AMT you cannot take the standard deduction, child exemptions, or deduct state, local, and personal property taxes. Without these important deductions, the AMT often carries the higher price tag of the two. Over three million American families discovered this just last month when calculating their taxes. For them, the AMT became their income tax.

Mr. Speaker, when the IRS's national taxpayer advocate, Nina Olsen, presented her annual report to Congress at the end of last year, she deemed the AMT to be the ``biggest problem taxpayers face today.''

I would urge my colleagues to note that Ms. Olsen said ``taxpayers.'' Not upper-income, not top bracket, not wealthy taxpayers, but simply taxpayers. In fact, middle-class families with children are increasingly liable to come under the AMT for several reasons.

First, the baseline exemptions in this tax were never indexed for inflation. So as more Americans have entered the middle-class over the past 30 years, they have ``outrun'' the exemption and therefore fallen into the AMT trap.

Second, the AMT has begun to fall especially hard on middle-class families with children--the very people who we in this body have aimed to help not hurt with our tax laws. These Aemricans--who have worked hard, played by the rules, and paid their taxes year after year--are now sending more of their earnings to the Federal government because this tax does not allow them to take the standard deduction for married couples and it does not allow them to enjoy individual exemptions for themselves and their children. The more children a family has, the more likely they will be forced into the AMT.

What's more, if families hail from high-tax States like Connecticut they are much more likely to be snared, as State, local, and personal property taxes are not deductible under the AMT. I represent the most- taxed state in the nation. This time of year I am hearing more and more about the AMT.

Just last week while participating on a call-in radio program I heard from a constituent of mine from Norwich, Connecticut. Rose Curran and her husband, Dan, did not have to pay the AMT this year, but they did owe Federal taxes for the first time in years. In going over their return, they discovered the AMT and were curious about what it was. Upon learning more about its current exemption levels, they realized that this supposed ``tax for the rich'' may well affect them in future years.

Rose is a retired State employee whose only income is social security. Dan is a disabled Vietnam veteran and retired sailor who works now as a civilian at the Subase in Groton. Mr. Speaker, I don't think Dan and Rose Curran would call themselves ``rich.'' But they are concerned that if Dan keeps working at the base they will fall into this tax trap. During my conversation with Rose I urged her to follow up with office and I promised that I would look into this matter.

When I did I was stunned. As one publication put it, this problem is ``growing like the monster from the tax lagoon.''

Today, the AMT exemption amount for a married couple is $58,000. However, this relief is scheduled to expire at the end of the year. Without action, the exemption amount will drop from $58,000 to $45,000 in 2005--raisinig taxes on millions of hard-working, middle-income families beginning next year. The exemption for individual payers will drop from $40,250 to $33,750 with the same result.

Therefore I have introduced the ``Middle-Class Alternative Minimum Tax Relief Act of 2004,'' to extend through 2005 the AMT relief provided in the 2003 law. This measure will also ensure that those taxpayers that are currently exempt from the AMT will continue to be protected from the AMT because it will be indexed for inflation over the next year.

If my legislation is not enacted, Mr. Speaker, the number of working families affected by the AMT will increase from over 3 million this year to over 11 million in 2005. Let me repeat that--over 11 million Americans will face this surtax next year without action on my bill today. What's more, the 8 million new families paying the AMT will face an average tax increase of $1,520 according to the Joint Committee on Taxation.

I'm sure that many of my friends here today will say that this won't solve the greater structural problems of this tax and that this is just a temporary fax. There is some truth to that. Thanks in part to the diligent work of people like my colleague from just next door, the gentleman from Massachusetts, Mr. Neal, we all recognize the seriousness of this issue and the need for a long-term solution. But lets not get so mired in debating how to address the long-range consequences of this problem that we fail to provide this critical extension.

Mr. Speaker, what began as a way to make sure that high-income Americans payed their fair share has today become little more than an unfair surcharge on people who choose to get married, have children and work their way into the middle class. My friends, the fireman and the teacher making around $65,000 together are not rich. They work hard every day to put food on the table, pay the mortgage, and save for their children's education. They cannot afford high-priced accountants to help them reduce their tax bill. But if this couple has three children and takes the standard deduction, they WILL--according to CRS--pay the AMT next year if we don't act. Lets make sure--with this legislation--that next April people like Rose and Dan Curran do not pay the considerable price of the alternative minimum tax because we failed to act on their behalf today.

Mr. Speaker, I urge all of my colleagues to join me in support of middle-class Americans like Dan and Rose Curran of Norwich, Connecticut and support the ``Middle-Class Alternative Minimum Tax Relief Act of 2004.''