Individual Tax Simplification Act of 2005

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4096) to amend the Internal Revenue Code of 1986 to extend to 2006 the alternative minimum tax relief available in 2005 and to index such relief for inflation.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on the subject of the bill under consideration.

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

Mr. Speaker, it has been called the ``stealth tax,'' a ``ticking time bomb for the middle class,'' and even the ``Darth Vader of the Tax Code.'' It is the individual alternative minimum tax, the AMT, and it has middle class America squarely in its sights.

Today, as we consider the Stealth Tax Relief Act of 2005 on the floor of the House, this body has a chance to stand with America's middle class by preventing an enormous, unnecessary tax increase from sneaking up on millions of unsuspecting taxpayers next year.

As many of my colleagues know, the AMT was originally enacted in 1969 to prevent a small percentage of taxpayers with very high incomes from paying little or no Federal income tax. However, because this stealth tax was never adjusted for inflation, it is now sneaking up on more and more middle class taxpayers each year as they climb the income ladder. Let me repeat: The AMT was never intended to hit the middle class, but now it is threatening millions of our middle class constituents.

That threat is what prompted the President's Tax Reform Commission to recommit repealing the AMT entirely when it issued its report last month. And, certainly, any serious discussion of long-term tax reform and simplification must include a long, hard look at the AMT.

Mr. Speaker, but middle-class taxpayers cannot afford to wait for the enactment of a permanent AMT relief. As many in this Chamber will recall, the temporary AMT relief that Congress has repeatedly enacted over the last several years is, once again, set to expire at the end of this month, only weeks away. Unless Congress extends this AMT relief, the stealth tax will claim many more middle-class victims.

For perspective, here are some numbers so our viewers at home can follow along with the charts. According to the Joint Committee on Taxation, if Congress fails to act, the number of middle class AMT victims will rise from 3.6 million in 2005 to over 19 million in 2006. In other words, if we fail to act, some 15.4 million more taxpayers will get hit with this stealth tax next year. And according to the U.S. Treasury Department, these taxpayers will pay $2,736 more in taxes just because of individual AMT.

The numbers from my home State of New York tell a similar story. According to the Manhattan Institute For Policy Research if we do nothing, the number of AMT taxpayers in New York will balloon from 379,000 in 2005 to 1.6 million in 2006. That is unacceptable for the middle-class taxpayers I represent in western New York. It is unacceptable for taxpayers nationwide.

Mr. Speaker, the bill before us today will simply extend for 1 additional year the individual AMT relief that we most recently enacted just a year ago. Specifically, this legislation will ensure that the higher AMT exemptions amounts to $58,000 for joint filers and surviving spouses, and $40,250 for singles, that are applicable to tax year 2005, are extended to 2006 as well. This legislation also includes a modest inflation adjustment, which will ensure that the value of this much- needed tax relief is not eaten away by inflation.

If Congress fails to act on this legislation, these exemption amounts are scheduled to revert back to the 2000 levels next year, 45,000 for joint filers and 33,750 for singles, resulting in a massive tax increase on the middle class.

I would note that the other body recently voted to provide a very similar AMT relief as part of its Tax Relief Act of 2005. I would hope that with a strong bipartisan vote here today, we will be able to work out with our colleagues on the other side of the Capitol to keep the stealth tax from being a middle-class nightmare.

Announcement by the Speaker Pro Tempore

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

I stand looking across the way at the ranking member, and not only is he the senior member on the Committee on Ways and Means, but also the senior Member of Congress from my State. I listen carefully when he speaks.

He does not want to see the AMT tax come onto the middle class. He does not really like the process. He is not really sure whether tax cuts are a good idea or not, but hopes that Members will support the legislation.

When we look at some of my brief experience here on both the Rules Committee and now on Ways and Means, I just want to remind the gentleman that as I introduced this legislation with cosponsors, I am pleased to know that we are actually taking up this legislation ahead of the other tax legislation that has been before the Ways and Means Committee on this floor which I hope will be tomorrow or the next day, and I also look back to see that this extension, which has been done in previous years, is not a new issue for Members in the House.

Everyone is familiar with the problem. It is essentially the same bill that passed overwhelmingly on May 5, 2004, with a vote of 333-89, unanimous on our side of the aisle, and 109 voted for it on the Democratic side of the aisle, and 89 against. I hoped there was not huge controversy with having the AMT legislation before us, and made sure there was ample time for debate on the floor by both sides of the aisle before we consider passage of the AMT.

The one thing I have learned in my time here, I cannot predict what the other body will do, but I hope they will do the right thing, and that would be to pass this legislation so the stealth tax does not become a middle-class tax, adding more people to the burden of having to pay this.

Mr. Speaker, I yield 3 minutes to the gentleman from Pennsylvania (Mr. English) who is a distinguished member of the Committee on Ways and Means.

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

Mr. Speaker, this bill that we have before us today will simply extend for one additional year the individual AMT relief that we most recently enacted just a year ago. Specifically, this legislation will ensure that higher AMT exemptions, now, hear these figures: they are not millionaires. They are not even people making over $100,000 a year. These are exemption amounts, $58,000 for joint filers and surviving spouses and $40,250 for singles that are applicable to the tax year 2005 and extended now to 2006 if we have the good fortune of passing it here today.

When I look at the aspect of this legislation, it is simply a stealth tax, raiding and invading middle-class America. This will have an opportunity to thwart that so that some 16.5 million Americans do not find themselves having to pay the stealth tax.

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Florida (Mr. Foley), who is also a distinguished member of the Committee on Ways and Means.

Mr. Speaker, I certainly respect the gentleman from Massachusetts (Mr. Neal) and his contribution to both the Ways and Means Committee and this important legislation for a final fix, which I advocated that we do a final fix. Unfortunately, as I stand here today, with only weeks away, I have legislation to extend into next year the opportunity of having the AMT not move into taking almost 20 million Americans of middle-class tax. And I also will be interested in listening to the views of my colleague, Mr. Neal, on the floor of the Ways and Means Committee, and other aspects on his thoughts of the Mack-Breaux solution, if that is in fact a solution that he supports or would recommend to our body to look at in the future.

I yield to the gentleman from Massachusetts.

I believe that solution that you had also contained tax increases that Members felt that they did not want to incur at this time.

Mr. Speaker, I yield 2 minutes to the gentleman from Colorado (Mr. Beauprez), another distinguished member of the Ways and Means Committee.

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from California (Mr. Herger), senior member of the Ways and Means Committee.

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, I yield 30 seconds to the gentlewoman from New York (Mrs. Kelly), who is a senior member of the Financial Services Committee, and no one has spent more time in battling this terrible stealth tax than Sue Kelly.

(Mrs. KELLY asked and was given permission to revise and extend her remarks.)

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

Mr. Speaker, the year 1969 saw examples of the best and worst of what the Federal Government can do. On one hand, the Department of Defense reachers invented the Internet, which has opened up a world of knowledge to anyone with access to a computer.

On the other hand, in 1969, Congress controlled by the other side of the aisle, created the original version of the AMT. But while the Internet has continually evolved, the AMT structure has not.

It has now become a stealth tax, sneaking up on unsuspecting middle class taxpayers. Mr. Speaker, many of us here today on both sides of the aisle would likely support AMT relief that goes far beyond what is included in this bill.

But the legislation before us today is a crucial first step. I urge my colleagues to come together on a strong bipartisan basis to protect the middle class against stealth tax increases from the AMT.

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 such time as I may consume.

I agree with my friend and the gentleman from New York that the alternative minimum tax was not created to put this undue burden on middle class income people. But I would like to suggest to him as a member of the awesome and powerful Committee on Ways and Means, and former member of the Committee on Rules, that suspension of the rules were not meant for bills like this.

I think it takes a little bit of arrogance to put hundreds of billions of dollars of tax cuts on the suspension calendar, which does not give us an opportunity to see whether we can bring the relief that these taxpayers deserve in a more equitable way. It just seems to me that we had an opportunity to take care of this tax that for many, many years has been threatening the full fiscal load on taxpayers that it was not intended for, but somehow the leadership did not put this in the tax reconciliation bill. It did not include it with their bill to reduce corporate gains tax or the capital gains tax or the corporate dividends tax.

Why would Republicans do something like this? Well, maybe it is because they do not really think the Senate is going to take it up. Maybe this is just a fig leaf for not having the courage to say that this thing is going to cost a trillion dollars if it is going to be permanently removed, and as of now, it is going to cost $33 billion.

I think the American people ought to know that this is either going to cut deeper into the social programs that the very poor have had taken away from them, or it is going to increase the deficit by an additional $33 billion. In any event, I am more than confident that my able colleague from the State of New York and a part of the leadership of the majority party will make it abundantly clear to us that when we all vote for this, that not only have we got some guarantee that it is going to pass the Senate, but we will not cut any further into the $35 billion that is in the real tax bill that came to the floor.

So, Mr. Speaker, it is my impression that we are just going through this for political reasons. The Senate is not going to take it up. The deficit will be increased by $30 billion, but I would encourage my colleagues on both sides of the aisle to support this bill because it certainly has more merit. We never intended for these people to get caught in this, but somehow capital gains and corporate dividends have a higher priority and so this suspension bill will turn slowly in the wind, but I do not know how much support we expect to get from the President or from the majority leadership on this. But we shall see what we shall see.

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

Mr. Speaker, I yield 4 minutes to the gentleman from Michigan (Mr. Levin), a very distinguished member of the Ways and Means Committee.

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

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

I want to congratulate the gentleman from Massachusetts (Mr. Neal) and the gentleman from Florida (Mr. Foley) for the fine work they have done for these people who got caught in this political fiscal trap. What the gentleman from New York, however, my colleague, does not know is that he is not answering the questions that we are asking. It is not that we do not support this bill. It is why did it not get the same protection as the capital gains bill or the same protection as the corporate dividends bill? Why do you have this bill turning slowly on the wind on the suspension calendar when you could have sent it to the Senate with protection?

Mr. Speaker, I yield 4 minutes to the gentleman from Massachusetts (Mr. Neal), the person that was described by the gentleman from Florida (Mr. Foley) as his partner in a bipartisan way, a very distinguished member of the committee.

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

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

I just want to point out, since we all are singing the same song as to how these taxpayers were pushed by inflation into this difficult situation, the question that we are raising on the floor, to make it abundantly clear, is what are the Republicans' priorities for relief? We had an opportunity to have $70 billion to give relief. This problem has been gnawing at all of us to do the right and equitable thing. It was not included in the Republican reconciliation bill. In fact, it was rejected when offered in the full committee by the Democrats.

So I can see the awkward political position that you find yourselves; and you know from the bottom of my heart, I sympathize with your political dilemma, not only in this area but in many other areas. But the question still remains, by putting it under the suspension calendar and sending it over to the other body, it does not have the same protection as the bill that you really want to make certain is there, and that is capital gains tax cuts and corporate dividends tax cuts.

So all we are trying to say as the minority party is that we thought there was a better way to do it to protect these people, not to put it on the suspension calendar, which limits the debate, which restricts the Democrats in trying to improve upon it, but to put it on a road that could be a road to nowhere. There are no protections on this bill when it reaches the other body. And we really, truly believe that this is serious enough, and having this cloud over hardworking voters, you should have given it a priority rather than just to put it on the suspension calendar without the legislative process protection that you have given to other issues.

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

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

Mr. Speaker, certainly we agree on the substance of the bill. But you do not have to blindfold the American people to say that you did not give it the same protection as you have given other tax priorities.

Let's face it, the $56 billion tax cut bill that you are going to bring up later, we know how you pay for that. You pay for it by going after the most vulnerable people that we have in the United States by cutting these social services. The rest of it goes into the deficit. So why will somebody not have the courage to say where are we going to get the $33 billion for this? I am certain that Americans are prepared to make the sacrifice because, after all, this was an unintentional event by Republicans and Democrats, unintentional by liberals and conservatives. So we all agree with that.

All I am saying to the distinguished member of the committee from Florida is that you know when we send this, it could be on the road to nowhere, not paid for. And unless you intend to ask the Senate to cut further in social services, it means that you have agreed on the concept, but you did not give it the same priority or the same legislative protection.

And you say you would like to see it abolished forever. Well, I guess with your lack of respect for the deficit, another $1 trillion, we can do that. So bring it on. Include it with the war cause, which is $6 billion a month. I mean, if there is no respect for anything, if we cannot work together as Republicans and Democrats and try to consider what our priorities are, but to come up in the middle of the night and say do I have a gimmick for you, we will put it on the suspension calendar, nobody is going to vote against it and whatever happens in the Senate happens, that is not the way we are supposed to legislate. Democrats and Republicans are supposed to work together and try to work out their differences before we send things over to the other body.

There is not one Member on the other side of the aisle that can say that there is any way they are going to do both, their priority bill in terms of capital gains cuts, their cuts in corporate dividends, and this bill too, and fix it and put it into reconciliation.

We did not put it into reconciliation. Why do you think that they are going to take your priority bill?

I yield to the gentleman from Florida.

How many names do you want as to why we don't do it again? I can tell you why we don't. We on this side would welcome the opportunity. I don't think that the general public and the voters like to see us fighting each other.

But there has not been one issue that the Republicans would allow us to work with them on. And further to that, even when you have your conferences, you know and I know Democrats are excluded from it. So if you and I were trying to work together, I am certain that we could.

But you and I don't call the shots around here, Mr. Shaw, and that is unfortunate.

Mr. Speaker, let me thank the gentleman from New York (Mr. Rangel) for allocating the time.

The gentleman from New York (Mr. Reynolds) made some comments at the outset talking about in his time on the Ways and Means Committee he has seen the committee try to address the issue of alternative minimum tax. But what is really interesting is he has only been there a short period of time. For some of us who have been there for a long time, this is the annual request we make of the majority.

Now, I want to thank the gentleman from Florida (Mr. Foley) for his good and sincere words. But there is a reality here, as we look at alternative minimum tax, and the reality is this: during the last 5 years, we have had time to repeal the estate tax. We have had time to not only address the dividend issue and capital gains, but in the next few days, we are going to take up the issue of extending them for another 5 years.

Now, Congress has had time during these 5 years to do all of this. We have cut taxes for the wealthiest among us, millionaires who have received annual breaks totaling well over hundreds of thousands of dollars. But then when it comes time to address alternative minimum tax, we do it in what is known as the Stealth Tax Relief Act. And you know what, Mr. Speaker? That is the right term, the Stealth Tax Relief Act, because stealth is what this issue is all about. There is no reality addressed to what Congress is going to do in the next hour or so when it passes this bill. Is there anybody here in the Congress who is not in favor of this? I am not aware of anybody. We are all going to vote for this, and then reality is going to settle in.

And the reality is that this really does not mean very much. And, in fact, the gentleman from Florida (Mr. Foley) and the gentleman from New York (Mr. Reynolds) and the gentleman from New York (Mr. Rangel) and I are going to be back here next year, and we are going to be having this conversation. And the majority is going to say something like, well, the minority had years to do something about this. Who has been in charge of

this institution for more than a decade? The problem is this does not square, the alternative minimum tax because it gives tax relief to middle-income Americans, it does not square with the overarching agenda here, and that is to take care of the strongest among us. That is to take care of people who really are minimally touched by alternative minimum tax.

They address this issue, as they do year after year, with a Band-Aid, with a Band-Aid. This issue, alternative minimum tax, requires major surgery. In fact, if they do not do something about it shortly, it is going to require a surgical air strike. That is how serious it has become. And my friends on the other side will say to me when we leave this Chamber, great job. You did a great job of calling attention to this issue. And then I am going to say to them, well, when are we going to do something about it? And they will say to me, next year.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, if the gentleman will recall, in committee I offered a substitute fully paid for and the majority rejected it on a party-line vote.

Mr. Speaker, without today's legislation, the number of Americans ensnared by the alternative minimum tax is estimated to grow from 3 million now to an astounding 21 million in 2006. The problem is so great that the Treasury Department has estimated that by 2013 an AMT repeal would be more expensive than a repeal of the entire income tax.

In my own Northern California congressional district, in one particular area, nearly 3,000 constituents face a significantly higher tax burden because of this onerous tax.

In February of 1986, a levee broke on the Yuba River, causing a flood that submerged the community, resulting in millions of dollars in damage. Now, after nearly 20 years, the courts have found the State liable for damages to these victims in the amount of $428 million. Unfortunately, because individual claims have to add back attorney fees as AMT taxable income, the flood victims may end up paying some

form of tax on 100 percent of their award even though this is money they never saw. This is double taxation, and it is unfair.

I urge my colleagues to vote for the Reynolds extension before us.

Mr. Speaker, because of time constraints during Floor debate, I was unable to present my full remarks in support of H.R. 4096, the Stealth Tax Relief Act of 2005. I would like to request that the following comments be published in the Congressional Record for Wednesday, December 7, so my remarks in support of H.R. 4096 are reflected in the Record in their entirety:

Mr. Speaker, without today's legislation, the number of

Americans ensnared by the Alternative Minimum Tax is

estimated to grow to an astounding 21 million in 2006.

The problem is so great that the Treasury Department

estimates that by 2013, an AMT repeal would be more expensive

than a repeal of the income tax.

In my own northern California congressional district, in

one particular area, nearly 3,000 constituents face a

significantly higher tax burden because of this onerous tax.

In February of 1986, a levee broke on the Yuba River

causing a flood that submerged the community, resulting in

millions of dollars in damages.

Now, after nearly 20 years of legal battles, a court has

found the state liable and ordered it to pay damages to flood

victims in the amount of $428 million.

Unfortunately, because individual claimants have to add

back attorney fees as AMT taxable income, the flood victims

may end up paying some form of tax on 100 percent of their

award, even though this is money they never saw.

This is double taxation, and it is unfair. The attorneys

have already paid income tax on the amount they earned

through representation.

Mr. Speaker, it is unfair that these flood victims--who

have waited so long to be justly compensated--now should be

subject to the AMT.

The AMT is sorely in need of fundamental reform. It's time

once and for all to do away with this middle class tax trap.

I urge my colleagues to vote for the Reynolds extension

before us.

This is a stealth approach, this so-called Stealth Tax Relief Act, to a real problem. The two gentlemen who have spoken had a choice in the committee. You had a choice. You had a choice between helping out with a tax cut a few years from now with more than 50 percent going to 1 percent of the population, or voting to help those 15\1/2\ million Americans who would otherwise have a tax increase. You voted for the 1 percent.

You had a choice in committee between helping out some years from now people making a million dollars a year, or helping next year millions of families making 75,000 to $100,000. You chose the millionaires. So now you are coming here and saying, well, we must do something. You had a chance to do that in committee. You did the wrong thing then, and now you are trying to cover your tracks. You do not pay for it. There is little chance the Senate will act, and so essentially this is an effort to cover your tracks.

But let me just suggest, you can try to hide from what you did in committee and what is in the reconciliation tax bill, but you cannot run on it next year. So now you are trying to put up something that gives you cover for next year's election.

Look, when you say we could have done something in the majority, I think we have been in the minority now for 11 years. Where have you been?

No, instead, you have adopted tax policies that, by and large, surely in the provision in the tax bill, the reconciliation bill, help the very wealthy instead of helping the families, millions who will be caught up by the increased coverage of the alternative minimum tax. And I do not have to go through with this. You have described these families. But essentially it is crocodile tears for them instead of real action. You made your choice.

Tomorrow, you are going to have a chance to make the choice again when we put up a substitute, or if you do not allow that, a motion to recommit. So essentially what you are going to do is to vote ``yes'' today; and when we bring up the substitute or the motion to recommit, you are going to vote ``no.'' So ``yes'' today and ``no'' tomorrow. That is not even a fig leaf. That is total inconsistency.

We proposed in the committee, we proposed dealing with the minimum tax now. You passed a bill that said no, you want to give the majority of tax relief that was not paid for, the 20 billion, to people making over a million dollars a year. That is undeniable.

My suggestion is that you, instead of passing the reconciliation bill that helps the millionaires and ignores the millions of families making 75,000 bucks or more a year who will be affected by the minimum tax, that you go back and do it the right way and not hope that somehow this stealth bill will cover your tracks.