AMT Will Hit 21 Million More Taxpayers This Year
Treasury Secretary Henry Paulson said Tuesday that unless Congress comes up with a "patch" by Nov., 21 million more Americans will be subject the alternative minimum tax in 2007.
The AMT was created in 1969 to ensure the very wealthy did not take so many deductions that they paid no tax at all but it was not indexed for inflation and steadily captures more and more middle-class Americans.
"To avoid confusion and delays for taxpayers, it is critical that an AMT patch be enacted by early November," Paulson wrote in letters to members of the U.S. House of representatives Ways and Means Committee and to the Senate Finance Committee.
"If Congress fails to act, we estimate that 25 million taxpayers will be subject to AMT in 2007 -- 21 million more than were subject to the tax in 2006," Paulson wrote.
In his letter, Paulson said that if Congress waits until after early November to approve a patch, the extra taxpayers will by then have become subject to AMT and it could "significantly delay processing of these taxpayers' returns and payment of any refunds."
Legislators including Ways and Means Committee Chairman Charles Rangel have said that they would like to permanently repeal the AMT and have suggested raising taxes on senior executives of private equity firms would help make up any lost revenues.