These new tax credits were exempt from the AMT in 1998, but the exemptions expired in 1999. Unless Congress acts quickly to retroactively extend the exemptions, the government estimates that 1.1 million taxpayers will find that Congress gave them a tax break with one hand and took it away with another.
Congress is aware of the problem.
"We are going to deal with it. The [House] speaker and the [Senate] majority leader are committed to it," says Trent Duffy, press secretary at the House Ways and Means Committee.
Earlier this year, in fact, Congress voted to eliminate the AMT completely, but the president vetoed that bill, along with a larger package of tax breaks.
For several years, Rep. Bill Archer (R-Texas), head of the House Ways and Means Committee, has been pleading for a drastic revamping of the AMT laws because of the way inflation has been causing the AMT to increasingly reach down into middle class, because levels are not adjusted for inflation each year.
But AMT reform has been a tough sell, in part because few people seem to understand what the AMT is--unless it strikes them personally. And, of course, it is an increasingly large revenue raiser for the government.
In 1987, for example, the AMT affected 140,000 taxpayers who paid a total of $1.7 billion. It is projected to affect 9 million taxpayers in 2009 and generate $19.8 billion in revenue.
Times staff writer Kathy M. Kristof can be reached by e-mail at kathy.kristof@latimes.com.
