Bipartisan vow: We'll fix AMT

By Jeanne Sahadi, senior writer


NEW YORK (CNNMoney.com) -- More than 20 million taxpayers are at risk of having to pay the so-called wealth tax when they file their 2010 taxes next year, if lawmakers fail to act. But that's not likely to happen.

On Tuesday, the Democratic chairmen of the House and Senate tax committees teamed with those committees' top Republican members to tell the IRS they are working on a bill to provide taxpayers with temporary relief from the Alternative Minimum Tax.

They advised the agency to "take all steps necessary" to adjust tax forms to reflect the anticipated changes.

"We will work to craft the AMT provision so that, in the aggregate, not one additional taxpayer faces higher taxes in 2010 due to the onerous AMT," the lawmakers wrote in a letter to IRS Commissioner Douglas Shulman.

Putting a temporary "patch" on the AMT to shield middle- and upper-middle-class taxpayers has become an annual event for Congress, although lawmakers have left this year's fix to the last minute.

The AMT was intended primarily for high-income taxpayers. But in recent years, it has threatened to engulf the less affluent because the income thresholds determining who must pay the tax were never adjusted for inflation.

While there is bipartisan disdain for the AMT, there is also bipartisan reluctance to get rid of it entirely because it raises a lot of revenue -- on paper, at least. If it's taken off the books all at once, lawmakers would be under pressure to find alternate sources of revenue to replace it or to cut spending to compensate.

That would be a much easier task if U.S. debt wasn't indefinitely projected to grow faster than the economy, barring other changes to the budget.

As it is, annual AMT patches cost roughly $70 billion a pop. The cost of the patch is typically added to the deficit every year.

The AMT patch is just one of a host of deadline-sensitive tax issues that the lame-duck Congress will face when it returns next weeks. But it is also the one tax issue that Hill watchers are most confident will be resolved before the year is out. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.