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Reforming a Tax on the Middle Class
By Eliot Engel September 6, 2004
Listening to President George W. Bush, one could be led to think his tax
policies are good for the middle class. Nothing could be further from
the truth. In August 2003, the Congressional Budget Office confirmed
what thousands of New Yorkers have known -- that the Bush tax cuts are
causing middle class families to shoulder a larger tax burden than the
wealthy, reversing the way things were before Bush took office. And for
New Yorkers, the biggest tax bite can come from the Alternative Minimum
Tax (AMT).
The Alternative Minimum Tax was first created in 1969 when it was
discovered that the super wealthy were avoiding paying any federal
income taxes by using tax shelters and deductions. To reform this,
Congress created the alternative tax to insure that all Americans pay
their fair share of taxes.
However, the threshold for having to use the tax has never been indexed
to keep up with inflation. This means that over the past 30 years, as
incomes have gone up along with the cost of living, the number of
families being drawn into this tax has gone up as well -- an estimated
400,000 more in 2003 than in 2002. So, a well-to-do family making
$60,000 and paying the alternative tax in 1969 has today become a
middle-class family making $60,000 and now getting unfairly slammed this
tax.
Fixing the Alternative Minimum Tax is essential for New Yorkers because
it hits New Yorkers at a higher rate than most other states. In fact,
close to 10 percent of the U.S. taxpayers who earn $50,000 to $75,000
and must pay the tax live in New York City. This is because residents of
the Empire State pay higher state income taxes than most states, and the
Alternative Minimum Tax eliminates any federal deduction for state
taxes.
President Bush came into office promising tax relief and continues to
campaign across the country saying that he has passed tax cuts for
average Americans. But, if the President and the Republicans in
Congress really wanted to provide tax cuts for average Americans in New
York and elsewhere, they would have dealt with the growing problem of
the Alternative Minimum Tax. Instead, they made the federal deficit
balloon by enacting tax cuts for millionaires and for corporations that
use overseas office fronts to avoid paying their taxes here in the
United States.
Looking at which Americans have benefited from President Bush's tax cuts
paints a very clear picture of who this Administration is watching out
for. Upon entering office, the Bush Administration advocated a permanent
end to the estate tax that only affected 49,000 of America's wealthiest
families rather than fixing the Alternative Minimum Tax that affects 3
million middle-class families.
America's priorities should be just the opposite. This nation should
reform the Alternative Minimum Tax before an estimated 41 million
families are drawn into it in 2013. Sadly, the Republican-controlled
Congress is using the income generated by the alternative tax to pay for
tax cuts for the wealthy.
Our leaders in Washington should concentrate on relief for working
people in New York and around the country. Today all over New York,
middle-class families are feeling the squeeze of higher prices,
unemployment, lower retirement earnings, and a strained economy.
Instead of using average Americans as a political football, President Bush
should have provided real leadership during the past four years and ended
the alternative minimum tax. That way, working Americans would keep more of
their earnings and our federal deficit would not be a burden on the backs of
New York's children and grandchildren.
Eliot Engel, a Democrat, is the U.S. Representative from the 17th
Congressional District in the Bronx.
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Presidential debates
President Bush and Senator John Kerry had a series of 90-minute debates:
Thursday, Sep. 30: University of Miami, Coral Gables, Fla. Theme: Foreign policy and homeland security. Moderator: Jim Lehrer, PBS
Transcript of debate
Friday, Oct. 8: Washington University, St. Louis, Mo., no subject restrictions. Moderator: Charles Gibson, ABC
Transcript of debate
Wednesday, Oct. 13: Arizona State University, Tempe, Ariz. Theme: domestic and economic policy. Moderator: Bob Scheiffer, CBS
Transcript of debate
Video of debate.
Vice Presidential debates
Tuesday, Oct. 5: Case Western Reserve University, Cleveland, Ohio. Theme: No limits on topics. Moderator: Gwen Ifill, senior correspondent for "The NewsHour with Jim Lehrer"
Transcript of debate
Live TV coverage: C-SPAN and C-SPAN2, ABC, CBS, Fox, NBC, CNN, MSNBC, Fox News Channel
Official debate site: www.debates.org
Critique of Commission on Presidential Debates: www.debate.org
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