Nothing reveals the nature of the Republican Party more than the battle going on in Congress. It involves a pesky little tax called the alternative minimum tax (AMT) and the desire to eliminate it. The AMT was introduced in 1970 to ensure that upper income tax payers paid a fair share since many at that time paid no tax at all. The flaw in the tax was it was not adjusted for inflation and now many middle income taxpayers are now forced to pay the AMT along with their ordinary taxes. The AMT applies to most married couples who make between $100,000 and $500,000 with more than half of the revenue generated from the tax being paid by those making over $200,000. All US Congressmen recognize the AMT needs to be done away with but there is a serious problem in doing so. In repealing the tax the government will lose between $800 billion and $1.5 trillion over the next 10 years. That is a heavy hit for a nation that is already $9 trillion in debt. Charley Rangel, a Democratic Representative from New York, has introduced a bill that would do away with the AMT and offset the loss in revenue by eliminating a tax loophole utilized for some time by the uber-wealthy and corporations. This loophole prevents hedge fund managers and other individuals from using offshore tax haven corporations to defer taxes on compensation received for providing investment services. In other words, these entities move money to locations like the Cayman Islands in order to avoid paying their fair share of taxes. Using offshore tax havens is illegal but rarely enforced. The bill entitled H.R. 4351, the AMT Relief Act of 2007 passed the House of Representatives 226 to 193, almost entirely along party lines. It now goes to the Senate where the bill will be hotly contested where the Democrats hold a razor slim majority.

The question you have to ask is why the Republicans are battling the changing of the tax code (offshore tax shelters) when the practice is illegal in order to do away with a tax imposed on upper-middle class Americans? In fact the President, who is threatening to veto the bill is calling the elimination of the shelter a “tax hike”.

“The administration does not believe the appropriate way to protect 21 million additional taxpayers from 2007 AMT liability is to impose a tax increase on other taxpayers,” said the White House today.

First off, I think everyone reading this or knowledgeable about the bill should write their congressmen and let them know they are aware of what is going on. Secondly, when you go vote in November, remember for whom the Republican Party represents. I am amazed as I pass small homes with Republican yard signs or drive by rugged pick up trucks with Republican bumper stickers on them the utter ignorance of their choice of candidates.  Isn’t it obvious the GOP has never had their interest at heart? The current battle going on in Congress is testament to the true character and loyalty of the Republican party.

Related article:

House Votes Minimum Tax Cut, Closes Fund Loophole

House Passes Responsible AMT Relief-Measure Moves to Senate

This entry was posted on Thursday, December 13th, 2007 at 8:01 pm and is filed under Economics, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.