This vote was on an amendment that would modify the budget resolution to allow for a reduction in the Alternative Minimum Tax (AMT), effectively rolling it back to pre-1993 levels. This would have the effect of exempting some 21 million Americans who would otherwise be subject to the AMT. The amendment would not make up for the loss of tax revenue by raising revenues in other ways. This amendment was offered to the fiscal 2009 budget resolution, which sets overall spending targets for the Appropriations committees and outlines other budget rules.
Devised in 1969, the AMT was intended as a way to capture more tax revenues from a handful of very wealthy people so adept at using loopholes that they paid little into the federal treasury. But the program has come under scrutiny in recent years, because an increasing number of middle-class taxpayers have found themselves subject to the tax. This is largely because the AMT’s formulas do not account for inflation or recent tax cuts.
Most everyone agrees that the AMT is affecting too many people unfairly and needs to be changed. But the AMT brings in a considerable amount of tax revenues that Congress spends from year to year and deciding how to make up that lost revenue is a perennial sticking point when it comes to making any changes to the AMT’s formulas. Republicans pushed for Specter’s amendment because they wanted the AMT fixed without the revenue offsets. Otherwise, Republicans argued, it could not be viewed as a tax cut but rather a shifting of tax burdens.
“I provided for no offset, because this tax was never intended to capture the millions of people to whom it now applies. Originally, it was intended to apply to a very small number of people. So, as a matter of equity, we ought not to have an offset when the tax was not intended to apply at all,” Specter said.
Democrats, meanwhile, have preferred fixing the AMT in a way that would not impact upon the deficit.
“The Specter amendment, as he correctly describes, would not be paid for, would not be offset, but would simply add to the debt $185 billion and would mean this budget would not be in balance for any one of the 5 years,” said Kent Conrad, D-N.D.
The amendment was rejected by a vote of 49-50. All but one Republican present voted for the amendment (George Voinovich of Ohio). Of Democrats present, all but two voted against the amendment (Evan Bayh of Indiana and Ben Nelson of Nebraska). Thus, the measure went forward without language that would have scaled back the AMT without offsetting the loss of revenue.