Ehrlich on Washington column, April 2, 2001

HEWS FROM Robert L. Ehrlich, Jr. Second Congressional District of Maryland 1 407 York Road, Suite 304 Lutherville, Maryland 21093 3 1 5 Cannon House Office Building Washington, D.C. 20515 EHRLICH ON WASHINGTON Week of April 2, 200 1 By Congressman Robert L. Ehrlich, Jr. The Alternative Minimum Tax: An Alternative No More Just three weeks after adopting landmark tax relief for America’s small businesses, my colleagues and I in the House of Representatives have won additional relief for America’s hard¬ working families. HR. 6, The Marriage Penalty and Family Tax Relief Act of 2001 was recently adopted in the House and represents the second phase of President Bush’s tax relief plan for America. By enacting this important initiative, Congress rescues middle-income families from a little-known, yet burdensome federal tax that affects millions of Americans - the alternative minimum tax, or the AMT. The AMT was first enacted in 1969, when Congress discovered that 155 wealthy Americans had paid no federal income taxes. Certain incentives tucked away in the tax code allowed these filers to substantially reduce - or wipe out altogether - their income taxes. The AMT was subsequently implemented by Congress to ensure that every wage-earner paid at least a minimum of taxes. Like many federal taxes, the AMT gradually weakened the spending power of millions of American families, including those middle-class Americans it was never meant to target. By the year 2000, over two million taxpayers were subject to the AMT, a far cry from the 155 wealthy Americans the AMT was originally meant to target. Remarkably, if the AMT was not reformed soon, an estimated 1 1 million Americans would have been subject to it by 2008. A vast number of the middle-income filers it would target live in Dundalk, Essex, Pasadena, Bel Air, and throughout the rest of Maryland. I recently met with a family in Dundalk that has felt firsthand the consequences of the AMT. Last year, this family, which has four children and taxable earnings of just over $42,000, claimed the $500 per child tax credit Congress adopted in 1997. Remarkably, all but $18 of that credit was wiped out after the application of the AMT. The AMT is a startling example of how a flawed tax code takes advantage of the middle-class families who most deserve tax relief. Americans cannot prosper when the federal government places a greater premium on the AMT than it does on family incentives such as the child-tax credit. Accordingly, I am committed to making the President’s tax relief plan, including The Marriage Penalty and Family Tax Relief Act, a reality for you and your family. Not only does H.R. 6 permanently allow the child tax credit to offset a taxpayer’s AMT, but it increases the child tax credit from $500 to $1,000 per child.