Congress to Force Middle Class to Finance Hedge Fund Managers’ Tax Break

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amtchart.jpg If Congress adjourns this month without fixing the Alternative Minimum Tax (AMT), 23 million Americans will see their tax bills increase next year by about $2,000. The AMT was originally designed to snare a few super rich tax cheats but it now threatens to affect millions of upper-middle class Americans. Congress is now scrambling to come up with $50 billion to make sure this doesn’t happen.

Bush administration officials have claimed the AMT increase was “unanticipated” and as such, they’ve been urging Congress to fix it with deficit spending rather than by raising taxes on, say, hedge fund managers. But that’s incredibly disingenuous. The AMT “crisis” stems almost entirely from Bush’s 2001 tax cuts for the wealthy. In fact, the administration and its congressional allies were explicitly counting on the extra AMT revenue to mask the impact of the tax cuts. Iowa senator Charles Grassley acknowledged back then that Bush’s tax cuts would double the number of middle-class people stung by the AMT.

Were it not for those early tax cuts, fixing the AMT would cost a fraction of what it’s going to cost today, according to the nonpartisan Center for Budget and Policy Priorities (see the chart.) Given Wall Street’s major lobbying campaign against taxing hedge fund managers, it likely that Congress is going to punt this bill on to our grandchildren.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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