The Alternative Minimum Tax, The President’s Budget, and the Congressional Budget Resolutions

Publication Date: March 2007

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Aviva Aron-Dine; Richard Kogan

Research Area: Banking and finance

Keywords: Federal budget; Economic projections; Fiscal future; Tax code

Type: Report

Abstract:

This week, the House of Representatives will consider the budget resolution that the House Budget Committee approved March 22. The House Budget Committee plan adheres to the Pay-As-You-Go (PAYGO) budget rules that have been in force in the House since January. These rules require that the cost of any legislation that increases entitlement spending or reduces revenue be offset. Consistent with this, the House Budget Committee plan assumes mandatory spending and revenue levels through 2012 equal to those that the Congressional Budget Office projects would result under current law. That is, the resolution assumes that all departures from current law in the form of tax cuts or entitlement expansions will be paid for. Some observers have criticized this aspect of the budget resolution as disingenuous. In particular, they have criticized the resolution for omitting the costs of providing Alternative Minimum Tax relief, which Congress is almost certain to enact in some form. They have compared this feature of the House Budget Committee plan to the omission of AMT costs for years after 2007 from the President’s budget. (The President’s budget includes a one-year AMT fix, but shows no costs for AMT relief beyond that.)