The Wall Street Journal on Friday headlines a possible attempt by the Democrats to enact middle class tax relief ($ubscriber pay link). With the Democrats now in control of Congress, they have enacted rules that require all tax legislation to be “revenue neutral.”
The big issue facing Congress is the extension of AMT relief. For the past several years, Congress has done one-year extensions of this relief. The Alternative Minimum Tax was designed to get 65 or so millionaires, back in the 1960s. If nothing is done, 25% of households will soon be paying AMT. If you’re unlucky enough to live in a high-tax state, and you have a large family (lots of dependents), you could be hit with the AMT even with an income of less than $100,000.
The Journal article suggests that the Democrats might enact long-term relief, but with corresponding tax increases to the wealthy. And the Journal hints that President Bush might go along with that idea.
I’ll keep you informed as the Congressional term continues.