Lawmakers Shudder at Tax Increase To Fix AMT

The Washington Post reports that almost a year after vowing to protect millions of middle-income families from a special tax meant for millionaires -- the alternative minimum tax -- Democratic leaders are still struggling to find ways to raise the $50 billion needed to fix the problem that will cause a tax increase on 23 million American households this year.

As I noted in my 10-9-07 post entitled "Democratic Leadership Lets Us Down: Buyout Firms to Avoid a Carried-Interest Tax Hike -- Reid Passes Word Senate Won't Act," many Democratic lawmakers had been pushing to more than double the tax rate on the massive earnings of private-equity managers, who the Democrats say have been chronically undertaxed.

I read The Wall Street Journal everyday and am routinely involved in tax law matters. I have studied the proposed carried-interest tax hike proposal, and I was convinced that it was a fair (and just as importantly, justified) tax increase and would have gotten rid of the alternative minimum tax (or much of it), and this also would have been very fair.

It is the only fair way I know that is out there that could pay for the repeal of the alternative minimum tax, and letting the lobbyists win this round really represents a blown opportunity.