Issue Position: Tax Reform

Issue Position

Alternative Minimum Tax (AMT)

The Alternative Minimum Tax (AMT) was originally enacted in 1969 to ensure that all taxpayers, especially high-income taxpayers, pay at least a minimum amount of federal taxes. At the time the law was enacted, the very rich could use many loopholes then available to avoid all federal income taxes, and the AMT was designed to avoid that.

After tax reform in 1980s, however, the law was subtly changed to aim at a wholly different set of deductions, the ones that everyone gets, like the personal exemption, state and local taxes, the standard deduction, certain expenses like union dues and even some medical costs for the seriously ill. Therefore, many taxpayers have to do a second tax calculation without claiming deductions like those for state and local taxes that they have come to rely on.

Congress has typically passed what has become known as the alternative minimum tax ''patch,'' which shields millions of taxpayers from paying the more onerous AMT by increasing the amount of exempt income. The most recent patch was included in the 2009 stimulus bill.

President Obama has pledged his full commitment to permanently correct the AMT issue, and I fully support his efforts.

Estate Tax

I strongly believe it is time to deliver true estate tax relief to Wisconsin family farms and small businesses that also protects our ability to pay down the debt and shore up the long-term solvency of Social Security and Medicare. The tax bill that was signed into law in 2001 will eliminate the estate tax, but allowed nearly 10 years -- through 2010 -- for it to be fully phased out. However, in 2011 the estate tax will again be part of the tax code. I believe we must reform the estate tax to bring fairness and equity to our tax system.
Marriage Penalty

The marriage penalty originated in 1969, when Congress tried to equalize what was then an advantage for couples, as compared to single taxpayers. In 1996, forty-two percent of married taxpayers paid more because they were filing jointly than they would have if they had remained single, and the average penalty was $1,380. Several pieces of legislation have been passed since the late nineties to do away with these penalties. For example, the Economic Growth and Tax Relief Reconciliation Act of 2001 mitigated the marriage penalty effect in the lower tax brackets, which will be in effect through 2010. As a result of this legislation, the tax system is now such that couples with disparate incomes will pay less tax than they would have paid as two single taxpayers. Unless reauthorized by Congress, however, the marriage penalty will return in 2011. I support efforts to permanently correct the marriage penalty.

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