is the first hearing of the select revenue measures subcommittee and i think it's appropriate that the subject we will discuss today is the alternative minimum tax or a summary for to it the a t m machine for our federal government the alternative minimum tax is an issue that i've been battling for almost a decade that's right almost ten years i first filed legislation trying to protect middle income families from the reach of the a m t back in  would note that the ranking republican on the subcommittee my friend mr english has also filed legislation to repeal a m t reaching back to nine hundred ninety nine as ambrose bierce once wrote that patience is a minor form of despair disguised as virtue i think as it relates to a m t mr inglis and i have all proved our virtue the a m t is a bipartisan problem and we are seeking bipartisan solutions is a parallel and stealth tax system estimated to hit twenty three million taxpayers this year if we do not extend a fifty billion dollar patch to the system can you imagine a fifty billion dollar pack for those of you who appreciate classic or older cars like i do you know how expensive it is to keep them up and running each year at some point though you wonder if it's worth the effort many car o simply resort to cheaper fixes from a different day and age it was called bondo to patch up the car but it's never pretty and eventually you have to commit a major overhaul we're at that point with alternative minimum tax the code of bondo we've put on year after year is just delaying the inevitable conclusion that this is a system that doesn't run very well and the testimony we will hear today on that point is quite dramatic a family of four earning just sixty six thousand dollars could be hit by a m t by the end of the decade virtually all families earning between seventy five thousand dollars and one hundred thousand dollars a year with two children will be paying higher taxes due to alternative minimum tax at my direction the committee staff prepared for each member today specific estimates showing the growth of a m t by congressional district for two thousand and seven it's important to see how this will be impacting our constituents state and local taxes and personal exemptions that is children are the top reasons taxpayers get pushed into a family unfriendly a this system originally designed to catch millionaires who are avoiding taxes with excessive the doc sions has gone seriously awry it's my intention to offer a permanent solution to a m t and just not another coat of bond this series of hearings will assist the subcommittee in finding and potentially recommending that solution today's hearings will explore the history the background and policy reasons for a m t and our next hearing two weeks from now we will hear more of a first hand experience from those impacted by i am today i'm pleased to welcome our witnesses today from the treasury department we have mr eric solomon assistant secretary for tax policy who will explain the position of the administration surely a partner in any ultimate solution we're very fortunate also to have all said the national taxpayer advocate who is exactly what her title says our advocate she has recommended for years that a m t be repealed because of the burden it places on individual taxpayers also pleased to welcome today dr lynn berman the director of the tax policy center if you read pretty much any article on paper on the a m t you will berman quoted or is work cited in the footnote we are fortunate to have his expertise today as well i also want to welcome dr allen the our resident scholar at the american enterprise institute written on the problems in the a m t both it and it is former position as an economist with the federal reserve bank of dallas san agustin said that patience is the companion of wisdom and i know mr english from previous get togethers are we are bull acolytes of san agustin today we await your wisdom and we certainly expect to find common ground for a solution this time i'd like to recognize my friend mr english for an opening statement i want to thank you mr chairman and i particularly want to thank you for calling today's hearing on the a m t and assembling this panel which i think offers a diversity of informed viewpoint on how to address this problem this initial examination is enormously timely and hopefully will yield a dialog that can point us in the direction for a possible solution in this con this or in the near future to deal with this growing monster of an a m t the most recent attempts to deal with the a m t have been through the use of patches and that's been a temporary expedient which has yelled at bigger and bigger problems he time the a m t still remains a source of complexity for american taxpayers and in my view a drag on economic growth i believe a comprehensive solution is the most desirable outcome hundred ninety s tax increases masquerading as reform is what gives the legislative process a bad name and i hope that we can avoid similar mistakes in the weeks in the months to come and my view the policy challenge facing this committee in this congress is the desperate need to reform the entire tax code one of the strongest arguments for doing that is the continued existence of the  i understand we may hear an argument being made today that the a m t is falling on more families because of the tax cuts and acted in two thousand and one and two thousand and three this logic would maintain that if income taxes are increased less people would be subjected to the a m t that's not my approach to reform i would argue that this line of thinking abandons the fact the a m t is growing so significantly because the tax brackets were never indexed to inflation no american is worse off under recent tax relief and fewer tax payers are subject to the a m t than otherwise would have been the case after  and i approach this hearing today with an open mind after today i think we may be able to conclude that the real solution is tax reform and above all abolishing the a m t i'm sorry to say that we missed an opportunity to do that in one thousand nine hundred ninety as a result of a presidential veto but it is my hope that this subcommittee will play a central role in developing a power a creative policy response that will point us in the right direction and again i'm grateful to you mr chairman for initiating this process thanks to all but without objection any other members wishing to insert statements as part of the record may do so and all written statements by the witnesses will be inserted into the record as well mr solomon thank you mr chairman ranking member english and distinguished members of the committee thank you for the opportunity to discuss the issue of the individual alternative minimum tax the a m t was intended to deal with a relatively small but important issue unfortunately the a m t illustrates how a good faith attempt to address an issue in the income tax system can have enormous undesirable consequences today the a m t is imposing burdens on millions of taxpayers who are not its intended target complex it frustrates millions of taxpayers who have to calculate their taxes twice once under the regular tax system and a second time under the a m t tax system the predecessor of the a m t the minimum tax was first inact sixty nine to ensure that a small group of high income individuals who had managed to avoid paying federal income tax would pay at least and then amount of tax more than thirty seven years of changes to the tax code to transform the original minimum tax taxable income as defined under the regular income tax but the base is broadened by adding back certain tax preferences such as itemized deductions for state and local taxes the standard deduction and personal exemption tax base is reduced by an anti exemption which varies by filing status but not by family size the m t a exemption is phased out above certain income levels beginning with the extra tax relief in two thousand and one congress has included provisions in its tax relief bill to extend and increase the a m t exemption temporarily thus preventing a large increase in the number of a m t tax payers for two thousand and six the a m t exemption was sixty two thousand five hundred fifty dollars for married taxpayers filing jointly and forty two thousand five hundred dollars for unmarried tax payers since one thousand nine hundred three the first one hundred seventy five thousand dollars of taxable income for ante purposes is packed that is twenty six percent ra and amounts above one hundred seventy five thousand dollars or tacked in a twenty eight percent rate however because the a m t exemption is phased out some taxpayers face a marginal effect of a m t tax rate of up to thirty five percent the temporary extensions of the higher ante exemptions allowance of the full use of most personal tax credits which would be income to be known as the a m t patch expired at the end of two thousand and six the president's this school year two thousand and eight budget include proposal to extend the a m t patch to two thousand and seven with the a m t exemptions increase for two thousand and seven to hold the number of taxpayers affected by the a m t and approximately four million the a m t exemption in effect through t thousand and six has generally kept the vast majority of taxpayers from being subject to the a m t however if the a m t patch is not extended or the a m t is not otherwise addressed the number of taxpayers projected to be affected by the a m t will rise sharply from four million in two thousand and six to twenty five million in two thousand and seven the a m t will increasingly affect middle income taxpayers unless action is taken the a m t also increasingly affects families with children because it does not allow to duction for personal exemptions moreover the a m t exemption includes a significant marriage penalty which can worsen the effect of the a m t on married couples unlike the regular tax a m t tax system is not index for inflation the a m t is emption exemption phaseout and the boundary between the two and t tax rates are all fixed in nominal terms because these a m t parameters are not indexed whereas the main parameters of the regular income tax are indexed annually for the effects of inflation over time the a m t itself has become a significant issue if the a m t exemption had been indexed to inflation beginning in one thousand nine hundred four when the regular income tax brackets were indexed the exemption in two thousand and seven would be almost eighty one thousand dollars for married taxpayers filing jointly and sixty one thousand dollars for unmarried individuals with these indexed exemption amount only about two million taxpayers would be affected by the a m t in two thousand and seven we share the concerns of taxpayers and congress about the increasing scope of the a m t we believe that a permanent solution is essential for the continued functioning of our individual income tax system we look forward to working with this committee and others in the congress on a permanent solution to this difficult and important issue however until a long term solution has been enacted is central to provide to prevent an ever larger share of taxpayers from being affected by the we are committed to being sure that middle income taxpayers are not affected by the a m t this year or in the future thank you again mr chairman ranking member english and members of the committee for the opportunity to appear before you today now would be pleased to answer any questions for solomon and now ms olson mr chairman ranking member english and distinguished members of the subcommittee thank you for inviting me to testify today about the alternative minimum tax for individual tax payers since i became the national taxpayer advocate six years ago i have repeatedly called attention to the deficiencies in the a m t and in my two thousand and six annual report to congress i designated the a m t problem facing taxpayers today indeed if i were given the opportunity to make just one change to the internal revenue code i would use it to eliminate the individual a m t with the concept of a minimum tax when the concept of a minimum tax first came into the code in  nine the intent was to prevent wealthy tax payers from using tax preferences to avoid paying their fair share in tel aviv taxes but congress has changed a lot the tax laws many times since the inception of the a m t and has long since shut state or choosing to have children to be a tax avoidance motive for two thousand for the treasury department found that fully sixty eight percent of aggregate a m t tax preference dollars are attributable to the disallowance of the state and local tax deduction and nineteen percent of these dollars are attributable to disallowance of personal exemptions thus about eighty seven percent of the additional income subject to tax under the a m t results simply because of tax payers place of residence or family composition moreover the a m t is now affecting increasing numbers of middle income taxpayers because the amount of income exempt from the a m t is not indexed for inflation when congress person acted a minimum tax in one thousand nine hundred sixty nine the exemption amount was thirty thousand dollars for all taxpayers if congress had indexed that amount it would be equal to a hundred and sixty five thousand dollars today instead the exemption amount after temporary increases that expired in december stands at forty five thousand for married taxpayers and thirty three thousand seven hundred fifty dollars for most other taxpayers at the same time many of the so called tax preferences claimed by middle income taxpayers are indexed for inflation and their added back into the income under the a m t as a result of these divergent trends more income become subject to the a m t each year in two thousand and seven absent a change in law it is projected that about twenty three point four million individual taxpayers or twenty six percent of individual filers who pay income tax will be subject to the t among the categories of tax payers hardest hit eighty nine percent of married couples with adjusted gross income between seventy five and one hundred thousand dollars and two or more children  the burden that the a m t imposes is substantial in dollar terms it is estimated that each a m t taxpayer will owe on average an additional six thousand seven hundred eighty two dollars in tax for two thousand  sometime very soon by mr berman's estimate as early as this year we will reach a point where it will cost more for congress to repeal the a m t than to repeal the regular tax and leave the a m t intact that's a in a very real sense and the a m t has ceased to fulfill its intended mission of preventing tax avoidance by the wealthy and is instead becoming the defacto tax system for millions of americans the obvious challenge in repealing the t is that it's increasing revenue stream has been built into revenue estimates so if it is it repealed congress will have to raise tax revenue in other ways reduce spending or allow the budget deficit to balloon these alternatives admittedly are not appealing but i have no doubt there are solutions that are far preferable to the status quo significantly the longer congress waits to act the more dependent the government will become on am to revenue and the harder it therefore will become to repeal it to be viewed as fair a tax system must be transparent while the concept of a minimum tax is not unreasonable the a m t is currently structured has morphed into something that was never intended it is hitting taxpayers it was never intended to hit it is taking large number of taxpayers by surprise and subjecting them to estimated tax penalties it is imposing onerous compliance burden it is altering the distribution of the tax burden that exists under the regular tax system is changing the tax incentives built into the regular tax system and it is neutralizing the effects of changes to tax rates imposed under the regular tax system tax payers subject to this treatment may wonder whether their government is dealing thank you mr chairman chairman ranking member english members of the subcommittee thank you for inviting me to share my views on the individual alternative minimum tax and thank you mr chairman and mr ranking member for your leadership on this issue and job anyway nine sixty nine treasury secretary joseph barr testified that one hundred fifty five high income individual taxpayers had paid no federal income tax nine hundred sixty six the news created a political firestorm members of congress received more constituent letters about those hundred fifty five taxpayers than about the vietnam war lawmakers could have responded in one of three ways they could have explained that the non tax payers were taking advantage of tax incentives that advance worthwhile social objective and thus should not have to not have to tax that would have been a hard sell they could have close the loopholes that allowed rich people to avoid tax but those loopholes had some pretty powerful constituencies so that didn't happen either instead congress decided to create an extra tax for high income people who didn't pay enough under the regular income tax system to avoid such embarrassing to disclosures in the future thus was born the a m t it was a bad choice b and c doesn't do much to reign in tax shelters because of poor design millionaires are actually less likely to go away empty than middle income people with kids it's inefficient and it undermines support for the tax system because it's the poster child for pointless complexity taxpayers can't understand it but they think it's unfair before getting into how to fix the a m t i'd like to address a couple of several it's why on the a m t is virtually a flat tax with low rates of twenty six and twenty eight percent now those are the rates written into the law but because the a m t exemption phases out with income as eric mentioned the effective rates actually go as high as thirty five percent and they don't even apply to the highest income tax payers because the highest rates don't apply to the highest income people the a m t hits almost everyone with incomes between two hundred and five hundred thousand dollars but not so many millionaires another one since the a m t is becoming the de facto tax system why not just eliminate the regular income tax the a n c would be a terrible tax system first high tax rates apply relatively modest incomes and high income people would get a big rate cut from thirty five percent to twenty eight percent second there are horrendous marriage and child penalties third it isn't indexed for inflation so it caused people's average tax bill to increase every year even if there really comes were in changing another one is that software and paid preparers make a m t complexity no big deal there a least three problems with this argument first as the a m t consumes the middle class it will have more and more people to do their taxes by hand or try second even with software is complex as i explained in my written testimony and third you might want people to understand how the tax system affects them with the a m t the tax system becomes an inscrutable black box it's not the bush tax cuts or the push people under the a m t but the failure to index for inflation actually it's both it's certainly true that the a m t was on a path to cause problems even before the two thousand one tax cuts were enacted but for a double dip problem without the tax cuts sixteen million people would be on the a m t in two thousand and ten which is way too many but with the tax cut the number balloons to thirty two million cutting the regular income tax without fixing the a m t at the same time is a tax policy equivalent of throwing gasoline on a fire the a m t is a blue state tax although in two thousand and six it's true the tax payers and relatively high income high tax coastal states are more likely to go away empty than those in the interior the a n c is going to have people in all states hard if it isn't fixed it might be better to call it a soccer mom tax or swing voter tax it's in all of your interest to do something about it so what should we do a serious fix to the a m t would at a minimum adjusted for inflation and retargeted at the higher income people who are intended to pay it the ideal solution might be  benefits would go to the top fifth of the income distribution we've looked at a number of options to pay for reform including an increase in top income tax rates elimination of the a m t tax preference for capital gains and dividends or repeal of the deduction for state and local taxes under the regular income tax eliminating that the tax break for capital gains and dividends has considerable merit prior to nine hundred eighty seven the tax break on capital gains was the single largest tax preference under the a m t if the purpose of the t is to limit tax shelters this makes sense since virtually any individual income tax cutter you can imagine involves converting ordinary income into lightly taxed capital gains or dividends and taxing gains and dividends and of the a m t would also be highly progressive the president's tax reform panel proposed eliminating say local tax deduction then you know that causes shutters of horror among people who live in high tax states but your constituents are losing this break anyway because of the a m t and it's becoming increasingly just a tax deduction for very high income people who aren't subject to the alternative minimum tax any of these changes would make the tax system more progressive and they wouldn't add to the deficit i understand it fixing the a n c isn't easy if it were it would have happened a long time ago but i applaud the subcommittee for taking the first steps toward what i hope will be a permanent solution thank you very much dr berman dr reardon chairman neal ranking member english distinguished members of the  subcommittee it is an honor to be invited to discuss the alternative minimum tax today i would like to make four main points first the fundamental reason for the spread of the a m t is that the exemption amount is not indexed for inflation the a m t spread rapidly before the two thousand and one and two thousand and three tax laws were adopted it would continued spreading without them and it will spread further after two thousand and ten even if those laws sunset second recent tax legislation slowed the spread of the tax cut from those laws for the spread of the a m t not only adds to complexity but it also moves more tax payers onto an el designed tax system as the other witnesses have already stressed the exemption amount has never been and x for inflation as a result inflation has always been a force that has pushed people onto the a m t from one thousand nine hundred seven to two thousand the a m t rolls doubled every three or four years the amount number of people on the a m t rolls grew from one point six million in two thousand to three point five million in two thousand and six it is sometimes suggested that the two thousand and one in two thousand and three tax cuts and the other legislation adopted during those years was responsible for the spread but the opposite is true for the time period two thousand and one law had remained in place the a m t rolls would have surged to eight point one million in two thousand and six they would have grown by a factor of five rather than a factor of about two on balance the tax legislation adopted in two thousand and one to two thousand and six slow the spread of the a m t the a m t relief that was offered in those laws part of it and themselves part of it and three other laws that a m t really was more than enough to offset the regular tax relief that was offered and therefore that and reduce the spread of the a m t during that time period things are different in the two thousand and seven to two thousand and ten period during these years the two thousand watt in two thousand and three tax laws and the other recent tax legislation are expanding the a m t rolls because those laws offer a m t really without a regular tax relief without corresponding a m t relief nevertheless inflation continues to be a significant factor behind the spread of the a m t this year more than ten million taxpayers would be on the a m t even after two thousand and one and two thousand and three laws had not been adopted let me also note that those tax payers who move on to the a m t because of the two thousand one in two thousand and three tax laws do not experience a net tax increase from those laws the a m t does take back part of the tax cut that those laws would otherwise have offered but it still leaves them with some net tax reduction if the tax laws do sunset after two thousand and ten in two thousand and ten they will continue to spread rapidly growing to a staggering thirty nine million people on the a m t in two thousand and seventeen t been adopted at the time of the extension let me say a few words about the consequences of the spread of the a m t as other witnesses of mention this is a source of complexity for millions of ordinary taxpayers some who merely have large families the a m t as an alternative tax system the notion that it is a low rate right broad based income tax deny you better than a regular income tax is fundamentally mistaken the base broadening provisions are limited they're highly selective and many of them are mr active for the more effective marginal tax rates under the a m t are not systematically lower than those under the regular income tax as len as already mentioned to you it is not the case that the a m t just has tax rates of twenty six and twenty eight percent tax rates of thirty two point five and thirty five percent also exists in summary mr chairman the fundamental reason for the spread of the a m t is the failure to index for inflation recent tax legislation slow b a m c spread in two mr solomon prior treasury testimony stated that quote nearly all the a m t tax payers will lose some part of the benefit of the two thousand and one through two thousand and four tax including some who will lose all of the benefit c r s estimates this take back effect of a m t piques for those earning one hundred thousand to one hundred fifty thousand dollars who will lose two thirds of the promise tax cut can you explain why the administration continues to push for permanent two thousand and one and two thousand and three tax cuts without any permanent a m t solution it seems that this income group will really be paying for everyone else's tax cut thank you mr chairman in response to your question there are two parts first the two thousand and one and two thousand and three tax relief provided because the tax relief has been very important for the economy it has helped make the economy strong and the economy is strong and we need to to keep it strong and for purposes of planning it is important for taxpayers to that looking forward they are going to have a stable tax rate and for this reason the administration thinks it's important that the tax relief be made permanent with respect to the with respect to the a t the administration has proposed a one year patch for the end king we recognize that the a m t is a very important problem and we look forward to working with this committee and the congress in finding a long term the premise that i offered that there was a claw back provision that did for people in the income groups that i described they did lose a substantial part of the tax cuts of two thousand and one through two thousand and three i would phrase it that virtually all americans have enjoyed the tax cuts there has been some claw that ok but virtually all americans have enjoyed the tax relief ok thank you dr berman we've heard some testimony today about inflation as dr being the fundamental reason for the spread of a m t do you agree and if not one of the reasons would you point to as contributing factors it is certainly true that inflation is a factor in this read of the without the the tax cuts and that's why i think you've been so engaged on the issue for such a long time and why why frankly it is agitated me as well the tax cuts doubled the size of the problem without the two thousand and one to two thousand and three tax cuts the number of people on the a m t would be about half half of what it is in two thousand and seven now we patch it every year with cap today congress has kept the damage from being too great but the cost of that t but that's that's a relatively small factor if it had been indexed for inflation and if there'd been the tax cuts the number that you know back since one thousand nine hundred three the number of people on the a m t would be on the order of hundreds of thousands rather than millions or tens of millions explain that well one point that i've tried to make is that the a m t is has so infected our entire tax system that not only is there some claw back effect as others have talked about but if congress has made a determination that the standard deduction in the personal exemption is reflective of basic needs the basic expenses that taxpayers need to have a place where they're get taxed and yet the a m t is adding that back in and people are being brought into the system solely because of dependency exemptions  nineteen percent of the income is attributable to that now that's a serious problem and i would make the point that with the look at tax rates or you just look at policy calls if you were to decide to increase the standard deduction or increase the personal exemption because you think it's not keeping up with cost of living allowances you would be bringing more people into the alternative minimum tax and when you have that kind of situation it's infected our entire tax system  the i'm wondering if the panelists could give us a sense of how many taxpayers are paying more tax or through regular as a result of the bush tax relief than they would as a result of the tax relief that the tax relief is in fact that tax relief and it does not result in more taxpayers paying tax there may be more taxpayer soran on the a m t but that's not the total consideration total consideration is the total tax liability measured under both the regular tax and the alternative minimum tax and taking both of those into account and not just focusing all turn and then on tax the tax relief was just that tax relief isn't it also true that if the bush tax cuts were allowed to expire the number of people paying the a m t will after a drop around twenty eleven continue to rise quickly and then soon surpass current level that's correct it goes to the basic structure of the a m t the real issue here is the a m t itself the structure itself the fact that it has amounts that are not indexed for inflation the fact that it adopt the fact that it denies the personal exemption the real issue lies in the structure of the a m t itself so even if the tax relief was to expire nevertheless the basic circumstances continue to exist and the number of anti tax payers would continue to increase and i'm struck by one element of your testimony and that is the argument we recognize that the a m t was put in place as a solution to what were perceived as abusive tax shelters but since it was conceived there's been a significant change in the character of the tax code are you making the argument that the rationale for  the those features of the tax code could be so dramatically gamed have been rolled back or if the limit by pass legislative action in fact if we has been limited and they've been replaced by new tax avoidance techniques and those tax avoidance techniques are not necessarily things that show up on the face of the return that you could easily add back as tax preferences offshore havens things like that they don't show up on the return so where you do have people sheltering income they're not going to be affected by the alternative minimum tax and i think the treasury and the tax policy show the number of taxpayers that make over a million dollars that paid zero tax the a m t isn't doing what it originally was intended to do in terms of bringing people back into the system and it is harming people that it never intended to touch so it's fair to say that there are tax avoidance problems now but most of them are problems of a sort that the a m t doesn't directly speak to but instead it creates its own problems particularly code to increase economic growth i'm not sure that i'm qualified to would any of the panelists like to speak to that dr berman i was actually thinking about that the other day because we get something from our personnel office saying you should have put your money in iraq for over three b and actually if you do that and you're in your income to a certain level could push you into the phase out range for the a m t and effectively the subject to a big tax and additional income you realize and iraq is a good deal if you expect your tax rate when you retire to be about what it is now or lower or higher but you know for people who are pushed on by their additional contributions it could be a bad deal the big problem is that and they say hard even for people to understand how the tax system is going to affect them and i think that's a problem not just for savings incentives for charitable contributions there's an article in consumer reports this week that said watch out your mortgage interest deductions will be taken back by the a m t it's not true thank you mr chairman i appreciate your have an opportunity to finally discuss this issue the last six years it's been sort of off base to even bring it up except i have a minor fix each year if i understand it correctly from this first start that we have it's called the present law background related to individual benefits tax i don't know whether you folks got that but the first gra in there has a drop if the bush tax cuts are not extended you have a drop from one hundred twenty billion dollars down to something like forty billion and it goes from down from thirty million taxpayers to eighteen million it seems to me that there were no changes in the a m t tax rates when they made the tax rate cuts in the other tax system is that is that a fair description mr berman of what is going on yes that's true and it the solution that's being offered here i don't know i can't tell what you really think is the solution to this but isn't the solution going back into those tax cuts of mr bush in two thousand and one and two thousand and three and making some adjustments and making some adjustments in the a tax rates are actually a variety of solutions you could roll back the bush tax cuts that would make it easier to fix would raise some revenue the would offset some of the cost to repealing or or reforming if you could just adjusting some tax rates by themselves as part of the current structure or you could do other things to raise revenue but the but it sounds to me and i have been here since one nine hundred eighty nine and i heard get the slow security system in two thousand and ten and it was almost as though they were trying to create a crisis to make it necessary to say well we can't fund it let's go to privatization i have same feeling about this tax thing that it was left alone to create a crisis that will get us in here to do some something to get rid of the income tax or what i don't know what they're up to tell me what my misperceiving the congress sitting on its hands for the last twelve years knowing this was getting worse for the last six years and making it worse by acting i'm not sure i want to comment on the motives but it's certainly been true that the problem has been in fact the biggest problem i think is that it's hard coming up with the revenue that you are pretending was going to come in from the alternative minimum tax repealing it would cost  billion dollars according to the j c t how about in two thousand and one how much would it have been it would it i don't have that estimate right in front of me that that the two thousand one tax cuts about doubled the cost to fixing the a m t and so and now it's three times four times well the estimate that's in my testimony is that if the tax cuts are extended the cost of repealing the a m t would be about one point six trillion over ten years rather than the eight hundred seventy billion that that that that was estimated and that the cost of the growing overtime so his i mean those who don't do anything what happens is just going to be screaming from the public that's going to change if you don't do anything twenty three million people the subject the aim to including more than a third of people with incomes between seventy five and a hundred thousand dollars so you have to think that the republicans were setting up thirty three million people to scream about changing the tax structure i'll leave it to you to to figure out the motive well if you can if you could explain some economic motive why they did it i'd be willing to listen to that can you think of any economic reason i think it's more like you know eating food you know you're you know you shouldn't be eating it you know it's not good for you but you can't stop we we need the red we need the revenue we need to pretend the revenues coming in and the president says about by just going to be balanced in two thousand and twelve he's counting on a lot of a m t revenue but that line they knew what that line was going to look like they moved they didn't fix it there if you go to a doctor and he says if you don't stop eating sugar you're go congress and had an opportunity to try in a small way to reinforce your strong voice on this is why i wanted to be on this subcommittee i want to pick up if i could on some of the line of inquiry from mr mcdermott because this is a millionaire's tax that is morphed into lawyers and accountants and lobbyist tax which is now being a tax on working two income families with children and i believe you mentioned that in two thousand and one the tax changes that were made doubled the cost of the fish but in two thousand and one we had surpluses we were looking we were concerned about paying off the federal  those were the days when we going to do when there are no taxable in debt instruments of the united states and a conscious decision was made to ignore this and instead incrementally tinker with the tax system making some very substantial benefits transferring very substantial benefits to a very relatively small group of people concentrated scatters some other things making out of our tax policy and kicking the can down the road on the alternative minimum tax it would have been a and i would like mr chairman for us to have provided to the committee exactly what would have happened in terms of the surplus that was projected in two thousand and one and instead of the rounds of tax cuts for those who needed it the least if we would have solved the problem that you have shown i think that would be very interesting for the committee to have my question and my concern is serving on the budget committee although the admin continues not to be a priority for the administration they have  sume the fifty million dollars pat but then they spend all this alternative minimum tax on their budget and they want to extend their tax cuts over the five year and ten year horizon instead of fixing this problem and so i would like to start mr solomon to understand it appears that this is not a priority of the administration they didn't deal with it when they could've relatively easily in two thousand and one and they were concerned about the federal government having too much money and they've watched as this has more it into a tax on the middle class with families it doesn't hit the hedge fund manager it's the lobbyist the accountants and now it's hitting postal workers and firefighters and teachers i don't understand why this isn't a priority of the administration the same way of extending the tax cuts and spending all of this money in their budget plan this is a priority for the administration this is a very important issue in the budget the ministration proposed a one year pass to deal with this very difficult important issue we care just like you do about the fact that the alternative minimum tax is having and will have on middle income taxpayers just to note with respect to two thousand and one the issue of the alternative minimum tax was raised during the two thousand and one considerations and a a patch was included as part of the tax relief in addition a patch was included in two thousand and three and i understand the patch little that's the that's the get out of jail free card that's the minimum you can do to get away with it if they didn't do the patch the whole house of cards would have collapsed if it is a priority why does the bush budget that we're dealing with in the budget committee right now mr dog and i are sort of scratching our heads why do you propose to spend all the money that the alternative minimum tax is going to collect if it's a priority to fix it it is a priority to fix it and we look forward to working with you to find solutions for the alternative minimum one last time if it is a priority of the bush administration to fix it having dodged the bullet and not done it earlier why does the budget that you have given us assume that we're going to spend all the money it raises except for a one year patch that doesn't like it's a priority doesn't it is a priority to deal with this very difficult and important issue there are many facets of this and many complexities to it and we look forward to working with you to try to find a solution to it mr chairman i would like with the help of the committee chair and ranking member to it maybe it's something maybe this is all mr solomon is authorized to say that he wants to work with us and it's a priority but i would like to sort of see if we can get a response from the administration as to whether or not it's a priority if it's a priority why are they proposing to spend all the money that it will raise other than the one what i'm trying to say is we've had an orgy of tax cuts that has been produced by this administration and the previous six years in congress i guess i soon that the issue of a priority is what you spend money on and the only money that this administration is willing to spend is the minimum the one year patch that they know passed to happen that will happen whether they propose it or not but they spend all the money that this tax would collect and so i'm trying to find out if it is in fact a priority if they're willing to put something on the  line to deal with some of the other spending or their tax proposals if not that's fine if we're kind on our own and it's not a priority of theirs and they're not going to help us budget fairly or in tax policy that's that's ok they'll cooperate but they won't put anything forward and i think it's a legitimate question to ask i that's why i turn to you mr english and chair to have some help in crafting their request because i may not have  enough expressed i think the gentleman's point is well taken and i think it will be an opportunity when the hearings are concluded in about three weeks to have an opportunity to speak with the secretary of the treasury as well at that moment as we begin to proceed with what we believe to be a solution for this issue the gentleman from texas mr dog it will inquire well i believe mr english is correct at least in part that the administration has been very forthright and direct about this you believe it's a priority to solve this problem for the next year and you have a proposal to do that right that is correct and as far as a long term proposal you had to propose something and neither then nor today have you viewed it as a high enough priority to at least concede that without counting the alternative minimum tax dollars to which mr bloom an allergist referred this administration president bush is not submitted a balanced budget of course he has never submitted a balanced budget to us so that doesn't come as a great surprise and there's no balance in the budget he has submitted even in the future because he includes this alternative minimum tax revenue in order to achieve  there are a number of tax avoidance schemes some of our wealthier neighbors utilize to avoid paying their fair share of taxes but that these are not reached by the alternative minimum t x just seems to me and i guess i would direct this question to dr berman to that we may have the very flawed implementation of this policy but the notion that all americans should contribute something  national defense if they have prospered in this country is not unlike my feeling that all corporations should and that we should not permit the amount of tax avoidance which this committee has traditionally been the number one protector of corporations to go offshore and dodge their taxes but even want to do work at taxpayer expense isn't there a way as we look at the alternative minimum tax preserving the concept that americans all have a responsibility want to reach a certain level of prosperity at least to share in the cost of our government i tried to think about how you could leav minimum tax things like the state and local preferences and add back some of the dependency exemption to standard deduction or medical expenses that are itemized deductions and replace them with items that are more targeted to the kind of the beast that we saw back in one thousand nine hundred eighty six and sixty nine and my concern is that you just make it still the enough to make up the revenue impact because so much of the a m t revenue is coming from these other items and i even personally witnessed that in two thousand and one when we first recommended repeal we had some other alternative suggestions index the exemption amount for inflation which was more modest at that time or simply say anybody with gross income under two hundred fifty thousand dollars wouldn't pay it but today because of the passage of time those solutions no one will not do it thank you doctor i think you could tax preferences no longer have it punish people for having kids or stay local taxes and the other thing is i and index of for inflation so inflation didn't push people on to the a m t the other thing is i would restore something that was  prior to nine hundred eighty seven which is the tax capital gains and dividends as as other income that was the biggest preference item in the a m t before nine hundred eighty seven and virtually any tax other you can imagine on the individual side  cuts and their oppression or whether americans got an opportunity to well take advantage of it and now learn that we've had an orgy of tax cut and but what i haven't heard in all of the history that has come from the increase in the history of the contraire there's been some that have outlined that in ninety three that tax increase accelerated the amount of people that are in consideration in their arms and we can't they were never intended to pay and even more unfair to expect them to continue paying for the tax once we get rid of it so my question under pay as you go rules the house would have define close to a trillion dollars of offsetting tax increases to repeal the a m t i wonder if anyone here might say are there folks who are not paying enough in taxes that are so low that you see a category where we should raise them in order to fix the a m t or should congress forgo and waive the pay go for the purpose of doing a permit really my first question is second is chairman rangle is quoted as outlining  the fact and they report to bloomberg that they may rearrange tax racial wealthy americans pay more to prevent the alternative minimum tax from hitting the middle class income households rearranging the rates and i just wonder what your thought might be of whether this congress in particular this body should look at using that approach for your consideration and panels would take questions they might reducing the measured cost by about a third that if if the country were swimming in red in tax revenues right now if we were looking at surpluses then of course it makes sense to look at tax cuts  but the problem is that and that the thing that concerns people like me is that we're looking at some very very serious budgetary problems in the long term in two thousand and ten the baby boomers are going to start retiring and even if you get the entitlements under control it's going to put unprecedented demands on the government and we're already running deficits in my view we ought to be at a minimum thinking about how to get the budget under control in anticipation of the huge demands we're going to put on the country and if you sure you know it's saying that some people would have to pay higher taxes to offset the loss from the sea i think given that we were counting on that revenue all along it was not particularly unfair i think it makes sense as a matter of policy to replace what is an irrational tax with a rational one and you can't do that without having some people pay higher taxes you can't replace an irrational tax without a rational tax without changing things one aspect of this question and one has to take into account is the size of revenues that is the appropriate target for the government to take and that is to say what percentage of the economy should be taken for government purposes and that is an important question what is the level of revenues that that should be captured through the tax system the historical average has been around eighteen percent eighteen percent tax proceeds g d p now it's about eighteen point four percent so in deciding with respect to  what you think the proper level of taxes are and what you think the proper solution to a m t is you need to take that into account because as of now it's projected that the share of tax g d p in this country is expected to rise to perhaps nineteen or twenty percent in the next five to ten years so that needs to be considered in deciding how you want to deal with the a m t i would just like to suggest that we don't have a lot of time to think about this if we see that twenty six percent of the tax paying the tax payers who are paying tax who actually are the ones paying the revenue that are funding the government are going to be pulled into this irrational tax that you may actually see an erosion of participation in the tax system that they will just become so disaffected because it really  have to calculate their taxes twice or they have to pay someone to calculate their taxes so it's not just the proper amount of revenues that should come in but whether your tax payers are going to pay them rates that some of talk about would not be the ideal way to finance a base broadening out of the regular income tax would be a far preferable strategy wonder why these things hadn't been raised and i would just note i didn't want to get too partisan in the cause in my line of inquiry here i was risking i was risking risking something but this sixty nine tax was birthed in the nixon administration eighty six changes in the tax code were under the watch of my fellow oregonian bob packwood republican from oregon who was one of the probably the major architects in the reagan administration i do brought up by a number of my colleagues on the diet that the current budget proposes to make just about every tax cut known to mankind permanent but only provides for a one year fix in the  i just want to draw on one particular part of your testimony where you say a permanent solution to the a m t is essential for the continuing functioning of our individual income tax  believe that don't we need a permanent fix we do need a permanent fix why is an enormous budget if it's not part of the budget we have an immediate problem which is for two thousand and seven which has already begun you need problem to deal with two thousand and seven and so to deal with the immediate problem the budget includes a one year patch understand and that is consistent with that but it is also important that we take the time to examine solutions the alternative minimum tax there are a number of possibilities that we can consider for example  basis dealing with the rates but it just seems to me and other people have already said it but the budget is the priority of our ministrations a priority of our country and if it's not in the budget it's just you can spin i any way you want it's just not a priority and i tend to agree with you that this does need to be fixed and needs to be fixed on a permanent basis and any one year patches were just obvious kate in the potential difficult system to navigate and a lot of people just don't even know about it if if a taxpayer does his or her own tax work and they fail to to do it under the t and then they later found that they should have what happens well the i r s has systems that will check whether you have based on how we put we plug in the information from the return that we get and it will just tell us that you should have calculated you get a penalty you will get a letter from the i r s and then you'll get a penalty for certainly you'll have interest and then you will get a penalty for failing to pay unless you can show reasonable cause and ignorance of the law is not an excuse if you just say this is really confusing i didn't know about it not good enough you still get your so there's a bunch of taxpayers out there who are apt to get hit with this with this yes and one of the things  because it is so hard to know until all of your information is at the end of the year you can't predict when you will be hit by the alternate minimum tax even if you could calculate it correctly you may have to get and you may be charged an estimated tax  you didn't pay enough money during the year to write the alternate is the i r s doing outreach to let people know that this is a problem they ought to be watching out for the i r s has has been working on a publication and is one of the few issues that we don't have a publication on which isn't a short what do you think happens you get your publication done first or we fix this permanently first i'd be a hard one to predict that's afraid of  berman you've given us several options assess how to deal with this do you have a favorite if you were the benevolent taxes are what would what would you do it i think there's actually a lot of merit to the tax reform panel's proposal to eliminate state local tax deduction as i am and i know that's not politically very popular but it's going away on its own and it does make things more complicated if you don't have a say local tax adduction people would have to itemize it would more than raise enough revenue to eliminate the  being here it's been a very interesting discussion educating one for me it seems to me though as we are looking to try and find one of these either sensible way to address this growing problem perhaps we ought to and twenty eight percent on an income above that amount and i know that joint tax has done an analysis which is show that about eleven million more americans will have to pay the a m t next year thanks to the higher pos ninety three am to the right so if it is in our interest to really shield or spare the average american and as my friend from oregon i think he's no longer here wants to make sure the social worker the firefighter and the teacher is protected from the a m t and the cleanest solution would be to repeal the clinton a m t tax rate hikes and basically move back to a pretty clinton twenty four percent and then index the exemption for inflation at the zero five level of forty thousand two hundred fifty which would now mean fifty eight thousand for joint were turned in what i have read that going back to this would mean that only about two point six million taxpayers would be filers would be subject to an a m t patch of a next year instead of the twenty three million that were in to slating under current law so i like to put out the panel for comment number one but number two also  maybe a doctor the art of mr solomon could answer the question about when we're operating under the majority's paygo rules and they're looking to try and quote unquote pay for the  that have a global of fact in terms of economic generation economic activity generation and in essence we will then be suffering from a decline in economic activity  declining revenues that will not serve the purpose that we are trying to do anyway under the paygo rules that they put in place which is to again quote unquote pay for the  you've asked at least two questions there and i'll try to address each one of them first you mentioned the one nine hundred ninety three right adjustments one thousand nine hundred right adjustments are just one change among many changes that have happened to the a m t that have caused it to become a large issue and one of the possibilities that one might consider is to change the rates as as i mentioned just a few minutes before i think also as perhaps you mentioned it would be important to index index the a m t and all the parameters the a m t as well so changing the rates perhaps indexing various parameters will would help reduce the impact of a m t with respect to other proposals perhaps to deal with the aim to yes you would have to take into account the other representations the consequences of of those of those proposed changes for example the lower rate on capital gains and dividends which was part of the two thousand and three tax relief we believe was very important for economic growth and we have had sustained economic growth particularly since since that time there has been a very positive economic very positive economic record and therefore there would be we believe very important ramifications that you would have to take into account with respect to any of the changes that you have suggested i'd like to just make a quick comment about tonight that the effect of the ninety three act that all of the measured effect that you were talking about actually would have come from reinstating the state tax or raising tax rates back up again on capital gains and dividends would be undesirable ways of trying to finance a m t relief because that would increase the tax burden on saving and investment which is the most harmful economic distortion of the tax system imposes it would be far preferable as i said earlier to pursue base broadening within the regular income tax that does not involve increasing the tax burden on saving and investment i think that when actually mentioned one very interesting option just a few minutes ago which is to repeal the state and local tax deduction there are others that also could be pursued but i thank the gentleman generally from pennsylvania  setting my my colleagues a really good job of presenting the concerns we have in the budget committee point of view that they were made very clear that if we don't do something about it in the end the administration is not propose anything but a one year fix and we're  even hearing from the other side of the aisle that a trillion dollars and in addition an additional we don't really worry about it may ministrations not worried about the other side of the aisle not worried about another trillion dollars of debt that i just want to borrow from a foreign country to make ends meet  i think on the budget committee we do care about it so what i want to do though is to take that to the a little bit more to some of my constituents who are going to see the effect of the administration's proposal which is a one year fix and then nothing no one to change a m t stays stays in place and as i understand it that really means that that people families who are within a hundred thousand two hundred fifty thousand dollars will be paying more than we pay middle class taxpayers who are we paying for the tax cuts that the bush administration is has put in since is no changes in that and in fact in my district we're looking about half of the taxpayers who are affected and on this panel actually more of my constituents are affected by the a m t than anyone else which is kind of interesting i didn't realize that until we got some of these numbers for the but the the group the adjusted gross income group are those people at one hundred to two hundred thousand dollar family income not the people making over five hundred thousand dollars a million two million three million dollars and so given the attention intention of the a m t isn't it true that those people who are making a hundred thousand dollars will be paying both of the bush tax effect of the ante and little class and the effect it will have that if it's not six in the future that it will affect an increasing number of taxpayers ministrations proposal for a one year patch as a first step to deal with this issue we agree with you that importance of this issue and how we do not want the a m t to affect the middle class so you know as i see you agree that it is the middle class one hundred thousand dollars family income that's going to hit the hardest if we don't do anything about it and the american other groups compared to other groups i do not have the numbers before me but it is true that the class between one hundred thousand and two hundred thousand dollars will be affected significantly if the a m t is not fixed after two thousand and seven so i can't speak for all americans i can tell you the numbers we got on this panel every member here the constituents we represent the group hit the hardest is one hundred thousand dollars to twenty thousand dollars so you're confirming that that's is going to get hit  patches for one year and then no suggestions about how to fix it for the future it is the first step in dealing the president's proposal the administration's proposal is the first step towards finding a long term solution to this issue of how how much i've only been here for one term you think you'd like more progress this year there has been progress as to say the number of a m t tax payers has been kept at a minimum of the last six years by doing a one year at a time patch it has been too short term temporary patches that's correct so is the intention to do a patch for next year and then the year after then leave it to the next president we hope to work with you to find a long term solution for this problem we share your concerns the question is how we deal with it moving forward i think share your pain is probably not not going to be enough but i would think we need some and i would say some really specific chairman is really working hard on this and i think as interested as we all are in creating that fix but c'mon you're the administration you have lost the specific proposals li by the alternative minimum tax would almost double under the bush proposals that comes from joint tax cuts not a partisan organization quote it is true that the a m t would eat away at some of the benefits flowing from the president's tax proposals as compared to the absence of an a m t interaction with the rest of the tax code that's the secretary of the treasury just on the quote unquote otherwise we're giving people a tax decrease on one side and  tax increase on the other side and they aren't really getting what we said they were going to get that senator charles grassley wrote the two thousand and one tax cut bill will roughly double the number of a  tax pairs in most of the last years of the budget window so that in two thousand and ten an estimated one third of all taxpayers will be subject to the a m t that's the treasury economist t all close the gentle lady said from two thousand and one and as i've indicated they're not partisan positions and i accept your word that you'd like to work with the members of the subcommittee and the full committee of the members of the house but there has to be something that moves beyond the level of testimony here to really tackle this issue because i want to tell you it's the intention of the chairman of the full committee to tackle this issue in the next couple of months so i'm sure that we put your desire to work with us but this is not going to go away and we intend to do the follow up based on what i've proposed and if you like the comics let us just a few comments first there have been a couple of reference that the tax relief is the cause of the problem i just want to reiterate that in my view the source of the problem is the a m t itself and we need to recognize that the a m t causes a penalty for being married there's a marriage penalty it causes negative effects on families because the personal exemptions are denied it denies the standard deduction your nice personal exemptions it denies the itemized deduction for state and local taxes all of these things are part of the n t and they need to be and they need to be addressed in terms of particular kinds of proposals some of the things that might be considered for example are changing the exemption increasing the exemption  singer rate or changing the adjustments those are some of the things that one might consider  comment well i just disagree with mr solomon that the two thousand when tax cuts are not a factor i think we were counting on the a m t revenue when the two thousand one tax cuts were enacted it made them appear to be much less costly in terms of revenue and they actually turned out to be i think we need a permanent solution i'm glad that the administration says they want to work towards a permanent solution i think the response from mr thomas to my response to my favorite solution is suggest that it's harder for politicians to better off the fact is that this tax is a capricious tax it's not hitting the people that you think it should be heading if you're going to make up the revenue with something that makes sense some other people are going to be paying more tax you know my preference would be to shift the tax burden on the people who are most able to pay the ones who benefited the most from the economic expansion of the last two decades but that's obviously not uncontroversial i think in this room an hour would you like to further inquire i would like to just dollars of income a teacher and a firefighter actually not a well paid teacher and a junior firefighter frankly with four children who pay a two thousand dollar surcharge where less than forty percent of the millionaires people not millionaires people who make a million dollars a year or more will be subject to the empty but ninety four percent of the two hundred thousand to five hundred thousand dollars i want to commend you for examples that show how starkly this is perverting what we're attempting to do with the tax code but i would like if you would to just elaborate where you were a moment ago you were taking modest exception to the secretary about whether or not the two thousand one hundred tax cuts figured into this you've already pointed out that  t doubled the number of people who were impacted when there was a chance when there were trillions of dollars theoretically available and they weren't spent to ameliorate it in fact it made it worse and as comment on this how much more difficult resolution is going to be if we were to take the approach recommended by the administration which is spend it all except the one year  as opposed to making some adjustments in the tax code not making it worse not extending it not complicating it further but redirecting to be able to have some of the simpler approaches that you've suggested if you wanted to sort of elaborate on the difference between the too in terms of ultimately being able to solve them and it all versus making some adjustment to get on it sooner rather than later i certainly agree that the sooner you deal with the a m t and ms olson made this point in her testimony than or you deal with the easier it's going to be every year the cost goes up by a a tender my question suggests i was suggesting you assign blame please don't go but if i want you to assess the difficulty of the two approaches i think it's better to deal with it now than to put it off i think if you eat this congress will be remembered as the one that dealt with a really hard issue that had escaped this gave the grasp of congress as of both parties for the last twenty five years i think would be great if i might make  observation the aim to be just to remind folks is not just about cost or at least a dollar cost it's about the cost on taxpayers themselves so it's more taxpayers are pulled into this year just i'm more taxpayers are having having to go through the process of calculating their income tax returns twice and that is an enormous compliance cost for taxpayers alone and it does have an effect on the tax system overall ms olson i really appreciate your a lab aeration mr chairman one of the same said i hope we might be able to do maybe some of our expert witnesses can help guide us in this point but dealing with these lower income families that are being caught in the net the reference that dr berman had to the seventy five thousand getting if we can have some sense of what the costs of tax compliance will be as a percentage of what they're paying and i may be mr secretary you've got something in the treasury maybe tax advocate has it but it just seems to me that we're going to be looking at a lot of people who are going to be maybe an extra five hundred thousand two thousand and twenty five hundred dollars but they're going to be paying an accountant an extra thousand dollars to for this fifteen hundred dollar bill but i think that the next panel that we've scheduled we're going to hear from the practitioners and then we're going to hear from those who have borne the burden of a m t and we have an opportunity to tax policies for the problem when of course we go back to the last administration and they threw away an opportunity to actually repeal flat out the a m t at a time when i would have been a much more affordable solution i don't in fact they feel this is something that needs to be addressed in the short term they certainly have the opportunity to do it and i'm certainly prepared to work with them as as coch looking for that kind of a partnership for years i thank the chairman for having provided this opportunity to explore some of the problems with the and i would simply want to ask the panel as a closing question is not the reform of the elimination or reform of the a m t something best done in the context of something that in the last bush administration  city fire officer but the eliminating the deductibility of state and local taxes which at least would would have some reasonable distributional effect and would also be an approach  best dealt in the context of a fundamental overhaul of the code given the dimensions of the a m t problem dr virus yes that's right a member i agree the fundamental tax reform would be the best  context in which to address this it is such a big problem that a permanent solution to the a m t particularly if there is offsetting financing through something like a repeal of the state level tax deduction would itself almost qualify as a fundamental tax reform  itself so i think it would be best to address it in the context of something very broad based whether that be a move to a consumption tax as i would prefer or whether it be a restructuring of the income tax dr berman i agree with you i actually came to washington to progressive it raises a much larger share of revenue from those who are most able to pay but it's too complicated it's in it's inscrutable and i think that before too long we really do need to fix the income tax so that people will support it as we're demanding more from it to finance the growing demands of the government as the baby boomers retire let's also well i've i've also noted that i need to repeal or deal with the a m t is going to drive fundamental tax reform as we either have to have a revenue hit to do the one year patches in order to keep people off of it we have to address  that and so it is important that we deal with the issue for two thousand and seven a year that has already begun which is consistent with the administration's proposal so i thank the gentleman from texas i think rather than more questions i just agree particularly with what ms olson just said fundamental tax reform is fine but i've been here through twelve years of republican rule in fact i've never known anything else in the house until this year and they never once brought fundamental tax reform proposal to a vote in this committee or anywhere else president bush has had six years to propose fundamental tax reform he just offer a specific proposal to do that and i think you're right this is a time bomb and while we do need more comprehensive reform we ought not to wait perfect reform if one exists in order to try to provide some redress to middle tax class taxpayers will the gentleman yield the gentleman the to do it i'd be willing to consider any proposal you had but the only proposed any proposal that you want to dance with the only ones that we've talked about in the committee rather than voted on have been ones that simply shift more of the burden to working people and more or less of the bargain to the people that are already trying to dodge and avoid their taxes and that kind of fundamental tax reform is fundamental tax deform not reform that i encourage the gentleman to look at my fundamental tax reform proposal to simplif usa tax and i don't think that you can make the same claim about that everything else i do so i would know today that for the panelists the members of the audience that you could see what the new leadership has brought their more esoteric arguments we began informative and i look forward to the next round of hearings but most importantly a solution to this meeting stand