Why Your Tax Refund Will Be Weeks To Months Late
From Robert Novack:
Habitual congressional gridlock usually has no impact on the lives of ordinary Americans. But what happened on the Senate floor last Friday just before lawmakers left for their Thanksgiving break will delay tax refunds next year for some 50 million taxpayers who count on them.
The underlying reason is a 38-year-old congressional tax blunder that has never been corrected. In 1969, Congress passed the alternative minimum tax (AMT) to collect from 155 tax-avoiding millionaires. But because the scheme was not indexed for inflation, this year alone it would hit 23 million extra people with higher taxes. The AMT will be “patched” to provide relief, as it has been in every Congress, but not in time this year. Refunds totaling more than $75 billion will arrive many weeks late not only for taxpayers earning $100,000 to $200,000 who are unintentionally affected by the AMT but also for lower-income persons because the IRS refund procedure will be disrupted by the delay.
Senate Majority Leader Harry Reid’s eleventh-hour effort to fix the problem on Friday collapsed when he refused to open the proceedings to votes on Republican tax-cutting proposals. At the heart of this deadlock is a debate between Democrats and Republicans over whether the level of federal taxation should be controlled. For once, the debate comes home to ordinary taxpayers in the form of delayed refund checks.
The AMT problem did not take Congress by surprise. For months the administration had been calling for another AMT “patch” to keep the monster that Congress built from devouring more taxpayers. But Democratic Rep. Charles Rangel, chairman of the tax-writing House Ways and Means Committee, said that he instead would attempt “the mother of all tax reforms”: total repeal of the AMT, with lost revenue paid for by massive taxing of the rich — a trillion-dollar redistribution of wealth over the next decade.
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