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ALTERNATIVE MINIMUM TAX (AMT).   Term Paper ID:29007 Click to get this paper

Essay Subject: Discusses lobbying Congress to modify the AMT.... More...

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Paper Abstract: Discusses lobbying Congress to modify the AMT. Background of AMT's inclusion in the Internal Revenue Code. Need for legislative changes in the AMT. Political problem posed by impact of AMT. Lobbying strategy and specific tactics. Mobilizing public support and coalition building. Lobbying the Administration. Paper Introduction: LOBBYING CONGRESS TO CHANGE THE ALTERNATIVE MINIMUM TAX This research paper discusses how one would go about lobbying Congress to modify the alternative minimum tax (AMT). The basic approach would be to seek a dilution of the impact of the AMT particularly on the middle class (but not its elimination) by fashioning a change in the law which would appeal to key Congressional committee members in both parties, building grassroots support for it among key Congressional constituencies and enlisting the assistance of various interest groups. An important ancillary lobbying effort would be directed at the George Bush administration which might otherwise frustrate these efforts. Need for Legislative Changes in the AMT The AMT was first included in the Internal Revenue Code Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. As a Washington Post editorial (1999, Dec. The AMT was designed to ensure that all taxpayers,especially wealthier ones, paid a minimum tax which was higher than wouldbe due if all otherwise allowable exemptions, deductions and credits weregiven full effect in the computation of the federal income tax due from ataxpayer in any given calendar year. (1997). . According to Berry,the best relationships "are usually begun and nurtured at the staff level,"due to the enormous influence Congressional staffers have in framing theissues and briefing their members (p. Boston: Little, Brown.Browne, W. B6). Lobbying the Administration. Browne said"lobbying is more than just contacts and close relationships. The lobbyist must get beyond theCongressional Liaison Office in the principal federal agencies involved, inthe Treasury Department and the Internal Revenue Service, the Office ofManagement and Budget and the White House staff, to the individuals mostinfluential concerning the AMT. de Kieffer said that the lobbyist must know "how thenew law should technically read" and his "research should consider not onlyfactual and philosophical justifications for [his] position, but also theeffects its institutionalization [as statutory law] would have" (p. He said "Mr. 2. According toWittenberg & Wittenberg, "once identified, prospective allies must beapproached with tact, caution, and pinpointed position papers that explainthe issue clearly in terms of their self-interest" (p. According to Rosenbaum (2 1, April26), the Treasury estimates that by 2 8 nearly 13 percent of taxpayerswith adjusted gross incomes of $75, to $1 , and by 2 16 29 percentof those in that range will be adversely impacted by the AMT (p. Gaining Access to Key Congressional Supporters. A nasty surprise. 15).All members of the lobbying team must have in hand a good summary of theproposal and the legislation proposed so that they all present a consistentand readily understood position. 5) noted, any lost taxrevenues would largely be due to the failure of the AMT to be indexed forinflation and that the lost tax revenue "was never Congress' intent tocollect" (p. 67). According to Truman, "conference managers have agreat deal of discretion . (2 1, April 26). A bigger bite on you? M. A14.The Alternative Minimum Tax. Result Desired. (1998). A14). According to de Kieffer (1997), "one of thereasons most lobbying campaigns fail is that the lobbyists do not have afirm grasp of either the primary or ancillary issues involved in thecampaign" (p. Action Plan. The net effect is that over time the AMT "reaches further downthe economic ladder" (Crenshaw, 2 1, March 4), increasing the tax burdenin 2 of 1,3 , taxpayers, a figure which is expected to increase by afactor of nine by 2 1 and by more than 2 times if the Bush tax planbefore Congress becomes law (p. 142). 2 6-2 8). The fate of any bill can be importantlyinfluenced by the reaction of the media and the public to it. 184). 1 5). As former Speaker TipO'Neil said, 'all politics is local.' Leading liberal media such as theWashington Post, which has come out in favor of AMT reform, should also beincluded in the media relations campaign because of its influence withinthe Beltway. Lobbying Strategy and Tactics 1. How to win in Washington.Cambridge, MA: Blackwell.----------------------- 1 The AMT in operation is bringing within its ambit more and moremiddle and upper middle class taxpayers for several reasons:(1) the one time exemption of $33,75 has remained constant unadjusted forinflation while average tax preference incomes, such as capital gains, haveincreased; (2) many itemized deductions such as property taxes, stateincome taxes, depreciation and mortgage interest deductions have greatlyincreased; and (3) due to special IRS rulings, one time gains which are nottaxable under other provisions of the IRC, such as imputed gains on theexercise of employee stock options, are included in income for AMTpurposes. The citizen's guide to lobbying Congress.Chicago: Chicago Review Press.Rosenbaum, D. As noted, AMTreform is not likely to generate broad public support. The net result is thenmultiplied by a flat rate of 26 percent which yields the actual tax duewhich may be substantially higher than it would be if no AMT existed. Much more, however, than the positive support of one key Senatecommittee will be required to push the AMT proposal through Congress.Wittenberg & Wittenberg said after the post-Watergate reforms of the 197 s"lobbyists used to the cozy simplicity of dealing just with committeechairmen to get laws passed or stopped, suddenly had to find ways toconvince hundreds of previously ignored legislators, whose vote nowmattered on every issue" (p. WashingtonPost, p. (2 1, March 4). Beforeapproaching Grassley, however, it would be wise to consult with theCommittee staff and Grassley's senior personal staff. 11). ReferencesBerry, J. 36). the only groups that have a voice in theconference are those that have established their access to its members longbefore" (p. The lobbyist should point out that the impact of the AMT proposalwould be phased in gradually and that a basic issue of fairness isinvolved. The emphasis should be on improving thelot of the middle class, especially those in major urbanized states whichhave supported the Democrats. According to Wherry (2 , December 11) oneDemocrat, Representative Richard Neal of Massachusetts, has come out infavor of AMT reform because of pressure from his middle class andprofessional constituents. Therefore, the aim of this effort will be amend the IRC to index theAMT exemption for inflation and to ensure that the passage of the Bush taxplan does not result in any increased tax burden because of the AMT onpersons with adjusted gross incomes of less than $1 , . Truman (1955)pointed out that tax bills "are inevitably technical; they are unlikely onmost occasions to have a very large public" (p. The Bush tax proposal has already passed through theHouse of Representatives and is presently being examined by the SenateFinance Committee which will shortly hold hearings on it. 6). An indispensable first step, therefore, is for thelobbyist to do the necessary homework to ensure that he understands andtherefore can explain his proposed amendment to the law. Wittenberg &Wittenberg (1994) emphasized the importance of obtaining a Congressionalsponsor for the bill who can shepherd it through the Congress, the idealsuch person being "a chairman or a senior member of the correctsubcommittee who is philosophically attuned to your cause" (p. Since tax issuesare highly specialized, this means that the services of a Washington, D.C.tax law firm should be engaged to research all aspects of AMT and to drafta concrete amendment. P. Need for Legislative Changes in the AMT The AMT was first included in the Internal Revenue Code (IRC) in 1969and has since been expanded by legislative amendments, especially under theTax Reform Act of 1986. . NA.Wittenberg, E., & Wittenberg, E. New York: Knopf.Wherry, R. The Democrats would change or repeal it" (p. The political problem posed by the impact of the AMTis that it negates the middle class tax cut which was promised but neverdelivered by the Bill Clinton administration and reduces in large part formany taxpayers the tax reductions they would otherwise receive fromenactment of the Bush across the board rate reductions in every taxbracket. The interest group society. E. An importantancillary lobbying effort would be directed at the George Bushadministration which might otherwise frustrate these efforts. Coalition Building. B. According to Browne (1998), "neither thepublic nor the media will listen to an improbable idea for long" andlobbying is likely to fail when the legislative proposal "cover(s) only asmall segment of society" or "irritate(s) the general public" (pp. An ad hoc coalition with those which cater tomiddle class and investor interests, such as national homeowners'associations, the American Association of Retired Persons (AARP), and thehigh technology community which is interested in using stock options toincentive its key employees, are examples of groups which should beconsulted and enlisted in the AMT reform cause. Former House Ways and Means Committee Chairman, Republican BillArcher, called it "a ticking time bomb" (Crenshaw, 2 1, March 4, p. In this connection, the lobbyist of theAMT bill should take into account that an unusual set of circumstances maymake the Democratic minority in the tax writing committees and in theCongress receptive to AMT reform. Each taxpayer computes his tax due inthe normal way, then he or she must complete a special AMT schedule underwhich the taxpayer is given a specific AMT exemption against adjusted grossincome which in 2 1 was $33,75 for single taxpayers, then his or herexemptions, itemized deductions, and credits are reduced by a formula basedon the size of his tax preference income, which is basically income frompassive sources, such as investment profits. 361). Nevertheless, thelobbyist must go out of his way, especially with potential Democraticsupporters, not to fall into the trap of appearing to support a bill whichmostly benefits wealthy taxpayers. Defining the Issue. No lobbying effort on AMT reform islikely to succeed in Congress unless the potential negative influence ofthe Bush administration on the Congress is at least neutralized. Conclusion In a Congressional season in which many competing versions of taxreduction and tax reform vie for public, media and Congressional attention,an effective lobbying effort on behalf of the aforementioned AMT proposalwill require careful planning, the pinpointing in real time of the mostinfluential Congressmen on this topic and the marshalling of a persuasivecampaign in favor of its passage. He must have a convincing sales pitch as towhy the administration should support, or at least not torpedo, AMT reform.It might be wise to use Grassley as the principal advocate because of hiscritical role in shepherding the tax bill through the Senate. Theadministration should politically be interested in strengthening its appealto the suburban middle class which in many states voted overwhelmingly forDemocrats in the last election. The Chairman ofthe Senate Finance Committee, Republican Charles Grassley, has alreadyindicated, according to Rosenbaum, that he intends to include AMTprovisions in the Senate version of the tax bill (p. 12). Berry said "it isnot difficult to be invited to testify if you play your cards right;" andthe hearings could present a magnificent opportunity to draw publicattention to the evils of the AMT (p. A14). A frequently usedtechniques is the Hill Blitz, a concentrated in time series of personalmeetings with critical legislators. According to Rosenbaum, completeelimination of the AMT would cost the Treasury $162 million in tax revenuesover the ensuing decade, $292 billion if the Bush tax cut is enacted (p.A14). H1).The simplest way to cure the problem would be to eliminate the AMT entirelyand increase the regular income tax rates payable by very high incometaxpayers. New York Times, p. According to Rosenbaum, one of theprincipal reasons the AMT increases the federal tax burdens of the uppermiddle class is its reduction of deductions for state income taxes andproperty taxes, which are highest in 1 states, including California,Wisconsin and New York, where the suburban vote went largely to Al Gore andDemocratic Congressional candidates (p. Washington, D.C.: Georgetown University Press.Crenshaw, A. Congressmen tend to bereceptive to lobbyists who represent organizations which through theirpolitical action committees or PACs have made contributions to theircampaigns. Theinitial reaction of the Treasury is likely to be that AMT reform should betabled until a later time because it will decrease government revenues andadd to the public perception which the Democrats have cultivated that theadministration's tax plan favors the rich. (2 , Dec. However, such an approach is probably not politically feasiblebecause the Bush administration wants to reduce not increase the tax ratespayable by higher (as well as lower) income taxpayers and the greatmajority of taxpayers, those in the lower income brackets, would not gainfrom the elimination of the AMT. B6.Truman, D. 4. Neither the large corporate PACs nor the labor union PACs arelikely to be much interested in AMT reform, but specialized PACs, such asthose which represent small and medium-sized businesses or those whichrepresent industries whose employees are especially adversely affected bythe AMT, such as for example, the entertainment industry where incomes varyappreciably from one year to the next, might be good targets. (1994). For middle class,the Alternative Minimum Tax may be next wave to hit home. 5). Followthrough. Groups, interests and U.S. H1.de Kieffer, D. 76). 27). 378). For this reason,the proponents of the AMT bill should call upon the services of a lobbyingorganization, law firm, or other representative which/who has developedover the years an effective working relationship and a reputation forcredibility with the key players involved. public policy. Democratshave, however, taken the lead in criticizing Bush's tax proposal as beingimprudent inasmuch as it might aggravate the deficit and reduce fundsavailable for social programs they favor. Think tanks such as the conservative American EnterpriseInstitute should be approached because, as Wittenberg & Wittenberg pointedout, they can "have a profound influence on the mood of the country" (p.142). This suggests that the organization of a letterwriting campaign and the planting of favorable articles in local newspaperswould have the most impact on Congress if they were concentrated at thegrass roots level in key Congressional districts. The governmental process. Recentarticles in the media chronicling the financial problems of optionees whohave been bankrupted by having to pay taxes on the exercise of underwaterstock options due to the AMT provide good human interest materialconcerning the unnecessary suffering caused by the AMT. In this case, some of the keyplayers are obvious. The name ofthe game is gaining access, often a slow process" (p. (1999, Dec. Forbes, p. If the AMT bill makes it through the Senate,followthrough will be required to ensure that it is not eviscerated in theHouse-Senate Conference. LOBBYING CONGRESS TO CHANGE THE ALTERNATIVE MINIMUM TAX This research paper discusses how one would go about lobbyingCongress to modify the alternative minimum tax (AMT). A variety of interest groups will have aninterest in AMT reform. H1). Washington Post, p. A14).Therefore, the AMT should be presented as a bipartisan reform. The AMT proposalwill have more chances of success if the forthcoming Senate FinanceCommittee hearings are attended by witnesses from such groups in order toconvey the impression that the bill has broad support. (1955). de Kieffer, however, pointedout that "it is essential that you be in direct personal contacts withcongressional allies" and "swing members" (p. Democrats and Republicans switch roleson a tax. 3. de Kieffer said "the action plan is more than acalendar of events of your campaign; it is quite literally a line ofbattle, and it includes schedules, names of the players, and the methods bywhich you will implement your entire strategy" (p. Bush would leavethe minimum tax as is. (1984). A14). The basic approachwould be to seek a dilution of the impact of the AMT particularly on themiddle class (but not its elimination) by fashioning a change in the lawwhich would appeal to key Congressional committee members in both parties,building grassroots support for it among key Congressional constituenciesand enlisting the assistance of various interest groups. E. Mobilizing Public Support. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.