Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, the modification should be to the Reid of Nevada amendment.

Mr. BAUCUS. So as not to interrupt the flow, the chairman would like to speak on the Senator's amendment first, if that is all right.

Mr. BAUCUS. That is our intention.

Mr. BAUCUS. That is correct.

Mr. BAUCUS. Not now.

Mr. BAUCUS. Mr. President, I ask unanimous consent----

Mr. BAUCUS. I ask unanimous consent that the Senator from Rhode Island be recognized to offer his amendment and speak for 10 minutes, and the time thereafter until 3:30 be equally divided on the Dorgan amendment.

Mr. BAUCUS. Mr. President, I amend my request to accommodate the request of the Senator from North Dakota. The Senator from Rhode Island can offer his amendment, and when he is finished, there will be a half hour on the Dorgan amendment. He gets 15, and the other side gets 15, and the vote will now occur at 3:40.

Mr. BAUCUS. Mr. President, if my colleague will yield a second, I ask unanimous consent that after the Coburn amendment is debated or set aside, Senator Santorum be recognized to speak for 15 minutes, Mr. Byrd be recognized to speak for 30 minutes, and Senator Feingold be recognized to offer his amendment on pay-go with 30 minutes of debate equally divided.

Mr. BAUCUS. With the understanding that perhaps an hour and a half may not all be used.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending amendments be set aside so that the Senator from Illinois, Mr. Durbin, may offer an amendment. I ask him, too, to limit his remarks to 3 minutes.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending amendments be set aside so that the Senator from New York may offer an amendment.

Mr. BAUCUS. Mr. President, a little bit out of order here, but under the previous order, Senator Santorum and Senator Byrd were to speak after the disposition of the pending amendment. At this point I have learned Senator Santorum and Senator Byrd wish to speak at a later point. I ask consent that the pending amendments be laid aside so Senator Feingold may offer his amendment, that is, after the disposition of this amendment.

Mr. BAUCUS. Mr. President, I think we are ready to wrap up debate on the pending amendment.

Mr. BAUCUS. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. BAUCUS. Mr. President, this is very important. It helps tremendously to improve some provisions in the underlying bill so no one else has to pay AMT; and, second, R&D provisions, enhanced R&D and contractors are not excluded. I support this.

Mr. BAUCUS. Accordingly, I yield 20 minutes to the chairman of the Ethics Committee, Senator Voinovich.

Mr. BAUCUS. Mr. President, I believe I manage the time in opposition on this amendment.

Mr. BAUCUS. I yield 10 minutes to the Senator from Connecticut, Mr. Dodd.

Mr. BAUCUS. I hear the Senator from Oklahoma, with all due respect. I wonder if we could agree to maybe 1\1/2\ hours.

Mr. BAUCUS. Mr. President, the Senate is not in order. I have a hard time hearing the Senator.

Mr. BAUCUS. Mr. President, I propose that we reach a time agreement on this next pending amendment, which is the Coburn amendment. I ask unanimous consent that the time on the Coburn amendment be limited to 1 hour equally divided.

Mr. BAUCUS. Mr. President, under a unanimous consent agreement we entered into earlier, we are now waiting for Senator Reed of Rhode Island to offer his amendment, and also Senator Coburn to offer his amendment. And under the agreement, thereafter, there is time remaining on the Dorgan amendment. But while we are waiting for Senator Reed and/ or Senator Coburn, or anyone else, to come to the floor, I will say a few words about the alternative minimum tax. The bill before us today does extend the alternative minimum tax exemption level and provides for an increase in inflation. That is the good news. But it is not all good news because there will still be about 600,000 additional Americans paying higher taxes next year under the alternative minimum tax, sometimes called the stealth tax. Why is that? That is because the so-called hold-harmless provision in the legislation before us today, or the patch, as some have called it, does not hold everyone harmless. For example, for the year 2005, there are 3.6 million American taxpayers paying the alternative minimum tax. Under the bill before us today, there will be 4.2 million taxpayers paying that tax in 2006. That is an increase of 600,000 taxpayers, and it is an increase I hope we can avoid. The alternative minimum tax, to refresh recollections, was originally enacted in 1969. Why did Congress do that? Congress discovered in that year there were about 155 very wealthy taxpayers making over $200,000 a year but who paid no taxes. Congress felt: Well, gee, that is not right; people earning over $200,000 a year at least should pay some taxes. So Congress passed the alternative minimum tax. What was once a class tax, unfortunately, has now been morphed into a mass tax. To refresh your recollection, whenever individuals calculate their income taxes, they calculate their income taxes and then they have to go through a separate, parallel calculation under what is called the alternative minimum tax. Under that separate, parallel calculation, there are certain provisions that cannot be deducted, and that includes the standard deduction or the personal exemptions, and some others. Then you look at the bottom line of the two calculations, and if one is higher than the other--it does not make any difference which one it is--you pay that higher tax. Because these provisions were not indexed to inflation, over time more and more people are finding they have to pay this stealth tax, this alternative minimum tax. Frankly, if it is not changed by the end of this decade, that tax will ensnare about 30 million Americans, a majority of who will have adjusted gross incomes below $100,000. The Internal Revenue Service National Taxpayer Advocate has identified this alternative minimum tax as the most serious problem facing individual taxpayers. By the end of the decade, the majority of filers with incomes between $75,000 and $100,000 will be paying this additional tax; that is, the majority of Americans with incomes between $75,000 and $100,000 will be paying this, unless it is fixed. In addition, virtually all married couples in that income group-- $75,000 to $100,000--with two children will be paying the AMT by the end of the decade. Now, I have filed legislation to repeal the AMT altogether. I am joined in that effort by the chairman, Senator Grassley, and 20 other Senators who have the same view as me. I think we should do it. It is clear, though, that repeal is very expensive. But it is the right thing to do, and we should do our level best to try to find a way to work toward total repeal, and try to find the revenue to pay for it. In the meantime, though, we should do all we can to make sure this stealth tax does not hit one more family next year. As you may know, Mr. President, the House companion bill on this same subject, tax reconciliation, which is working its way over here, does not in any way address this AMT issue. But it does contain provisions to extend the capital gains and dividends cuts for 2 more years. Under current law, which we enacted in 2003, deductions will stay in effect at least until the end of 2008. Nevertheless, the House in their bill made the decision to extend that capital gains and dividends cut for 2 more years past 2008. But they did not include the alternative minimum tax. That is wrong. Senator Grassley and I have discussed this. We want to make a change. At the appropriate time I think we will make a change to the underlying bill so not one more American pays this stealth tax compared to current law. As I mentioned, under the bill currently before us, about 600,000 more Americans will pay it. We feel that is wrong. It is a mistake. We shouldn't do that. We will find a way, as the chairman and I have found, to make sure not one more American has to pay this additional tax. Otherwise, I might say that under the House-passed version of tax reconciliation, 17 million families will see a tax increase next year. Under the House bill, working its way over here to conference, 17 million families will see a tax increase next year thanks to the alternative minimum tax. In fact, CRS has found that if the House proposal prevails, next year a family with three children, making $63,000 a year, will also be hit by this additional stealth tax, the AMT. I believe, and I know the chairman believes, and many of us in the Senate believe, this family- unfriendly AMT should not be allowed to creep deeper and deeper into the middle class each year. At the appropriate time, we are going to make that change, that adjustment, because it is the right thing to do.

Mr. BAUCUS. No objection.

Mr. BAUCUS. Mr. President, I ask unanimous consent that these be 10- minute votes, with 2 minutes between the votes, but otherwise 10-minute votes.