James Sensenbrenner, October 27, 2005

When President Bush began his second term, he formed a bipartisan panel to examine ways to make our nation’s tax code less complicated and more equitable. This was welcome news to me and most of my constituents, because as we all know, Wisconsinites pay a lot in taxes, and any relief would be greatly appreciated. On November 1, 2005, the President’s Advisory Panel on Tax Reform will issue its final report. Although its findings have yet to be presented, the Panel recently offered a glimpse of what will be included.

The main component of one of the Panel’s two proposals will be a repeal of the Alternative Minimum Tax (AMT). Every year, particularly around the tax filing season, an increasing number of middle class families contact me to express their frustrations when they discover they must pay the AMT. This tax was never intended to affect middle income wage earners. It was created to be a way to stop the wealthy from finding loopholes in our convoluted tax code by taking so many exemptions that they paid little or no taxes.

The Panel’s members are wise to make this recommendation because if no action is taken soon, the number of taxpayers subject to the AMT is set to increase from 3.6 million today to over 35 million in five years. However, I have a problem with the manner in which the Panel has proposed to solve this issue. To make up the money lost to the federal government from the elimination of the AMT, the Panel suggests terminating deductions for state and local taxes, in addition to reducing health care and home mortgage deductions.

We can’t have that. I am a firm believer in a tax code that encourages economic growth and investment, which is why I oppose all tax increases. Eliminating deductions for state and local taxes would severely hurt taxpayers in Wisconsin who are already suffering from some of the highest taxes in the nation. Wisconsin homeowners paid the third highest property taxes in America in 2003-2004, and removing these deductions would only succeed in pushing people out of the Badger State.

Though I support a simpler tax code, it should not be done on the backs of those who are trying to pay for health care costs and achieve the American dream of owning a home. Upon the release of the Panel’s report, President Bush and Congress will thoroughly review its recommendations. I look forward to carefully evaluating the Panel’s proposals, and working with my colleagues in the House to create meaningful tax reform that strengthens our economy, while alleviating Wisconsin workers and employees nationwide from a burdensome tax code.

Congressman James Sensenbrenner, a Republican, represents the Fifth Congressional District of Wisconsin. He serves as chairman of the House Committee on the Judiciary. The Fifth District of Wisconsin forms an arc surrounding Milwaukee to the North and West, and includes parts of Jefferson, Milwaukee and Waukesha counties, and all of Ozaukee and Washington counties.