Connecticut Governor Rell Calls on Congressional Delegation to Restore Alternative Minimum Tax Relief

Failure to Act Will Result in Tax Increase for Hundreds of Thousands of Connecticut Taxpayers

December 17, 2007 -- Connecticut Governor M. Jodi Rell today sent a letter to Connecticut’s Congressional Delegation urging action on the federal alternative minimum income tax. Without a fix to the alternative minimum tax (AMT), more than one in four state taxpayers will be subject to a tax intended for the nation’s highest income earners.

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“Most new filers affected by an unchanged alternative minimum tax will be middle income taxpayers and these are people who were never intended to be subject to this tax,” Governor Rell wrote. “Without a legislative remedy, the alternative minimum tax exemption will decrease from $62,550 to $45,000 for joint returns and from $42,250 to $35,750 for single filers.”

The AMT was created in 1969 to prevent a small number of wealthy individuals from avoiding all income tax payments. However, the tax was never indexed for inflation and each year more middle income earners become subject to it. In recent years, Congress has legislated annual fixes to keep the AMT reach from expanding. Legislation this year has stalled and unless action is taken the tax will affect approximately 450,000 state taxpayers -- a staggering increase from the 100,000 Connecticut individuals who were subject to the tax in 2005.

“Connecticut taxpayers literally cannot afford for Congress to ignore this issue any longer,” Governor Rell said. “The ramifications of inaction will hurt hundreds of thousands of families already struggling with high energy costs and other expenses.

“The tax was originally targeted at the wealthy, but it will ensnare more middle-class taxpayers each year unless Congress acts,” Governor Rell said. “I am urging Connecticut’s Congressional Delegation to move quickly to resolve this problem.”

Source: Connecticut Governor