House eyes replacement for AMT

House Republicans yesterday introduced a bill that would repeal the Alternative Minimum Tax and impose an optional “simplified tax.” The bill, entitled “The Taxpayer Choice Act,” will allow individuals to pay federal income taxes either under current tax code or through a “simplified tax,” the Republican Study Committee, the House of Representatives’ conservative caucus, said in a statement. This simplified tax system would use two rates: a 10% rate on taxable income up to $100,000 for joint filers and $50,000 for single filers, and 25% for income over these amounts. These brackets would be adjusted yearly based on increases in the consumer price index, the benchmark inflation measure. The standard deduction is $25,000 for joint tax filers and $12,500 for singles, and the personal exemption would be set at $3,500. This is equal to a family-of-four exemption of $39,000. No additional credits or itemized deductions would be allowed. With these provisions, the Taxpayer Choice Act should raise about the same revenue in its first year as would be raised under the current tax code, exclusive of AMT revenue: 18.5% of gross domestic product.