Congressman Rahm Emanuel Delivers Democratic Radio Address

April 14, 2007
This morning, Congressman Rahm Emanuel (IL-5), Chairman of the House Democratic Caucus, delivered the Democratic Radio Address. In his address, he discusses the need to provide tax relief for the middle-class. In 1969, Congress created the Alternative Minimum Tax, or AMT, in response to the fact that 155 of the wealthiest families in America were able to avoid paying any federal taxes by using loopholes, deductions, and exclusions. Over time, the AMT has morphed into a tax on the middle class, and in particular middle-class parents, who are not using any tax avoidance strategies. For this reason, a better name for this tax is the "Parent Penalty," as it harshly penalizes couples for deciding to have children.

The Alternative Minimum Tax is a parallel tax system that requires taxpayers to calculate their taxes a second time. Under the AMT, many of the deduction and credits available to taxpayers under the regular income tax are disallowed. Specifically, the AMT disallows the personal exemptions that parents are allowed to claim under the regular tax rules to reflect the additional costs they incur in raising children.

Congressman Rahm Emanuel addresses this issue in the Democratic Radio Address today. To listen, click here or read the transcript below:

Rep. Rahm Emanuel"Good morning. This is Congressman Rahm Emanuel of Illinois, Chairman of the House Democratic Caucus.

"I don't have to tell you that Tax Day is just around the corner. Some folks in the other party like to brag that they've cut billions in taxes over the last six years. But as you prepare your returns this year, do you feel that relief?

"If you don't, it's probably because you are not one of the wealthiest 1 percent of Americans. The fact is that the Bush Administration has cut taxes -- but only for the extremely wealthy. As a result, middle-class families are paying an even greater share of federal taxes.

"And all this is happening while health care and college costs continue to skyrocket, and retirement security is eroding. The middle class is being squeezed.

"Democrats believe that the middle-class families are the ones who need tax cuts. And if Congress and the Administration don't act quickly, the middle-class squeeze will get decidedly worse.

"One reason for this is something people in Washington call the Alternative Minimum Tax, or the AMT. But a more accurate name is the 'Parent Penalty.'

"Consider this: If you have three kids, you'll be nearly four times more likely to pay this Parent Penalty than a childless taxpayer. Is that fair, being penalized for having children?

"This tax now affects schoolteachers, firefighters, police officers. It was never intended to be that way.

"This Parent Penalty was originally designed to make sure that America's wealthiest families could not avoid paying any taxes by exploiting shelters, loopholes or deductions. But now, if you make $50,000, you could have to pay this tax.

"While they were passing multiple tax cuts for the very wealthy over the last six years, the Bush Administration and the Republican Congress seem to have forgotten about the middle-class families. They failed to fix this Parent Penalty for the long-term. Under their watch, an additional 2 million taxpayers now pay the Parent Penalty. And because of their misplaced priorities, middle-class families making between $75,000 and $100,000 are now more likely to pay the tax than those making more than a million dollars.

"Let me say that again, middle-class families making between $75,000 and $100,000 are now more likely this year to pay the tax than those making more than a million dollars.

"It gets worse. President Bush's budget will extend the reach of this Parent Penalty Tax to nearly 29 million more taxpayers over the next three years. This amounts to an average of $3,600 tax increase that will hit one out of every three taxpayers. Virtually all families of four earning between $75,000 and $100,000 will have to pay this tax. This would be the biggest tax increase on the middle class in the history of our country.

"While the Bush Administration is avoiding this problem, others have sounded the alarm. Nina Olson, the non-partisan Taxpayer Advocate, has identified this tax as the most serious problem facing taxpayers.

"The new Democratic Congress has made cutting this tax -- the Parent Penalty -- our top priority for tax reform. In Congress we heard testimony from a mother, a firefighter, a sales manager, and other middle-class Americans who were never supposed to pay this tax. Their stories show clearly how the Parent Penalty is hurting middle-class families.

"Now is the time for a middle-class tax cut. We should end this Parent Penalty. We will work with our Republican colleagues to identify bipartisan solutions that help middle-class families avoid this tax that was never intended for them. This is the one thing on which Democrats and Republicans should agree.

"What's more, by reforming the Parent Penalty, we can dramatically simplify the complex tax code. According to the IRS, it takes taxpayers 63 hours just to figure out how to calculate this tax. Not surprisingly, 60 percent of American taxpayers resort to hiring a paid preparer to do their taxes. That's hundreds of dollars that could have been used for college, retirement, or health care costs.

"The tax code is now so complicated that nearly 50 percent of Americans say they would rather go to a dentist than fill out their taxes. Reforming the Parent Penalty is the first step in making the tax code simpler and fairer. As you file your taxes this year, let your Member of Congress know that this broken system must change.

"Today also marks the 100th day since the Democrats took control of Congress. During our first 100 days Democrats passed sweeping ethics reform and began to strengthen our national security, increasing the minimum wage, expanding stem cell research, lowering the cost of prescription drugs, cutting the interest rates on student loans, and ending the subsidies for big oil.

"Our work is not done. Democrats will continue to deliver on the promise of returning the People's House to the American People.

"This is Congressman Rahm Emanuel of Illinois. Thank you for listening."