I don't understand, what am I not getting here?

[fencesitter]

Senate Clears Path for Vote on $838 Billion Stimulus: http://www.nytimes.com/2009/02/10/washington/10stimulus-web.html?_r=1&hp

"The Senate bill also includes nearly $70 billion to prevent millions of middle class families in 2009 from having to pay the alternative minimum tax, originally designed to impose minimum tax payments by the wealthy. Because Congress has made such an adjustment for years now, economists say the provision offers no new help to the economy."

Okay, so why does it cost 70 billion to change a calculation in the tax code?

[leftstreet]

1. Kick for an answer

I have no idea

:shrug:

[Qutzupalotl]

2. $70 billion is in lost revenue

from people paying lower taxes who would otherwise have had to pay the AMT.

[Solomon]

3. Yep

:thumbsup:

[fencesitter]

4. but that's write down, not an expense

what, does the treasury loan its'self the money back? That's a budgetary adjustment.

[bbgrunt]

5. it's called a "tax expenditure" or "backdoor spending" because

it essentially creates a "loophole" whereby some people get to pay less taxes. Thus taxes must be raised on others to pay for the expenditures of government.

The idea is that when you look at tax provisions, you must look at what would be a revenue neutral revenue system. Collecting more from some in order to give a tax break to others is no different than any welfare program--it is spending and allocating resources by the government rather than spending by the private sector.