Panel advises repealing alternative minimum tax

WASHINGTON -- A presidential panel said yesterday that the alternative minimum tax, designed to snare affluent tax dodgers but now hovering over the middle class, should be abolished.

''I think we have to bite the bullet," Bill Frenzel, a former House lawmaker who served on budget and tax writing committees, said at a meeting of the President's Advisory Panel on Federal Tax Reform.

It is the first decision made by the nine tax specialists chosen to analyze the nation's tax system and recommend changes to make it simpler, fairer, and more economically efficient.

The consensus to repeal the alternative minimum tax, or AMT, means the panel must replace the $1.2 trillion that the Treasury Department expected to collect through that tax over the coming decade.

The president instructed the panel to develop restructuring ideas that raise the same amount of tax revenue as current laws.

Commission chairman Connie Mack, a former Florida senator, said the government's tax revenue could be replaced through changes in tax rates or tax breaks in the panel's recommendations to simplify or replace the tax system.

''The choices range from rates to expenditures," he said. ''No decision's been made on that."

A few commission members said the panel should be careful not to let a few wealthy taxpayers avoid paying taxes by repealing the alternative minimum tax.

Congress created the AMT in the late 1960s after learning that some wealthy individuals paid no income tax. It has ballooned in the ensuing decades under the effects of inflation, and it increases taxes for more middle-class families every year.

Those affected must calculate their tax twice -- under the regular tax system and then the alternative system -- and pay the higher amount.