The next AMT dance begins

Tax Notes ($) reports that the House and Senate budget resolutions each contain a patch for the AMT during tax year 2008. The "cost" of the patch has ballooned to an astonishing $70 billion dollars! For just one year!

The Senate proposes to ignore the cost, the House pretends to pay for it by "closing the tax gap." In other words, ask IRS to just work harder. That doesn't sound like much of a difference to me, but a Conference Committee will be needed iron out the differences in the two resolutions. The key point of the exercise is that after the budget is adopted its elements are protected from a Senate filibuster.

The budgets assume that the current preferential treatment of qualified dividends and long-term capital gains are allowed to expire. If that really happens, I expect a lot more "downside volatility" in stock prices.