Still not encouraging

The headline today in Tax Notes:  "Lawmakers Cede No Ground on 2001, 2003 Tax Cuts"

Democrat Dick Durbin complains that Republicans are not compromising, darn it.  They seem to be under the illusion that they won the election.

The usually sensible Max Baucus sticks to the line that a tax increase on the wealthy is essential, failure to allow the tax increase to go forward is "unaffordable."

Congress has become so accustomed to annual gamesmanship with the AMT, they now appear to have no qualms about playing games with whole tax code.  This is really irresponsible.

Which side is going to blink?

Here's the thing.  Republicans might be thinking, let the tax increase take effect, we'll repeal it when we take over in January. And they can do that. But the AMT for 2010 has not been patched yet, so the exemption is a scant $40,000.  If Congress does not act, the federal tax bite in the blue states will skyrocket.

Could the 2010 AMT be patched retroactively in 2011? There are enormous practical problems, it seems to me.  Among them, reprogramming the tax software that everyone now must use to file their returns.