December 07, 2007

Senate Passes AMT Patch Without $50 Billion In Offsets

The Senate yesterday passed a one-year fix to the alternative minimum tax by an 88-5 vote after Democrats dropped demands that the $50 billion cost of the provision be offset to meet the pay-as-you-go budget requirements.

The action sets up a confrontation with the House, where Democratic leaders have continued on a fully offset AMT provision, so as not to run afoul of PAYGO rules. The House is expected to add offsets to the Senate package and send it back early next week, according to a House Democratic aide.

Such a move would further delay a final resolution of the AMT, which the IRS has estimated will affect 25 million taxpayers in 2007 unless Congress enacts a patch.

House Ways and Means Committee Chairman Charles Rangel, D-N.Y., yesterday offered a last-minute concession to the Senate by agreeing to drop from House legislation a $26 billion tax increase on the profits of investment partnership managers and use other offsets to pay for the AMT patch. But by that time, the damage was done, as Senate Majority Leader Harry Reid had offered a deal to Republicans to pass a clean AMT patch without any offsets.

In next week's possible House response to the Senate-passed measure, Rangel said he will seek offsets that are not controversial with the Senate. They will likely include a $24 billion raiser to prevent hedge fund managers from deferring compensation they earn offshore and a measure to delay new interest expense allocation rules which have not taken effect.

"Having removed this political challenge from the Senate on the question of the AMT, I now ask Republicans to join with the Democratic leadership to move swiftly to remedy this situation," Rangel said in a Thursday statement. "The clock is ticking. Sooner or later the American people will be asking 'Why are the Republicans not responding to this urgent legislative need?'"

-Martin Vaughan, CongressDaily

Posted at 7:34 AM
Posted to: Congress, House, Senate, Taxes
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