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Archive for Wednesday, September 24, 2008

Senate passes tax break package

September 24, 2008

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— The Senate passed a giant tax package Tuesday that saves more than 20 million taxpayers from the bite of the alternative minimum tax.

At a cost of more than $100 billion, the bill also nudges the nation toward greater use of alternative energy resources, renews popular tax breaks for businesses and individuals, and extends relief to disaster victims.

It includes a provision to ensure that mental health problems get the same level of insurance benefits as other medical treatment. The bill passed 93-2.

"The economy is struggling," Senate Finance Committee Chairman Max Baucus, D-Mont., said. "At times like these, Americans need tax cuts that they've come to count on, that can help them get by."

But with time running out in this session of Congress, the House is choosing to diverge from the Senate by taking up a bill that fully pays for the business and individual tax breaks by eliminating some tax breaks for hedge fund managers and for corporations doing business overseas.

The Senate only partially offsets the costs of its business and individual tax breaks, and Senate leaders warned that any changes could doom the bill. The House could take up its version as early as Wednesday.

The tax bill is one of several major efforts to right the teetering economy in what could be the final week of this session of Congress. Lawmakers are trying to reach agreement on a $700 billion plan to bail out failing financial institutions, and Democrats are trying to put together a stimulus package to help average citizens get through the current economic crisis.

The alternative minimum tax was enacted in 1969 to catch a few very rich tax dodgers. But it was never adjusted for inflation and now Congress must act every year to ensure it doesn't catch more people.

Without action, those affected could grow from about 4 million to 25 million, at an average tax increase of $2,000. The fix would cost $64 billion spread out over 10 years.

Last year Congress, after a prolonged fight over whether to pay for the fix with new tax revenues in other areas, waited until late December to pass legislation, causing delays in some IRS refund payments. The AMT patch this year, as last year, is not paid for.

Comments

Chris Ogle 6 years ago

The AMT was not intended for the middle class taxpayer. So why would anyone expect the AMT patch (as outlined in the article) to pay for itself. It is not a tax break- it is a correction on the IRS ruling.

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SettingTheRecordStraight 6 years ago

"At a cost of more than $100 billion..."This is intellectual dishonesty by the AP. Tax reductions do not "cost." Tax reductions save.

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S0uPnAzi 6 years ago

Yeah, STRS, anytime we try to take our money back to put it in our pockets, the lib press tries to make out that it's costing our country xx dollars. What hypocracy! It's our money to begin with, I for one am tired of Uncle Sugar reaching into my pockets trying to pull out more.xbusguy is correct in pointing out that bracket creep has fundamentally changed AMT to make it apply to the middle class, and at considerable cost to the individual taxpayer I might add. Perhaps the tax and spend crowd might want to rethink their positions a little bit, from where I sit I pay enough #@~% taxes!

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