House Democrats Pass Alternative Minimum Tax Relief

Press Release

HOUSE DEMOCRATS PASS ALTERNATIVE MINIMUM TAX RELIEF

Congressman Eliot Engel and his fellow Democrats approved legislation Wednesday providing for a one-year "patch" to prevent more than 21 million additional taxpayers, including 38,000 in his district, from being subject to the alternative minimum tax, and saving them an average of $2,400 each.

The Alternative Minimum Tax Relief Act of 2008 (HR 6275) was approved by the full House by a vote of 233 to 189.

Rep. Engel said, "The wealthiest Americans got their tax relief from the Republican-led Congress. Now the Democratic majority is working on behalf of the middle class. This legislation would provide essential tax relief to working families and provide Alternative Minimum Tax relief to 21 million households, including approximately 38,000 in my Congressional district."

The act would provide a one year "patch" to the AMT by increasing the income exemption to $46,200 for individuals filing and $69,950 for married couples. This would provide relief because in the original AMT bill the exemption amount was not indexed for inflation or wage growth.

The AMT was initially created to ensure that high-income individuals and corporations, who pay little or no taxes under the regular tax system, through use of deductions, credits or other tax breaks, pay their fair share of taxes.

The bill adheres to pay-as-you-go or "paygo" budget rules adopted by Congress earlier this year. Paygo requires that new mandatory spending and tax cuts be paid for with revenue increases or spending cuts. To pay for improvements to the AMT, the bill would tax "carried interest" from hedge funds as income at a rate up to 35% instead of capital gains with a rate of 15%. It would also repeal the domestic production tax deduction for the major oil and gas producers, tighten the rules on foreign-owned companies that use tax treaties to reduce their tax burdens, and require credit card issuers to report more information to the IRS about purchases at merchants.

The bill now goes to the Senate where it faces strong Republican opposition.

Source