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WASHINGTON - Congress acted in its final hours yesterday to block growth of the alternative minimum tax, putting off an economic hardship affecting more than 20 million taxpayers and avoiding what would have been a political black mark for both parties.
The House voted 352 to 64 for a one-year fix of the AMT, a tax originally meant only for the super-rich, but now hitting millions of middle- and upper-middle income households. Without that fix, an annual ritual of Congress, those subject to the tax would have risen from 4 million in 2006 to about 25 million in 2007, with the average levy of $2,000 a taxpayer.
The legislation now goes to President Bush, who says he will sign it because, bowing to GOP demands, it does not include tax increases or other new sources of revenue to pay for the $50 billion cost of the tax relief.
The last-minute nature of the vote resulted from a fundamental difference between the House and Senate. House Democrats had insisted the $50 billion in tax relief from the one-year fix must be paid for by an equal amount of revenue elsewhere, mainly by closing a loophole on offshore tax havens.
Senate Republicans, however, blocked the Senate from taking up legislation that includes a tax increase, and Bush threatened to veto any bill that raised taxes.
On Tuesday night the Senate for a second time rejected the House-backed approach of a paid-for AMT bill. The House Democratic leadership, which was committed to paying for the tax relief, had asked the Senate to make one last stab at the issue. The Senate vote was 48 to 46 for the House bill, 12 fewer than needed to approve it.
With that vote, the House had no choice but to take up the Senate bill, which shields some 21 million taxpayers without covering the cost to the Treasury.
"Let me be clear: There is no disagreement between Republicans and Democrats over protecting the middle class from the AMT," House Majority Leader Steny Hoyer, Democrat of Maryland, said. "The question is, will we do so responsibly or charge tens of billions of dollars to our grandchildren?"
By waiting until the last day of the session, Congress left in question whether the IRS can adjust its forms in time for the 2008 filing season.
© Copyright 2008 Globe Newspaper Company.
