The House Ways and Means Committee is expected today to vote on a bill that would provide a one-year "patch" to the alternative minimum tax and about $65 billion of revenue-raising offsets, while Senate members are struggling to gain traction on their own AMT provision, which would not be offset.
The bill is sponsored by committee chairman Charles Rangel, D-N.Y. It comes as lawmakers in the Senate for the second time shot down, by a vote of 52 to 44, a procedural vote that would have allowed consideration of a House-approved tax extenders bill containing $5.4 billion of tax credit bonds. The bill, HR 6049, needed to garner 60 votes to be considered. Sources said it is likely Senate Majority Leader Harry Reid, D-Nev., will continue to try to obtain votes for the bill but will not bring it up for consideration again until after the July 4 recess.
Earlier this month, Senate Finance Committee chairman Max Baucus, D-Mont., said on the Senate floor that if members voted for "cloture" to limit debate on the bill so that it could move forward,, he would substitute his own provisions for the House language.
While the bond provisions are expected to be similar, a key difference is that Baucus' proposal would include the AMT patch without revenue-raising offsets. Last year, Democrats were forced to break their pay-as-you-go rules for legislation to pass a one-year AMT fix, and Baucus has said this year that it is obvious the provision again will not be offset.
It appears that Republicans on the Ways and Means Committee support the version of the patch proposed by Baucus. When the committee approved the tax extenders bill earlier this month, Republicans repeatedly attempted to include AMT relief that would not be paid for, saying that a provision meant to lower taxes should not include tax increases elsewhere to offset it.
The AMT, which applies to interest earned on private-activity bonds and some governmental and 501(c)(3) bonds, was created to prevent high-income households eligible for several tax breaks from paying little or no taxes. However, the AMT is not indexed to inflation, so more taxpayers become subject to it each year.
The less controversial bond provisions in the current bill and Baucus substitute measure include the creation of a new category of "qualified energy conservation bonds" to finance state and local initiatives to reduce greenhouse gas emissions. Up to $3 billion of the bonds would be allocated to states, localities, and tribal governments.
The bills also would authorize $2 billion of clean renewable energy bonds to finance facilities that would generate electricity from renewable resources. In addition, the bills would authorize state and local governments to issue another $400 million of qualified zone academy bonds annually, which can be used for public schools located in certain designated areas.