The House passed a one-year "patch" of the alternative minimum tax with revenue-raising offsets yesterday, while the housing bill stalled in the Senate as members argued over whether to add bond-related and other energy tax-credit provisions to it.
House members voted 233 to 189, largely along party lines, to approve the AMT Relief Act, which was sponsored by Ways and Means Committee chairman Charles Rangel, D-N.Y. But thanks to a threatened veto from the Bush administration and a reluctant Senate, Republicans are arguing its overall prospects are bleak due to the revenue-raising offsets.
Ways and Means ranking minority member Jim McCrery, R-La., said the bill highlights "a clear difference between the two parties in the House when it comes to tax policy."
"Republicans believe that Congress should not raise taxes on one group of taxpayers in order to prevent a tax increase on another set of taxpayers," he said.
The president echoed that sentiment in a statement issued Tuesday that said he would veto the bill if it came to his desk in its current form because of the offsets.
The House measure would offset the estimated $61 billion a new patch of AMT would cost by raising taxes on oil companies and hedge fund managers.
If the Bush veto is not enough, House proponents of the bill are forced to deal with discouraging words from Rangel's counterpart in the Senate, Finance Committee chairman Max Baucus, D-Mont.
Baucus, who introduced his own one-year AMT patch without offsets, said earlier this month: "We all know [an AMT patch is] not going to be paid for, so why go through all the motions?"
Last year, Congress barely was able to pass a one-year patch of the tax to prevent millions of homeowners from becoming subject to it, with Democrats ultimately agreeing to forgo pay-go rules.
Baucus proposed his patch as part of a larger tax-extenders bill, but that measure has yet to be considered by the Senate, as it has twice failed a procedural vote to limit debate.
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.
Meanwhile, a broad housing bill with several tax-exempt bond provisions continued to stall yesterday after Senate members overwhelmingly voted Tuesday to limit debate on it.
The lack of action on the $300 billion Housing and Economic Recovery Act of 2008 was due to Sen. John Ensign, R-Nev., who was insisting that an amendment be added to the bill that would extend renewable energy tax credits. That amendment would authorize $3 billion of energy conservation bonds and $2 billion of clean renewable energy bonds, as well as modify tax-exempt and tax-credit bonds issued in Gulf Opportunity Zones and areas affected by the flooding in the Midwest.
Senate Democrats have refused to consider the non-housing amendment, so Republicans have refused to grant the unanimous consent needed to advance to direct consideration of the bill, instead consuming all 30 hours of debate until late yesterday.
While housing sources remained confident the measure would be passed late yesterday, additional procedural votes could potentially drive debate of the bill into this weekend.
If passed, the bill would provide an additional $11 billion in mortgage revenue bonds to housing finance agencies to refinance subprime mortgages or provide new loans to first-time homebuyers, as well as permanently exempt all housing bonds from the AMT. Bush has also threatened to veto this bill.