The House Ways and Means Committee passed a one-year "patch" for the alternative minimum tax by a vote of 22 to 16, but Republican members said the bill has no chance of becoming law because of its revenue-raising offsets.
The Republicans pointed to comments made last week by Senate Finance Committee chairman Max Baucus, D-Mont., who is attempting to introduce an amendment that contains an AMT patch without offsets to a House tax extenders bill slated for consideration in the Senate.
Baucus had said, "We all know [an AMT patch is] not going to be paid for, so why go through all the motions?"
Ways and Means ranking minority member Jim McCrery, R-La., repeated those remarks yesterday, saying, "Everybody in this room knows this bill is just for show and has no prospect of getting through the Senate."
During the debate on the AMT bill, which was sponsored by Ways and Means chairman Charles Rangel, D-N.Y., Republicans introduced several amendments that would remove the revenue-raising provisions, but those attempts failed. The provisions include scale-backs of deductions for oil companies, and limiting tax treaty benefits for companies operating in tax havens.
The committee's action is just the latest round of what has been a contentious debate between parties about how to handle the AMT. Democrats insist on providing offsets to the patch in an attempt to adhere to pay-go rules, but Republicans argue that a bill intended to lower taxes should not be paid for by tax increases elsewhere.
It had been a point of contention in May when the Ways and Means Committee passed the 2008 tax extenders bill, which would provide $5.4 billion of tax credit bonds, among other tax-exempt bond-related provisions.
Republicans complained that the bill did not contain AMT relief. Since Congress was barely able to pass an AMT patch last year before the tax went into effect, the matter should be taken up as soon as possible this year, they argued.
Rangel insisted that the tax would be addressed in separate legislation, and would contain revenue offsets. Republicans made several attempts to pass amendments providing for a patch or complete repeal of the tax, but they all failed.
The House-passed extenders bill is the same one Baucus is attempting to amend with his substitute language containing an AMT patch that would not be offset with revenue raising provisions. However, Senate Republicans have twice blocked the bill from being considered on the Senate floor with limited debate. They have called instead for a full and open debate on the bill.
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. It is estimated that more than 20 million taxpayers would become subject to the AMT in the 2008 tax year if a patch is not approved.
Meanwhile, President Bush once again vetoed the $300 billion farm bill, after a clerical error was discovered that invalidated his first veto. Congress is expected to override the veto, as it did the original one.
The farm bill contains $500 million of timber conservation tax-credit bonds, as well as several improvements to the "aggie bond" program, which helps first-time farmers and ranchers purchase land.