By David Hansen and Jeff Carlson, CCH Washington Staff Writers
The House of Representatives approved the Middle Class Alternative Minimum Tax Relief Bill of 2004 by a 333-89 vote on May 5, 2004. The measure now goes to the Senate for consideration.
The bill would extend by one year an increase in exemption amounts for the alternative minimum tax (AMT) in the Jobs and Growth Tax Relief Reconciliation Act of 2003. Under the measure, exemption amounts in 2005 will remain at 2003 and 2004 levels--$58,000 for marrieds filing jointly and surviving spouses, $40,250 for singles and heads of households, and $29,000 for marrieds filing separately.
The bill faces an uncertain future in the Senate. The Senate will not consider small tax extension bills on an individual basis, according to senior tax writers on the Senate Finance Committee. Instead, it would most likely try bundle those bills, such as the AMT extension, to reconciliation instructions for the Fiscal Year 2005 federal budget.
Shortly before passage, the House rejected a Democratic substitute that would have given a one-year AMT exemption to single taxpayers with adjusted gross incomes less than $125,000 ($250,000 for joint filers). It also would have phased in the AMT over the next $20,000 of adjusted gross income ($40,000 for joint filers) and required the Treasury Department to design reforms so that less than 1 percent of taxpayers pay the tax. Some Democrats preferred their alternative because it would be offset by cracking down on corporate tax shelters, said House Minority Whip Steny Hoyer (D-Md.), who voted against the House-passed version.
Treasury Secretary John Snow thanked the House for passing the bill. "These temporary provisions will keep the number of taxpayers affected by the AMT from rising significantly in the near-term," he commented. "More importantly, this temporary extension will allow the Treasury Department the time necessary to develop a comprehensive set of proposals to deal with the AMT in the long-term."
The Middle Class Alternative Tax Relief Bill of 2004 would cost $17.8 billion during the next 10 years, according to the congressional Joint Committee on Taxation. The Democratic alternative would have cost $19 billion during the same period, but would have
been offset by closing loopholes and raising taxes on corporations.
This measure is the second of four votes House Republicans plan to have during the next few weeks to make permanent or extend President George W. Bush-era tax cuts. Last week, they passed a bill to permanently increase the standard deduction and maximum taxable income in the 15-percent tax bracket for joint filers to twice that of singles. Next week, House Republicans will propose a bill making permanent the expansion of the 10 percent tax bracket in the Economic Growth and Tax Relief Reconciliation Act of 2001, according to Ways and Means Committee spokesperson Christin Tinsworth.
Republicans also plan a separate drive to pass economic legislation which they call "Careers for a 21st Century America." As part of that effort, Rep. Jim McCrery (R-La.) plans to introduce a bill that would allow rollovers up to $500 from a flexible spending account to a health savings account, IRA or other savings vehicle. It could reach the floor by next week, he said.
The White House strongly supports the extension of AMT relief through 2005. "The AMT relief provided will prevent 9.2 million taxpayers from facing the AMT in 2005," noted a Bush administration policy statement.
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Added to the news on May 6, 2004.
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