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The House of Representatives on April 28, 2004, passed a bill to make permanent the marriage penalty relief measures contained in a 2001 tax cut law, by a 323-95 vote. The measure now goes to the Senate.
The bill would permanently increase the standard deduction and maximum taxable income in the 15-percent tax bracket for married persons filing jointly to twice that of single taxpayers. In addition, the bill would permanently extend the earned income credit (EIC) phaseout for lower income taxpayers to factor in marriage penalty relief. Under the original 2001 tax cut package, the EIC increases by $2,000 in tax years 2005-2007 and by $3,000 in following tax years up to 2010.
Democrats had offered a substitute bill, but it was defeated 189-226. Besides addressing marriage penalty relief, it would have accelerated the $3,000 EIC credit to the 2005 taxable year. The bill's cost would have been offset by increasing the highest personal income tax rate with a 3.6-percent surtax on adjusted gross income over $1 million for couples and $500,000 for singles. It also would have adjusted the alternative minimum tax (AMT) so couples could otherwise receive the full benefit of marriage penalty relief. Sponsor Rep. Charles Rangel (D-N.Y.) charged that the AMT would cost middle-class Americans $99 billion of marriage penalty relief.
Republicans countered that they have plans to address the AMT situation in coming weeks. The marriage penalty relief tax bill is the first of four bills House Republicans will introduce during the next four weeks to make permanent various portions of the 2001 tax cut package scheduled to expire later in 2004. The others are an increase in the child tax credit to $1,000, expansion of the 10 percent tax bracket to $14,000, and a raise in AMT exemption amounts.
While election-year politics will jam much legislation, the Senate will be hard-pressed to reject the four because they are so popular, said House Ways and Means Chairman William Thomas (R-Calif.). "These are the kind of bills that can break the logjam in the Senate," asserted Thomas. The House has patiently awaited action by the Senate on a variety of bills including foreign sales corporation repeal and energy policy, and the tax measures may serve as vehicles to address the unfinished legislation.
Even though more Democrats voted for the marriage penalty relief than against it, their party leaders sharply criticized its costs. The bill "is absolutely divorced from the fiscal reality that confronts our nation," claimed House Minority Whip Steny Hoyer (D-Md.) in a press statement. It is not offset at a time the federal deficit is soaring out of control, he stated. Democrats support marriage penalty relief, but want to pay for it with other tax increases, he added. Without offsets, the bill will end up suppressing job and economic growth, asserted House Minority Leader Nancy Pelosi (D-Calif.)
The House had set aside money for marriage penalty relief in the fiscal year 2005 federal budget outline it passed on March 25. This bill would cost $104.7 billion from fiscal years 2004 through 2014.
"This bill is about American families and couples who shoulder an additional and unnecessary tax burden simply because they're married," said bill sponsor Rep. Jim Gerlach (R-Penn.). "Until 2003, married couples who filed a joint return paid taxes they wouldn't have been responsible to pay had they filed separately. My bill extends permanently tax relief aimed at leveling the playing field for married couples."
White House Reaction
President George W. Bush has repeatedly called upon Congress to preserve marriage penalty relief before it is set to expire at the end of 2004. "Failure to extend marriage penalty relief at the 2004 levels would increase taxes, on average, by $310 for 28 million married couples. Making the marriage penalty tax relief permanent. . .will greatly reduce the unintended and unfortunate bias in the tax code against married families," noted an administration policy statement on April 28.
The president also has urged the Congress to act swiftly on other provisions that are set to expire at the end of 2004, namely the increase in the child tax credit to $1,000, the expansion of the 10-percent tax bracket, and relief from the individual AMT.
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Added to the news on April 29, 2004.
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