Posted on 11/10/2005 7:30:59 PM PST by al_again
WASHINGTON - The House's top tax writer introduced a bill Thursday that would allow the alternative minimum tax to hit millions more taxpayers next year.
House Ways and Means Committee Chairman Bill Thomas opted to use tax cuts allotted in the GOP's budget to extend tax cuts for capital gains and dividends for two years instead of holding back the alternative minimum tax.
Thomas, R-Calif., said last week that preventing the alternative minimum tax, or AMT, from spreading deeper into the middle class next year could drain the energy from efforts to overhaul the nation's tax laws.
"Might it not help the momentum on tax reform if a few more people fully understood the impacts of AMT?" he said.
Thomas also said he did not have enough room under a $70 billion cap dictated by the budget to address the alternative minimum tax as well as capital gains and dividends.
The alternative minimum tax aims to prevent wealthy individuals from avoiding all taxation. The annual effects of inflation have brought it closer to less wealthy taxpayers each year. Those with several children and those who live in states with high income and property taxes are more likely to feel its pinch.
Lawmakers routinely enact temporary patches to restrain it. More than 20 million taxpayers can expect to pay the alternative minimum tax next year without that temporary fix.
Thomas did propose extending a provision that ensures taxpayers don't lose some of their personal credits because of the alternative minimum tax, including the adoption credit and the child credit.
His bill would extend several tax cuts through 2010 — the 15 percent maximum tax rate for capital gains and dividends, equipment write-offs for small businesses and a saver's credit for lower income taxpayers.
Many other tax breaks would be continued for another year, including a business research and development credit, a state and local sales tax deduction and a tuition deduction.
The House Ways and Means Committee plans to debate the legislation next week. The Senate's tax-writing panel started advancing its own version of the tax cuts Thursday but postponed debate after failing to agree on its size and scope.
They lacked the pivotal support of Sen. Olympia Snowe (news, bio, voting record), a moderate Republican from Maine, who said she'd like to see senators concentrate on matters that must be done this year, like tax cuts that expire in 2006.
"We're in a different economic environment," she said. "We've had three back-to-back hurricanes."
The list of tax cuts due to expire this year does not include reduced rates on capital gains and dividends — a top priority for other Republicans on the committee.
"If I move one way, I lose a couple votes. If I move another way, I lose a couple votes," said Senate Finance Committee Chairman Charles Grassley, R-Iowa.
The 15 percent tax rate on investment income runs out at the end of 2008, but many Republicans want to act this year and push that date ahead to 2010, as included in the House bill.
Snowe isn't the only moderate Republican to voice concern about passing tax cuts this year. Sen. George Voinovich (news, bio, voting record) of Ohio, another Republican moderate, said he will vote against tax cuts because the government is accumulating too much debt and the economy does not need stimulation through tax reductions right now.
I guess the idea is to raise taxes on the middle class so that we really understand how bad they are. A brilliant plan that could only come from the GOP!
Unfortunately, we'll have to hold our friendly election fire until '08 or the 'Rats will try to impeach Bush. Then let the purge begin.
These people did not win on big government platforms but that is all they are giving us. It is time for them to be held accountable!
This is essentially a hit piece by the AP. They know that the AMT reform is more of a gimme. They are trying to goad republicans into taking it on extending the tax cuts, so "moderates" will have an excuse not to extend the existing tax cuts. Both need to happen, but if the AMT reform is done first, the tax cuts will not be extended.
...taking it on before extending...
Actually, assuming Roberts works out and Alito is confirmed and is as we believe, that is only four.
Still, I believe the Reps deserve what they get. At this point I have no faith a Republican Majority will allow that fifth seat, if it comes up for Bush, to be filled with an originalist. Too many RINO's in hiding...like Hagel...Murkowski...Hutchinson waiting to sell us out.
I can't fathom why any true conservative hasn't abandoned the Republican Party already. They've HAD 12 YEARS of control of Congress and 5 years of control of Congress and the Presidency, except for the Jumpin' Jim Jeffords period. All conservatives have received is timebombed tax cuts and a few other little carrots, just to keep them [conservatives] "on the plantation".
Could the AMT be used as a way to get a flat tax? Set the AMT at the desired level for the flat tax (15% or so?) then lower other taxes until everyone pays the AMT...
The trouble is that is just what is happening... except the minimum tax rate (flat) is coming out to 28%!!
In my opinion, its fairly unconscionable. What the hell do they think theyre doing anyway? Income tax really isnt the biggest component of government income...
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