CONGRESS House ends marriage penalty tax

WASHINGTON (AP) -- The House delivered the first in a series of election-year bills designed to shine a light on President Bush's domestic agenda by voting to preserve his tax cuts for married couples.
House Majority Leader Tom DeLay, R-Texas, said Wednesday that the alternative minimum tax, a levy aimed at preventing the wealthiest individuals from dodging taxes but that is now snaring less-wealthy families, would be the next target in the GOP's sites. Lawmakers next week will be asked to pass a bill arresting its slow creep into the middle class.
Before Memorial Day, House Republican leaders intend to pass bills locking in the president's tax cuts for wage earners and parents with bills to preserve the expanded 10 percent tax bracket and the $1,000 child tax credit. All are scheduled to expire at the end of the year.
"Making this tax relief permanent will lay the foundation for sustained economic growth and job creation over the long term and enable taxpayers to better plan for the future," the Bush administration said in a statement supporting permanent tax cuts for married couples.
Here's the situation
Some couples face a tax increase next year unless Congress acts to make permanent three changes in law that reduced the so-called marriage penalty. The House voted 323-95 Wednesday to make those changes permanent and deliver $105 billion in tax cuts to married couples over the next decade. The Senate must pass the bill before the president can sign it into law.
The marriage penalty most often affects working couples with roughly equal incomes who get pushed into a higher tax bracket when their salaries are combined.
Congress fixed part of the problem by making the standard deduction for married couples twice that of single individuals, and by increasing the 15 percent tax bracket for married couples to twice that of singles.
Those fixes were only temporary and are scheduled to roll back at the end of the year. The House bill would stop them from receding.
"By repealing the marriage penalty tax, we have given married couples a wedding present that will last a lifetime," House Speaker Dennis Hastert, R-Ill., said.
By 2008, couples who receive the earned income tax credit would see some of their marriage penalty lifted under the House bill. Democrats argued that those couples should see immediate relief.
"You differentiate. Indeed, you discriminate," said Rep. Sander Levin, D-Mich. "Why discriminate against working people who have less income?"
What was rejected
House rejected, 226-189, a Democratic solution to the marriage penalty that would have sped the tax cuts for couples receiving the earned income tax credit, a benefit aimed at lifting working families out of poverty.
Democrats also wanted to ensure that married couples don't lose some or all of their tax cuts to the alternative minimum tax. They would have reduced taxes for married couples $206 billion over a decade and offset the cost of the reduction with a tax increase on married couples earning more than $1 million.
"The Democrats offer twice as much marriage penalty relief as the Republican bill does because we make sure no middle class family is left out," said Rep. Charles Rangel, D-N.Y.
Tax cuts for couples not only reduce the marriage penalty, but also increase the so-called marriage bonus, said Joel Friedman, a senior fellow at the liberal-leaning Center on Budget and Policy Priorities. Couples get the marriage bonus when they pay less tax together than they would as two single individuals.
Friedman said the president's tax cuts have shifted the balance to give more couples marriage bonus.
"The law reduces taxes for all of them. It doesn't distinguish," he said.
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