Congress OKs fix of AMT

Two local congressman voted for the tax bill.

STAFF/WIRE REPORT

WASHINGTON — Congress acted in its final hours Wednesday to block growth of the alternative minimum tax, putting off an economic hardship affecting more than 20 million taxpayers and avoiding what would have been a political black mark for both parties.

The House voted 352-64 for a one-year fix of the AMT, a four-decade tax originally meant only to touch super-rich tax dodgers but now hitting millions of middle- and upper-middle income level households.

Without that fix, an annual ritual of Congress, those subject to the tax would have risen from 4 million in 2006 to about 25 million in 2007, with the average levy of $2,000 a taxpayer.

U.S. Rep. Phil English of Erie, R-3rd, who voted for the bill, chastised Democrats earlier this month at a press conference in Hermitage, Pa., for their inaction on the measure.

“Although this is a bill that is important that the House passed, it should have been voted on four to six months earlier this year,” English said. “This is critical tax relief that has been held up by crass congressional politics from spend-thrift politicians who tried to milk the middle-class for extra revenue. Because of their delaying tactics, many taxpayers are going to face unprecedented delays in getting their tax refunds next year.”

English noted that Congress’ delay was holding up the printing of tax forms because they were unsure of the law. This will lead to tax refunds being sent out later than usual, he said.

U.S. Rep. Charlie Wilson of St. Clairsville, D-6th, said he voted for the legislation, “to protect more than 29,000 taxpayers in my district who would have been hit with a tax increase.” Wilson’s district includes a portion of Mahoning County and all of Columbiana County.

The legislation now goes to President Bush, who says he will sign it because, bowing to White House and GOP demands, it does not include tax increases or other new sources of revenue to pay for the $50 billion cost of the tax relief.

The last-minute nature of the vote on the AMT fix resulted from a fundamental difference between the House and Senate. House Democrats had insisted that the $50 billion in tax relief resulting from the one-year fix must be paid for by an equivalent amount of revenue elsewhere, mainly by closing a loophole on offshore tax havens.

Senate Republicans, however, blocked the Senate from taking up legislation that includes a tax increase, and Bush threatened to veto any bill that raised taxes.

“In the new year, we must re-engage on this issue with renewed energy and set a clear path toward the repeal of the AMT,” English added.

The AMT was created in 1969 to make sure that a small group of very rich people did not totally avoid paying taxes. But the tax, which applies more stringent rules for using deductions in calculating tax obligations, was never adjusted for inflation, and every year more middle- and upper-middle-level income people are hit by it.

The main beneficiaries of the tax relief would be people in the $75,000 to $200,000 income level.