Tax News

CCH (cch.taxgroup.com) reports:

Taxpayers would receive one year of relief from the alternative minimum tax (AMT), under a bill passed by House lawmakers on June 25. By a vote of 233 to 198, the House approved the Alternative Minimum Tax Relief Bill of 2008 (HR 6275), which was introduced on June 17 by House Ways and Means Chairman Charles B. Rangel, D-N.Y (TAXDAY, 2008/06/18, C.1).
The $61.5-billion cost of the bill, which is offset by provisions that raise taxes on oil companies, hedge fund managers and others, continued to draw opposition from GOP lawmakers. "This vote is nothing more than a cynical and craven political exercise that will only further delay the inevitable: a one-year patch without revenue raisers," said Rep. Phil English, R-Pa., ranking member of the House Select Revenue Measures Subcommittee.
According to a summary of the legislation, the two biggest revenue raisers in the AMT bill would tax the so-called "carried interest" earned by investment fund managers as ordinary income, rather than as capital gains. This would raise $30.9 billion over 10 years. The bill would also deny Code Sec. 199 benefits to major integrated oil and natural gas companies. This provision would raise $13.5 billion over 10 years.
Rangel told lawmakers that the federal government should pay for what it buys, rather than increasing the nation's budget deficit. "We shouldn't go to China and Japan and ask them once again to bail us out," Rangel said. "Instead, we should take a look at the tax code and see what loopholes we can close to repair the AMT --at least for this year --without passing this burden on to our children and grandchildren."
GOP lawmakers noted that the Senate, as well as the White House, reject the idea of raising taxes to offset the cost of AMT relief. They predicted that a tax-free AMT relief bill will be passed by Congress and signed into law by President Bush in 2008.
The White House issued a veto threat against the AMT relief bill because it contains tax offsets to pay for it. "The administration does not believe that the appropriate way to protect the 26 million Americans from higher 2008 AMT liability --including 22 million that would be newly exposed to the AMT --is to impose a tax increase on other taxpayers," according to a written policy statement. The administration statement warned that a delay in enacting the measure would likely disrupt the 2009 tax filing season.
By Stephen K. Cooper and Paula Cruickshank, CCH News Staff
Ways and Means Release: House Passes Bipartisan AMT Relief Bill