The U.S. House of Representatives Dec. 19 approved an alternative minimum tax (AMT) one-year "patch" bill without any offsets, ending what had been a stalemate between Senate Republicans and House Democrats. The House voted 352 to 64 to support the measure, which will prevent millions of additional American households from having to pay the tax. The legislation now goes to the president, who says he will sign the measure.
Pressure had been mounting on House Democrats to agree to an AMT patch that the president would sign before the end of the year. Without a legislative fix by the end of the year, an additional 23 million households would have had to pay the AMT on their 2007 returns.
Although the House this fall twice approved legislation that would have offset the tax cut by closing a loophole that currently allows hedge fund managers to defer compensation for offshore accounts, the Senate-approved bill did not include any offsets, and President Bush had threatened to veto any bill that included offsets.
On the Senate Floor, House Ways and Means Chairman Charles Rangel (D-N.Y.), the original sponsor of legislation that included the offsets, urged his colleagues to vote for the Senate measure in order to prevent more people from having to pay higher taxes. But he added, "This is an extraordinary time because the Republican minority in the Senate, bolstered by a lame-duck president, has actually dictated to the House of Representatives will or will not due with regards to this critical tax relief."
But the committee's ranking member Jim McCrery (R-La.) said that offsetting the AMT tax relief by closing the hedge fund loophole actually equated to a tax increase. "It is not necessary to enact a tax increase in order to prevent another tax increase," he said in a statement released after the vote. "That statement is simple, local and obvious�yet House Democrats chose to delay tax returns for tens of millions of Americans before agreeing today to pass an AMT patch without additional tax increases."