WASHINGTON - The House Committee on Ways and Means today voted 22-13 in favor of a fiscally responsible tax package to prevent more than 23 million families from a tax increase under the alternative minimum tax (AMT). The bill, H.R. 3996, the Temporary Tax Relief Act of 2007, would ensure that no additional taxpayers pay the AMT this year while also extending popular tax credits and deductions that expire at the end of the year. This must-pass tax relief is fully offset by closing loopholes and eliminating narrowly targeted tax benefits enjoyed by a privileged few. H.R. 3996 is expected to be considered by the full House next week.
"This legislation provides responsible tax relief for families across America without adding to the Federal deficit," said Chairman Rangel. "The Temporary Tax Relief Act of 2007 keeps 23 million families from getting hit with a tax increase from the AMT through no fault of their own. Provisions in this bill would put money back into the pockets of working families through an expanded child tax credit, extensions of deductions for property and State and local sales taxes, as well as tuition payments.
"Many of the provisions in this bill would extend current law, but the legislation is a break from the status quo of out-of-control borrowing put forward by the Bush Administration and previous Congresses. It is astounding that Senate Republicans have threatened to filibuster this package because they wish to continue funding tax relief at the expense of future generations. Their reckless behavior should not stand in the way of tax relief for 23 million Americans."
Senate Republicans have indicated that temporary AMT relief should not be offset, thereby adding to the Federal deficit. They have threatened to filibuster a revenue-neutral tax package, preventing this must-pass bill from reaching the President’s desk for signature.
"This Democratic Congress believes that, when we provide tax relief, we should not borrow the money to pay for it from Japan and China. Being responsible is difficult, but necessary. To ensure this relief is not financed through more reckless borrowing, we close loopholes and end unfair advantages for a few taxpayers. This should not be a partisan issue. If people believe they are treated unfairly under this bill, let them come forward and justify to the American people the tax preference they have enjoyed for decades and we’ll take another look at it."
H.R. 3996 contains provisions to change the tax treatment of "carried interest" for investment fund managers. Under the Committee-passed legislation, they will no longer receive a lower capital gains rate of 15% for what is essentially a management fee or payment for services. Partners and managers would continue to receive a lower rate of taxation on returns derived from money they have personally invested.
The Committee began looking at this issue in the context of fairness and equity in the tax code and found no evidence to conclude that these partners or fund managers should receive preferential treatment for the same services provided by other corporate professionals doing the same jobs. The provision changing the tax treatment of carried interest has received broad public support, including several editorials in leading national newspapers advocating for the change.
"For those who do not yet know what the AMT is, let me assure you, 23 million Americans do and they are waiting to know that Congress did the responsible thing and kept them from paying higher taxes."
