WASHINGTON — The Senate voted Thursday to block a looming tax increase averaging $2,000 for millions of taxpayers after Senate Republicans succeeded in thwarting a Democratic plan to also raise taxes on investors.
The Senate bill, passed 88-5, provides a one-year fix for the alternative minimum tax but without matching the cost of the tax relief with new tax revenues. Without the fix, an estimated 25 million people would be subject to the higher AMT, up from 4 million in 2006.
The Senate vote puts it at odds with the House, where Democratic leaders, under a principle of not adding to the national debt, demanded that the AMT fix be paid for. Last month, the House passed legislation matching the AMT fix and other tax cuts with about $80 billion in new tax revenues.
Senate Finance Committee Chairman Max Baucus, D-Mont., said it was not his first choice to pass an unpaid-for bill but “this is our best choice.” He said 12 million people in the $100,000 to $200,000 income level alone would be hit by the AMT without the fix, and “we need to stop that from happening.”
The bill now goes back to the House, where Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee, suggested making up the difference by closing a loophole on offshore funds that now escape taxation.
Earlier Thursday, Senate Republicans united in stopping the Senate from moving to the House-passed bill. The vote was 48-46 against beginning debate, 14 short of the 60 needed.
The Finance Committee’s top Republican, Charles Grassley of Iowa, said it was time for Democrats to abandon their “pay-go obsession,” referring to the “pay-as-you-go” principle that tax cuts or spending increases should be paid for so as not to add to the federal deficit. With the “clean” AMT bill, “the Senate Democratic leadership seems to realize that the AMT should not be offset,” he said.
House Democratic leaders throughout the day Thursday reaffirmed their commitment to pay-go.
Republicans, said House Majority Leader Steny Hoyer, “complain that we pay for this legislation by closing tax loopholes. Their solution? Just add the costs of the AMT fix ($50 billion) to the deficit and national debt. I absolutely reject this fiscally irresponsible approach.”
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
