House passes bailout bill - President Bush will sign
Wednesday: Senate attaches extenders and AMT Fix to rescue bill; sends package to House
The proposed alternative minimum tax patch and extensions of expiring tax deductions and credits for individuals and businesses have now become part of the rescue package that the Senate approved late Wednesday and has sent to the House. They are meant to attract at least a dozen House members who voted against the measure Monday, when it failed, 228-205. The two houses of Congress have been deadlocked over the extensions bill, with the Senate approving a package last week that the President has said he will sign and the House refusing to take up the measure before the end of the year.
Leaders in both houses have found time to maneuver around the tax bill on almost a daily basis in the last two weeks, despite the intense activity surrounding the financial rescue plan. Following the Senate vote on Tuesday last week, the House passed four bills in three days to extend the tax breaks, but Senate leaders said they would not consider any new bills, cqpolitics.com says.
Fiscal conservatives in the House are requiring revenue offsets for the approximately $60 billion in extensions and the AMT patch under their "paygo" rules. Senate Republicans and the President are opposed to tax increases, but approved some revenue offsets in the compromise Senate bill, which the President has said he will sign.
If Congress cannot agree to a one-year patch to the alternative minimum tax for 2008, approximately 20 million more Americans would fall into the AMT, and could end up owing an additional $2,000.
The original House bills extending the tax breaks included steps to boost tax revenues from the oil and gas industries and close loopholes used by hedge fund managers and corporations to avoid taxes on their overseas incomes. The Senate bill incorporated the House extension of numerous expiring tax breaks including deductions for state and local taxes, education and teacher expenses, the research and development credit, and the AMT patch, along with incentives for renewable energy resources and tax breaks for disaster victims, but did not include revenue offsets for all of the extensions or the AMT patch.
House Majority Leader Steny Hoyer (D Md.) told reporters that, "I'm going to continue to work with the Senate...to see what can be done, even if it's next year," according to a report in The Wall Street Journal.
"The IRS is going to have a huge problem if the AMT is not passed now," said Senator Max Baucus (D- MT), chairman of the Senate Finance Committee, who managed the Senate package for the Democrats. The IRS will begin printing 2008 forms in November.
Rep. Hoyer "indirectly criticized the Senate leadership for waiting until Monday morning - hours before the House was set to adjourn - to send to the House the tax package passed by the Senate last Tuesday," the Journal reports. Hoyer suggested that it was an effort to steamroll the House, calling the move "legislating by blunt force."
"The larger issue is the House and Senate just don't talk to one another and work out an understanding," Baucus said, according to a CCH report. "They're in their little world and we're in our little world, instead of just sitting down like adults, both sides - House and Senate, and working out solutions."
Evolution of the Emergency Economic Stabilization Act of 2008:
- 9/27/08 Senate approves one year fix to AMT; extends tax credits for individuals and businesses 
- 9/30/08 House turns back on Senate extenders bill and AMT patch 
- 10/2/08 House passes bailout bill - President Bush will sign 
- 10/6/08 Rescue bill extends tax breaks, expands energy credits, and more