By a vote of 22-13, the House Ways and Means Committee passed legislation that would provide a patch to the Alternative Minimum Tax for the 2007 tax year. The Temporary Tax Relief Act of 2007 provides an offset to the funds that would be generated by the AMT by raising revenue in a number of areas.
The TTRA would set AMT exemption amounts at $42,350 for single and head of household taxpayers, down from $42,500 in 2006, and $66,250 for married taxpayers filing jointly and surviving widow(er)s (and half that amount for married taxpayers filing separately), up from $62,550 in 2006. Other features of the legislation include:
- A maximum $350 (single) or $700 (married) non-itemizer's additional standard deduction for real estate taxes.
- Exclusion from income tax of discharges of mortgages in bankruptcy.
- Extension through 2014 of the deduction for private mortgage insurance.
- Revision of tax rules on expatriation of individuals - impose mark-to-market and 10-year income inclusion rule on generally individuals who expatriate.
- Treating income of partners for performing
investment management services as ordinary income received for performance of services.
- Application of section 1239 to partnership interests and tax sharing agreements of rule treating certain gain on sales between related generally persons as ordinary income.
- Broker reporting of customer's basis in securities transactions.
In addition, many tax features that are scheduled to expire this year would be extended for one more year by the legislation.
Treasury Secretary Henry Paulson expressed dissatisfaction with the legislation, indicating that raising taxes to correct the injustice created by the Alternative Minimum Tax is not a program that the Bush administration will endorse. "Since February, we've asked for an AMT patch that does not raise other taxes," he is quoted as saying in a Forbes.com article. "I still believe this is the right policy."
"With only weeks to act to avoid the risk of 25 million taxpayers facing unintended tax increases, or millions more facing significant delays receiving refunds, Congress must quickly pass a patch that does not raise other taxes," Paulsen said.
"The legislation passed through the Ways and Means Committee does not meet that criteria. I again call on the leaders of both the House and the Senate to act quickly on an AMT patch that the President can sign for this year," he concluded.
Others disagreed with the legislation as well. "This so-called 'fix' is not a fix at all," declared House Minority Leader John A. Boehner, R-OH, in a statement. The Democrats' AMT patch, he said, "includes job-killing tax hikes on entrepreneurs and risk-takers who invest and create family-wage jobs for working families. The American people won't support it, Republicans will strongly oppose it, and it will never be signed into law."
The legislation is expected to be addressed on the House floor this week and could move on to the Senate by next week.
You can read the complete text of the legislation.