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Friday, December 07, 2007

Alternative Minimum Tax (AMT) Bill Passes the Senate

Quick flashback to November when the House passed their version of the AMT, with a vote of 216 to 193, passing the bill already knowing and being told that it did not have the votes in the Senate to pass, as is.

"There's no doubt that Congress will complete work this year on an AMT patch that will protect those who don't pay the tax now from being hit," Senate Finance Committee Chairman Max Baucus (D-Mont.) said after the vote, without mentioning how it would be paid for. "Millions of American families are counting on us to act, and we will."

But Baucus said this week that it is unlikely he could get the 60 votes he would need to pay for an AMT patch with the same tax-increase provision. The White House has also issued a veto threat, so yesterday's vote was for a tax increase that is not likely to be enacted.

Fast Forward to today:

The Senate passed a different version of the AMT last night, (correction made) with a vote of 88 to 5 with 7 note voting, roll call can be found here.

The five senators who voted no were Senate Budget Committee Chairman Kent Conrad (D-N.D.), and Sens. Tom Carper (Del.), Byron Dorgan (D-N.D.), Russ Feingold (D-Wis.) and Sheldon Whitehouse (D-R.I.). The senators running for president missed the vote.

Senate Minority Leader Mitch McConnell (R-Ky.) praised passage of the measure and criticized Democrats for delaying action until now.

“The Democrats’ unprecedented and indefensible delay on this commonsense solution means the filing season will already be disrupted,” McConnell said. “Now that the Senate has passed an AMT fix without tax hikes, the House must do the same or explain to taxpayers why they will further delay tax refunds for millions of Americans.” (Source)

The difference between the House and the Senate bills is that the House wanted to offset the AMT by reaching further into the bank accounts of the rich as if it were their own piggy bank instead of doing the responsible thing and trimming the fat off of expenditures.

The Senate, understanding that neither the house nor the Senate had the votes to override the impending Presidential veto, waived that offset and passed a bill that would be signed by the president into law.

Going back to the word, legislate, meaning to enact laws, where both houses and the President must sign these bills for them to become law.

The Senate acted responsibly, the House did what they do so often and passed something just to say they passed it, knowing it didn't stand a chance of becoming law.

Take a good look at this graph, the top %5 of wage earners pays 54.36% of all Federal income taxes, the top 10% of wage earners pay 65.84% of all Federal income taxes and the top 50% of wage earners pays 96.54% of all Federal income taxes.

The top 50% of wage earners already pays for everything except 3.46%.

Instead of treating those that already pay to run our country like their own piggy banks to reach into, the House needs to use the other methods available to them to "offset" the monies that will be lost by the Senates bill.

Edward Morrisey explain just a few of the common sense solutions that Congress and the Senate keep ignoring:

Think about the scale for a moment. All it takes to save the taxpayers from a bigger bill or larger debt from a fix of the AMT is a reduction in spending of less than 2%. Four hundred and thirty-five Representatives apparently can’t figure this out, and neither can 100 Senators. Does anyone doubt that the federal budget has 1.67% fat, duplicative programs, inefficiencies, or flat-out waste? Why not get rid of that before looking for a tax to replace a tax?

Senate Democratic leaders claims that they have done all they could to preserve their highly touted, pay-as-you-go -- or "paygo" -- rule, which says that any new entitlement spending or tax cuts would have to be offset by tax increases or spending cuts.

They are always willing to use the "tax increase" option but they continue to ignore that the same "fix" could be done by reducing spending or even foregoing some of their much talked about "pork" aka earmarks.

The pay-go is a good idea on paper but unless the House and the Senate are willing to reduce spending, it is an idea that cannot withstand the test of time.

[Update] According to this letter (PDF) that was sent to Congress from the Department of Treasury, in late October, the enactment of a patch beyond early November could also significantly delay processing of the taxpayers' (25 million) returns and payments of any refunds.

The based on historical filing patterns, they estimated the enactment of a patch in mid-to-late December could delay issuance of $75 billion in refunds to taxpayers that are likely to file their returns before March 31, 2008.

Congress has limited time to adjust their version of the bill and get it passed so the President can sign it and they do not have time to continue playing political games to force tax increases.

Furthermore, Harry Reid making the decision to put off the Senates vote until after Thanksgiving has been one of the most completely irresponsible acts in his career.