Defying the White House, Representatives in the US House voted to prevent about 22 million taxpayers from being hit by the alternative minimum tax (AMT).
What?
Oh yeah, just like with any headline, there’s more.
The idea of AMT relief was originally endorsed by the GOP (such as Senator McCain). The problem with AMT relief? The $61 billion hole in the budget left behind.
To offset the hole, Deomocrats propose to raise revenue in three key areas:
1, The bill would tax the “carried interest” of private equity and hedge fund managers at ordinary income tax rates instead of the 15% capital gains rate;
2, The bill would close a loophole that Democrats say has allowed foreign-owned US firms to avoid taxes on payments to foreign parent companies as a result of tax treaty provisions; and
3, The bill would bar integrated oil companies from claiming a domestic manufacturing tax deduction and would freeze the benefit for smaller oil and gas companies. Integrated oil companies are those involved in the upstream (i.e., exploration and production) and downstream (i.e., refining, marketing, distribution and retailing) segments of the industry. Prior to 2004, oil companies were not entitled to this deduction which was estimated to cost $3.5 billion over 5 years.
House Ways and Means Committee Chair Charles Rangel (D-NY) claims that the offsets are necessary in order to prevent the deficit from getting bigger: “We’ll be able to say we didn’t borrow the money and we didn’t put this burden on our children and grandchildren.”
But the GOP and the White House see it differently, calling the offsets a “permanent tax increase.”
With the offsets in place, the bill likely won’t pass the Senate. If it does, the White House has threatened a veto.
I think we all agree that AMT relief needs to happen in some form – and not as a series of last minute patches. The question is whether there should be an accompanying revenue offset: what do you think?
Here’s an idea: How about instead of raising taxes to offset the AMT repeal, we CUT SPENDING. An entitlement program here, a war or two there… Shouldn’t be hard.
Oh Colin, that’s just crazy talk… 😉
Aren’t these tax breaks ‘entitlements?’
Yes, let more Americans keep their money because they are obviously fiscally responsible. I mean you would never see Americans going out and over-leveraging themselves or buying things they cannot afford.
What a crippled system.
Maybe the government should stop trying to bail out homeowners who made bad decisions. Survival of the fittest, I say. Those of us who make fiscally responsible decisions will survive.
Under that theory, the government should also stop bailing out the banks that made loans to risky borrowers. Survival of the fittest, and all.
Agreed!
J,
I think the only folks who will disagree with that are the CEOs of those banks!
You certainly won’t find me disagreeing. It amazes me what some of the banks got away with. Even when I attended real estate closings, I would be amazed and mention it to the buyer. However, the broker had always assured them that they would just refinance or sell it before it resets.
I don’t expect people to be smart or frugal enough to make smart investments. Statistically, so many have not, but I expect banks to not make so many darn risky loans.