In Effort To Right Economy, Senate Passes Tax Package
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WASHINGTON — The Senate passed a giant tax package yesterday that saves more than 20 million taxpayers from the bite of the alternative minimum tax.
At a cost of more than $100 billion, the bill also nudges the nation toward greater use of alternative energy resources, renews popular tax breaks for businesses and individuals, and extends relief to disaster victims.
It includes a provision to ensure that mental health problems get the same level of insurance benefits as other medical treatment. The bill passed 93-2.
“The economy is struggling,” the chairman of the Senate Finance Committee, Max Baucus, a Montana Democrat, said. “At times like these, Americans need tax cuts that they’ve come to count on, that can help them get by.”
The tax bill is one of several major efforts to right the teetering economy in what could be the final week of this session of Congress. Lawmakers are trying to reach agreement on a $700 billion plan to bail out failing financial institutions, and Democrats are trying to put together a stimulus package to help average citizens get through the current economic crisis.
The House was expected to take up the tax package today.
The alternative minimum tax was enacted in 1969 to catch a few very rich tax dodgers. But it was never adjusted for inflation and now Congress must act every year to ensure it doesn’t catch more people.
Without action, those affected could grow from about 4 million to 25 million, at an average tax increase of $2,000. The fix would cost $64 billion spread out over 10 years.
Last year Congress, after a prolonged fight over whether to pay for the fix with new tax revenues in other areas, waited until late December to pass legislation, causing delays in some IRS refund payments. The AMT patch this year, as last year, is not paid for.
The first segment of the three-part tax bill was a $17 billion measure to spur investment and create jobs in the renewable energy industry. The energy legislation extends for eight years, through 2016, investment tax credits for the solar power industry and for homeowners who install solar and wind equipment.
Taxpayers can claim a credit of up to $7,500 for purchasing plug-in electric cars, and production credits are extended to wind, biomass, and marine — waves and tide — facilities. There are incentives to use smart meters for more efficient home energy use.
A study commissioned by the Solar Energy Industries Association found that the eight-year extension would more than triple investment during that period, to $325 billion, and almost triple employment in the industry, to 440,000 in 2016.