Senate Passes One-Year AMT Fix
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

WASHINGTON — The Senate voted today to block a looming tax increase averaging $2,000 for millions of taxpayers after Senate Republicans succeeded in thwarting a Democratic plan to also raise taxes on investors.
The Senate bill, passed 88-5, provides a one-year fix for the alternative minimum tax but without matching the cost of the tax relief with new tax revenues. Without the fix, an estimated 25 million people would be subject to the higher AMT tax, up from 4 million in 2006.
The Senate vote puts it at odds with the House, where Democratic leaders, under a principle of not adding to the national debt, demanded that the AMT fix be paid for. Last month, the House passed legislation matching the AMT fix and other tax cuts with about $80 billion in new tax revenues.
The chairman of the Senate Finance Committee, Max Baucus, Democrat of Montana, said it was not his first choice to pass an unpaid-for bill but “this is our best choice.” He said 12 million people in the $100,000 to $200,000 income level alone would be hit by the AMT without the fix, and “we need to stop that from happening.”
The bill now goes back to the House, where Rep. Charles Rangel, Democrat of New York, chairman of the tax-writing Ways and Means Committee, suggested making up the difference by closing a loophole on offshore funds that now escape taxation.
The Senate majority leader, Harry Reid, Democrat of Nevada, said after the vote that he had heard the House would accept the Senate version. But Mr. Rangel said the House would “give the Senate another chance to do the right thing and pass responsible AMT relief.”
The White House, in a statement, praised the Senate action. “We encourage the House of Representatives to swiftly pass this bill to stop this tax increase and to prevent a costly delay in refunds.”
Earlier today, Senate Republicans united in stopping the Senate from moving to the House-passed bill. The vote was 48-46 against beginning debate on the House bill, 14 short of the 60 needed.
The Finance Committee’s top Republican, Senator Grassley of Iowa, said it was time for Democrats to abandon their “PayGo obsession,” referring to the “pay-as-you-go” principle that tax cuts or spending increases should be paid for so as not to add to the federal deficit. With the “clean” AMT bill, “the Senate Democratic leadership seems to realize that the AMT should not be offset,” he said.
House Democratic leaders throughout the day today reaffirmed their commitment to PayGo.
The House majority leader, Steny Hoyer, said “complain that we pay for this legislation by closing tax loopholes. Their solution? Just add the costs of the AMT fix ($50 billion) to the deficit and national debt. I absolutely reject this fiscally irresponsible approach.”
Without congressional action, the IRS, unsure of the final status of the tax, says it may have to postpone the processing of returns scheduled to begin in mid-January. That could mean delays for millions of people waiting for income tax refunds worth billions of dollars. The tax agency says it will take about seven weeks after the tax is revised to reprogram and test forms reflecting the changes.
For weeks, Democrats and Republicans have blamed the intransigence of the other party for the delay. “The Democrats’ unprecedented and indefensible delay on this commonsense solution means the filing season will already be disrupted,” the Senate Republican leader, Mitch McConnell, Republican of Kentucky, said.
“They find it offensive to have to pay for these tax cuts,” Mr. Reid said of Republicans. “This is a $50 billion patch. Shouldn’t it be paid for? The answer is obviously ‘yes.'”
The AMT was created in 1969 to ensure that a small number of wealthy people could not use tax breaks or deductions to eliminate their entire tax bill. But the tax was not indexed to inflation, and every year more people are exposed to it. Nearly 4 million taxpayers were subject to this tax in 2006, and the number is expected to multiply in 2007.