While the Treasury bailout seems to be heading toward another vote this week, the state of the alternative minimum tax patch and the various tax extenders now seems in doubt.
This seems odd, as both the Senate and the House have passed their own versions of both the AMT patch and the tax extenders. There have been efforts to reconcile them, and they haven’t been too far apart. Unfortunately, as of Monday when I am writing this, there remain some key differences in the offsets that would pay for at least some of the expiring or expired tax deductions and credits in both versions of the bills.
The Senate and the House have both agreed to forego offsets to pay for the AMT patch, a sticking point that held up agreement last year until the last minute and caused some tax forms to be delayed last tax season.
The House Ways and Means Committee made perhaps the fatal mistake of splitting up the Senate’s bill into four parts, which seems to have sown seeds of confusion. The argument is being portrayed as all about offsets, with the Senate insisting on no offsets and the House arguing for including some ways of raising revenue, such as denying some tax breaks to large oil and gas producers, hiking taxes on carried interest earned by executives who receive deferred compensation, and on closing some offshore tax loopholes. But even the Senate version had some offsets (see Senate Passes Tax Extenders and AMT Patch).
House Ways and Means Committee Chairman Charles Rangel, D-N.Y., is insisting that his committee should not need to make the House's bill conform with the Senate’s in every respect before it can win passage. Now should be the time for a conference committee to come together to try to hammer out a version of the legislation that would be acceptable to both sides.
But with the Treasury bailout bill consuming much of the energy this week as Congress rushes to adjournment so members can campaign for the November elections, we may not see a compromise get done in time. That could lead to another round of fighting over the AMT, while also putting in peril a variety of tax credits, such as for research and development and clean energy, not to mention the provision that would equalize penalties for tax preparers and taxpayers.
If Congress eventually can manage to come to an agreement, however flawed, on the $700 billion financial bailout, then it should be able to find its way to a compromise on the tax legislation without again making more than 20 million taxpayers anxious about falling prey to the threat of the AMT.
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