During my annual Saturday ritual of completing my extensive “to-do’ list — compiled the night before courtesy of my wife — I discovered, between trips to the hardware store and the dry cleaners, a rapidly deflating rear tire.

Before I found myself riding on the rims, I hurried to the local service station in town, where to my pleasant surprise, they took me right in and I was good to go in 15 minutes.

I also realized that eventually, I would probably have to spring for a new tire in the not too distant future.
If one could equate a puncture with tax policy, my damaged tire could conceivably be the alternative minimum tax and my quick repair the myriad patches applied to prevent the AMT contagion from affecting million of taxpayers like an out-of-control Pac-Man.

Last week, House lawmakers voted to approve a $78 billion bill that would provide yet another temporary patch in an effort to prevent the AMT from spreading to 23 million more taxpayers for the 2008 filing season.

To put that number in perspective, that’s more than the population of New York State.

By a scant margin of 23 votes, which included exactly no Republican “ayes,” H.R. 3996 or the Temporary Tax Relief Act of 2007, moved through the House and now will travel over to the Senate.

In essence, the legislation raises the taxes on managers of hedge funds and private equity firms by approximately $50 billion over the next 10 years.

In lieu of their traditional 15 percent carried-interest rate for partnerships, financial managers would be subject to a corporate income tax rate of up to 35 percent.

Some other provisions of the bill include such things as mortgage forgiveness debt relief, extending the R&D tax credit and expansion of the child tax credit among others.

In the Senate, however, it gets a bit tougher where both Republicans and some Democrats such as John Kerry of Massachusetts and Charles Schumer of New York, have voiced their objections to its carried-interest provisions.

The president has also threatened a veto of the bill in its present form.

This temporary bill was sponsored by House Ways and Means chairman Charles Rangel, D-N.Y., who just last month unveiled his massive tax reform plan, which among other things, calls for the abolition of the AMT. Rangel’s temporary measure calls for the last “patch’ to be applied to the AMT before, ideally, abolishing it.

But strange things have happened in election years and I think we all can expect a good deal of haggling before any true reform is enacted.

But regarding an AMT fix something more permanent needs to be agreed upon before this latest patch expires.

Because much like with a flat, a patch is only temporary. Sooner or later, you’re going to need a new tire.

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