Alternate Minimum Tax Update

The following information regarding the status of the alternate minimum tax is from Edmund L. Andrews, House Backs Tax Relief Bill, but Fate in Senate Is Unsure, NY Times, Nov. 10, 2007:

The House passed a $78.3 billion tax bill on Friday [November 9, 2007] that would shield about 21 million people from the alternative minimum tax next year, and pay for it in part by ending tax breaks for private equity funds, hedge funds and other partnerships.

But the bill, approved 216 to 193, faces a highly uncertain future in the Senate. Republicans are staunchly opposed to any tax increases, and some Democrats are torn between appealing to their party instincts and alienating some of their big contributors.

President Bush has already threatened to veto the bill, which also includes extensions of several other tax provisions, if it includes higher taxes that would shift more of the tax burden to the wealthy. He argues that Congress should freeze the alternative minimum tax without trying to make up the $50.6 billion revenue loss for the 2007 tax year. * * *

Republicans charged that Democrats were simply raising taxes, because Congress never seriously intended to impose the alternative minimum tax on anybody but a handful of millionaires.

“The A.M.T. is crazy; it was never meant to apply to middle-class taxpayers,” said Representative Jim McCrery, Republican of Louisiana.