The House voted today on a revenue-neutral $60.3 billion energy and tax extenders bill, H.R. 7060, passing it by a vote of 257-166. Bush--staying true to his view that tax cuts are always okay no matter what the state of the federal fisc-- had urged the House to take up the Senate's measure (H.R. 6049), instead, even though the administration opposed the Senate revenue raisers, which included freezing the domestic manufacturing credit for oil and gas, chagning treatment of foreign income for American energy companies, and eliminate the cap on the oil spill liability trust fund. The Administration has threatened a veto of the House bill.
Remember that with the $700 billion bailout for banks, we are looking at a debt ceiling of more than $11 trillion.
The House measure extends the research tax credit, the subpart F active financing exception, and the state and local sales tax deduction. None of those make good sense as policy items. Continuing the active financing exception for banks to defer taxes on their business income seems expecially nonsensical in the current situation where these banks are at the public trough asking for handouts.
Revenue raisers include a further delay of world-wide interest allocation (i.e., revenue from not yet allowing a tax cut idea passed earlier to take effect, when in fact that idea probably should never have been enacted) and ending the perc of deferral of compensation claimed by fund managers.
The House decoupled the extenders from the AMT, as apparently both the House and Senate have decided to continue enacting AMT patches without paying for them with taxes elsewhere. (The Senate bill, H.R. 6049, included an AMT patch without revenue offset.) Since most of the AMT tax breaks go to those making more than $100,000, one has to wonder what concept of ordinary taxpayers the Congress has. It should limit the AMT patches to protect those making less than $100,000 from the AMT.
From my perspective, the House should at the least insist on paying for these measures, else it shouldn't pass them. In the long run, we are better off without most of these extenders.
For more information, see:
Bloomburg.com, Sept. 26, House Passes Tax Bill that Could Jeopardize Solar Tax Breaks
Bloomburg News, Sept. 26, House Delays Vote on Tax Measure (discussing delay until Friday)
Tax News, Sept. 23, Senate Passes Tax Extenders, AMT Legislation
National Women's Law Center, Reggie Oldak, Sept. 26, Again, A Waiting Game for Our Children (commenting on the delayed effective date for the provision in the House bill expanding the child tax credit)
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