Impasse over AMT, other tax relief continues

[September 29, 2008]  WASHINGTON (AP) -- The House-Senate impasse over tax policy continued Sunday as the House brought up, and then withdrew, tax relief bills that a senior senator said the Senate would not pass. The House is scheduled to adjourn Monday after voting on the financial bailout legislation.

The deadlock, coming on the eve of the House's planned adjournment for the year, left uncertainty over how Congress would handle several crucial tax issues, including action to shield millions from the alternative minimum tax.

"There comes a time when we are going to have to stand our ground," said Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee, in rejecting the Senate assertion that the only way to pass tax relief legislation in the final hours of this session was for the House to accept the Senate version.

The Senate last week passed, on a 93-2 vote, a multifaceted bill that most significantly makes adjustments to ensure that more than 20 million people don't get hit by the alternative minimum tax in 2008, with an average tax increase of at least $2,000. The bill also provides tax breaks for disaster victims, extends expiring business and individual tax breaks and expands tax incentives for renewable energy resources.

The House responded by passing three separate bills that differ slightly in content, particularly by finding new revenue sources to pay for the $42 billion in extensions for expired business and individual tax breaks.

House Democrats are influenced by a powerful contingent of fiscal conservatives who insist that tax relief should be paired with increased revenues so as not to add to the federal deficit. Senate Republicans and the White House have countered that the addition of anything they consider tax increases would kill the entire package.

House Majority Leader Steny Hoyer, D-Md., urged the Senate to take up and pass two bills originally put forth by the House Sunday, saying they "would create tens of thousands, maybe hundreds of thousands of jobs." He said the House Democratic principle of not adding to the deficit was "extraordinarily important" and the Senate take-it-or-leave-it stance was unacceptable.

But Senate Finance Committee Chairman Max Baucus, D-Mont., who helped craft the Senate compromise, said late Sunday, "It is clear to me from discussions in the Senate that even this new package of bills will not pass this body."

The House did make two concessions to the Senate in the bills it introduced Sunday and then withdrew after an hour of debate. They included provisions from the Senate bill that provide parity in the insurance coverage of mental health and that extend a federal aid program for rural schools in communities that have smaller tax bases because they abut federal lands.

The two bills offered some $15 billion in credits to promote renewable energy such as wind, solar and geothermal power. They also extended for two years in most cases, such tax breaks as the research and development tax credit, deductions for state and local sales tax, credits for higher education costs and expansion of the child tax credit.

The House passed nearly the same two bills -- minus the mental parity and rural schools provisions -- last week as one package. The costs of the bills is offset by limiting some tax breaks available to oil and gas companies and closing loopholes that have lowered the taxes of hedge fund managers and corporations with overseas income.

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The bills are H.R. 7201 and H.R. 7202.

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[Associated Press; By JIM ABRAMS]

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