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 But the Ways and Means Committee put off for another day the annual debate over what to do with the alternative minimum tax that threatens millions of taxpayers with thousands of dollars in extra taxes apiece unless Congress acts to suppress it.
The package, approved 25-12, includes some 60 provisions encompassing incentives for investment in renewable energy, renewal of specific tax breaks that have expired or will expire this year, and new help for parents, homeowners and lawyers.
The total cost would be about $57 billion. In addition to the $10 billion in new relief for individuals, it contains $20 billion in renewable energy incentives and $27 billion to extend such popular tax breaks as the research and development credit and the credit for the out-of-pocket expenses of teachers.
It's paid for mainly by closing a loophole allowing hedge fund managers and others working for offshore corporations to defer tax on their compensation and by delaying implementation of a tax break for multinational corporations operating overseas.
The bill now goes to the full House. The Senate is working on its own version of tax extension and renewable energy incentives.
The alternative minimum tax issue was not taken up because of a basic difference over whether Congress should come up with new revenues to offset money lost by shielding people from the tax. House Democrats, committed to a policy of paying for lost revenues or new spending, have been split with Republicans who argue that it is wrong to keep one tax from rising by raising taxes elsewhere.
Last year that debate stretched into December, when House Democrats finally bowed to pressure from the Senate and accepted an unpaid-for AMT fix. Without that fix the AMT, enacted in 1969 to catch a very small number of very rich tax dodgers, would have hit some 25 million mostly upper-middle-class taxpayers, up from about 4 million in 2006.
The late action on the tax forced the Internal Revenue Service to delay sending out refunds to millions of taxpayers as it made adjustments to its computer programs.
Rep. Tom Reynolds, R-N.Y., who unsuccessfully tried to attach an unpaid-for AMT fix to the bill, said that the tax could hit some 21 million more families this year at a cost of $61.5 billion, or $2,800 a family. The Joint Committee on Taxation has put the cost this fiscal year at almost $75 billion.
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 "We're about to go down that same long road," said Rep. Jim McCrery of Louisiana, top Republican on the committee, predicting that Democrats would eventually have to accept another fix without offsets.
Committee Chairman Chairman Charles Rangel, D-N.Y. disagreed, but stressed that "we will not leave this Congress until this burden is removed."
The bill would increase eligibility for the refundable tax credit in 2008. That's the credit that becomes available when the child tax credit, worth up to $1,000 per child, exceeds a person's tax liability. The measure would extend the credit to 12 million more children.
It would also provide for one year an additional standard deduction for state and local real property taxes paid by those who claim the regular standard deduction. It would be worth up to $700 for a couple.
Another provision, unsuccessfully opposed by Republicans, would give a more generous deduction to attorneys who pay litigation costs in advance in contingency-fee cases. It would cost an estimated $1.6 billion over 10 years.
The extended tax breaks include deductions of state and local sales taxes and deductions of tuition and other education expenses. It extends, at a cost of $7 billion over 10 years, the tax credit for production of renewal fuel sources such as wind, biomass and geothermal power. Separate tax items affect solar energy, clean coal, cellulosic biofuels, plug-in electric vehicles and energy-related home improvements.
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The bill is
H.R. 6049.
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On the Net:
Congress: http://thomas.loc.gov/
[Associated
Press; By JIM ABRAMS]
Copyright 2008 The Associated
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