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Managing America: Taxes

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Week Ending June 27, 2008

H.R.6275 To amend the Internal Revenue Code of 1986 to provide individuals temporary relief from the alternative minimum tax, and for other purposes.

The Alternative Minimum Tax (AMT) was adopted in 1969 to ensure that despite loopholes in the tax code favoring the wealthy, they paid some taxes. The provision was not subject to inflation resulting in the tax being applied to middleclass incomes in current years.

This bill forestalls application of the AMT to more US taxpayers in several ways:

The minimum AMT exemption amounts are extended through 2008;

The offsetting of some nonrefundable personal tax credits against regular and AMT tax liabilities is extended through 2008;

Net income and loss from an investment services partnership can be treated as ordinary income and loss;

Other provisions

The major integrated oil companies tax deduction for gross receipts attributable to domestic production of oil, gas, or primary petroleum products is repealed. Other investors related to oil products would find the domestic production deduction held at 6%.

Tax treaty benefits regarding US withholding of tax requirements imposed on some tax deductible payments made to foreign parent corporations are limited to prevent foreign multinational's operating from offshore tax havens from avoiding taxes.

Continuous levy for delinquent taxes on payments due to a vendor over property or services sold or lease to the federal government are extended;

Estimated tax payments due in the third quarters of 2012 and 2013 for large corporations with assets over $1 billion is increased.

Following a proposal set forth by the President's budget the bill would require institutions that make payments to retailers to settle payment card transactions must file a return with the IRS. Merchants must report income from credit and debit cards and other third party network transactions..

Sponsor:  Rep. Charles Rangel (D-NY-15^th)

Vote: Passed the House June 25, 2008 23 to 189 RC 455. The Minority Motion to Recommit the bill failed 199 to 222  RC 454.

The Minority Motion to recommit the bill would require that  the bill to be reported back to the House with amendments which add a new section providing that charitable mileage rates are treated the same as medical and moving rates.

Cost to the taxpayers: The bill concludes that it increases revenues by at least $61 billion over ten years due to tax deduction repeals. The AMT fix is reported as costing $61.5 billion over ten years. The bill then would appear to be budget neutral.

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