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Senate Approves AMT Patch with No Revenue Offsets

By: Gerald Prante

News from Thursday night on Capitol Hill regarding AMT, courtesy of Bloomberg:

The Senate agreed to spare 23 million American households from the alternative minimum taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. this year after Republicans forced Democrats to drop plans to balance the cuts with higher taxes on managers of hedge funds and buyout firms.

The Senate voted 88-5 to approve a one-year, stop-gap measure that temporarily indexes the minimum tax for inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. and adds $51 billion to the deficit.

The vote sends the issue back to the House of Representatives, which last month approved higher taxes on executives of hedge funds, buyout firms, real estate, and other partnerships to offset the revenue lost from the minimum tax relief.

Senate Democrats today complained that Republicans refused to balance the revenue losses by increasing taxes elsewhere, adding to the federal deficit.

Republican leader Mitch McConnell of Kentucky said House Democrats must agree to the “commonsense solution” or “explain to taxpayers why they will further delay tax refundA tax refund is a reimbursement to taxpayers who have overpaid their taxes, often due to having employers withhold too much from paychecks. The U.S. Treasury estimates that nearly three-fourths of taxpayers are over-withheld, resulting in a tax refund for millions. Overpaying taxes can be viewed as an interest-free loan to the government. On the other hand, approximately one-fifth of taxpayers underwithhold; this can occur if a person works multiple jobs and does not appropriately adjust their W-4 to account for additional income, or if spousal income is not appropriately accounted for on W-4s. s for millions of Americans.”

The Senate vote to approve the alternative minimum relief came hours after the Senate earlier in the day refused to begin debate on the House version. A proposal to take up the House measure fell 14 votes short of the 60 necessary to proceed.

Here’s the roll call vote. The vote was 88-5. Each of the presidential candidates plus Voinovich and Ensign were absent, while five Democrats voted no including Dorgan (ND), Conrad (ND), Carper (DE), Whitehouse (RI), and Feingold (WI).