- The Washington Times - Thursday, December 8, 2005

The House yesterday extended a popular tax break that prevents millions of middle-class Americans from having to pay a tax initially intended for the wealthy.

With a vote of 414-4, the House approved a bill that protects about 17 million taxpayers from being forced to pay the Alternative minimum tax next year.

Many in the middle class may be unaware of the AMT, the so-called “stealth tax,” a second layer of taxation that was created to ensure that the wealthy cannot completely avoid paying taxes. The AMT threatens more of the middle class each year because of inflation.

The one-year AMT fix is not included in the House’s broader, $56 billion tax-cut extension package that is set for a vote today. Instead, the House package would extend a lower tax rate for capital gains and dividends income.

Bill Thomas, chairman of the House Ways and Means Committee, said that with limited space in the House’s protected tax-cut package, the capital gains and dividends extension should take priority, because it will help the economy more.

“It’s a question of where you get the most bang for your dollar,” said the California Republican.

House Democrats overwhelmingly voted for the AMT bill yesterday, but complained that Republicans do not truly support it, because they excluded it from their broader tax-cut package.

“If they believed it, it would be the centerpiece,” said Rep. Earl Blumenauer, Oregon Democrat.

“It’s my impression that we’re just going through this for political reasons,” said Rep. Charles B. Rangel, New York Democrat. “The Senate’s not going to take it up.”

The Senate has passed a broad $58 billion tax-cut extension package that includes an AMT fix but omits the capital gains and dividends extension.

Meanwhile, the capital gains and dividends extension has been criticized by Democrats and some more-liberal Republicans as a tax cut for the wealthy. Republican leaders defend it.

“These are not — as Democrats may say — tax cuts for the rich. I see them as tax cuts for job creation,” said Rep. Eric Cantor, Virginia Republican.

One House Democratic aide said Republican leaders allowed the AMT vote to give some members a “fig leaf” — a popular tax cut to tout to constituents in light of the less-popular tax-cut extensions they will pass today.

The House yesterday also passed by a vote of 415-4 a tax-relief bill for Gulf Coast residents and businesses affected by recent hurricanes. Heeding conservative members, Republican leaders excluded casinos, massage parlors and similar businesses from the bill.

Conservatives were pleased but wary, because the Senate’s broad tax package includes hurricane relief that could be accessed by casinos and related businesses.

“We’re still going to have to watch that,” said Rep. Joe Pitts, Pennsylvania Republican.

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