Bush Faces a $30 B Quandary (AMT) After Delay of Tax Overhaul Until 2007

[papau]

President is backing legislation to prevent the AMT from imposing "a $30 billion increase on 15 million households next year, a task that would widen the deficit and complicate the Republican push to extend breaks on dividends and capital gains."

http://www.bloomberg.com/news/economy/politics.html

Bush Faces a $30 Billion Quandary After Delay of Tax Overhaul Until 2007
Dec. 7 (Bloomberg) -- U.S. President George W. Bush is backing legislation to prevent the alternative minimum tax from imposing a $30 billion increase on 15 million households next year, a task that would widen the deficit and complicate the Republican push to extend breaks on dividends and capital gains.

``We're going to ensure that it's not going to impact middle-income working families and does not take away from the tax relief the Congress provided in 2001 and 2003,'' White House spokesman Trent Duffy said in an interview.

Bush's 2006 budget made no provisions to protect taxpayers from the AMT because he wanted to address the problem as part of a comprehensive overhaul of the tax code that would raise some taxes and cut others, without contributing to the deficit. That larger endeavor, people familiar with the matter said this week, has been delayed for at least a year as officials fear it would prove a hard sell with the public and Congress during the 2006 midterm elections.

Bush is ``working with Congress'' to address the AMT issue, Duffy said. The House of Representatives is scheduled to vote today on a measure to curb the minimum tax's reach for one year. The House legislation renews a temporary law that exempts a higher amount of income from the AMT, reducing the likelihood that households with incomes as low as $75,000 would trigger it.

The House also will consider this week separate budget legislation that would reduce taxes by as much as $70 billion over five years, mainly by extending for two years the 15 percent rate on dividend and capital-gains levies that was slated to expire in 2008. House Majority Leader Roy Blunt of Missouri said yesterday that he is confident his fellow Republicans have the votes to pass the measure.

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The two measures set up a confrontation later this month with the Senate, which has passed a budget measure that contains the AMT provision without extending the investment tax breaks. Republicans such as Olympia Snowe of Maine and George Voinovich of Ohio have voiced objections about the effect the dividend tax cut would have on the $319 billion deficit.
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