House and Senate Debate Income and Estate Taxes on Budget Resolution
Both the House and Senate this week considered their respective non-binding budget resolutions, addressing income taxes, estate taxes and the alternative minimum tax. Under both resolutions, the 2001 Bush tax cuts are not extended, which Republicans argue would result in a tax hike in 2011 for the majority of taxpayers. Democrats in both chambers claim that their plans help low and middle class taxpayers by instead the lowest 10% tax rate.
In the House, the budget attempts to find revenue from other sources to pay for a one year AMT patch to ensure this tax does not affect more people in 2008 than it did in 2007. The Senate, meanwhile, lacks the votes necessary to pay for the AMT patch and instead does not address the issue. The AMT patch will need to be voted on before the 2008 filing season.
Sen. Max Baucus (D-Mont.) offered an amendment in the Senate which would permanently extend the 10% tax rate, extend the increased refundable child tax credit and the marriage penalty tax relief, plus modify the estate tax law to make permanent the 2009 rate of 45% over a $3.5 million exemption. Sen. Lindsey Graham (R-SC) offered an amendment that would extend the 2001 Bush cuts, the lowered capital gains and dividends rates, and make permanent a $5 million estate tax exemption with a 35 percent tax rate. While the Baucus amendment passed last year, Congress did not act on it, and is not expected to this year.
For more information, contact Heidi Blumenthal at (202) 547-8892 or email@example.com.
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