Mr. NEAL of Massachusetts. Madam Speaker, I yield myself such time as I may consume.
The provisions of H.R. 7005, the Alternative Minimum Tax Relief Act of 2008, as scheduled for floor action today, provides alternative minimum tax relief.
Ways and Means Committee Chairman Rangel and the ranking member, Mr. McCrery, have asked the nonpartisan Joint Committee on Taxation to make available to the public a technical explanation of the bill. The technical explanation expresses the committee's understanding and legislative intent behind this important legislation. It is available on the joint committee's Web site at www.jct.gov.
I want to thank Mr. Rangel for his diligent work on a flurry of last minute bills here. There is some urgency to the bill we are debating today. I also want to acknowledge, to his everlasting relief, that this is the last time Mr. Reynolds will have a chance to speak on the issue of the alternative minimum tax.
If we do not pass this legislation today, 25 million families will pay higher taxes this year. That is right, this tax relief is for this year. I might add to this conversation that one of the nice things about this bill, despite how tumultuous these days have been for Members of Congress and for the American citizens watching what has happened to their 401(k) plans, this legislation actually provides middle class tax relief. The current patch expired at the end of the last year, and it is urgent
that we pass this relief now.
Of those 25 million families facing higher taxes, 84 percent of them earn less than $200,000. In my constituency alone, families paying alternative minimum tax will rise from 8,000 to 69,000 if we do not enact this patch, and only 500 of those unlucky 69,000 people earn more than half a million dollars annually. Clearly, the alternative minimum tax is not the millionaire's tax it was designed to be.
For the last decade I have sought to repeal or radically reform the AMT because of the unfairness it wreaks on our progressive tax system. The AMT patch we are considering today costs more than $60 billion, and a reminder to all, next year, $70 billion. But unlike the version we considered earlier this year, we should acknowledge, this one is not offset. Despite partisan efforts in outreach to the other side on the issue of fiscal responsibility, we have, unfortunately, been unable to find common
ground. We have run up against the reality of the closing days of Congress, and this legislation simply must be accomplished.
Again, I want to congratulate Chairman Rangel on crafting a responsible bill and one which picks up on the good work of our colleagues, Mr. Van Hollen of Maryland and Mr. Johnson of Texas, on the issue of incentive stock options. For a decade, Mr. Johnson and I have tried to find relief for those taxpayers unfortunately caught with a massive AMT bill on phantom stock gains, and today's bill provides relief by abating penalties and interest on underpayments
and by allowing quicker recovery of AMT credits.
The bill we are considering today is a true hold-harmless patch because it not only extends but increases the AMT exemption level. It also extends protection from AMT for taxpayers with personal, nonrefundable credits, such as education credits and the dependent care credits. Otherwise, taxpayers might lose these essential credits to AMT.
I urge adoption of this bill, Madam Speaker.
Madam Speaker, I reserve the balance of my time.
Mr. REYNOLDS. Madam Speaker, I thank the chairman of the Select Revenue Measures Subcommittee of Ways and Means. Mr. Neal has been a true leader in the goal of trying to get permanent repeal of AMT, and while it is something that we share, we have not yet reached a solution.
So I find myself rising today on behalf of middle class families all across America in strong support of this bill. As my colleagues well know, I have fought year in and year out for the AMT patch, and I am disappointed that Congress has not addressed a permanent solution. Absent a long-term proposal, I think we have no choice but to once again pass a temporary 1-year fix.
Without patch legislation, more than 25 million families will be hit by this stealth tax. This includes more than 21 million taxpayers who didn't owe AMT in 2007. If Congress does not act, each American affected by AMT will, on average, face a tax increase of almost $2,500. We delayed action for so long last year that 13.5 million taxpayers were forced to delay filing their returns. Because we did not act earlier this year, millions more have been hanging in the balance.
We have an opportunity to end the uncertainty of the middle class that they have been facing all year long. Each Member of this House has the opportunity to live up to their responsibility and truly help the middle class trapped in this stealth tax that was so unintended for the middle class.
Yesterday the other body passed their bipartisan tax extenders package. The Senate majority leader was as candid as I have ever heard him when he bluntly told the House, ``Don't send us back something else. We can't get it passed.'' He went on to make it clear that if we do, the important extenders we have all been working so hard to accomplish will die and we will have ``snatched defeat from the jaws of victory.''
In these difficult and uncertain economic times, we have an obligation to pass a bill that can be signed into law as quickly as possible to protect middle class Americans. While I believe our time today would be better spent moving a comprehensive tax extenders package, I am nonetheless pleased to see the majority put up a clean AMT bill before this House.
I thank Chairman Rangel for his leadership on this legislation and Chairman Neal for his additional leadership as the Chair of the Subcommittee of Select Revenues.
Madam Speaker, I reserve the balance of my time.
Mr. KIND. Madam Speaker, I thank the Chair of the subcommittee, and I too want to commend the Chair and ranking member of the committee for bringing this important AMT fix before the Congress today.
Madam Speaker, I couldn't agree with my friend from New York more. These 1-year fixes of the alternative [Page: H9308]
minimum tax are just not sustainable. It is not fair, because it doesn't build in predictability and certainty with the Tax Code. That is why I commend the gentleman from Massachusetts, given the groundwork he has so far laid in trying to find a permanent fix to the AMT dilemma we face in the Nation.
Obviously, none of us in this Chamber or in this Congress would want to see millions of working families wake up on Tax Day realizing that because of bracket creep and the inability to index the AMT, that they are going to be facing a higher tax liability. Given the doldrums that the economy is facing right now, working class families especially can't afford to take an additional tax hit.
But at some point in this Chamber and in this Congress and in this country, we have to start paying for things again. That is why one of the first things that we did as a new majority last year was reinstitute pay-as-you-go budgeting rules. Not because we thought it was going to be easy or simple or fun, but because we thought it would be necessary to restore some fiscal discipline.
While many of us have been working on the extension of tax provisions and making sure AMT doesn't capture more working families, we are trying to do it in a fiscally responsible manner by finding appropriate offsets to pay for it so we are not adding to the debt burden of future generations. That is the great task left before us.
It is unfinished today, because obviously this AMT fix is not paid for, but it is something we have to take up in the next session of Congress, finding a permanent fix, and getting into the Tax Code with major reform, which is coming up next year already.
Again, I appreciate the leadership that the gentleman from Massachusetts and others on the subcommittee have shown so far on this issue. I encourage my colleagues to support it.
Mr. PASCRELL. Madam Speaker, the legislation we have before us today arises at a time when our American workers are suffering under a failing housing market and struggling financial market. I want to commend Mr. Neal and Mr. Reynolds for being advocates for this, not just yesterday, but through the past many years. This is an injustice on the middle class in America. We know it very clearly.
I want to commend you, Mr. Neal, for trying to get this done on a permanent basis and paying for it. The sin of this administration is trying to provide tax relief for folks and not finding a way to pay for it. Now we see what situation we are in. Kudos to you. You stuck to your guns.
The economic burden on the American worker is enormous, and it should compel us to take a bold and affirmative stand on serving their best interests today. As a proud cosponsor of H.R. 7005, the AMT Tax Relief Act of 2008, I want to also thank our distinguished colleague, Chairman Rangel, for bringing it to the floor.
We must remind ourselves that the impact on the AMT as it currently stands will continue to harm the wrong taxpayer. The AMT no longer targets just wealthy taxpayers engaged in tax avoidance. Instead, it targets the unintended taxpayer, the middle class family.
The AMT is not adjusted for inflation. In the absence of an indexing provision, it is largely responsible for the rising numbers of middle class taxpayers subject to the AMT.
Filers in high-tax States are more likely to face the AMT to a surprising degree. In my State, the State of New Jersey, one of the three highest ranking States in terms of AMT filers, in my home State of New Jersey, $800 million in AMT taxes were paid last year. The three States of New Jersey, New York and California account for 40 percent of the country's 3.15 million AMT returns, just those three States. You tell me about justice in the tax system. [Page: H9309]
Texas, a State with 200 percent larger population than New Jersey, has roughly half the number of AMT filers.
Mr. REYNOLDS. Madam Speaker, it is now my pleasure to yield 2 minutes to the ranking member of the Rules Committee, who has long been an expert on trade as well as tax issues that affect this body and the country, the gentleman from California, David Dreier.
(Mr. DREIER asked and was given permission to revise and extend his remarks.)
Mr. DREIER. I thank my friend for yielding.
Madam Speaker, I would like to begin by saying that I suspect that after many decades of stellar public service, this will be one of the last times that we see our good friend from Buffalo (Mr. Reynolds) who served ably as a member of the Rules Committee for many years and now as a member of the Ways and Means Committee actually manage a measure on the floor. I would like to thank him for his wonderful public service and to say that we are very pleased to be here with this very important
I don't want to be the skunk at a picnic, but I have to point to a couple of very, very important issues. I listened to my good friend from New Jersey (Mr. Pascrell) talk about the fact that Mr. Neal has moved forward with a measure that is paid for. The fact of the matter is we are waiving PAYGO on this provision which will allow us to deal with this patch for the AMT relief.
We all know back in 1969, 155 millionaires were the target of the alternative minimum tax, as was pointed out by my friend from Houston (Mr. Brady). The fact is, the indexation has created a situation whereby millions and millions and millions of Americans are now saddled with this responsibility.
Madam Speaker, what we heard time and time again was that in this new Congress, we were going to have everything paid for. I find it interestingly ironic that here, as we deal with the alternative minimum tax, this measure, we have suspended the rules and waived PAYGO on this. Yet we did not choose to do that when we dealt with the very important issue that the American people wanted us to try to address, and that is to bring gasoline prices down with a responsible energy bill.
We chose to waive it for the farm bill. Unfortunately, again, on the gas issue, we didn't waive it there, and we are waiving it again here.
I would also like to point to the fact that my good friend from New Jersey talked about the fact that his State, I guess, has the third highest number of people impacted by the alternative minimum tax. The issue of repealing the alternative minimum tax is a high priority for many of us. I believe that it should be completely eliminated.
Mr. DREIER. I thank my friend.
Let me say that I believe it's important for us to remember that a very short 8 years ago, in 1999, the House and the Senate passed a repeal of the alternative minimum tax. Unfortunately, President Clinton at that time chose to veto that measure.
We can get into the issue of paid for or not paid for, but it's interesting that the measure we are considering today is basically under the same structure that we in 1999 passed the repeal of the alternative minimum tax out under and President Clinton chose to veto it at that point.
Mr. PASCRELL. The problem is back in 1998 there were just a few people that were eligible. It didn't make it less onerous, but there were many less people that were subject to the AMT tax. That was the difference. You know what the situation is today, my friend from California.
Mr. DREIER. If I could reclaim my time, Madam Speaker, let me just say I concur. But if we had, in fact, in 1999, when President Clinton chose to veto that bill 8 years ago, if we had had that passed, we wouldn't be here dealing with this issue as we are today. I just wanted to make that clear for the record.
Thanks again, and congratulations to my friend from Buffalo.
Mr. NEAL of Massachusetts. Madam Speaker, I appreciate my friend, Mr. Dreier's, comments, about the alternative minimum tax and how we are going to proceed today, but, let me be blunt, over my objections for the last 8 years, what we talked about today is simply this for the American people that might be viewing this discussion, we are going to borrow the money. I object to it, but I have tried time and again to find concurrence on the other side with a common way forward and have been
Madam Speaker, I would like to yield 2 minutes to the gentlelady from Nevada, a very valued member of the Ways and Means Committee, Ms. Berkley.
Ms. BERKLEY. I thank the gentleman for yielding.
Madam Speaker, I rise in support of the AMT Relief Act. While I strongly believe the alternative minimum tax should be eliminated, this bill will provide a necessary, temporary solution to protect the more than 25 million Americans who would otherwise be hit by the AMT this year.
If this legislation is not enacted, more than 138,000 Nevada taxpayers will see their tax bill increased by the AMT. This includes more than 32,000 hardworking Las Vegas families who were never intended to be affected by this tax.
I am also pleased that the bill contains language to help those who face gargantuan alternative minimum tax liabilities on stock option income that they never actually received. I have several constituents in my district affected by this so-called ISO AMT, including one citizen who received a $1.2 million tax bill on a $30,000 stock option gain. This provision will help make these individuals whole.
With the current economic downturn, the rising cost of food and gas, increased unemployment and people losing their homes due to mortgage foreclosure, the last thing Las Vegas needs is a tax increase on thousands of middle class families.
I urge my colleagues to support this legislation.
Mr. NEAL of Massachusetts. Madam Speaker, I want to agree with some of what Mr. Reynolds said, but I also want to remind the American citizenry today, we have now borrowed hundreds of billions of dollars to fix the alternative minimum tax, only to discover that a temporary patch is hardly a fix.
Think of what we might have done had we adhered to some fiscal rectitude and actually paid for this legislation as opposed to borrowing the money.
The reality is, in a legislative body, that there are some days that you can't get the votes to do what you would like, and this is one of those days.
But be mindful as we proceed to the next session of the Congress that the request for fixing the alternative minimum tax, or patching the alternative minimum tax, you will be out $70 billion, the following year $80 billion, maybe more. Then when you calculate the interest that attends to the issue, we quickly find that we will be at $500 billion to have temporarily patched alternative minimum tax, when we have offered a remedy here to do away with it?
We can argue about percentage of GDP that results in taxation to administer the Federal Government. I have heard that argument. The difficulty with that argument is that it doesn't take into consideration the reality of what we might have done in the intervening time to address the issue.
We have put very thoughtful pieces of legislation to permanently repeal it, to put it behind us once and for all, alternative minimum tax, only to discover that we have had difficulty securing the necessary cooperation to get it done. So, I will be standing here next year, talking about alternative minimum tax, asking for a permanent repeal. I hope, in the atmosphere of tax reform, that we might accomplish that task.
Madam Speaker, I would like to yield 2 minutes to the gentleman from New York, a classmate of mine from 1988, my friend, Mr. Engel.
Mr. ENGEL. I thank my friend from Massachusetts for yielding, and it's hard to believe that it has been 20 years. We are classmates, and I am very proud of the work that Mr. Neal is doing on the Ways and Means Committee.
Madam Speaker, I rise to strongly support the bill, but I want to express the frustration that so many people here have expressed that we are not permanently repealing the AMT. Every year, it seems, we come and we talk about a fix, which we are doing now, which needs to be done, but we point fingers at each other, we play the blame game and somehow or other a total repeal and a redoing of the AMT doesn't happen.
If you come from a high-tax State like mine, like New York, which also happens to be a very high cost-of-living State, people are making more money because it costs more money to live in a high cost-of-living State.
Yet many of these middle class families find that they are being hit with the AMT. Even if we pass this today, as I am sure we will, those families will continue to be hit with the AMT, even though they are middle class, and, as all my colleagues have mentioned, the AMT was never supposed to affect them.
We need to put our heads together and come up with a plan to have alternative means of raising revenue and not have the AMT that affects so many middle class families. We are talking about a $700 billion bailout for Wall Street, and yet we never seem to have the money to bail out the middle class.
We need to do that. We need to do it, and we need to do it now. We need a permanent fix, not patchwork every year. PAYGO, I am certainly for it, but the main thing is, middle class families should not be harmed by the AMT. And in a State like New York where there is a high taxation and high cost of living, we have a double whammy.
I thank my friend, I support the bill, and I hope that next year we will come back for a permanent fix and finally repeal the onerous AMT.
Mr. REYNOLDS. Madam Speaker, it's interesting in the debate, and many of us who spoke today and so many others that have come forward in years past have presented the history or the finger pointing or the direction of how we got to where we are.
The important thing is that we know that we must produce a result, even if it's a 1-year patch. It has been admirable, as Chairman Rangel took over Ways and Means, a goal he had was to rid the AMT tax from the books. We need to work in a bipartisan fashion, I suspect, to reach that permanent goal.
But as we banter some on PAYGO or pay not, or whether they are in or they are not, it reminds me to think as a Member who will not be going home to campaign, maybe I should spend a little time to see how many times we have waived PAYGO on this bill after we beat up the fact that we should do it, it's the right thing, it must happen. And then at the end of the day, we take the Republican version of not raising taxes. Quite frankly, I don't think we are borrowing money for the bill, we are just
not raising taxes in order to prevent a tax increase, particularly one to the middle class which both parties so dearly want to preserve.
So as we look to the reality of this year, I remind my colleagues, we have caution to get this bill matched with the other body so that we make law in order to send it to the President's desk to protect our middle class taxpayers.
Last year 352 bipartisan Members of the House voted for the AMT extension that was not offset by devastating tax increases, just like this bill coming before us today.
I urge my colleagues to do the same today by supporting this bill so it may be included in a comprehensive tax extenders package equal to the Senate version, or that the other body relinquishes their very clear, strong warning from their leader. Ignoring the other body's warning will not get this across the finish line. So I urge adoption of the resolution, and I thank Chairman Rangel and Chairman Neal for their efforts and work to get this before us today as we are in the final
days of this legislative session.
Madam Speaker, I yield back the balance of my time.
Mr. NEAL of Massachusetts. Madam Speaker, let me, as I close, acknowledge the work of Chairman Rangel. He has given me considerable latitude not only on this issue but on a range of other issues within the jurisdiction of the committee. We have come up with some pretty good pieces of legislation during the last couple of years.
What is striking about this debate is we find ourselves in the same predicament where we will once again convene next year to discuss it. Mr. Rangel's legislation that I helped to author actually repealed the alternative minimum tax and did it in a responsible manner. The fact that we are here today because we couldn't find enough numbers in the House to move forward on the proposal, I think, demonstrates the frustration that we all feel with what has now become a very onerous position
for the Congress to entertain.
But I do want to thank my friend, TOM REYNOLDS. And he is my friend. We probably on tax policy disagree on where the sun rises and the sun sets, but it is an example of a friendship [Page: H9311]
that has been able to supersede any of those differences because after the debate of this House is over, socially he has been a good pal for a long time. And I have the impression that he is not going to miss debating alternative minimum tax when he is back in New
York. His position has been steadfast in this arena on the issue of AMT, and we have really worked hand in glove with one minor difference: I think rather than borrow the money, I think we should pay for it. And at the same time, I must tell you, he has been a good and humorous friend along the way, and we will miss his presence in the House and on the Ways and Means Committee.
Madam Speaker, I urge adoption of the resolution.