What: All Issues : Fair Taxation : More Equitable Distribution of Tax Burden : HR 976. (Small business tax breaks and children's health insurance), motion to allow an amendment on the Alternative Minimum Tax to go forward/On the motion (2007 senate Roll Call 295)
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HR 976. (Small business tax breaks and children's health insurance), motion to allow an amendment on the Alternative Minimum Tax to go forward/On the motion
senate Roll Call 295     Aug 02, 2007
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This vote, which occurred on a complicated bill that sought to expand the State Children's Health Insurance Program (SCHIP), was on whether to allow a tax-related amendment to go forward. Some senators sought to kill the amendment because it ran afoul of Congress' budget rules outlawing legislation that increases deficit spending. This vote was an attempt to waive that budget rule and allow the amendment to go forward.

The amendment in question was one introduced by Sen. Arlen Specter, R-Pa., that would repeal a 1993 law that increased the rate of taxation for the "alternative minimum tax" (AMT).The AMT was devised in 1969 as a way to capture more taxes from a handful of very wealthy people so adept at using loopholes that they paid little into the federal treasury. But the program has come under scrutiny in recent years, because an increasing number of middle-class taxpayers have found themselves subject to the tax. This is largely because the AMT's formulas do not account for inflation or recent tax cuts. According to Specter, taxpayers filing joint returns with no dependents will be subject to the AMT starting at incomes of $75,386, and at $49,438 for large families .

"This is a matter that can be explained in a minute. It is a tax which never should have occurred, and now we can correct it for the people in the lower brackets," Specter said.

Max Baucus, D-Montana, said he shares Specter's concerns about the increasing number of the middle class that are being affected by the tax. But he said that Specter's amendment may in fact increase the number of people who have to pay it.

"No one wants the Americans who currently do not pay the alternative minimum tax to have to pay it next year. They will have to unless this body, this Congress, makes the appropriate change in the adjustment. I am fully committed to finding a solution so anybody who has not paid alternative minimum tax in 2006, when he or she files their tax returns next April, does not have to pay it for 2007," Baucus said.

There is fairly broad agreement that the AMT needs adjusting, but that agreement breaks down when it comes to the question of whether the tax should be repealed outright, or simply tweaked. Many fiscal conservatives believe it should be adjusted so it has little effect on those in lower income brackets, while many Democrats would prefer to see it erased altogether. Some fiscal conservatives also argue that repealing the AMT could be cost-prohibitive, possibly costing the federal treasury some $800 billion to $1.5 trillion in foregone revenue over the next decade.

The motion to preserve the amendment was defeated by a vote of 52-47, with most Democrats voting no and most Republicans voting yes. Though more people voted yes than no, the motion failed because it fell short of the three-fifths majority of the entire Senate body (60 votes) it needed to succeed. Thus, the budgetary rules were not waived, and so the children's health insurance bill went forward without language that would have changed the AMT.

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