House passes AMT patch

The House approved legislation to shield 25 million families from a scheduled tax increase this year, voting to raise taxes on the private equity industry and major oil companies to offset part of the measure’s $60 billion cost.

Ten Republicans joined all but six Democrats to support the bill, signaling that GOP opposition to raising taxes on business to extend popular tax relief may be softening. Last year, Republicans were unified against similar legislation.

{mosads}“The main difference between Democrats and Republicans is that Democrats don’t believe we should pay for the cost of this bill by adding to the national debt,” said Ways and Means Committee Chairman Charles Rangel (D-N.Y.).

The legislation, which is fully offset with revenue raisers, would patch the Alternative Minimum Tax (AMT) for one year. It passed on a 233-189 vote.

The bill has a steeper climb in the Senate, where Republicans appear united against offsetting the cost of such tax relief and where even Sen. Max Baucus (D-Mont.), the chairman of the Finance Committee, has suggested that Congress will ultimately pass a “clean” un-offset AMT patch.

The House-passed legislation would raise taxes on the private equity and hedge fund industries by taxing fund managers’ “carried interest” at ordinary income rates as high as 35 percent, rather than at the 15 percent capital gains rate. The measure would raise more than $30 billion over 10 years, the Joint Tax Committee has estimated.

The bill would also phase out certain deductions for major oil companies and require credit card companies to report details of merchants’ payment transactions to the IRS. Finally, it would crack down on multinationals seeking to avoid taxes on U.S. income.

Among the 10 Republicans who supported the bill, Reps. Mark Kirk (Ill.), Robin Hayes (N.C.) and Brian Bilbray (Calif.) are facing competitive races this fall, according to The Cook Political Report.

GOP Reps. Mike Rogers (Ala.), Ileana Ros-Lehtinen (Fla.), Timothy Johnson (Ill.), Walter Jones (N.C.), Ray LaHood (Ill.), Chris Smith (N.J.) and Wayne Gilchrest (Md.) also voted for the legislation.

Meanwhile, Democratic Reps. Melissa Bean (Ill.), Dan Boren (Okla.), Gene Green (Texas), Ron Klein (Fla.), Harry Mitchell (Ariz.) and Robert Wexler (Fla.) opposed the bill.