Since Congress has wrapped up the financial services bailout bill that will cost us taxpayers some dollars, they're now trying to come up with some tax breaks for Jane and John Q. Public.
Yep, it will be very nice for Representatives and Senators, when they get back to their districts and states for one last pre-election push, to be able to change the subject from the $700 billion rescue package for wealthy Wall Street financiers to tax breaks for the residents of Main Street.
But the House and Senate still are having a stare down over how to pay for the extenders, those tax breaks that have limited lives and must be regularly renewed. This year they (again) include the state sales tax itemized deduction and the above-the-line deductions for tuition and fees and educators' expanses. Mere pittances compared to the bailout, but still important to a lot of voters constituents.
Another fine legislative mess: Things have gotten tangled up of late, with the extenders being combined with energy (and energy tax) legislation and the alternative minimum tax. A disaster relief bill that has some tax provisions also was thrown into the mix.
The big problem, as usual, is the House's insistence that the tax breaks be paid for somehow. The Senate prefers to worry about that later. Last year , House members blinked. House Ways and Means Chairman Charles Rangel (D-NY) believes things will be different this year.
"I think they’ll pick up AMT and they’ll pick up disaster. The ball’s in their court now for those two things," Rangel said this morning of the tax package the House sent to the Senate. You can read more on the legislative game of chicken in this CQ Politics story.
If lawmakers don't act on the various tax measures before recessing this week, they'll likely be back post-election for a lame duck session. However, by then it will be too late for the IRS to take care of its necessary filing season administrative tasks. So get ready for another confusing filing season in 2008 just like we've had the last couple of years.
AMT amounts: Late action on the alternative minimum tax was a major hassle for the IRS and taxpayers last year (blogged here).
The filing complications are the least of the worries of those taxpayers who will have to pay more under this parallel tax system if Congress doesn't at least pass another temporary patch.
Check out this Ways and Means Committee web page that breaks down state-by-state and by Congressional district how many filers could be affected by the AMT on their 2008 returns.
Stare down photo courtesy of Lily & Olivia.
