House OKs Parallel-Tax Relief Bill

WASHINGTON — The House voted Wednesday to spare millions of middle-income families next year from a complicated tax invented in the 1960s to capture rich tax evaders.

The force of inflation is pushing more middle-income households into the alternative minimum tax each year. About 3 million individuals and families paid it this year.

The House voted 333 to 89 to prevent the tax from ensnaring 9 million more taxpayers next year.

The bill must still be passed by the Senate and signed by President Bush to become law.

“The expected growth in the individual alternative minimum tax is a major problem in the Tax Code that must be addressed,” Treasury Secretary John W. Snow said.

The House bill slows the tax’s spread into the middle class by keeping the amount of income exempt from the tax at current levels, $40,250 for individuals and $58,000 for couples. Without action, the exemptions fall back next year to $33,750 for individuals and $45,000 for couples.

The less-affluent taxpayers stuck with an alternative minimum tax bill often have a combination of factors that work to lower taxes but are ignored in the alternative minimum tax system. These include high state taxes, unreimbursed employee expenses, numerous children and dependent parents.

“If this bill is not enacted, it will amount to a tax increase on millions of Americans next year,” said Rep. Phil English (R-Pa.).

The White House estimates that 9 million more taxpayers can expect to pay the alternative minimum tax next year unless lawmakers act.