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Washington, D.C. - Yesterday, House Republicans rejected a Democratic proposal that would have replaced the extension of deficit-increasing tax breaks for the very wealthy in the Republican tax bill with an extension of relief from the alternative minimum tax (AMT), relief that primarily benefits middle-income families.
Republicans sent to conference a tax bill that overwhelmingly benefits the very wealthy. Nearly 50% of the benefit from the extension of capital gains and dividend rate cuts goes to households with incomes over $1 million. However, these households make up only 1% of all American households. The tax bill affords these wealthy households an annual benefit of more than $32,000. Middle-income families receive only 2% of the benefit of the capital gains and dividend rate cuts, resulting in an average annual benefit of only $7. Importantly, the capital gains and benefit tax breaks that Republicans want to extend do not expire until the end of 2008.
Significantly, while untimely extending tax breaks for the wealthy, the Republican tax bill fails to extend tax relief for middle-income families. Without an extension of AMT relief, over 17 million American families will face a tax increase in 2006, and the size of that tax increase could be as large as $3,640. The Democratic motion to instruct the conferees would have extended tax relief for middle-income families and required House conferees to develop a conference report with a view toward not increasing the Federal deficit.
“Republicans’ failure to extend AMT relief will unfairly force millions of taxpayers to pay taxes they were never intended to pay,” said Ways and Means Ranking Democrat Charles B. Rangel (D-NY). “I don’t understand how, in good conscience, this Republican Congress can effectively raise taxes on the middle-class while unnecessarily extending fiscally irresponsible tax breaks for the super wealthy,” said Rep. Rangel.
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