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What it means to you, and why it can suckCrowded Agenda Greets Returning Congress
By ANDREW TAYLOR – 1 day ago
WASHINGTON (AP) — President Bush scolded Congress for its meager accomplishments as lawmakers returned Monday for an abbreviated holiday season session.
Taxes, spending, paying for the war, energy, farm subsidies and wiretapping top a crowded list of items Congress will consider during the three weeks.
"The end of 2007 is approaching fast and the new Congress has little to show for it," Bush said in the Rose Garden. "I call on members to use the time left to support our troops, and to protect our citizens, prevent harmful tax increases and responsibly fund our government."
Senate Majority Leader Harry Reid, D-Nev., said Bush — not Congress — was to blame.
"We could have already given our troops what they need in Iraq and funded our critical needs at home if not for the stubborn refusal of President Bush and his Republican enablers to work with us," Reid said.
Partisan feelings are especially intense and fights are brewing on multiple fronts between Democrats who control Congress and Bush.
The Democrats' goal is to make sure they don't stumble over must-do legislation funding government agencies and programs, and preventing millions of upper middle income taxpayers from falling prey to the alternative minimum tax, or AMT.
They vow to bring the appropriations process to a close, even at the price of giving in to Bush's strict funding levels for domestic programs like education, grants to local governments and energy research. But many Congress-watchers thinks it's just as likely Congress will limp home for Christmas having passed yet another temporary stopgap funding bill.
"If they send me an irresponsible spending bill, I will veto it," Bush said.
Bush insisted that Congress pass his war funding request; he is expected to devote much of December to attacking Democrats for trying to condition additional money on a timetable for withdrawing troops from Iraq. His war-related requests so far this year have totaled almost $200 billion.
Democrats counter that the Pentagon can juggle its books to provide the needed money for current operations, but that further funding a change in administration policy was necessary to make sure U.S. forces don't stay in Iraq indefinitely.
Addressing reporters before opening the Senate, Reid said Defense Secretary Robert Gates told Congress that the Army has until March 1 and the Marines until mid March. Reid suggested that Bush was exaggerating about how quickly the troops will need the money by depicting more of a doomsday scenario.
"Let me just say that the president is not leveling with the American people," he said.
The Senate is slated this week to try again to pass a $50 billion infusion for operations in Iraq and Afghanistan, said Jim Manley, spokesman for Senate Majority Leader Harry Reid, D-Nev. But Republicans are sure to filibuster the measure over conditions attached by Democrats, including setting a nonbinding goal of removing combat troops by Dec. 15, 2008.
Congress also must pass a temporary fix to the AMT to prevent 20 million taxpayers from getting hit with tax increases averaging $2,000. House Democrats insist on paying for the AMT fix with revenue increases elsewhere. Republicans have promised to block that approach in the Senate. The common wisdom holds that any AMT fix will ultimately add to the deficit.
Even if the AMT is fixed, Democrats are likely to take a political hit. Delays in addressing the minimum tax are keeping the IRS from preparing tax forms and computer programs for the upcoming filing season, which means million of taxpayers counting on early refunds will be getting them later.
Democrats announced agreement Friday to move ahead with energy legislation that would raise automobile fuel economy standards, increase the use of ethanol as a motor fuel, and boost the use of alternative fuels such as wind and solar technology, by electric utilities. If the bill passes and Bush signs it, the energy reforms would join a slender roster of Democratic accomplishments, including a minimum wage increase and increases in college aid.
Other items on a crowded December agenda include:
_Terrorist surveillance. The Senate could vote as early as this week to renew the Foreign Intelligence Surveillance Act, which dictates when the government must obtain court permission to conduct electronic eavesdropping.
_Farm bill. The Senate hopes to finish a bipartisan bill extending farm subsidies and food programs after the legislation bogged down over GOP attempts to add unrelated tax provisions.
_Children's health care. Negotiations should continue on legislation to expand the State Children's Health Insurance Program by $35 billion over five years.
With time so precious, leverage is flowing to Bush, who's armed with both a veto pen and enough Republican allies in the Senate to sustain filibusters against bills they don't like. When legislation — such as the AMT fix — simply has to pass, that leverage gives Republicans the edge in driving the outcome.
Also on the Senate agenda this week, Manley said, is ratification of a free trade agreement with Peru.
Expecting a Tax Refund? Expect to Wait
By Dan Caplinger December 3, 2007
You've probably gotten used to stories of government bureaucracy and inefficiency. But now, waffling among lawmakers will hit everyone where it hurts: in the wallet.
Elected representatives have decided this year to play chicken with the alternative minimum tax (AMT), a controversial tax provision that was created to make sure that all taxpayers paid at least some taxes regardless of deductions or other tax breaks. The original law included an exemption from the AMT that was high enough to tax only those with relatively high incomes.
Because that exemption was never indexed for inflation, however, the AMT now threatens to capture middle-class taxpayers. For years, Congress has passed temporary increases to the exemption amount -- often at the last minute -- to mitigate the impact of the AMT.
Beyond the 11th hour
This year, lawmakers seem determined not to resolve the AMT issue until the last possible moment. With four weeks left in the year, Congress hasn't yet passed a so-called "AMT patch" to give taxpayers their much-expected relief. Instead, a more extensive proposal has called for outright repeal of the AMT along with a general cut in the corporate tax rate. In exchange, high-bracket tax rates would rise, and certain perceived loopholes would be closed, including the 15% rate on carried interest that benefits managers of private-equity firms like Blackstone Group (NYSE: BX) and Fortress Investment (NYSE: FIG). That proposal is unlikely to pass, but it has framed the debate in a way that makes it harder to get a plain AMT patch through Congress.
Without a patch, you might end up owing as much as $4,000 to $5,000 more than you might have expected. Yet the problem has gone beyond merely who pays the AMT. The Treasury has said that because lawmakers are waiting until the last minute to make significant changes, the IRS may not be able to process early tax returns, which taxpayers typically file if they're expecting large refunds. What that means is that even if the AMT has absolutely no impact on your taxes, you might end up having to pay for AMT gridlock in the form of a delay on your refund -- money that no one disputes is owed to you.
What to do
If there's a chance that you owe AMT, you should think about its potential effects now. The most likely reason you'll have to pay AMT is if you have certain types of deductions that don't get counted for AMT purposes, such as real estate and state income taxes.
In general, it often pays to pay those taxes early in order to pull a potential tax deduction into the current year. But if you're stuck paying AMT, it actually makes sense to wait, since you won't be able to claim that deduction by paying early. The problem, obviously, is that if you're right on the fringe of the tax right now, your decision may hinge on whether that patch gets passed.
As for tax refunds, there's probably not a lot you can do this year. For 2008, however, let this serve as a reminder that you're better off keeping more of your paycheck for yourself than letting the IRS have an interest-free loan that gets repaid in your tax refund. By adjusting your withholding and estimated tax payments to get you closer to the amount you actually owe, you won't have to worry about whether the IRS will pay your refund on time. You'll already have that money to use, however and whenever you wish.
And to end on a positive note, you can probably expect this to be just the first in a series of similar yet more extensive deliberations to come in future years. With many previous tax cuts set to expire in coming years, there are no guarantees that they'll be extended. A massive tax increase might result simply from government inaction. Unfortunately, the one thing that people from every political viewpoint can agree on is that it's easy for lawmakers to get stuck in gridlock.