Advocacy Update: December 19, 2007

Congress Prepares to Adjourn -- Update on AMT Relief and SCHIP Extension

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Moments ago the House of Representatives approved by voice vote legislation that the Senate passed earlier this month that provides a one-year "patch" of the individual alternative minimum tax (AMT) and a one-year extension of the child tax credit.

H.R. 3996 as originally passed by the House included offsets (totaling $50 billion over 10 years for the AMT patch, and another almost $30 billion over 10 years for the extension of 32 expiring tax provisions). The Senate amended H.R. 3996 to eliminate the extenders and the offsets. The House action of this morning accepted the Senate amendments.

The offsets that were dropped include a nonqualified deferred compensation (NQDC) provision that would have eliminated the ability to defer compensation when the NQDC arrangements involved an offshore (tax haven) country.

The final legislation also did not include a proposed $1 million cap on NQDC.

However, the House--which has objected to this point to approving the AMT patch without offsets--also approved a change in its rules to provide a "point of order" against any tax bill in 2008 that does not include offsetting revenue (retroactively applied) to pay for the AMT patch as well as for the provisions in the pending tax bill to which the point of order would attach. This means there will be early and large bills with revenue raisers in them early next year. The first one is likely to be an extenders bill, to retroactively extend the 32 expiring tax provisions that were stripped by the Senate from HR 3996. The point of order would require only a simple majority to waive. The rule does not apply to the Senate.

Congress is near the end of this session. It must still make a final decision on extending the State Children's Health Insurance Program (SCHIP) until March 2009, and stave off cuts in Medicare reimbursements of doctors. A consensus approach to these issues has been approved by the Senate and is awaiting a final vote in the House, which is expected to approve it prior to adjourning later today.

President Bush has said he will sign both the AMT patch bill (HR 3996) and the Medicare/SCHIP agreement into law