Tax Quote of the Week

"A lottery is a tax on people who are bad at math."



Republicans Propose Tax Extenders With "Appropriate" Offsets

On July 15, 2008, the Republican leaders of the Senate Finance Committee introduced their version of the AMT relief and tax extenders bill. Their "Substitute Amendment to the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (S. 3098)" is very similar in most provisions to the Democrat bill. The tax extenders and AMT relief provisions, plus the energy incentives, are essentially the same in both bills.

The key difference is that the Republican bill does not include specific offsets for either AMT relief or the tax extenders. Instead, it states that "A section has been reserved for spending reductions and appropriate revenue raisers for new tax relief policy."

Senators McConnell, Grassley, Kyl and Hatch sponsored the proposed bill. In a press release, they criticized the Democratic "pay-go" provisions because they require tax offsets to continue any tax relief, but the Democratic rules do not require offsets to continue increased expenditures. These four Senators claim that this system is unfair because "existing entitlement programs are allowed to continue indefinitely without needing offsets" even though the projected increases are over $1 trillion. In the view of the Republican Senators, the tax extenders and AMT relief should be permitted without offsets.

Editor's Note: Both Democrats and Republicans now support the tax extenders and AMT relief. Therefore, the probability of passage this year of the tax extenders and the included IRA charitable rollover is now very high. But the timing is still very uncertain. It remains possible that the agreement may not come until after the November election. While 2008 IRA rollovers will be completed by many who are now waiting for Congress, the timing will be a challenge if the bill is passed after the November election.