Providing for Consideration of H.R. 6275, Alternative Minimum Tax Relief Act of 2008

PROVIDING FOR CONSIDERATION OF H.R. 6275, ALTERNATIVE MINIMUM TAX RELIEF ACT OF 2008 -- (House of Representatives - June 25, 2008)

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Mr. WELCH of Vermont. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, H. Res. 1297 provides for consideration of H.R. 6275, the Alternative Minimum Tax Relief Act of 2008, under a closed rule. The rule provides for 1 hour of debate, controlled by the Committee on Ways and Means.

As Americans know, the alternative minimum tax was enacted in 1969 with a very legitimate intent: to ensure fairness in our tax system by avoiding the situation where very wealthy individuals don't pay taxes and to close loopholes. It is in the same spirit of fairness that we consider legislation today that will keep the middle class out of being hit by the alternative minimum tax when it was never intended that they would be caught up in its web and who have been because of inflation and because of no adjustments in the Tax Code.

The Alternative Minimum Tax Relief Act of 2008 will provide, one, 25 million Americans with over $61 billion in tax relief. Two, it offers property tax relief to homeowners and expands the child and adoption credits to parents. Nearly 50,000 families in my own State of Vermont, Mr. Speaker, will see tax relief from this legislation.

However, in order for the tax relief to be fair, we have to ensure that the cost of the tax relief is not simply passed on, the credit card debt, to our children, and we have already saddled the next generation with $9 trillion in debt, costing us $1 billion a day in interest payments, money that could be spent on other, much more productive things. Enacting an AMT patch today when we don't pay for it would simply shift that $62 billion burden from the middle class on to their children and their grandchildren. What we fail to pay today they will be forced to pay tomorrow with interest.

Furthermore, we do pay for this tax relief by improving the Tax Code. With the bill's offsets, we are closing two very large tax loopholes, one that has benefited very wealthy hedge fund managers at the expense of middle class taxpayers, and let me talk about that first.

The ``carried-interest'' loophole. It is a preferential rate of capital gains tax, a 15 percent rate that gets applied to income earned by many people who do financial work.

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Right now, under current law, the income earned by many investment fund managers at a private equity firm, and hedge funds, are taxed at the lower capital gains tax rate. So you have this very unjustified situation where some of these folks who are making, in some cases, billions of dollars, pay a tax rate lower than the secretaries who work in their firms, and they do this when they don't actually put their capital at risk but manage the capital of others.

A second loophole that is closed in this bill stops major oil companies from receiving what is called a special domestic production subsidy through the Tax Code. As we all know, record gas prices, the record cost of a barrel of oil is resulting in oil company profits that are unparalleled in the history of this country, in some cases, as high as $11 billion in a single 3-month period. So it's clear that those companies are doing very well and that they do not need continued taxpayer assistance.

I commend Chairman Rangel and Chairman Neal and the Committee on Ways and Means for their excellent work on this legislation, and I encourage my colleagues to support the rule and the underlying legislation.

I reserve the balance of my time.

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Mr. WELCH of Vermont. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, my friend from Texas characterizes a bill that will provide tax relief to 25 million Americans as a tax increase, and it is just flat out wrong. There are 25 million Americans. These are folks who earn between $40,000, $50,000, $60,000 a year, who, if we do not pass this legislation, will find themselves essentially being the target of legislation that was intended in 1969 to have millionaires pay their fair share.

We are talking about soldiers returning from Iraq and Afghanistan who get a job as a police officer or as a carpenter. We are talking about some our school teachers all across the country. We are talking about sanitation workers who are struggling hard on $40,000 or $50,000 a year, oftentimes with two people in that family who are working, raising three or four kids. We are saying in this legislation that we are going to protect you, because we know you need to have that money to pay your bills.

We also have to level with the American people. This is going to be $61 billion in tax relief for those incredibly hard-working Americans who are getting clobbered by these $4-plus gas prices. They can't fill up their tank. They have got cars or SUVs or trucks that they have to drive, and they don't have the money to get something that is a little bit more fuel efficient. A lot of them have long commutes. This legislation is going to give them the opportunity to keep a little bit more money in their pocket so they can make it from one end of the week to the other and can pay their bills.

Now, the question is for this Congress, do we pay for it, or do we put it on the credit card? As to what my friend from Texas is characterizing as a tax increase, let me go through it, because I think Americans have a commitment to fairness, and I think Americans know a very commonsense proposition, and that is we have all got to bear the burden. We all have to pay our share of the load.

There are two very glaring situations in the Tax Code, and attention should be paid to them, and it is overdue. One is this hedge fund exemption, where folks who make an awful lot of money pay at a capital gains rate. What is unfair about it? If you are a financial advisor, if you or I ask someone to help us figure how to invest our money, we pay them a fee, and of whatever earnings they get, they pay a regular tax rate just like any other American. Whatever that rate is--15, 20, 35 percent--that is what they pay.

If you are a hedge fund executive and you make billions, because of this provision in the Tax Code, which I am calling a loophole, they get to pay at a 15 percent rate. That is costing the treasury billions of dollars, and it is also a glaring unfairness, because you literally have a situation where the hedge fund manager who is doing the same work as another financial advisor down the street pays one rate, 15 percent, while the other person doing the same work, working just as hard but who is perhaps making less money, pays 35 percent.

You also have this bizarre situation where the person making this immense amount of money pays a much lower tax rate than the secretary, than the back office help in that very same firm. I think most Americans see a basic fairness, and let's have the income tax rate apply to earned income. That is what this provision does.

The second question is on the oil company exemption, and I am using the word ``loophole.'' What is a ``loophole''? I think, commonly, you know it when you see it. What a ``loophole'' is in this case is giving taxpayer benefit to very successful companies that do very well in what they do--explore for oil, sell it. We are taking money from the taxpayers of America to give it to major American and foreign oil companies. These are mature industries that are making hundreds of billions of dollars, and they don't need taxpayer help.

So this legislation provides 25 million Americans with tax relief, and it is the folks who need it. It asks other Americans, the hedge fund executives, to pay at the income tax rate, and it has oil companies foregoing what has been an incredibly good deal--tax credits that they get at the expense of the American taxpayer.

I urge a ``yes'' vote on the previous question and on the rule.

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