Grassley Works to Stop Tax Increases on Middle-Income Families, Teachers, College Students

Press Release

Grassley Works to Stop Tax Increases on Middle-Income Families, Teachers, College Students

Senator Chuck Grassley said that the bipartisan tax relief bill passed by the Senate today would protect an estimated 134,000 Iowans from having to pay an average of $2,000 in the alternative minimum tax on top of what they already owe in federal taxes.

In addition, Grassley said the legislation extends for two more years the tax deduction for tuition that was created in 2001 tax legislation he sponsored as chairman of the tax-writing committee in the Senate, and it extends the tax deduction for teachers who buy supplies for their classrooms.

The measure also continues the research and development tax credit for business innovation and tax relief for certain restaurant and retail improvements. "These provisions will be a big shot in the arm for the economy at a time of great anxiety about the economy," Grassley said. "The last thing people need right now is a tax increase, and this bill prevents it. It helps to protect family budgets that are already stretched by higher prices for gas and groceries, it helps teachers and college students, and it encourages job-creating business activity." The overall "tax extender" bill also includes a more than $6 billion disaster tax relief package authored by Grassley to give help that goes beyond direct federal dollars to flood and tornado victims in Iowa and other states. The disaster tax relief legislation is modeled after what Congress passed for the Gulf Coast after Hurricane Katrina to help families rebuild their lives, small businesses recover and make payroll, communities rebuild infrastructure, and charities raise more money.

Grassley is now Ranking Member of the tax-writing committee in the Senate.

He worked to reach agreement on the overall year-end tax legislation so that it could be passed before Congress adjourns for the elections. Now that the Senate has acted, Grassley urged the House of Representatives to take up the tax bill quickly so that it can be sent to the President's desk to be signed into law.

Grassley has worked repeatedly to enact legislation in recent years to protect middle-income taxpayers from being hit by the Alternative Minimum Tax, which went on the books in 1969 in response to the discovery that 155 wealthy taxpayers were able to eliminate their entire tax liabilities through legal.

Congress didn't index the AMT's rates and exemptions for inflation. As a result, middle-income taxpayers are getting hit with a tax they were never intended to pay. In 2001, as Chairman of the Finance Committee, Grassley shepherded through five years of protection against any more taxpayers falling into the AMT. In 1999, Congress passed a tax relief bill that would have phased out the AMT entirely, but President Clinton vetoed it. Below is summary information about the tax relief provisions included in this year's bipartisan tax extenders bill. These provisions are separate from the disaster tax relief sponsored by Grassley and also included in the overall bill.

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