Congress has approved legislation (H.R. 4810) intended to alleviate the marriage tax penalty. The conference report was approved, 271-156, by the House on July 20. The Senate voted, 60-34, to approve it on July 21.
Earlier in the week, the Senate approved, 61-38, its version of the bill passed the previous week by the House (see The Source, 7/14/00). During that debate, the Senate rejected, 46-50, a narrower Democratic alternative offered by Sen. Daniel Patrick Moynihan (D-NY). Senators then approved a number of amendments highlighting the policy priorities of each party in such areas as health insurance deductibility for the self-employed, Medicaid coverage for children and disabled individuals, assistance with long-term care expenses, computers for libraries and community centers, and expansion of the adoption tax credit. However, following consideration of the amendments, the Senate adopted, 54-45, Majority Leader Trent Lott’s (R-MS) motion to recommit the bill and report it back without amendments, effectively removing the amendments.
The President has announced that he intends to veto the measure unless Congress approves a Medicare prescription drug benefit.
Due to a glitch in current tax law, some married couples filing a joint return pay more in income tax than they would have been required to pay as individuals. The conference report would address that discrepancy by increasing the standard income tax deduction for married couples filing jointly, making it equal to twice the standard deduction for single filers. Under the legislation, the standard deduction for married taxpayers would be $8,800, an increase of $1,450 over the deduction allowed under current law. The change would be in effect for the 2000 tax year.
The bill also would phase-in over five years an expansion of the lowest tax bracket—the 15 percent bracket—for married filers. The threshold for married couples would eventually be increased to $52,500, which is double the corresponding threshold for single filers.
H.R. 4810 would expand married couples’ eligibility for the Earned Income Tax Credit, raising the current $30,580 annual income ceiling by $2,000. In addition, the bill would extend for five years the allowance for married couples who pay the alternative minimum tax (AMT) to qualify for certain tax credits, including the child tax credit, the dependent care credit, the adoption credit, the credit on certain home mortgages, the Hope Scholarship credit, and the District of Columbia first-time homebuyers credit. Although current law bars those who pay the AMT from taking these credits, Congress has repeatedly approved temporary exemptions. The current exemption is effective until 2001.
