On November 1, the House Ways and Means Committee approved, 22-13, the Temporary Tax Relief Act of 2007 (H.R. 3996), after approving, by voice vote, a substitute amendment sponsored by Chair Charles Rangel (D-NY), that would provide offsets for the cost of the measure.
The bill would expand eligibility for the refundable child tax credit in 2008. The child tax credit is refundable up to 15 percent of the taxpayer’s earned income in excess of $11,000. Reducing the floor from $11,000 to $8,500 in 2008 would increase the number of taxpayers eligible for the credit. The measure also would extend through 2008 several tax provisions, including the $100 per day excise tax on group health plans that impose limits on mental health benefits that are not imposed on medical and surgical benefits; the rules permitting servicemembers to include their combat pay when determining their eligibility for the Earned Income Tax Credit (EITC); the $250 “above-the-line” tax deduction for qualified education expenses for teachers who pay for school supplies using their own money; and the Qualified Zone Academy Bonds program, which grants $400 million to state and local governments for school modernization, equipment purchases, and teacher training.
H.R. 3996 also would prevent for one year the extension of the Alternative Minimum Tax (AMT) and would increase the AMT exemption amount to $66,250 for joint taxpayers and $44,350 for individual taxpayers. The AMT was enacted in 1969 to ensure that high-income taxpayers did not avoid all income tax liability by taking a large number of income tax deductions. The AMT disallows many common income tax deductions, including those for mortgage interest, educational credits, and dependent children. A growing number of moderate-income families now are subject to the AMT, as it is not indexed for inflation. For more information on the AMT’s impact on families, please see The Source, 3/23/07.
