On April 13, the Senate defeated two cloture motions to end debate and bring about a vote on a bill (S. 2346) designed to alleviate the marriage tax penalty. The votes on S. 2346 and a similar House-approved bill (H.R. 6) were both 53-45, falling short of the 60 required for cloture.
Majority Leader Trent Lott (R-MS) brought H.R. 6 to the floor on April 11 with plans to amend it by adding S. 2346. However, he objected to Democratic attempts to offer amendments. An impasse resulted from negotiations between Sen. Lott and Minority Leader Tom Daschle (D-SD). The cloture vote was then scheduled by Sen. Lott in an effort to break the impasse.
Following the defeat of the cloture motions, Sen. Lott predicted that the matter will be raised again after the Senate returns from its spring recess on April 25.
The Senate version of the bill would reduce federal tax revenues by $240 billion over ten years, while the House-passed bill would cost $182 billion over ten years. Both bills have been criticized by the President, who claims couples who are not subject to the penalty would benefit. The President has stated that he would support a less expensive, more narrowly targeted bill.
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. Both the Senate and House bills aim to address that discrepancy with several provisions that were included in an omnibus tax measure (H.R. 2488) vetoed last year by the President.
Both bills would increase the standard income tax deduction for married couples filing jointly, making it equal to twice the standard deduction for single filers. Under the bill, the standard deduction for married taxpayers would be $8,800, an increase of $1,450 over the deduction allowed under current law.
Married couples’ eligibility for the Earned Income Tax Credit (EITC) would be expanded under both bills. Currently, married filers with an annual income of more than $30,580 are ineligible for the EITC; the legislation would raise that ceiling by $2,000.
In addition, both bills would phase-in an expansion of the lowest income tax bracket, the 15 percent bracket, for married filers. For the 2000 tax year, the 15 percent tax bracket would include married couples with an annual income up to $43,850 and individuals with an income up to $26,250. The threshold for married couples would eventually be increased to $52,500—double the corresponding threshold for single filers. However, the phase-in would begin in 2003 under the House bill and 2002 under the Senate bill.
The Senate bill also contains a provision to permanently allow 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 repeatedly has approved temporary exemptions. The current exemption is effective until 2001.