December 13, 2007 12:40 PM | | Bookmark and Share

On Wednesday, December 12, the U.S. House of Representatives passed a bill, H.R. 4351, that would extend the exemptions that keep the Alternative Minimum Tax (AMT) from affecting most Americans and would replace the $53 billion in revenue that the AMT would otherwise collect. The revenue would be replaced partly by restricting offshore tax avoidance schemes by wealthy individuals. Another provision that would help replace the AMT revenue would delay the implementation of an unnecessary tax break for multinational businesses which hasn’t even gone into effect yet.

Dropped from this bill is a provision that would end the tax subsidy for “carried interest,” a type of compensation paid to wealthy fund managers. Carried interest is currently taxed at a special, low rate of15 percent rate, lower than the tax rate paid by many middle-class families. Last week, Republicans in the Senate blocked a similar House-passed bill that would have ended this tax subsidy because they were committed to defending this break for millionaire fund managers. So, in the spirit of compromise, the House passed H.R. 4351 on Wednesday without the carried interest provision.

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