President Bush Pushes House to Follow Senate in Fixing Alternative Minimum Tax

President Bush pushed the House on Friday to follow the Senate in passing a bill to prevent millions of taxpayers from paying an average of $2,000 more to the Internal Revenue Service.

The Senate on Thursday approved a one-year fix for the alternative minimum tax, though without matching the cost of the tax relief with new tax revenues. The Democratic plan would have raised taxes on investors to pay for the AMT fix.

Without the fix, an estimated 25 million people would be subject to the higher AMT tax, up from 4 million in 2006.

"I congratulate the United States Senate for acting to do so," Bush said in his Saturday radio address, which was taped Friday and released by the White House for immediate use. "Now it's up to the House of Representatives to move the bill. They've already delayed the bill so long that $75 billion in tax refund checks could be delayed next year."

Bush urged the House to send the Senate bill to him before leaving for a holiday break. "I can sign it and protect millions of families from higher taxes and avert any further delay in the tax refund checks next year," the president said.

But in the House, Democratic leaders are demanding that the AMT fix adhere to their "pay-as-you-go" principle of not adding to the national debt. The House legislation providing an AMT fix would offset it and other tax cuts with about $80 billion in new tax revenues.

Rep. Charles Rangel, D-N.Y., chairman of the tax-writing Ways and Means Committee, has suggested making up the difference by closing a loophole on offshore funds that now escape taxation.

Without congressional action, the IRS, unsure of the final status of the tax, says it may have to postpone the processing of returns scheduled to begin in mid-January. That could mean delays for millions of people waiting for income tax refunds worth billions of dollars. The tax agency says it will take about seven weeks after the tax is revised to reprogram and test forms reflecting the changes.

The AMT was created in 1969 to ensure that a small number of wealthy people could not use tax breaks or deductions to eliminate their entire tax bill. But the tax was not indexed to inflation, and every year more people are exposed to it. Nearly 4 million taxpayers were subject to this tax in 2006, and the number is expected to multiply in 2007.

Congress has reacted by passing annual fixes to prevent the number of people subjected to the AMT from growing.

This year, however, the first with Congress under Democratic control, that fix has been blocked by a fundamental difference between the two parties over whether to find ways to pay for revenues lost from the anticipated expansion of the AMT. For weeks, Democrats and Republicans have blamed the intransigence of the other party for the delay.