WASHINGTON – The Senate passed a giant tax package Tuesday that saves more than 20 million taxpayers from the bite of the alternative minimum tax.
At a cost of more than $100 billion, the bill also nudges the nation toward greater use of alternative energy resources, renews popular tax breaks for businesses and individuals, and extends relief to disaster victims.
It includes a provision to ensure that mental health problems get the same level of insurance benefits as other medical treatment. The bill passed 93-2.
"The economy is struggling," Senate Finance Committee Chairman Max Baucus, D-Mont., said. "At times like these, Americans need tax cuts that they've come to count on, that can help them get by."
The tax bill is one of several major efforts to right the teetering economy in what could be the final week of this session of Congress. Lawmakers are trying to reach agreement on a $700 billion plan to bail out failing financial institutions, and Democrats are trying to put together a stimulus package to help average citizens get through the current economic crisis.
The House was expected to take up the tax package on Wednesday.
The alternative minimum tax was enacted in 1969 to catch a few very rich tax dodgers. But it was never adjusted for inflation and now Congress must act every year to ensure it doesn't catch more people.
Without action, those affected could grow from about 4 million to 25 million, at an average tax increase of $2,000. The fix would cost $64 billion spread out over 10 years.
Last year Congress, after a phe said, "it will die." The House bill could require that all renewals of expired tax breaks, except for the AMT, be paid for.
The Senate bill offsets the energy measures by limiting tax breaks for the oil and gas industry and pays for about $25 billion of the $68 billion in individual and business tax breaks.
Among the extensions of expiring tax breaks, the biggest is the $19 billion research and development tax credit. Also renewed are deductions for state and local general sales taxes, higher education costs and teachers' personal expenses.
The legislation additionally includes more than $8 billion in tax relief for Midwestern states hit by natural disasters this summer and for the more recent victims of hurricanes in Texas and Louisiana.
It requires private insurance plans that offer mental health benefits to offer benefits equivalent to those of medical-surgical treatments.