Last week, I was excited to again join with a bipartisan majority of my House colleagues by voting on a series of tax cuts for American families.   The Working Families Tax Relief Act of 2004 (H.R. 1308), which passed by a 339-65 vote, extends tax relief to American families through 2010.  Without action, families would face a $109 billion tax increase over the next 10 years, starting on January 1, 2005.

Voting in favor of these tax credits ensures that families across America will keep more of what they work for. 

For example, families who earn two incomes are often taxed at the rate of their combined income.  This is known as the “marriage penalty,” and if left alone would unfairly punish couples who marry.  Thankfully, legislation in 2001 and 2003 offered married couples relief from the marriage penalty.  The Working Families Tax Relief Act of 2004 extends this tax relief through 2010.

The Working Families Tax Relief Act of 2004 also increases the child tax credit to $1000 per child. Previous tax relief limited the child tax credit to $700.  This increased tax relief will help families with children decide how they want to spend their money.   

Prior tax relief in 2001 and 2003 extended the expansion of the 10 percent income tax bracket so more families would pay the lowest income tax rate.  This Congressional action made it possible for countless lower and middle income families to take home more of their paychecks.

Finally, last week’s tax cuts also extend relief from the Alternative Minimum Tax (AMT).  Congress created the Alternative Minimum Tax in 1969 after the Secretary of the Treasury testified that 155 individuals who made over $200,000 had paid no income tax (in 1967).  The AMT was designed to ensure that everybody with significant income pays income taxes.  The problems with the AMT are numerous and complex, but what is most striking about the AMT is how it affects Americans.  In 1990 only 132,000 individuals paid the AMT.  By 2000 however, an estimated 1.3 million individuals were affected. 

Last week Congress acted to extend the current $58,000 AMT exemption for married couples for another year.  Without action, the AMT exemption would have dropped to only $45,000 next year.  For single individuals the current AMT exemption is $40,250, which if left alone, would have dropped to $33,750.

I have been a leader in pushing for additional benefits for the men and women serving our nation in the military.  The Working Families Tax Relief Act of 2004 achieves this end, by providing an additional $199 million in assistance to families of military men and women serving in combat zones.  The Tax Relief Act also increases the child credit for military families by allowing them to include tax-free combat pay when calculating their refundable child credit.  It also increases the Earned Income Tax Credit (EITC) for military families in 2004 and 2005 by giving them the option to include combat pay when calculating the EITC. 

Business tax credits such as the Research and Experimentation Credit (R&E) and the Work Opportunity Tax Credit (WOTC) have been extended for another year to help keep the economy growing and create jobs. 

There are a number of other important provisions that have been extended for another year.  Teachers can continue to take up to a $250 deduction for classroom supplies they buy.

Additionally, the tax relief in The Working Families Tax Relief Act of 2004 will have a positive effect on the environment.  The Act calls for expensing of Brownfield environmental remediation costs.  Also, while the country still needs a comprehensive energy plan, this bill extends the tax credit for electric vehicles and the deduction for clean-fuel vehicles.

The effects of these tax cuts will be felt across the country, and southwest Ohio will be no exception.  According to the Joint Committee on Taxation, the measures passed last week will provide an average of $530 in tax savings for 94 million taxpayers.  Bottom line: American families should be able to keep more of their hard earned money and this bill will ensure that is the case in the coming years