By Richard Rubin, CQ Staff

The House on Wednesday passed a one-year “patch” to the alternative minimum tax (AMT) that would prevent more than 21 million taxpayers from facing the additional levy in 2008.

The 233-189 vote showed the continued partisan division in Congress over tax and budget policy and portended a difficult path ahead for the Democrats’ bill — even though it drew support from 10 Republicans who had voted against a similar measure last year.

Democrats put revenue-raising offsets into the bill (HR 6275), arguing that the $62 billion in revenue that would be lost through the patch must be made up. The revenue increases would target private-equity managers, the oil and gas industry, certain foreign-owned corporations and merchants who underreport their income.

“Enacting an AMT patch today when we don’t pay for it would simply shift that $62 billion from the middle class onto their children and their grandchildren,” said Peter Welch , D-Vt.

Republicans contend that offsets are unnecessary because the patch would simply maintain the tax status quo. They also say a temporary tax reprieve should not require permanent revenue increases and argue that the budget deficit should be closed by spending cuts, not revenue increases.

Before passage, the House rejected, 199-222, a Republican motion to recommit that would have removed the offsets and increased the tax deduction for miles driven for charitable purposes.

Offsets Still Face Stiff Resistance

In the end, Republicans seem likely to get their way, as they did last year, when Congress enacted a patch without offsets (PL110-166). Senate Republicans were able to block consideration of two House-passed bills that contained offsets (HR 3996, HR 4351), and Senate Democrats seem disinclined to try very hard this year to move the current House bill. The White House issued a veto threat against the measure Tuesday.

Wednesday’s vote marked the first time this Congress that any House Republicans voted for an AMT patch with offsets. Ten of them joined the Democrats, even though they voted the opposite way on similar bills last year. Some of those Republicans are leaving Congress; others are facing tough re-election battles.

Hours later, Brian P. Bilbray , R-Calif., was regretting his “yes” vote.

“It still raised taxes,” he said. “I probably shouldn’t have done it.”

Congress created the AMT in 1969 to ensure that the wealthiest Americans could not legally avoid all income tax liability. Taxpayers subject to the AMT pay on a broader base; they are unable, for example, to take the state and local tax deduction.

The AMT’s exemption has never been indexed for inflation and, combined with recent tax cuts that increased middle-class incomes, the AMT threatens to expand dramatically. The patch would temporarily raise the AMT exemption, limiting the tax to about 4 million taxpayers.