WALZ FIGHTS FOR MIDDLE CLASS TAX CUTS

11/10/2007

Two tax relief bills authored by Walz included in legislation that expands economic opportunities for the middle class


(Washington, D.C.) – Congressman Tim Walz announced today that two tax relief bills he authored have been included in legislation to provide middle class tax relief, which passed the House of Representatives this week.

Walz said that both H.R. 3997, the Heroes Earnings Assistance and Relief Tax Act of 2007 and H.R. 3996, the Temporary Tax Relief Act of 2007 will provide tax relief to tens of millions of middle class Americans.

The Heroes Earnings Assistance and Relief Tax Act, which passed the House on November 6, includes a provision originally authored by Walz to permanently extend the use of qualified mortgage bonds for veterans, making it easier for veterans to purchase their own home.

“Earlier this year, I introduced the Easing Vets Access to Homes Act, which waives the first-time homebuyer requirement for veterans who use qualified mortgage bonds to finance their mortgage” said Walz. “I’m pleased that the provisions of this bill have been included in H.R. 3997. Helping veterans buy their own home is an important step to strengthening our middle class and stabilizing the housing market.”

Additionally, the Temporary Tax Relief Act, which passed the House today, extends a $250 tax deduction for teachers who spend their own money on classroom supplies. This provision is nearly identical to legislation Walz introduced in September.

“K-12 teachers spend an average of nearly $475 of their own money on books and supplies for their classrooms,” Walz said. “I introduced the Educator Expense Deduction Act earlier this year to increase the tax deduction for teachers who spend money out-of-pocket. Having this tax deduction included in H.R. 3996 is a big win for teachers all across southern Minnesota.”

The Temporary Tax Relief Act of 2007 also provides relief from the Alternative Minimum Tax for tens of thousands of Minnesota taxpayers and increases the AMT exemption amount to $66,250 for joint filers and $44,350 for individuals.

“Unless the President signs this legislation, 23 million middle class Americans will be hit by the Alternative Minimum Tax this year,” said Walz. “This legislation will provide them with real tax relief and save nearly 44,000 residents of Minnesota’s 1st District from paying the AMT this year.”

Additional information on each piece of legislation follows:

On Tuesday, the House approved H.R. 3997, the Heroes Earnings Assistance and Relief Tax Act. This legislation will:

· Make tax relief for families of soldiers in combat under the Earned Income Tax Credit permanent. The bill makes permanent a provision in tax law that counts combat pay as earned income for purposes of the Earned Income Tax Credit (EITC). At the end of the year, soldiers’ families working to get into the middle class will be denied needed tax relief if combat pay is not counted for purposes of receiving the Earned Income Tax Credit. Under its former leadership, Congress in 2003 deliberately excluded certain military families from the Child Tax Credit law, choosing instead to provide $350 billion in tax cuts to the wealthiest taxpayers.

· Make it easier for veterans to become homeowners. The Walz provision in the legislation would make thousands of veterans eligible for low-interest loans by making permanent and modifying qualified mortgage bonds used to finance residences for veterans.

· Make permanent other tax provisions to relieve economic hardships for military families. The bill makes permanent provisions in the tax code which:

o permit active duty reservists to make penalty-free withdrawals from retirement plans;

o permit an employer to make contributions to a qualified retirement plan on behalf of an employee killed or disabled in combat;

o count extra pay for active duty military personnel from their previous civilian employer for retirement purposes; and

o permit recipients of military death benefit gratuities to roll over the amounts received, tax-free, to a Roth IRA or an Education Savings Account.

· Include tax benefits for other public servants who face risk, such as volunteer firefighters and Peace Corps volunteers. The bill clarifies that rebates of state and local taxes for volunteer firefighters and reimbursements for expenses incurred in the line of duty by volunteer firefighters are not taxable.

On Friday, the House passed H.R. 3996, the Temporary Tax Relief Act of 2007. This legislation will:

· Extend AMT relief for 2007. This bill extends for one year AMT relief for nonrefundable personal credits and increases the AMT exemption amount to $66,250 for joint filers and $44,350 for individuals.

· Increase eligibility for the refundable child tax credit in 2008. The child tax credit is refundable to the amount of 15 percent of the taxpayer’s earned income in excess of approximately $11,000.

· Extend tax deductions for qualified tuition and related expenses. This important provision allows families with an Adjusted Gross Income of less than $160,000 to receive a tax deduction up to $2,000 for tuition expenses.

· Extend tax-free distribution from individual retirement plans for charitable purposes. This bill extends the provision that permits tax-free charitable contributions from an Individual Retirement Account (IRA) of up to $100,000.

· Extend for seven years the deduction for mortgage insurance. Current law limits the deduction of mortgage insurance to payments made prior to the end of 2007. The bill would provide that payments will qualify for this deduction whenever they are paid so long as the contract is entered into after 2006 and before 2015.