1) The temporary higher AMT exemptions, which expired at the beginning of 2006. Everyone knew it was gonna happen, and so far Congress has been unable to agree on how to fix it--even though everyone agrees it must get fixed. And the main reason for this inaction is...
2) the temporary lower capital gains/dividends tax rates, which won't expire until 2009. The Republican leadership in both houses is much more intent on extending these not-yet-expired tax cuts than in fixing a tax cut that expired more than four months ago.
So why is this happening? Why is Congress skipping dinner and heading straight for the dessert?
An interesting article in Bloomberg today suggests that it's because Republican tax writers are starting to worry that they won't be running things when 2009 rolls around-- and may even be looking for new offices before the end of 2006:
Republican lawmakers, facing the prospect that their power to cut taxes may soon be curbed, plan to extend breaks that mostly benefit the wealthy and Wall Street at the expense of reductions for middle-income households. "In politics, timing iseverything; you do what you can when you can, and this is what's queued up right now," says Arizona Senator Jon Kyl, the No. 4 Republican in the Senate.It's not too late to fix the AMT problem. And Republican Senate and House leaders would almost certainly laugh out loud at the notion that they're getting what they can while the getting is good. But it's a plausible explanation of why Congressional leaders have been so spectacularly unsuccessful in extending needed AMT relief-- and the more plausible it starts to sound, the worse the news may get for Republicans in November.