Alternative Minimum Tax
Myths and Realities about the Alternative Minimum Tax
Public discussion of issues surrounding the AMT suffers from several misconceptions, which seem to be widespread among policymakers and many media outlets.
Myth 1:
The AMT is (or is rapidly becoming) a "middle-class" tax.
Myth 3:
The only way to protect middle-class households from the AMT is to repeal it.
Analyses
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Budget Deal Makes Permanent 82 Percent of President Bush’s Tax Cuts
January 3, 2013
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Romney Budget Proposals Would Necessitate Very Large Cuts in Medicaid, Education, Health Research and Other Programs
Updated September 24, 2012
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Proposed “Tax Reform” Requirements Would Invite Higher Deficits and a Shift in Taxes to Low- and Moderate-Income Families
July 31, 2012
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Budget Plans Should Not Rely on "Dynamic Scoring"
Revised June 21, 2012
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Romney Budget Proposals Would Require Massive Cuts in Medicare, Medicaid, and Other Programs
Revised May 12, 2012
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Background
The Alternative Minimum Tax was created in 1969 to ensure that the highest-income households could not exploit loopholes, exclusions, and deductions to avoid paying any federal income tax. The AMT acts as a stop-gap tax system, with taxpayers owing their regular income tax or AMT liability, whichever is higher.
Because the AMT parameters were never indexed for inflation, and because the 2001 and 2003 tax cuts substantially lowered taxpayers’ liability under the regular income tax without changing the structure of the AMT, the tax will affect a rapidly increasing number of taxpayers in future years in the unlikely event that no changes are made. Thus there is bipartisan agreement on the need for changes in the AMT. Congress disagrees, however, on whether the tax should be repealed or reformed (and if so, how).
By the Numbers
