The Alternative Minimum Tax was originally designed to catch very high income earners who found ways to avoid paying income tax at all. But it has not been significantly revised in thirty years and has begun affecting more and more American voters. The Bush tax cuts and new exemptions have propelled a large new group of American taxpayers into this category. This would effectively wipe out the Bush tax cuts for many. The existence of the AMT was known by the architects of the Bush tax cuts. The AMT along with sunset provisions were what enabled the tax cuts to be marketed at a cost amount that was deceptively low. now the time is coming for many of us to pay the piper in the form of the AMT.



The Alternative Minimum Tax: What Is It and Why Should You Care?

Here is a detailed site.

Guide to Alternative Minimum Tax (AMT)


Here is an assessment of the impact this will have of the middle class.

The AMT is meant for the rich, but it's the scourge of the middle class.

The questions for debate are:

Should the AMT be altered to only affect the very wealthy taxpayers it was originally designed to tax?
Why or why not? How should it be altered if you favor altering it?

The whole idea of the AMT is burdensome. Americans spend more than 5 billion hours doing our taxes at an estimated cost of over $115 billion. That isn't paying the tax, that is figuring out how much to pay!! source

The AMT forces tax payers to actually do their taxes twice and pay the higher amount. Luckily for me, TurboTax does this calculation for me. I sure hope it's correct.

Should the AMT be altered to only affect the very wealthy taxpayers it was originally designed to tax?

Ideally, it should be abolished. Whoever thought that parallel tax codes was a good idea is a dolt. The whole idea started because the IRS reported that 155 people earning more than $200,000 in 1967 paid no taxes (that income translates into about $1.2 million today). Rather than fix the loopholes which allowed this, Congress in its infinite wisdom came up with the AMT. Idiots. Change the law because 0.00007% of the population aren't paying anything.

The AMT should be repealed because not only does it make tax calculations burdensome, it makes creating tax law burdensome.

A poor substitute for this would be to enact an inflation-adjusted floor to the income level subject to the AMT.

To be fair, calculating the AMT is not particularly burdensome. Almost all the work has been done when calculating the "regular" tax. But, I do agree with the sentiment that our tax system is baroque in its complexity.

Should the AMT be altered to only affect the very wealthy taxpayers it was originally designed to tax? How should it be altered if you favor altering it?

I would like all laws/rules to be reviewed periodically to determine if they are functioning as intended; for the case of the AMT, it is not. As for changing it, it is worth considering some philosophical underpinnings.

People tend to fall into three philosophical camps concerning taxation: the "no" taxers, the "one size fits all" taxers and the "punishment fits the crime" taxers. The "no" taxers want taxes abolished and for the sake of this discussion are not very interesting. The "one size fits all" taxers advocate things like the flat tax. The "punishment fits the crime" taxers want taxes aimed to help or hinder economic, political or social agendas. You may note that I've left out the less/more tax category which is really about scaling factors rather than a philosophical camp.

The AMT is a type of "punishment fits the crime" tax; thus, those falling into the other two categories reject it outright. Personally, I'm not against the AMT. However, it has not scaled with inflation so it does more than it was intended. Unless.... Unless it was intended to not scale with inflation and thus tax the higher wage earners progressively through time.

What would happen if the AMT were just incorporated into the "regular" taxation tables? That is, what would happen if it were no longer an AMT but instead just part of the T? Actually, in many ways the AMT behaves similarly to the flat tax (except that it does have a progressive tax rate yet far fewer deductions). Thus, I could see the "flat taxers" advocating for the AMT to be used as the "regular" tax calculation.

Anyway, I suppose if I were to change the AMT, I would introduce an inflation scaling factor to the minimum salary.