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Options to Fix the AMT

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Publication Date: January 2007

Publisher(s): Tax Policy Center

Author(s): Leonard E. Burman; Greg Leiserson; William G. Gale; Jeff Rohaly

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Banking and finance (Taxation and tax policy)

Keywords: Economy; Federal Budgets & Fiscal Policy; Income and Wealth Distribution; Tax Policy

Type: Report

Abstract:

The individual alternative minimum tax (AMT) was originally designed to limit the amount of tax sheltering and to assure that high-income filers paid at least some tax. The current AMT, however, has strayed from those original goals and under current law the tax will affect over 23 million taxpayers in 2007. This brief examines a variety of implications of AMT repeal or reform and an array of options for offsetting the revenues lost under such options. The ideal solution would be to address the AMT in the context of a complete overhaul of the income tax, such as the proposal made by the President?s Advisory Panel on Federal Income Tax Reform.