The Individual Alternative Minimum Tax

Publication Date: March 2007

Publisher: Tax Policy Center

Author(s): Leonard E. Burman

Research Area: Banking and finance

Keywords: Tax Policy; Tax Distribution and Economic Trends; Taxation of Households; Individual Alternative Minimum Tax

Type: Report

Abstract:

A precursor to the current individual alternative minimum tax (AMT) was originally enacted in 1969 to limit the amount of tax sheltering that taxpayers could pursue and to assure that high-income filers paid at least a minimal amount of tax. However, the current AMT has strayed far from those original goals and threatens to grow from a footnote in the tax code to a major component affecting tens of millions of taxpayers every year. This testimony outlines how the AMT works, whom it affects, and why it demands attention. It also discusses possible ways of reforming the AMT and why financing AMT reform or repeal is important.