What Is Responsible for the Growth of the AMT?

Publication Date: March 2007

Publisher: Tax Policy Center

Author(s): Greg Leiserson; Jeff Rohaly

Research Area: Banking and finance

Keywords: Tax Policy; Taxes, the Budget, and the Economy; 2001 Tax Cut; Taxation of Households

Type: Paper

Abstract:

Under current law, the number of taxpayers affected by the alternative minimum tax (AMT) is projected to rise from about 4 million in 2006 to more than 23 million in 2007 and more than 32 million in 2010. On average, taxpayers affected by the AMT in 2010 will owe an additional $3,600 in taxes. Two primary culprits are responsible for this impending explosion: the failure to index the AMT for inflation and the 2001?2006 tax cuts. This article illustrates the growth of the AMT that would have taken place if the different incarnations of the tax that have existed since 1990 were in place today and explains the reasons for the changes in the projections under each scenario.