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Publication Date: November 2007
Publisher: Center on Budget and Policy Priorities (Washington, D.C.)
Author(s): Aviva Aron-Dine
Research Area: Banking and finance
Keywords: Economic projections; Fiscal future; Tax code; Federal budget
Type: Report
Abstract:
One of Congress’s avowed goals for the rest of this year is to extend the Alternative Minimum Tax (AMT) “patch†through 2007. Because the AMT exemption level is not indexed for inflation, and because the 2001 and 2003 tax cuts reduced regular income tax rates without making corresponding changes in the AMT, the number of AMT taxpayers is expected to increase from about 4 million in 2006 to 23 million in 2007 in the absence of congressional action. The AMT patch is a temporary increase in the AMT exemption level that Congress has put in place each year since 2001 to keep the number of AMT taxpayers from exploding. It is an expensive fix; patching the AMT just for 2007 carries a price tag of $51 billion.