Reply #2: AMT isn't inflation adjusted

[Gulf Coast J]

Culled from an archived article from The Economist

Reforming the Alternative Minimum Tax (AMT). In an attempt to stop rich taxpayers avoiding tax by over-using deductions, Congress introduced the AMT in 1969. It has a lower rate but allows virtually no deductions. If your tax bill is higher using the AMT formula, that is what you must pay. Traditionally, few taxpayers have been affected by it: 2.5m in 2002. However, the combination of Mr Bush's tax cuts (which reduce taxes under the traditional system) and the fact that the AMT is not indexed to inflation means that it will affect far more people in future: 33m in 2010 and 42m in 2014. Politically, that will be explosive. But simply indexing AMT thresholds to inflation adds $690 billion to the ten-year deficit.


A flood of red ink
Nov 6th 2003 | WASHINGTON, DC
From The Economist print edition

http://www.economist.com/displaystory.cfm?story_id=2189237