It appears no one likes the Alternative Minimum Tax – although some like the revenue it generates for the Treasury. According to Bloomberg,
“The minimum tax was created in 1969 to prevent 155 wealthy Americans from eliminating tax liabilities by claiming excessive deductions, credits and exemptions. The tax works by replacing common deductions such as those for medical expenses and state and local taxes with a flat exemption when the itemized deductions become too large relative to income….Because the exemption was never indexed for inflation, the levy has ensnared a growing number of Americans as incomes and the value of deductions rise. “
How Many Americans Should Pay AMT?
For most of its existence, the AMT has affected less than one percent of taxpayers in any one year. However, estimates indicate that under the current law and exemption, up to 22 million taxpayers would owe additional taxes under AMT in 2007. That is a quite an increase since the law was instated in 1969 to beat extra taxes out of 155 wealthy people. In fact, to get to 22 million taxpayers affected in 2007 from 155 taxpayers affected in 1969 requires nearly a 37% annual growth rate.