Leonard E. Burman The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
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Background
1966: 155 high-income taxpayers paid no income tax1969: creation of a minimum tax designed to ensure high income filers did not exploit tax laws to reduce or eliminate their federal income tax liability2010: Alternative Minimum Tax (AMT) will affect 30 million taxpayers, including virtually all upper-middle-class families with two or more kids.Determination of AMT Liability
Add preferences and adjustments to taxable incomeSubtract AMT exemptionCalculate tax using AMT rate schedule and rulesIf more than regular tax, pay the difference as AMT(Many complexities left out of this simplified explanation.)
Note: This testimony is available in its entirety in the Portable Document Format (PDF).
