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Alternative Minimum Tax (AMT) Reform Act

A bill designed to prevent the Alternative Minimum Tax from adversely impacting low and middle income families

This bill was submitted on September 7, 2004
Suggested committee: Appropriations and Finance

Author: JJ Jackson

Cosponsors: Juan Galt �, Bertram Dalton �, Kurt Garwood �, Schuyler Hatcher �, Richard Perry (D), Laverone, Schmidt, Carpenter, Ewiak, Martinez, and McMillan

Section I - Background

In 1969, Congress enacted the Minimum Tax to prevent high income households from using perceived loopholes in the tax code to avoid paying income taxes. However, due to a variety of problems with the original Minimum Tax, Congress further enacted the Alternative Minimum Tax (hereafter referred to as AMT) in 1978 to fix these problems, and then in 1982, abolished the Minimum Tax completely. However, the tax brackets affected by the AMT were never indexed for inflation, meaning that a phenomenon known as "bracket creep" (whereby inflation pushes nominal wages higher and individuals end up in higher brackets) occurred, and many middle income families were subjected to the AMT when they were never intended to be affected.

Section II - Purpose

The AMT comprises both a corporate AMT and an individual AMT. This bill addresses only the individual AMT and not the corporate AMT.

It is the aim of this bill to index tax brackets for inflation and better define precisely who is included in the AMT to prevent "bracket creep" whereby low and middle income families are subjected to the AMT.

Section III - Amending the AMT

The AMT shall hereafter only apply to the top federal income tax bracket, and shall always be indexed at the same rate.

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AYE

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Aye.