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1 Scott Eastman, The Alternative Minimum Tax Still Burdens Taxpayers with Compliance Costs 1 (2019)

handle is hein.taxfoundation/altmintxb0001 and id is 1 raw text is: The Alternative Minimum Tax Still Burdens Taxpayers with Compliance Costs FISCAL FACT No. 647 Apr. 2019 Scott Eastman Federal Research Manager The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, local, and global levels. We are a 501(c)(3) nonprofit organization. ©2019 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Key Findings The Alternative Minimum Tax (AMT) requires a subset of taxpayers to compute their income tax liability twice-once under the ordinary individual income tax, and again under the AMT that allows fewer tax preferences-and pay whichever tax is highest. The Tax Cuts and Jobs Act (TCJA) increased the AMT's exemption and exemption phaseout. These reforms will reduce the number of taxpayers that pay the AMT to an estimated 200,000 each year through 2025, down from 5 million in 2017. The AMT increases income tax compliance costs for taxpayers. TCJA reforms limited the number of taxpayers filing AMT returns, saving an estimated $4.6 billion in AMT-related compliance costs. The number of AMT taxpayers will increase again in 2026, from about 200,000 to 7 million when the TCJA's individual income tax reforms expire. This will increase compliance costs for taxpayers. Removing one individual income tax-either the ordinary individual income tax or the tax currently structured as the AMT- would eliminate compliance burdens stemming from a system that subjects taxpayers to two different income taxes. Alternatively, policymakers could make the TCJA's expanded exemption and exemption phaseout threshold permanent. This option would limit the number of taxpayers subject to the AMT and reduce AMT revenue. Taxpayers would still be subject to compliance burdens created by having to calculate two different income taxes.

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