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1 Gerald Prante, Majority of Taxpayers Affected by AMT Also Claim Capital Gains or Dividend Income 1 (2006)

handle is hein.taxfoundation/fffbxz0001 and id is 1 raw text is: FOUNDATION February 26, 2006 Majority of Taxpayers Affected by AMT Also Claim Capital Gains or Dividend Income by Gerald Prante The current debate on Capitol Hill over what type of tax bill should emerge from a conference committee is pitting many Democrats who argue that AMT relief should be the top tax relief priority against many Republicans who believe that extending capital gains and dividend tax relief should be the top priority. Both sides claim their position will benefit a distinct group of people-either taxpayers affected by the AMT, or those earning capital gains or dividends. The underlying assumption is that these two groups of taxpayers are mutually exclusive. However, an analysis of data from the Internal Revenue Service (IRS) and the Congressional Budget Office (CBO) shows these groups are not distinct sets of taxpayers at all. In fact, there is a high degree of overlap between them. Using the most recent IRS data available and projecting out the number of AMT filers by income cohorts, Table 1 shows the percentage of taxpayers claiming capital gains or dividends among those who are affected by the AMT, by income group. Table 1. Many AMT Filers Also Claim Capital Gain and Dividend Income Percentage of AMT Percentage of Tax Percentage of All Returns with Filers Projected to Projected 2006 AMT Adjusted Gross Capital Gains or Have 2006 AMT Filers in Income Income Dividend Income Liability Group !I m .............................................................. vd........co..e.........................................b ! . Y...................................................... ........... . .p...................................... $50,000 - $99,999 50.6%0 34 6 o 40.4% S 100,000 - $199,999 77.9% 81.1 43.6% S200,000 - 499,999 93.9%: 86.9 o. 9.9%. :500,000 - $999,999 99.3%: 30.4%o 0.6% is o 0 0 9 9 9 ...................................................................9 9 O o ................................................................. 0 O o ................................................................................ 6 o .. ::$I million or over 99.9% 23.4% 0.2%: Total 647 1 o:10O iT ......................................................................................................................... ( . °/ ° ii............................................! .. !i............................................................................... Source: Congressional Budget Office, Internal Revenue Service, and Tax Foundation calculations. All projections assume current tax law.

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