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The Alternative Minimum Tax for Individuals: Legislative Initiatives and Their Revenue Effects , Record No.: RS22100, Date: April 22, 2005 1 (April 22, 2005)

handle is hein.tera/crstax0016 and id is 1 raw text is: Order Code RS22100 April 22, 2005 CRS Report for Congress Received through the CRS Web The Alternative Minimum Tax for Individuals: Legislative Initiatives and Their Revenue Effects Gregg Esenwein Specialist in Public Finance Government and Finance Division Summary The alternative minimum tax (AMT) for individuals was originally enacted to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of federal taxes. However, the AMT is not indexed for inflation, and this factor, combined with the recent reductions in the regular income tax, has greatly expanded the potential impact of the AMT. Temporary provisions intended to mitigate the effects of the AMT expire at the end of 2005. If this occurs, then the number of taxpayers subject to the AMT will increase from 3 million in 2004 to 21 million in 2006. The Congressional Budget Office estimates that holding the AMT harmless would reduce federal revenue by $198 billion over the next five years. The House budget resolution (H.Con.Res. 95) assumes $105 billion in tax relief over the next five years, while the Senate budget resolution (S.Con.Res. 18) assumes $134 billion in tax relief over the next five years. Neither bill would provide enough tax relief to hold the AMT harmless over the next five years. To date, five stand-alone bills (H.R. 206, H.R. 703, H.R. 1186, H.R. 1538, and H.R. 1599) modifying the AMT have been introduced in the 109th Congress. The Administration did not include modifications to the AMT in its FY2006 budget proposal. This report will be updated as legislative action warrants. The alternative minimum tax (AMT) for individuals was originally enacted to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of federal taxes1. However, absent legislative action, there will be a significant increase in the number of middle- to upper-middle-income taxpayers affected by the AMT in the near Congressional Research Service Ae The Library of Congress ' There is also a corporate minimum tax, but it is not addressed in this report.

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