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The Alternative Minimum Tax for Individuals: Legislative Initiatives and Their Revenue Effects , Record No.: RS22100, Date: July 07, 2005 1 (July 7, 2005)

handle is hein.tera/crstax0017 and id is 1 raw text is: Order Code RS22100 Updated July 7, 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in Public Finance Government and Finance Division Summary The alternative minimum tax (AMT) for individuals was originally enacted to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of federal taxes.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 extending and indexing the 2006 AMT parameters would reduce federal revenue by $191 billion over the next five years. The conference agreement on the 2006 budget resolution, H.Con.Res. 95, contained $106 billion in tax relief over the next five years, $70 billion of which would be protected through the reconciliation process. Under reconciliation, $11 billion of tax relief is allocated for 2006. The budget resolution, however, would not provide enough tax relief to hold the AMT harmless over the next five years. To date, seven stand-alone bills (S. 1103, H.R. 206, H.R. 703, H.R. 1186, H.R. 1538, H.R. 1599, and H.R. 2987) 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 The alternative minimum tax (AMT) for individuals was originally enacted to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of federal taxes.1 However, absent legislative action, there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 - -The Library of Congress ' There is also a corporate minimum tax, but it is not addressed in this report.

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