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The Alternative Minimum Tax for Individuals: Legislative Initiatives and Their Revenue Effects , Record No.: RS22100, Date: November 25, 2005 1 (November 25, 2005)

handle is hein.tera/crstax0018 and id is 1 raw text is: Order Code RS22100 Updated November 25, 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in Public Finance Government and Finance Division Summary The alternative minimum tax (AMT) for individuals was originally enacted to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of federal taxes.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, approximately $70 billion of which would be protected through the reconciliation process. Under reconciliation, $11 billion of tax relief is allocated for 2006. On November 16, 2005, the Senate Finance Committee approved a tax cut reconciliation plan - the Tax Relief Act of 2005 (S. 2020) - that would, among other things, extend AMT tax relief through 2006. The full Senate approved S. 2020 on November 18. On November 15, the Ways and Means Committee approved H.R. 4297 which, among other things, would provide partial AMT relief through a one-year extension of the treatment of nonrefundable personal tax credits under the AMT. In addition, 15 stand-alone bills modifying the AMT have been introduced in the 1 09th 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 The alternative minimum tax (AMT) for individuals was originally enacted to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of Congressional Research Service • -The Library of Congress

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