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The Alternative Minimum Tax for Individuals: Legislative Activity in the 110th Congress , Record No.: RS22909, Date: July 01, 2008 1 (July 1, 2008)

handle is hein.tera/crstax0014 and id is 1 raw text is: Order Code RS22909 July 1, 2008 A CRS Report for Congress The Alternative Minimum Tax for Individuals: Legislative Activity in the 1 10th Congress Steven Maguire Specialist in Public Finance Government and Finance Division Jennifer Teefy Information Research Specialist Knowledge Services Group Summary The alternative minimum tax (AMT) for individuals was originally enacted to ensure that all taxpayers, especially high-income taxpayers, pay at least a minimum amount of federal taxes. However, the AMT is not indexed for inflation, and this factor, combined with 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 expired at the end of 2006, and Congress worked throughout 2007 to enact an AMT patch. The patch for the 2007 tax year, as provided for in the Tax Increase Prevention Act of 2007 (P.L. 110-166), enacted on December 26, 2007, set the AMT exemption levels for 2007 at $66,250 for joint filers and $44,350 for single filers. The AMT exemption amounts for the 2008 tax year revert to $45,000 for joint filers and $33,750 for single filers. Without a patch, roughly 26 million taxpayers will be affected by the AMT in 2008. The FY2009 budget compromise, S.Con.Res. 70, includes an offset AMT patch. On April 17, 2008, the Senate Finance Committee released legislation, S. 2886, that would extend the AMT patch through 2008 and allow the use of nonrefundable personal credits against AMT liability. S. 2886 does not include offsets. More recently, Senator Baucus unveiled a substitute amendment to H.R. 6049 that would include an AMT patch without an offset and extensions of a variety of expiring tax provisions that would be offset. Motions to proceed to H.R. 6049, however, failed because the Senate was unable to invoke cloture on the measure on June 10, 2008, and again on June 17, 2008. On June 18, 2008, the House Ways and Means Committee reported out H.R. 6275, which provides an AMT patch that is offset (the patch is estimated to cost $61.8 billion). The House approved H.R. 6275 on June 25, 2008, as reported. This report will be updated as legislative action warrants. Congressional Research Service The Library of Congress Prepared for Members and Committees of Congress

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