Here’s a nice summary of the Alternative Minimum Tax:
Let’s devise a politically inept income tax policy. We’ll begin by eliminating tax breaks people have been accustomed to for decades, such as those for qualified retirement accounts, and state and local taxes. Next, we’ll negate the child tax credit so that families with young children will be hit especially hard. Then, we won’t adjust for inflation, so that our tax will affect more people each year as their incomes grow along with the economy and inflation. We’ll tell people that they must calculate their taxes twice, using two different formulas — and finally we’ll add insult to injury by requiring them to pay whichever amount is higher.
The full story, available here, is chilling but worth reading in its entirety. Even the IRS has criticized the AMT:
Nina Olson, the IRS’s National Taxpayer Advocate, made this declaration last month: “It’s a horrible provision. We are really sorry about the impact of this tax, but it is not for us to rewrite the laws; it’s for Congress to act.”
It is estimated, however, that outright repeal would cost the Treasury $1 trillion between 2003 and 2012. So get ready for some ongoing tax increases, even if you hear that your taxes are being cut you might have to pay the AMT instead.