A bipartisan coalition of members of the U.S. Senate Finance Committee, including chairman Charles Grassley, R-Iowa; ranking member Max Baucus, D-Mont.; Ron Wyden, D-Ore.; and Jon Kyl, R-Ariz., have introduced legislation to repeal the alternative minimum tax.
The Individual Alternative Minimum Tax Repeal Act of 2005 would amend the Internal Revenue Code to end the AMT beginning in the 2006 tax year.
The current temporary "patch" or increase in AMT exemptions is set to expire at the end of 2005. According to the Congressional Research Service, the end of those exemptions would increase the number of taxpayers paying the AMT to more than 19 million next year -- up from 2.3 million in 2003.
The AMT, created some 35 years ago to snag rich people who tried to dodge paying federal income taxes, has increasingly snared middle-class taxpayers. In a 2003 annual report to Congress, the National Taxpayer Advocate designated the AMT as the No. 1 problem facing individual taxpayers. According to that same report, in 2010, the AMT will affect nearly 32 million taxpayers, the majority of whom will have incomes under $100,000.
"We have two parallel tax systems that make taxpayers do two sets of calculations, and if they get an AMT hit, pay more. If we do nothing, the situation will get worse. It's a mess, and we need to clean it up for good, " said Grassley.
