Document Type

Article

Publication Date

4-23-2018

Abstract

The individual alternative minimum tax (AMT) was a much disliked feature of the tax law prior to the Tax Cuts and Jobs Act (TCJA). Yet, despite repeated promises to repeal the AMT as part of tax reform, the TCJA dropped AMT repeal in favor of increasing the AMT exemption and its phaseout threshold. The question raised by this development is whether the AMT changes should be viewed as yet another stop-gap tweak of the AMT or whether the changes should be viewed as returning the AMT to its roots as a tax on high-income taxpayers using excessive loopholes. In this essay I compare the AMT before and after the TCJA. I show how the pre-reform AMT and regular tax were structured in such a way as to capture a broad swath of taxpayers who did nothing more than use common personal deductions. By contrast, I show that the new AMT is a much defanged version of the old. Under the TCJA many fewer taxpayers will be exposed to the AMT and those who are exposed are likely to look much more like the sort of taxpayers that were the original target of the tax: high income taxpayers taking advantage of loopholes.

Publication Citation

Tax Notes, April 23, 2018, p. 495

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