Newsletter Archive
January 19, 2007
The Tax Policy Center Newsletter
The individual alternative minimum tax (AMT) was originally designed to limit the amount of tax sheltering that taxpayers could pursue and to assure that high-income filers paid at least some tax. The current AMT, however, has strayed far from those original goals and threatens to affect over 23 million taxpayers in 2007. While extending an AMT provision that expired at the end of 2006 would keep the number of AMT taxpayers at about 4 million for another year, this temporary fix would cost more than $40 billion in 2007 alone, leading some policy makers to consider more permanent ways to reform or repeal the AMT.
This report examines a variety of options for reforming or repealing the AMT and an array of options for offsetting the revenues lost under such options. It shows that fiscally responsible AMT reform or repeal is feasible but that replacing lost revenue will require difficult political choices.
Read all of the options
View the New AMT Web Page
This article examines variations in tax liability and tax rates confronting typical families as income and the number of children change for tax year 2006. Although the examples represent very simple tax situations, they illustrate how hidden taxes and subsidies can make the marginal tax rate an amalgam of different effects. The paper highlights some reasons that effective marginal tax rates and average tax rates can vary significantly from the statutory tax rates including the phase-ins and phase-outs of deductions and credits, the individual alternative minimum tax, and progressive tax schedules. The paper also illustrates cases in which taxpayers will be subject to the AMT, and the amount of additional tax paid, in 2006.
Read the complete paper
In this commentary for public radio's Marketplace program, Len Burman explains why raising the minimum wage now simply sets the stage for the same debate in a few years. That could be avoided--to the benefit of low-wage workers and their employers--if the minimum wage were automatically adjusted for inflation.
Read the full commentary
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