May 31, 2007

AMT Taxpayers Have Benefited Greatly from Bush Tax Cuts

For more information, contact Bill Ahern at 202-464-5101

Bush Tax Cuts Found to Push Millions into AMT, But Tax Cuts Still Outweigh Extra AMT Payments

full study online at  http://www.taxfoundation.org/research/show/22425.html

Washington, D.C., May 31, 2007 - IRS data show that most people filing the AMT, most of whom earn between $100,000 and $500,000, will pay nearly $2,800 less in 2007, even counting their AMT payments, than they would pay if the Bush tax cuts had never happened.

"There's been a lot of misinformation put out about the AMT," said the new report's author, Tax Foundation economist Gerald Prante. "Many politicians have proclaimed that the AMT foists an unfair financial burden on ‘middle-class' taxpayers who allegedly were not helped much by the Bush tax cuts, but the opposite is true. Current AMT filers benefited enormously from the Bush tax cuts."

The study is titled "AMT Taxpayers Have Benefited Greatly from Bush Tax Cuts," number 86 in the Tax Foundation Fiscal Fact series, on the web at www.taxfoundation.org/research/show/22425.html.

If no laws are changed this year, approximately 23 million people will file AMT returns for 2007.

• In the $75,000 - $99,999 range of income, the average AMT filer will save $2,279, then pay back $793 in extra AMT payments, for a net saving of $1,486.

• In the $100,000 - $149,999 range of income, the average AMT filer will save $3,224 because of the Bush tax cuts, then pay back $1,515 in extra AMT payments, for a net saving of $1,709.

• In the $150,000 - $199,999 range of income, the average AMT filer will save $4,301 because of the Bush tax cuts, then pay back $2,497 in extra AMT payments, for a net saving of $1,804.

As a result of these tax savings, many AMT filers still pay less than non-AMT filers with identical incomes, despite the extra payment and annoying calculations.

"Even though many AMT filers end up paying less, they feel as if they're being picked on unfairly because the AMT was originally enacted as a loophole-closing tax, and people don't like to think of their own tax preferences as loopholes," commented Scott Hodge, president of the Tax Foundation.

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The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.

For more information, contact Bill Ahern at 202-464-5101