AMT portion of new tax bill.

[Black Bart]

Here's a desired, beneficial result of the deal (never mind everything else); AMT has been indexed to inflation -- no more required annual "fix". For years this has been a political football allowing reps to toot annually that they voted "against taxes." Anyway, now we can stop worrying about it (annually).

[JoshinNC]

It's a ploy by the Dems

Here's a desired, beneficial result of the deal (never mind everything else); AMT has been indexed to inflation -- no more required annual "fix". For years this has been a political football allowing reps to toot annually that they voted "against taxes." Anyway, now we can stop worrying about it (annually).

Now they can come back in 2-12 months and say "we gave away revenues in indexing AMT without a full review of the ramifications so nw we need to raise rates on income above xyz to make up for it".

[Snaggletooth]

Too late in coming

They should have adjusted this for inflation from its beginning in 1970 - back then only 1 in 200 taxpayers had to worry about it.

However, even though Congress can do whatever they want, they mostly do absolutely nothing unless there is pressure on them. So indexing to inflation DOES help, and the fix is permanent and not scheduled to expire. This means to backtrack and take away the indexing, they would actually have to DO something instead of sitting around until Christmas and putting us through another fire drill.

Believe it or not, opposition to the AMT was heaviest in the BLUE states. States that like to tax their citizenry. Too many taxpayers paying huge amounts of state income and property taxes in those states, and losing all the benefit because of the AMT.

[Bees Knees]

Well, what actually happened was politicians finally bit the bullet and permanently extended indexing so that future budgets are no longer based on fantasy land. Prior law did not index AMT for inflation. What that means is future budget predictions were always tied to AMT not being indexed. Thus, the budget deficit over the next 10 years assumed more and more taxpayers were going to actually pay AMT.

IRS announced in November that 4 million taxpayers were subject to AMT in 2011. Without an AMT patch, which Congress has ALWAYS provided historically, then 33 million taxpayers would be subject to AMT for 2012. The budget deficit predictions assumed that 33 million taxpayers would actually pay AMT for 2012, something that neither political party wanted.

The problem was, indexing AMT meant increasing future deficits. Except that realistically, since Congress ALWAYS historically has temporarily extended AMT indexing, those future deficits were already increased, only not on paper.

With the new law, the Congressional Budget Office announced the deficit will increase by $4 trillion over the next 10 years. The AMT indexing is a perfect example of why that number is not reality. $4 trillion assumes all the Bush-era tax cuts would have been sunset in 2012 and that everybody would pay more tax, including the 33 million taxpayers subject to AMT. For 2013, that 33 million would increase again, 2014 again, and so on, so that in a few short years, every taxpayer in the nation would be subject to AMT. Thus, the $4 trillion increase in the budget deficit is actually something that realistically was already there, based on what Congress historically has always done and what future Congresses were most likely to do. All the new law did was finally acknowledge that reality. Politicians will no longer have to argue about something everybody agrees on simply because they don’t want to be perceived as having increased future deficits.

[DonPriebe]

Acknowledge Reality ??

... All the new law did was finally acknowledge that reality...

Perhaps you missed Section 1011. .

Sec. 1011 The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010.