The anti-family tax

"The broad reach of the tax suggests that taxpayers in larger families (who have a greater number of personal exemptions) and taxpayers with larger deductions for state and local taxes will tend to be more affected by the AMT than will other taxpayers," said Douglas Holtz-Eakin, then-director of the Congressional Budget Office.

In 2001, 2003 and 2004, Congress enacted temporary increases in the amount of income exempted from the AMT to prevent an explosion in the number of families that would have to pay it. The latest fix expired Jan. 1. The explosion impends.

"Beginning in tax year 2006, after the temporary AMT provisions expire," Treasury's Carroll testified, "the number of taxpayers projected to be affected by the AMT rises sharply, from 3.8 million in 2005 to 20.5 million in 2006."

The additional 16.7 million people who would be subjected to the AMT this year includes some couples with two or more children and incomes as low as $67,890. But families making low six figure incomes will be especially rocked by the tax. "In tax year 2005," Carroll testified, "about 13 percent of taxpayers with incomes between $100,000 and $200,000 will be subject to the AMT. But, when taxpayers file their returns in the spring of 2007 for tax year 2006, over 75 percent of taxpayers in this income group will be subject to AMT."

By 2010, National Taxpayers Advocate Nina Olson testified, "94 percent of married couples with adjusted gross income between $75,000 and $100,000 and two or more children will owe AMT."

In December, the House approved a new one-year "patch" for the AMT, calculated to "cost" $31 billion in lost federal revenue. The Senate is also considering a new one-year patch. Why won't an all-Republican government push to simply abolish the AMT?

Because it has already made plans to spend every penny of revenue the AMT will bring in to the federal coffers from its expanded taxation of middle-class families. Abolishing the AMT, according the Congressional Budget Office, would reduce federal revenue by $611 billion between 2006 and 2015, adding that much to $2.26 trillion in deficit spending already in the pipeline for that period.