AMT is a separate tax system....if you make enough, you pay AMT taxes rather than regular income taxes....the laws were built in the 60's but weren't tied to any indexing. The idea I think was to make the rich pay more taxes....they just were idiots for not indexing it.

>I don't really understand the details of the AMT. I know it was featured prominently in the news back in the dotcom bust days. Something about paying taxes on stock options based on the price of the option vs. the market price of the stock the day the option was excercised.
>
>There were many stories of people who had excercised options and had yearly incomes of 50-70k. They ended up with 300k tax bills.
>
>I think there are similar stories today. But I'm not sure what triggers the hugh AMT assesment.
>
>>There's good and there's the bad:
>>
>>http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20071024%5cACQDJON200710242253DOWJONESDJONLINE001107.htm&
>>
>>A small section:
>>
>>Middle and upper-middle income families would benefit under the plan by a repeal of the alternative minimum tax starting Jan. 1, 2008.
>>
>>Upper-income families, however, would pay for that repeal with a 4% surtax on incomes above $150,000 for a single earner or incomes above $200,000 for a married couple. That surtax would grow to 4.6% for incomes above $500,000.
>>
>>The surtax will also make possible an expansion of the earned income tax credit, an increase in the standard deduction, and an increase in the value of the child tax credit for those earning too little to owe federal income taxes.
>>
>>A third section of the plan would address a number of pressing tax issues, including a temporary patch of the alternative minimum tax prior to Jan. 1, 2008, and the extension of a number of expiring tax provisions.
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>>Absent a patch, the alternative minimum tax will expand to hit roughly 25 million taxpayers, up from 4.4 million in 2006, increasing their taxes by a total of nearly $50 billion, according to congressional estimates.
>>
>>
>>And a Republican rebuttal:
>>http://republicans.waysandmeans.house.gov/News/PRArticle.aspx?NewsID=133