The Alternative Minimum Tax...was created by Congress in 1969 to affect 155 wealthy Americans. Because it was never indexed for inflation, those original 155 taxpayers has increased to affect about 3.5-million in 2006.
On Jan. 17, 1969, Treasury Secretary Joseph W. Barr told Congress that 155 taxpayers making $200,000 or more did not pay any taxes on their 1966 income. That shook lawmakers into creating the alternative minimum tax in the Tax Reform Act of 1969. It was created as separate income tax system to ensure people did not use loopholes to avoid paying any taxes at all. Because of the law, people who are able to use deductions and legal shelters to lower their tax bill too much must pay a minimum income tax, the AMT. Under the law, taxpayers who meet the AMT threshold must pay the higher tax bill, whether it's their actual bill or the AMT. The trouble is that, unlike the standard income tax system, the AMT is not indexed for inflation. So as time moved on, growing numbers of people have fallen into the AMT program and, as a result, are paying higher taxes. In 2006, 3.5-million taxpayers fell under the AMT, which equates to about 4 percent of American taxpayers, according to the Congressional Research Service. But that was with a special limit — "a patch" — imposed by Congress. So, Giuliani has it right. All of it.
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