Issue:
The Alternative Minimum Tax (AMT) provides an alternative set of rules for calculating income tax. These rules are used to determine a minimum amount of tax owed. If a taxpayer is already paying at least that much in regular income tax, the AMT does not apply. But if the regular tax falls below this minimum, the difference has to be made up by paying AMT.
The AMT is a paperwork nightmare. AMT is a separate income tax system with its own definitions, exclusions, deductions, credits and tax rates. Taxpayers are required to calculate both their regular income tax and the AMT and pay the higher of the two calculations. This adds considerable complexity to the tax code and creates a paperwork burden for all taxpayers, whether or not they actually owe the tax.
The AMT is a middle-class tax increase. Because AMT thresholds and exemptions were never indexed for inflation, high-income taxpayers aren’t the only ones who pay the tax anymore. Each year, more and more middle-income taxpayers owe AMT, an estimated $21.6 million in 2006. Unless Congress changes the law, one in four households will owe the AMT by 2010. About half will be families making $100,000 or less a year, including 73 percent of households making $75,000 to $100,000 and 37 percent of those making $50,000 to $75,000.
Farmers pay a disproportionate amount of their income in AMT because of the way the tax is calculated.
Farm Bureau Policy:
Farm Bureau supports repealing the Alternative Minimum Tax. Farm Bureau supports enhancing and extending the higher AMT exemption levels and personal tax credits against the AMT that expired at the end of 2006. As long as the AMT is in place, depreciation should be the same for both it and the regular income tax.
Legislative Request:
Pennsylvania Farm Bureau members support and urge Congress to pass S. 55, introduced by Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) and H.R. 1366, introduced by Rep. Philip English (R-Pa.), to repeal the Alternative Minimum Tax. | 
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