The Alternative Minimum Tax is almost universally hated. It’s basically a second tax code. If your income is high enough, you have to do your taxes twice. Once under the normal tax code, and again under AMT rules. Then you pay whichever is higher.
That’s bad enough. But Congress didn’t index the AMT for inflation when they enacted it in 1969. Almost forty years later, that means as many as 30 million people are subject to AMT. Some of them have incomes as low as $40,000.
This is where Congress gets a chance to look good. Every year, without fail, they pass an AMT relief bill. By sparing over 20 million people the hassle of doing their taxes twice, they earn voters’ gratitude.
Why don’t they just pass a one-and-done permanent AMT repeal or reform? That would be much easier.
Passing a patchwork bill every year means Congressmen get to hold more press conferences and talk to more reporters. It gives voters an annual reminder that their representative is looking out for them. It’s better for getting Votes. That’s why fundamental, permanent AMT reform is unlikely to happen.
Politics is a loathesome business.
Inertia Wins! 