Because the AMT requires that the higher of the two tax amounts is the one owed. Therefore if the tax cuts lower overall tax owed, the taxpayer gets bumped into the higher, AMT rate.
the general concept of the AMT - is a good one. you can argue that the scale has fallen too low, and that "normal" people have fallen into its grip. But in general, if someone wants to buy a $1 million dollar summer home with a huge mortgage, and reduce their tax payments accordingly, someone else is making up that difference. so there does need to be a cap on deductability. if you earn X dollars, there has to be some minimum amount of tax you pay on it, regardless of whether you can structure your debt and asset base to avoid it through deductions.
no one likes to pay taxes, but someone has to. the idea that a regular W2 wage earner gets shouldered with the full share, while others can structure themselves to avoid that, is what the AMT was designed to balance.
No. Are they itemizing? Are they flooding that "excess" cash into offshore accounts? What?