The Altenative Minimum Tax should be abolished immediately. The AMT was placed in the tax code in 1969, based on Congressional testimony that 165 Americans had paid NO federal income tax in 1967. But it was never indexed for inflation. For years the AMT affected less than 1 percent of all taxpayers. In 2005 the AMT effected roughly 3 percent of all taxpayers. Without changes to the tax code the AMT will penalize nearly 20 percent of taxpayers by 2010. Kill it!
In other words, the AMT may be the most remarkable tax ever created -- since it applies disproportionately to regions that have historically been among the most liberal parts of the country.
As always, that was the political tug at the heartstrings of the public and was strictly for public consumption. The real reason was to get at some tax deductions that businesses were taking, specifically depreciation on capital equipment. They also restricted the time over which those assets could be depreciated.
Combined with a strong dollar, the AMT had the effect of putting many US manufacturers out of business. The Germans and Japanese quickly moved in with equipment at about 50% of what American equipment was selling for. That, plus the obstinacy of the unions, meant bye bye for lots of US manufacturing.
At the root of it all is taxing income and the myriad of hoops that must be jumped through to comply or avoid. The NRST is a complete sea change from that Marx inspired income tax. That is the direction we should go.