Originally Posted by tcampb01

I just did my taxes yesterday. My $3150 for the Prius was cut to a number much closer to $2700 because the full credit would have pushed me below the AMT limit.

Actually the AMT was _not_ designed to tax the wealthy... it was designed to tax the _extremely_ wealthy. It was designed to target 155 individuals who were so rich and had created so many tax shelters that it was discovered that they paid no taxes or nearly no taxes at all!

The problem is that it wasn't designed to adjust for inflation. Over time it's become a tax for the wealthy and ultimately a tax for the middle class. Since the AMT has the effect of limiting your tax deductions and credits to insure that everyone pays some minimum tax threshold (based on income), the more you're getting stung with other taxes (e.g. you live in a high tax state or you have a lot of dependents (or both)) then the more likely you are to get stuck paying AMT.

Because so many people are currently stiffed with the AMT, the tax has -- not surprisingly -- become a noticeable amount of tax revenue for the federal government. If they were to refresh the law so that it went back to only affecting the _extremely_ wealthy then it would make a noticeable dent in the federal revenue and they'd have to find some other way to make up for it.