I think it is time for the Tax Policy Center (TPC) to develop a decent fix to the AMT. The January 19, 2007 TPC paper on this matter is pathetic. And, Mr. Obama picked the “Plan 2” fix from that paper. So, if you do not like the Obama AMT fix, you can thank the TPC. Let’s take a quick look at the AMT for the 2009 tax year. A retired couple with no children and with no qualified dividends (QD) or long-term capital gains (LTCG) can be hit by the AMT. A married couple with no children and a very small amount of QD’s and/or LTCG’s can be hit by the AMT. Add children and/or QD’s/LTCG’s and the AMT exceeds the regular tax even more. This is not why the AMT was developed. The Obama/TPC fix does not fix these problems. Why has this AMT impact happened? Technically, it’s because the AMT exemption has only been partially indexed. The partial indexing is due to greed on the part of the government. To illustrate this greed, all we have to do is look at the increasing number of taxpayers hit by the AMT and the increase in AMT revenue received by the Treasury in the last few years. The TPC shows that the number of AMT taxpayers rose from 1.6 million in 2001 to 4.0 million in 2005. Over the same time period, the AMT revenue grew from $8.8 billion to $20.5 billion. In 2008, the revenue from AMT was $31.7 billion. These increases are astounding! The government has increased the AMT exemption over the years, yet the AMT has a bigger and bigger effect. I think you can see why the government does not want to be honest with us and fix the AMT. Each year they make big headlines that they have indexed the AMT exemption one more time to keep more taxpayers from being affected by the AMT. It is true that without this indexing that more taxpayers would be so affected, but what they don’t tell you is the AMT has not been indexed appropriately and more and more AMT revenue is being sucked into the “black hole”. Mr. Obama is calling for a fix of the AMT whereby the aforementioned exemption is indexed for inflation from 2009 and the AMT tax brackets and threshold are also indexed from 2009. This is an improvement, but falls far short of what is fair and appropriate. The AMT exemption has been increased over the years from what it was in 1993. The tax brackets and threshold have not been increased – which is both incredible and stupid. In order to make Mr. Obama’s plan for AMT fair, the exemption, tax brackets and threshold all need to be indexed from 1993. One could make a good argument that the indexing should begin in 1986. Again, Mr. Obama’s hodgepodge plan (index one thing from 1993 and others from 2009 – the TPC’s “Plan 2”) is an attempt to have the AMT affect more and more taxpayers over time. It is clear to me that this inconsistent indexing (proposed by the TPC and adopted by Mr. Obama) was developed by economists. Had engineers been involved to demand logic be imployed, such craziness would surely not be in a TPC proposal. I believe that it is time for the government and the TPC to get out of their parallel universes and come to the universe the taxpayers live in.