The complete version of this testimony is available here as an Adobe Acrobat PDF.

Chairman Baucus, Ranking Member Grassley, Members of the Committee, it is an honor to appear before you today to discuss the reform of the Alternative Minimum Tax (AMT).

As everyone on this committee knows, the AMT is a bizarre feature of the tax code that is affecting the lives of more and more Americans each year. Because fixes for the AMT are so costly and ambitious, Congress has chosen to pare the AMT back by adopting a sequence of patches. These patches, however, simply delay the inevitable; the AMT reappears the following year, larger than ever. This year, if the patch is not passed, projections suggest that 23 million taxpayers will be swallowed up by the AMT.

Before addressing the incidence and economic efficiency effects of the AMT, I should note at the outset that uncertainty concerning the likelihood of passing a patch each year creates significant costs for taxpayers. If a patch is not passed, then a taxpayer runs the risk of facing a steep tax bill next April if he is captured by the AMT, and the prudent will plan ahead. . . .

Kevin A. Hassett is a senior fellow and director of economic policy studies at AEI.