The Alternative Minimum Tax is getting a lot of coverage in the US since changes made by Reagan in the 80s are causing it to affect 80% of “families with an adjusted gross income of $75,000 to $100,000,” in other words, a lot of frickin’ families.
When the tax was first introduced in 1969, it was intended to catch only the wealthiest members of American society who were paying little to no tax thanks to various deductions, loopholes and shelters.
But in 1986, … the law was subtly changed to aim at a wholly different set of deductions, the ones that everyone gets, like the personal exemption, state and local taxes, the standard deduction, certain expenses like union dues and even some medical costs for the seriously ill. At the same time it removed and revised some of the exotic investment deductions.
We have AMT in Canada, but since I’m not reading stories in our media about this situation I’m assuming it isn’t a problem. I suppose the fact that we weren’t taught anything about it in any of the three tax courses I took in school supports the assumption that this doesn’t affect nearly as many Canadians.
If I had to guess, it’s because we missed the 1986 adjustments that occurred south of the border.