Lawmakers have proposed eliminating Wisconsin’s Alternative Minimum Tax, a change that would give a tax cut to some people with high incomes and exclude nearly all taxpayers with incomes under $100,000. The legislature's budget committee is likely to vote on the proposal next week.
The AMT is a way of making sure that at least a minimum level of income tax is paid by individuals who have relatively high incomes and have a lot of tax deductions and exclusions. As lawmakers have cut income tax rates for taxpayers with high incomes, the number of people required to pay the AMT has increased. Eliminating the AMT this year would give a $27.8 million tax break this year to mostly high-earning taxpayers in Wisconsin.
Eliminating the AMT would mostly benefit taxpayers earning $200,000 or more. Only about 0.2% of taxpayers earning under $100,000 would receive a tax cut under this proposal, compared to 29% of taxpayers with incomes over $200,000.
In dollar amounts, the tax cut would be minimal for taxpayers earning under $100,000. They could expect to receive a tax cut of only $2, based on the 2013 AMT amounts paid by all taxpayers in that income group. In contrast, taxpayers with incomes of over $200,000 would receive an estimated tax break of $283 from eliminating the AMT.
There’s a lot we don’t know about the tax proposal at this point. Lawmakers have said that they would make other tax changes to compensate for the revenue lost by eliminating the AMT, but have not released any details. We also don’t know yet whether lawmakers want to eliminate the AMT right away or phase it out over time. But one thing is clear: Eliminating Wisconsin's AMT would give a tax break to high earners, with very little benefit to anyone else.
From www.wisconsinbudgetproject.org