An expansion in the reach of the alternative minimum tax is the element of the U.S. fiscal cliff with the largest immediate effect on taxpayers and the most bipartisan appetite for a solution, creating the possibility that lawmakers could use it to propel Congress toward a deal.
If Congress doesn’t act to prevent the $92 billion tax increase, the number of households facing the alternative tax would increase to 32.9 million from 4.4 million, according to the Internal Revenue Service. That’s an average unanticipated tax increase of about $2,800.
The AMT is one of several urgent issues Congress faces as it returns to Washington this week after its summer break. Lawmakers have a Sept. 30 deadline to pass a stopgap measure to fund government operations for six months in the new fiscal year, which congressional leaders and Obama tentatively agreed to in July.
“It has to be resolved in some way this year,” said Buckley, who now teaches at Georgetown University’s law school. “It would be a real unpleasant surprise if it actually lapsed.”