There is a strong case for flat taxes. They reduce compliance (and avoidance) costs. They create a very broad base for taxes that in turn distort the economy less and have a lower dead weight social loss. The Economist says that they may be practical and feasible.

The conventional wisdom from (NYT, April 10) is that alternative minimum taxes (AMT) are bad news. An alternative view is that they are a back door way to get a flat tax. The number of people who pay AMT is expected to grow to $200 billion projected in 2015. This growth is due to three factors: deductions get more generous, maximum marginal rates stay low due to the tax cut, and inflation and growth steadily increase income. While $200 billion less than 5% of the federal budget and less than 1% of the $20 trillion economy (in 2000 constant dollars) projected for 2015, it is still a significant portion of taxpayers paying a flat tax.

If US wants a flat tax, it should do nothing about AMT, it should increase deductions like crazy and reduce the marginal rate of the non-flat tax further. For those worried about the budget deficit, the AMT rate can be raised, or perhaps Medicare and Social Security rationalized.

You said it brother!

I have always believed that the reason Congress never even mentions the AMT is because they are counting on it to pull their butts out of the sling, budgetwise, eight to ten years from now. If they do nothing and simply let inflation do its work the AMT will eliminate the deficit and we will be running surpluses again.

I have yet to hear a good argument for the existence of the AMT. First, as I understand, it's not a tax on current income. It's a forced prepayment of future taxes. Second, we negate the prime reason for a flat tax - namely its simplicity. We're forced to calculate taxes in two ways. It also causes far too much trouble in cases like the dotcom stock options where AMT taxes had to be paid on the stock options based on the value when the options vested rather than the eventually much lower price at which they often were sold.

Finally, is it really "flat"? I seem to recall that the richest people have found ways around the AMT. Could someone more knowledgeable discuss that.

There's no good argument for any tax except that the guys with the badges and the guns say you gotta pay it.

This page has a pretty good explanation of AMT.

http://www.fairmark.com/amt/amt101.htm

AMT is harder to avoid than regular taxes, but not impossible. If it becomes really hard to avoid taxes, it will be done less due to supply and demand. Compliance costs would drop if AMT became more prevalent. If almost everyone paid the AMT, it would be fairly easy to total up enough deductions to show you did not have to pay regular tax. (i.e., you might be under what you would pay with AMT just counting your state and local taxes and home mortgage). AMT mostly bothers people because it seems like double jeopardy, not because it takes a lot of time to calculate. The anti-distortion benefits stem from its incentives not its simplicity so those would kick in right away.

If the people who earn more are collected more taxes, it ensures the money of those persons will circulate back into the economy faster. God knows the State will spend it quickly. What they get, and what they don't get from taxes.