If President Bush's tax cuts are enacted, the committee said, nearly a quarter of all taxpayers will have to pay the AMT by 2010. A big capital gain can do it. In rare cases, having a lot of children can do it. The complexity is simply stunning. In effect, the AMT is a separate tax system that operates parallel to the regular one.
Taxpayers first calculate their taxes the normal way.
Then they calculate them again using the AMT rules, which involve different deductions and different tax rates. Compare this result with your regular tax. If your regular tax is higher, you pay that. If the AMT is higher, you pay that. This whacks residents of high- tax jurisdictions such as the District and New York.