page_title: Bush tax cuts
section_title: Implications for the Alternative Minimum Tax
hierarchical_section_title: Bush tax cuts / Implications for the Alternative Minimum Tax
caption_attribution_description: English: Average tax rate percentages for the highest-income U.S. taxpayers, 1945-2009. The average tax rate for the top 0.01% (one taxpayer in 10,000) was about 60% in 1945 and fell to 24.2% by 1990. The average tax rate for the top 0.1% (one taxpayer in 1,000) was 55% in 1945 and also fell to 24.2% by 1990, following a similar downward path as the tax rate for the top 0.01%. Between 1990 and 1995, the average tax rate for both the top 0.1% and top 0.01% increased to about 31%. After 1995, the average tax rate for the top 0.01% was lower than that for the top 0.1%.
context_page_description: The phrase Bush tax cuts refers to changes to the United States tax code passed originally during the presidency of George W. Bush and extended during the presidency of Barack Obama, through:
  Economic Growth and Tax Relief Reconciliation Act of 2001
  Jobs and Growth Tax Relief Reconciliation Act of 2003
  Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
  American Taxpayer Relief Act of 2012
  While each act has its own legislative history and effect on the tax code, the JGTRRA amplified and accelerated aspects of the EGTRRA. Since 2003, the two acts have often been spoken of together, especially in terms of analyzing their effect on the U.S. economy and population and in discussing their political ramifications. Both laws were passed using controversial Congressional reconciliation procedures.
  The Bush tax cuts had sunset provisions that made them expire at the end of 2010, since otherwise they would fall under the Byrd Rule.
context_section_description: The 2001 act and the 2003 act significantly lowered the marginal tax rates for nearly all U.S. taxpayers.  One byproduct of this tax rate reduction was that it brought to prominence a previously lesser known provision of the U.S. Internal Revenue Code, the Alternative Minimum Tax (AMT).  The AMT was originally designed as a way of making sure that wealthy taxpayers could not take advantage of "too many" tax incentives and reduce their tax obligation by too much.  It is a parallel system of calculating a taxpayer's tax liability that eliminates many deductions.  However the applicable AMT rates were not adjusted to match the lowered rates of the 2001 and 2003 acts, causing many more people to face higher taxes.  This reduced the benefit of the two acts for many upper-middle income earners, particularly those with deductions for state and local income taxes, dependents, and property taxes.
  The AMT exemption level aspects of the 2001 and 2003 tax cuts, as well as the sunsetting year of capital gains and dividends, were among the tweaks made to the tax code in the Tax Increase Prevention and Reconciliation Act of 2005.
caption: Average tax rate percentages for the highest-income U.S. taxpayers, 1945–2009
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