What does the Alternative Minimum Tax ensure?

The Alternative Minimum Tax (AMT) is designed to ensure that all taxpayers, particularly those with higher incomes, pay at least a minimum level of federal income tax. The AMT was established to prevent wealthy individuals from using various deductions, credits, and loopholes to significantly reduce their taxable income to the point where they pay little to no federal income tax. By imposing an alternative tax calculation, the AMT creates a floor for tax liabilities, thus ensuring that even individuals who claim numerous deductions contribute a minimum amount to federal revenues.

This mechanism addresses concerns about equity in the tax system, aiming to ensure that those with substantial financial resources still fulfill a basic tax obligation. While the other options hint at various aspects of tax policy, they do not accurately represent the primary function of the AMT, which is fundamentally about establishing a baseline level of tax responsibility for all taxpayers, regardless of the deductions or exemptions they may claim.