As per this NYT op-ed, the 2005 Trump tax return is causing some people to salute the alternative minimum tax (AMT) and argue that it should be retained after all.
I actually wrote about this topic nearly 30 years ago, when I was just starting out in academics and reflecting on my legislative staff experience, which had included being on the team that made sure the AMT worked technically as intended. (It did.) But it has had few defenders since, and they haven't included me.
That said, I would want its repeal to be accompanied by adjusting overall revenue and distribution appropriately, which the Congressional Republicans obviously wouldn't do. But let's take a quick look at the relevance of the Trump tax return to the AMT issue.
In his 2005 tax return, Trump had about $150 million of regular adjusted gross income (AGI), reduced to about $50 million by what may have been the last of the late-1990s net operating losses (NOLs), and then to about 2/3 of that by itemized deductions. With predominantly capital gain remaining, he would have owed only about $5 million of tax, but the AMT raised this to about $36 billion total. This implies that his AMTI (alternative minimum taxable income) might have been in the neighborhood of $112 million or so.
Why was it (a) so much lower than AGI pre-NOLs, yet (b) so much higher afterwards? We don't know. So how in this case it was performing the backstop role, and how common that is for a broader range of circumstances, we also don't know.
A key point here is that there often is nothing wrong with allowing NOLs to reduce current year taxable income. If you genuinely lose $100 million in Year 1, and make $100 million in Year 2, that's a net of zero. But in Trump's case, of course, if that $100 million of NOLs was the last residue of his late 1990s gambit that enabled him to deduct more than $900 million of other people's losses that they also were deducting, then his NOL deduction was bad in a policy sense for that reason – but not relatedly to its being hit by the AMT (which generally allows NOLs, as computed for its purposes, anyway, albeit with a rule that stops their current year allowability 90% of the way to zero).
Certainly a bit random if, this time around, the AMT caused Trump to pay closer to the amount to what he arguably “ought” to have been paying, and not enough to induce one (or at least me) to endorse the darned thing, especially if it could be traded in for something with a better-designed impact on people at Trump's income level.