Final answer:
The Alternative Minimum Tax (AMT) was created to prevent high-income taxpayers from using tax preferences to significantly reduce or eliminate their tax obligations. It does this by calculating tax under a separate set of rules which add back certain preferences into income. Therefore, the correct answer is B. curb abuses by high-income taxpayers.
Step-by-step explanation:
The Alternative Minimum Tax (AMT) was originally designed to curb abuses by high-income taxpayers. This was meant to ensure that those with high incomes would pay a minimum level of taxes and could not use various preferential tax benefits to pay little to no tax. The AMT achieves this by adding back certain tax preferences into one's income and recalculating the tax based on an alternate set of rules. For example, some deductions available under the regular tax system are disallowed for AMT purposes.
The need for such a tax system, which might seem complex, originated from the perception that some wealthy individuals, despite their high income, were able to pay disproportionately low taxes or even escape tax liability entirely through the use of various deductions, exemptions, and tax shelters. Tax reform, such as the Tax Reform Act of 1986, sought to simplify the tax code and eliminate these shelters, but the AMT remains a parallel system to ensure that high-income individuals contribute a fair share of taxes.
Thus, answering the original question, the AMT was designed as a measure to prevent high-income earners from avoiding their fair share of taxes, making option B (curb abuses by high-income taxpayers) the correct choice.