In looking at the AMT form it appears that the computation deletes the deduction you might have had for other taxes, the deduction for any mortgage interest paid on a refinance for the amount over the original loan, and the deduction for miscellaneous expenses. Is this right so far? If so, why are they disallowing the deduction for state and local taxes?
Then there is a page of stuff related to qualified dividends and capital gains. Does this basically phase out the favorable 15% rate on those items, replacing it with the 26% or 28% AMT rates?
I think you have it. The AMT does not allow the deductions you mention. You are also correct that AMT taxpayers will not get the full benefit of the rate reductions for capital gains and dividends. On the plus side, the AMT paid can be used as a credit against regular tax in future years if you stop being an AMT taxpayer.
It will make you head hurt.
Why these provisions are in the rules undoubtably comes from some legislative compromise done in years gone by. I fear, looking for well thought out rational reasons may be fruitless.