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Policy Watch: The Expanding Reach of the Individual Alternative Minimum Tax

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  • Leonard E. Burman
  • William G. Gale
  • Jeffrey Rohaly

Abstract

The individual alternative minimum tax (AMT) was designed in 1970 to apply reduce aggressive tax sheltering, but under current law will grow to cover tens of millions of households in the next decade. The growth occurs because the AMT is not indexed for inflation and the 2001 tax cut reduced regular income taxes but not the AMT. AMT growth is troubling because the tax has questionable effects on equity and efficiency and is inordinately complex. This paper describes the AMT, discusses economic issues related to the alternative minimum tax, and examines options for reform.

Suggested Citation

  • Leonard E. Burman & William G. Gale & Jeffrey Rohaly, 2003. "Policy Watch: The Expanding Reach of the Individual Alternative Minimum Tax," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 173-186, Spring.
    • Handle: RePEc:aea:jecper:v:17:y:2003:i:2:p:173-186
    Note: DOI: 10.1257/089533003765888494
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    References listed on IDEAS

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    Cited by:

    1. Niemann, Rainer, 2004. "Entscheidungswirkungen von Verlustverrechnungsbeschränkungen bei der Steuerplanung grenzüberschreitender Investitionen," Tübinger Diskussionsbeiträge 276, University of Tübingen, School of Business and Economics.
    2. Rainer Niemann, 2004. "Asymmetric Taxation and Cross-Border Investment Decisions," CESifo Working Paper Series 1219, CESifo.
    3. Caren Sureth & Ralf Maiterth, 2008. "The impact of minimum taxation by an imputable wealth tax on capital budgeting and business strategy of German companies," Review of Managerial Science, Springer, vol. 2(2), pages 81-110, July.
    4. Leonard Burman, 2013. "Pathways to Tax Reform Revisted," Center for Policy Research Working Papers 155, Center for Policy Research, Maxwell School, Syracuse University.
    5. Leonard E. Burman, 2013. "Pathways to Tax Reform Revisited," Public Finance Review, , vol. 41(6), pages 755-790, November.
    6. Caren Sureth & Ralf Maiterth, 2006. "Wealth Tax As Alternative Minimum Tax ? - the Impact of Minimum Taxation on Business Structure and Strategy -," EcoMod2006 272100093, EcoMod.
    7. Auerbach, Alan J., 2006. "The U.S. Tax System in International Perspective: A Review of the 2006 Economic Report of the Presidentís Tax Chapter," Berkeley Olin Program in Law & Economics, Working Paper Series qt23b9n6bp, Berkeley Olin Program in Law & Economics.
    8. Rainer Niemann, 2006. "Wirkungen der Abschnittsbesteuerung auf internationale Investitions- und Repatriierungsentscheidungen," Schmalenbach Journal of Business Research, Springer, vol. 58(7), pages 928-957, November.
    9. Michael J. Graetz, 2007. "Tax Reform Unraveling," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 69-90, Winter.

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