THE ALTERNATIVE MINIMUM TAX: EMPIRICAL EVIDENCE OF TAX POLICY INEQUITIES AND A RAPIDLY INCREASING MARRIAGE PENALTY

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

We use the 1995 IRS Public Use Tax File in simulation models to examine the factors associated with the widely anticipated growth in the alternative minimum tax (AMT). The evidence suggests that the changes in the marginal tax rate structure associated with the 2001 and 2003 tax legislation are likely to result in exponential growth in AMT incidence and create a substantial hidden marriage tax penalty, a result contradictory with the intent of these tax law changes. The evidence further suggests that the elimination of preferential long-term capital gain rates for the AMT could effectively fund structural changes in the AMT that would substantially reduce the impact of the AMT on middle and lower income taxpayers, many of whom are liable for the AMT due to the add-back for AMT purposes of such non-tax preferential items as Schedule A adjustments and personal and dependency exemptions.

Original languageEnglish
Title of host publicationAdvances in Taxation
Pages123-146
Number of pages24
DOIs
StatePublished - 2004

Publication series

NameAdvances in Taxation
Volume16
ISSN (Print)1058-7497

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