Abstract

http://ssrn.com/abstract=1691080
 
 

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The AMT’s Silver Lining


Brian D. Galle


Boston College Law School

Jonathan Klick


University of Pennsylvania Law School; Erasmus School of Law; PERC - Property and Environment Research Center

October 12, 2010

Regulation, Vol. 33, No. 3, p. 24, 2010
Boston College Law School Legal Studies Research Paper No. 210

Abstract:     
The federal Alternative Minimum Tax has potentially salutary – and heretofore unrecognized – effects that counteract pathologies of state budgets over the business cycle. A taxpayer’s AMT liability increases with income, and acts to eliminate federal tax subsidies for state revenue-raising. Thus, as a state’s income grows and the AMT hits more state residents, state spending becomes more expensive in flush times as the federal tax subsidy for state and local taxes is reduced. Conversely, when state fiscal health deteriorates, the federal tax subsidy grows as fewer state residents fall under the AMT, boosting taxpayer support for state spending. This stabilizing mechanism has the potential to overcome problems state politicians face committing to saving during boom times and spending during bust times. This article presents empirical evidence suggesting that the AMT does indeed provide some degree of fiscal stabilization in accordance with micro-theory.

Number of Pages in PDF File: 7

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Date posted: October 13, 2010 ; Last revised: November 20, 2010

Suggested Citation

Galle, Brian D. and Klick, Jonathan, The AMT’s Silver Lining (October 12, 2010). Regulation, Vol. 33, No. 3, p. 24, 2010; Boston College Law School Legal Studies Research Paper No. 210. Available at SSRN: http://ssrn.com/abstract=1691080

Contact Information

Brian D. Galle (Contact Author)
Boston College Law School ( email )
885 Centre Street
Newton, MA 02459-1163
United States
Jonathan Klick
University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
2157463455 (Phone)
Erasmus School of Law ( email )
3000 DR Rotterdam
Netherlands
PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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