Abstract

http://ssrn.com/abstract=2306353
 


 



Understanding the AMT, and Its Unadopted Sibling, the AMxT


James R. Hines Jr.


University of Michigan; NBER

Kyle D. Logue


University of Michigan Law School

August 5, 2013

U of Michigan Public Law Research Paper No. 347
U of Michigan Law & Econ Research Paper No. 13-011

Abstract:     
U.S. taxpayers are currently required to pay the greater of their liabilities under the regular income tax and their liabilities under the Alternative Minimum Tax (AMT). Despite its unpopularity, the AMT serves the function of permitting Congress to offer tax preferences for certain activities and expenditures while maintaining a progressive tax system. This paper examines this role of the AMT, and explores the possibility of adding an Alternative Maximum Tax (AMxT) that would augment the impact of the AMT. An AMxT limits a taxpayer’s liability to the minimum of the amount due under the regular income tax and the amount due under an alternative regime with the same tax base as the AMT, but higher tax rates. Adopting a coherent AMT/AMxT combination would increase the complexity of the tax system but make it possible to increase the progressivity of the regular income tax while using tax preferences to encourage socially beneficial activities, all without inducing excessive inequities in resulting tax burdens. Although the U.S. Treasury proposed an AMxT when it first advanced its plan for an AMT in 1969, and despite AMxT features of the current U.S. income tax, a comprehensive AMxT has never been enacted.

Number of Pages in PDF File: 52

Keywords: taxation

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Date posted: August 6, 2013 ; Last revised: September 11, 2013

Suggested Citation

Hines Jr., James R. and Logue, Kyle D., Understanding the AMT, and Its Unadopted Sibling, the AMxT (August 5, 2013). U of Michigan Public Law Research Paper No. 347; U of Michigan Law & Econ Research Paper No. 13-011. Available at SSRN: http://ssrn.com/abstract=2306353 or http://dx.doi.org/10.2139/ssrn.2306353

Contact Information

James Rodger Hines
University of Michigan ( email )
625 South State Street
Ann Arbor, MI 48109-1215
United States
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Kyle D. Logue (Contact Author)
University of Michigan Law School ( email )
625 South State Street
Ann Arbor, MI 48109-1215
United States
734.936.2207 (Phone)
HOME PAGE: http://cgi2.www.law.umich.edu/_FacultyBioPage/facultybiopagenew.asp?ID=220

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