The Case for Repealing the Corporate Alternative Minimum Tax

Abstract

The article argues that the corporate alternative minimum tax ("AMT") should be repealed. The article notes that recent events involving Enron, Worldcom, Global Crossing, and Qwest have demonstrated that Congress' justification for enacting the corporate AMT in 1986 has been undercut because book income, like taxable income, can also be subject to wholesale manipulation. The article argues that the corporate AMT raises minimal revenue, distorts investment incentives, and imposes substantial compliance costs. In addition, the article argues that the corporate AMT does not increase efficiency or equity and does not prevent corporate tax shelters. In lieu of the corporate AMT, the article proposes reducing tax preferences and requiring greater public disclosure of the tax information of public companies.