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Cracking the Code
Making Sense of the Corporate Alternative Minimum Tax
Authors:
Publisher:
2010
Summary
The corporate alternative minimum tax (AMT) was hailed in the Tax Reform Act of 1986 as instrumental to ensuring that tax loopholes would not permit corporations to avoid paying their fair share of tax liability. In 1995, less than ten years later, repeal of the AMT was pledged as part of the Republican Party's "Contract with America" and passed by the House of Representatives. Opponents of the AMT object that it penalizes new investment by firms and prevents the use of legitimate deductions. Its defenders tout the ability of the AMT to address public perceptions of unfairness in the tax system. At first glance, the debate over the AMT seems to be another example of the classic struggle between equity and efficiency. But, as this book reveals, there are serious flaws in the arguments used on both sides of this issue. As a result, the AMT may fail to achieve any notable equity objectives and may miss the opportunity to make significant improvements in the efficiency with which the nation's scarce capital is employed. Whether or not reforms of the AMT are ultimately enacted, the debate over the AMT raises fundamental questions of tax policy that will persist: Who benefits from tax subsidies? How much should the tax code be used to direct resources in the economy? If corporate taxes are ultimately borne by individuals, how do corporate tax provisions affect fairness? Andrew Lyon opens these topics up to a wide audience, presenting new data on the impact of the AMT, and offering suggestions for future policy reform. He argues that the legislative desire to respond to an apparent inequity should be channeled into considering whether there are efficiency reasons for reducing the tax advantages observed. The best solutions to these considerations, he contends, are not found in a minimum tax.
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Bibliographic data
Copyright year
2010
ISBN-Print
978-0-8157-5324-7
ISBN-Online
978-0-8157-0803-2
Publisher
Rowman & Littlefield, Lanham
Language
English
Pages
156
Product type
Book Titles
Table of contents
ChapterPages
Contents No access
Why an Alternative Minimum Tax? No access
Corporate Tax Reform No access
Making Sense of the Alternative Minimum Tax No access
The Corporate Income Tax No access
The Minimum Tax No access
Calculation of the Alternative Minimum Tax No access
Overview of Adjustments and Preferences No access
The Alternative Minimum Tax Depreciation Adjustment No access
Appendix A: Legislative Background of the Alternative Minimum Tax No access
Appendix B: Alternative Minimum Tax Adjustments and Preferences No access
The Incidence of the Corporate Tax No access
Does a Minimum Tax Improve Horizontal Equity? No access
Does a Minimum Tax Improve Vertical Equity? No access
Perceptions of Fairness No access
Summary No access
The Benefits of a Level Playing Field No access
The Case for Tax Incentives: Market Failure No access
Does a Minimum Tax Improve Efficiency? No access
Debt-Financed Investment No access
Compliance Costs and Tax Planning No access
Summary No access
Investment in Equipment No access
Investment in Other Capital No access
Effects of the 1993 Alternative Minimum Tax Reform and Other Proposals No access
Effects on the Timing of Investment No access
Appendix: The Cost of Capital Model No access
A Snapshot of the Alternative Minimum Tax Firm No access
Alternative Minimum Tax Status by Industry No access
A Dynamic Look at the Alternative Minimum Tax Firm No access
Summary No access
Do Alternative Minimum Tax Payments Increase in Bad Times? No access
Does the Alternative Minimum Tax Affect Investment? No access
Appendix: Data Set Description No access
Congressional Proposals for Reform of the Alternative Minimum Tax No access
Scaling Back Tax Advantages under the Regular Tax No access
