TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Monday, August 19, 2013

Hines & Logue: The AMT and the AMxT

James R. Hines, Jr. (Michigan) & Kyle D. Logue (Michigan), Understanding the AMT, and Its Unadopted Sibling, the AMxT:

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.

http://taxprof.typepad.com/taxprof_blog/2013/08/hines-logue.html

Scholarship, Tax | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef019104d42c32970c

Listed below are links to weblogs that reference Hines & Logue: The AMT and the AMxT:

Comments