TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, October 3, 2013

Hines Presents The AMT and the AMxT Today at Columbia

HinesJames R. Hines, Jr. (Michigan) presents Understanding the AMT, and Its Unadopted Sibling, the AMxT (with Kyle D. Logue (Michigan)) at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex Raskolnikov, David Schizer, and Wojciech Kopczuk:

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.

Colloquia, Scholarship, Tax | Permalink