The Individual Amt: Problems and Potential Solutions

Tax Policy Center Discussion Paper No. 5

69 Pages Posted: 19 Sep 2002

See all articles by Leonard E. Burman

Leonard E. Burman

Maxwell School; The Urban Institute; Syracuse University - Center for Policy Research

William G. Gale

Brookings Institution

Jeff Rohaly

Urban Institute

Benjamin H. Harris

Brookings Institution

Multiple version iconThere are 3 versions of this paper

Date Written: August 13, 2002

Abstract

Originally targeted at high-income households, the individual alternative minimum tax (AMT) is now on the verge of switching from a "class" tax to a "mass" tax. Under current law, the AMT will encroach dramatically on the middle-class over the next decade and will become the de facto tax system for upper-income households. These changes occur because of the non-indexation of the AMT for inflation and the tax cuts enacted in 2001. The trends are troubling because the AMT is notoriously complex, its effects on efficiency and equity are questionable, and its underlying purpose is controversial. This paper provides information on the AMT, its economic effects, and options for policy reform, and is intended to help inform the debate and the eventual reforms that will be required in the near future.

Keywords: Alternative minimum tax, tax complexity, equity, efficiency

JEL Classification: H2, H3

Suggested Citation

Burman, Leonard E. and Gale, William G. and Rohaly, Jeff and Harris, Benjamin H., The Individual Amt: Problems and Potential Solutions (August 13, 2002). Tax Policy Center Discussion Paper No. 5, Available at SSRN: https://ssrn.com/abstract=323840 or http://dx.doi.org/10.2139/ssrn.323840

Leonard E. Burman

Maxwell School ( email )

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The Urban Institute ( email )

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Syracuse University - Center for Policy Research ( email )

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William G. Gale (Contact Author)

Brookings Institution ( email )

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202-797-6148 (Phone)
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Jeff Rohaly

Urban Institute ( email )

2100 M Street, NW
Washington, DC 20037
United States

Benjamin H. Harris

Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States

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