The alternative minimum tax and effective marginal tax rates
By: [by] Daniel R. Feenberg [and] James M. Poterba
Contributors: Poterba, James M.; Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 03-37; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 03-37.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2003
Place of publication: Cambridge, MA
Language: eng
Number of pages: 31
Description: This paper examines the impact of the Alternative Minimum Tax on the weighted average marginal tax rates that apply to various components of taxable income. It also considers the impact of several AMT reform proposals on the number of AMT taxpayers, the total revenue collected from the AMT, and the weighted average marginal tax rates that apply to wages, capital income, and deductions such as state and local taxes and charitable gifts. The paper uses the NBER TAXSIM model to project federal personal income tax liabilities as well as AMT liabilities between 2003 and 2013. The AMT has only a modest impact on the average marginal tax rates for most sources of income because some AMT taxpayers face higher marginal tax rates, and others lower tax rates, as a result of the tax. The projections show that modest increases in the AMT exclusion level have substantial effects on the number of AMT taxpayers, and that indexing the AMT parameters would reduce the number of AMT payers in 2010 by more than sixty percent. These changes would also reduce the AMT's impact on average marginal tax rates. Keywords: Income taxation, alternative minimum tax. JEL Classifications: H24, H62.
Notes: "October 2003."

Includes bibliographical references (p. 22-23).

Abstract in HTML and working paper for download in PDF available via World Wide Web at the Social Science Research Network.

Supported by the Smith Richardson Foundation, the National Bureau of Economic Research, and the National Science Foundation.