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AMT Burdened More Than 30,000 Companies in 1998

Daily Policy Digest

Tax Issues

Friday, November 30, 2001

While the Senate has yet to take action on the economic stimulus package, the Treasury Department has released data showing the retarding effects of the Alternative Minimum Tax, which President Bush wants to eliminate. According to the report, the AMT tends to increase a company's tax burden during an economic downturn, which may result in a deeper and more prolonged economic weakness by reducing business activity.

Among the Treasury findings:

The AMT increased the tax liability of 30,226 companies in 1998 -- ranging from agriculture to the service sector.

More than a quarter of all corporate assets were held by companies paying higher taxes due to the AMT.

The AMT particularly burdens the manufacturing sector, which employs more than 17 million workers -- and more than 5,500 companies in the sector paid higher taxes due to the AMT.

Using a continuous sample of tax returns of larger companies (over $50 million in assets) from 1993 to 1998, nearly one-half of companies paid higher taxes due to the AMT in at least one year. Companies paying higher taxes due to the AMT in at least one year during this period account for about 70 percent of corporate assets in the sample.

Source: Jon Berlau, "Democrat AMT Tax is a Tax on Jobs," Insight Magazine, December 17, 2001.

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