The Alternative Minimum Tax and Effective Marginal Tax Rates

Daniel Feenberg, James Poterba

NBER Working Paper No. 10072
Issued in November 2003
NBER Program(s):Public Economics

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.

download in pdf format
   (222 K)

email paper

A non-technical summary of this paper is available in the April 2004 NBER Digest.  You can sign up to receive the NBER Digest by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10072

Published: Feenberg, Daniel R. and James M. Poterba. "The Alternative Minimum Tax And Effective Marginal Tax Rates," National Tax Journal, 2004, v57(2,Jun), 407-427. citation courtesy of

Users who downloaded this paper also downloaded* these:
Bernheim Incentive Effects of the Corporate Alternative Minimum Tax
Lyon and Silverstein w4783 The Alternative Minimum Tax and the Behavior of Multinational Corporations
Lyon, Silverstein, and Hubbard Alternative Minimum Tax Rules and Multinational Corporations
Markle and Shackelford w15091 Do Multinationals or Domestic Firms Face Higher Effective Tax Rates?
Kotlikoff and Rapson w12533 Does It Pay, at the Margin, to Work and Save? -- Measuring Effective Marginal Taxes on Americans' Labor Supply and Saving
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us