The Alternative Minimum Tax Bombshell, Part 2: The Critics Strike Back
For tax reform to be as pro-growth as possible, that means burying the AMT once and for all.
Caroline L. Harris
Former Vice President, Tax Policy & Economic Development, Former Chief Tax Policy Counsel
December 08, 2017
Earlier this week, the U.S. Chamber wrote about the last minute, unpleasant surprise the Senate inserted into its tax reform bill – the return of the alternative minimum tax (AMT). We noted the harm it imposes as well as the threat to America’s tax competitiveness its reappearance brings.
In effect, for many companies the AMT would become the primary tax system while the “regular” income tax would become the backstop system. No policy justification exists for reintroducing the AMT, which has been on most analysts “bad policy” list for many years. The Senate brought the AMT back from the dead for one simple reason – they were short of money. Oddly enough, much the same reason the individual AMT in its current form was adopted in the 1986 tax reform act.
Trade associations like the National Association of Manufacturers were quick to point out the detriment of this tax, stating:
The American Petroleum Institute (API) shared concerns over the AMT overriding the pro-growth impacts of this reform:
As did the Associated General Contractors of America, noting that,
The Air Conditioning Contractors of America highlighted the damaging impacts of the AMT on investments and job creation, stating:
The International Franchise Association also noted the damage to job creation:
Others noted the damaging impact the AMT has on research and development (R&D). The Aerospace Industries Association provided that:
The General Aviation Manufacturers Association echoed the importance of R&D, noting:
Likewise, the American Gaming Association noted the importance of the R&D tax credit, stating:
The Associated Builders and Contractors expressed concerns over the AMT’s contribution to accounting method complexities:
The National Stone, Sand and Gravel Association highlighted the impact corporate AMT can have on production projects:
Others expressed concern over the impact of the AMT on various bond markets. The Airports Council International-North America focused on private activity bond issues, noting that:
And the Property Casualty Insurers Association of America highlighted the impact in the municipal bond market:
The American Council of Life Insurers echoed these concerns, noting:
The Insured Retirement Institute and its member companies support the repeal of the corporate AMT, noting its adverse impact on retirement,
The Edison Electric Institute noted the negative ramifications in the electric power space, stating:
And banks were not without their own concerns. The Financial Services Roundtable noted:
As we said earlier this week, the message is pretty clear: For tax reform to be as pro-growth as possible, that means repealing the AMT. We’re fairly certain the tax conference committee has gotten the message and is as inclined as the business community to bury the AMT once and for all.
Editor's note (12/11/2017): Comments from the American Council of Life Insurers, the Edison Electric Institute, and the Financial Services Roundtable were included.