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Minimum Taxation by Taxing Wealth - Capital Budgeting and Business Strategy
Caren Sureth,
University of Paderborn
Ralf Maiterth, University of Hanover
Jens Mueller, University of Paderborn
ABSTRACT. An alternative minimum tax (AMT) is often regarded desirable. We analyze the influence of a wealth tax designed as AMT on marginal investment decisions and provide an analytical approach and numerical analyses identifying distortive effects. We present a wealth tax AMT paradox under loss offset restrictions. Modelling enterprises of different structure, industry, size and legal status we show that companies in the service sector are more frequently subjected to this AMT than capital intensive industries. This result runs counter to well-known effects of a common wealth tax. We resume that whenever income is taxed correctly, AMT is dispensable.
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