American Accounting Association 2006 Midwest Region Meeting March 30 – April 1 Chicago, Illinois

Friday, March 31, 10:20 a.m.-12:00 noon Concurrent session 2C - Fraud, Ethics, Equity and Partnerships (Taxation)

Title: Effect of Various Alternative Minimum Tax Components on Horizontal Equity

Peter J. Westort University of Wisconsin Oshkosh

ABSTRACT: Using tax-year 2000 IMF data, the effect of the AMT on horizontal equity is assessed. For lower income ranges, the effect of the AMT is detrimental. The impact of the various components of the AMT on horizontal equity are analyzed using the coefficient of residual variation from regression models where various components of the AMT are explanatory variables and, alternatively, the AMT and total income tax are the dependent variables. For lower income ranges, the variation in total income tax is affected primarily by the itemized deduction AMT adjustments and by the exemption disallowance. At the higher income ranges, it is the other AMT adjustments that explain most of the variance in tax liability.

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