GAO Reports  
GGD-95-88 April 03, 1995

Tax Policy: Experience with the Corporate
Alternative Minimum Tax

Pursuant to a congressional request, GAO provided information on the corporate alternative minimum tax (AMT), focusing on: (1) the corporations that paid AMT between 1987 and 1992; (2) whether AMT achieved its purpose; and (3) how AMT might affect corporate investment.

GAO found that: (1) AMT accelerated tax payments of $27.4 billion and corporations used credits totalling $5.8 billion, from 1987 to 1992; (2) at the end of 1992, corporations had accumulated $21.6 billion in credits that would result in lower tax revenues in the future; (3) of the 2.1 million corporations subject to AMT, 2,000 large corporations paid 85 percent of all AMT in 1992; (4) the two AMT provisions that produced the largest increases in taxable income were the depreciation adjustment, used by 87 percent of all AMT payers, and the adjusted current earnings adjustment, used by 67 percent of all AMT payers; (5) the three industries that paid the most AMT were manufacturing, transportation, and finance; (6) AMT has achieved its objectives of making corporations with positive economic income pay tax and causing corporations that reported positive amounts of book income in a particular year to pay some tax in that year; (7) the effects of AMT on corporate investment are unclear due to insufficient data; and (8) while AMT might reduce present cash flows, future cash flows would be enhanced as taxpayers recover AMT credits.

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