For more on corporate taxes, see Kyle's recent study "U.S. Multinationals Paid More Than $100 Billion in Foreign Income Taxes."
- Districts in NY, NJ Hammered by AMT
Districts in NY, NJ Hammered by AMT
New Report Shows Effect of Alternative Minimum Tax by Congressional Districts
Media contact: Brian Phillips (202) 464-5102
WASHINTON, D.C. - A new study by the Tax Foundation reveals that home districts of congresspersons in New York, New Jersey and California are the hardest hit by the alternative minimum tax (AMT). Broken up by congressional district, the study shows that nearly half of the top 20 districts that pay the most as a result of the AMT are in New York alone. New Jersey and California both have four. (See the full study here: http://www.taxfoundation.org/legacy/show/2131.html.)
States with high state and local income taxes tend to be harder hit due to federal law that allows the deduction of these taxes from the federal income tax. The structure of the AMT also contributes to the number of taxpayers it ensnares. The AMT system defines income more broadly and prohibits certain types of deductions that are allowed under the regular federal income tax system. Congressional districts that are home to many who take such deductions and credits tend to be heavily affected.
Previous studies by co-author Gerald Prante showed New York and New Jersey as having the highest property taxes in the country as well. "Since they can be deducted, it follows that those who pay the highest property taxes will more likely be subject to the AMT," said Prante. (The property tax study may be found here: http://www.taxfoundation.org/legacy/show/1889.html.)
The congressional districts least affected by the AMT were in Alabama, Tennessee and Texas.
"A confluence of factors is pushing more and more Americans into the AMT system," said Prante. "Not the least of which has been the Bush tax cuts, which have significantly reduced taxes for all taxpayers."
Thirteen of the most affected congressional districts are represented by Democrats. Some members of the new Democratically controlled congress, such as House Ways and Means Chairman Charles Rangel, have made reforming the AMT a top priority for this year.
For media inquires please email Brian Phillips or call 202.464.5102.