A Horizontal Equity Analysis of the Minimum Tax Provisions: 1976-1986 Tax Acts.

Abstract This study extends previous research [Anderson, 1985) by (1) replicating the horizontal equity analysis of minimum taxes under the Tax Reform Act of 1976: (TRA76) and the Tax Equity and Fiscal Responsibility Act of 1962 (TEFRA) using samples from 1978 and 1983 individual Tax Models and (2) examining the horizontal equity impact of the recently enacted Tax Reform Act of 1986. (TRA86) using both data sets. The results support the previous study's conclusion that the TRA76 add-on minimum tax enhances horizontal equity more than the TEFRA alternative minimum tax. The study also concludes that the regular tax under TRA86 increases horizontal equity far more than did the minimum tax under prior law and that the alternative minimum tax under TRA86 makes a moderate additional contribution to horizontal equity.