An analysis of the Alternative Minimum Tax in Taiwan

• Main Authors: Hsu,Chen-ling, 許珍綾
• Other Authors: De-Xing, Guan
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/25191084208645538834

碩士 === 國立臺北大學 === 經濟學系 === 95 === Before 2005, high-income class and some engineering corporations had tax deductions because of the tax-deduction rules. Therefore, on January 1st 2005, the Taiwanese government launched the Alternative Minimum Tax system (AMT) to promote the fairness of the Taiwanese tax system. After the AMT was implemented, those who had had tax deductions had to pay the minimum taxes. In this thesis, we explore the effectiveness of the AMT system and the impact on the overall social welfare after the execution of the AMT. Based on the theoretical structure introduced by Becker, Murphy, and Werning (2005), social status, according to individual’s income which includes bonus, is a positive factor, as well as complementary with consumption in individual’s utility function, in this thesis. Additionally, we divide individuals into three kinds of social status, the wealthy people who apply to the AMT, the middle class and the ordinary people who don’t apply to the AMT. After establishing this framework, we probe that the changes of the merchandize consumption, the social status consumption and the related individual’s utility, after the implement of the AMT. Subsequently, we use simulation to further analyze those changes and the result of the simulation shows that after the implement of the AMT, the utilities of the people who don’t apply to the minimum tax system will rise. Therefore, from Rawls’ perspective, the overall social welfare will also increase. However, the rises is actually less than the decline in the utilities of the wealthy people who apply to the system. Hence, from utilitarianism’s perspective, the overall social welfare will decrease. In this thesis, we find out that the Alternative Minimum Tax system certainly can promote the economic fairness, but reduces the economic efficiency meanwhile. Thus, the Taiwanese government should take all the impacts into consideration.