As recent events illustrate, state finances are pro-cyclical: during recessions, state revenues crash, worsening the effects of economic downturns. This problem is well-known, yet persistent. We argue here that, in light of predictable federalism and political economy dynamics, states will be...

We present an argument from micro-economic foundations suggesting that the federal Alternative Minimum Tax has potentially salutary – and heretofore unrecognized – effects that counteract pathologies of state budgets over the business cycle. AMT liability increases with income, and acts to...

We present an argument from micro-economic foundations suggesting that the federal Alternative Minimum Tax has potentially salutary – and heretofore unrecognized – effects that counteract pathologies of state budgets over the business cycle. AMT liability increases with income, and acts to...

The federal Alternative Minimum Tax has potentially salutary – and heretofore unrecognized – effects that counteract pathologies of state budgets over the business cycle. A taxpayer's AMT liability increases with income, and acts to eliminate federal tax subsidies for state revenue-raising....