WASHINGTON -- The U.S. tax system would be fairer more efficient if Congress repealed the corporate alternative minimum tax and exempted shareholders from paying taxes on corporate dividends, the Treasury Department's Office of Tax Policy said yesterday.

Eliminating the minimum tax would be a boon to the municipal market, which has chafed under the levy since it was imposed in 1986. But ending taxation of corporate dividends at the shareholder level would make corporate securities more attractive to investors at the expense of tax-exempt debt, municipal bond proponents have warned.

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