TL/DR –
The Trump administration is reportedly working to dismantle a Biden-era corporate tax designed to prevent large corporations from avoiding tax obligations while reporting sizeable profits. This corporate alternative minimum tax (CAMT) was introduced as part of the Inflation Reduction Act and requires profitable US corporations to pay at least a 15% tax on their reported profits. Critics claim the Trump administration’s actions have created loopholes in the CAMT, allowing significant corporations and wealthy investors to benefit further, while programs for low-income Americans face cuts.
Trump Administration Targets Biden-Era Corporate Tax
The Biden-era corporate tax, specifically designed as a measure to prevent large corporations from evading tax while reporting large profits, is under fire from the current Trump administration. This tax, known as the Corporate Alternative Minimum Tax (CAMT), was put in place as part of the Inflation Reduction Act, signed into law by former President Joe Biden in 2022.
The CAMT requires that highly profitable U.S. corporations pay a minimum tax of 15% on their so-called book profits – the figures they report to their investors. As the Institute on Taxation and Economic Policy points out, corporations often utilize special breaks to report profits to the IRS that are significantly lower than their book profits. This tactic allows corporations to minimize their tax obligations while appearing profitable to investors.
Trump Administration Moves to Undermine CAMT
Since taking office in January, the Trump administration has been working to undermine the CAMT. They have issued guidance and regulatory proposals aimed at severely weakening the tax. These efforts favor corporate giants and wealthy private equity investors, coinciding with the administration’s ongoing attacks on low-income American programs such as Medicaid and nutrition assistance.
The New York Times reported that this move could add hundreds of billions of dollars in tax breaks for big businesses and investors. This is on top of the trillions of dollars in tax cuts included in the Trump-GOP budget law enacted over the summer.
Congress Raises Concerns
Members of Congress are scrutinizing the Trump administration’s attack on the CAMT. On September 8, a group of Democratic lawmakers, including Sen. Angus King (I-Maine), addressed a letter to US Treasury Secretary Scott Bessent. The lawmakers expressed their concern that the Trump administration’s new guidance would create loopholes in the CAMT for the largest and wealthiest corporations.
In particular, they noted a June guidance notice that would allow companies to avoid the CAMT if their income, calculated via a simplified accounting method, falls below $800 million. This threshold dramatically exceeds the $500 million safe harbor threshold set by the Biden administration. The lawmakers fear that this change could allow more wealthy corporations to evade their legally required tax obligations.
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