The Trump administration has initiated significant regulatory changes aimed at dismantling the Corporate Alternative Minimum Tax (CAMT), a measure designed to ensure that large, profitable corporations pay at least 15% of their reported book profits in taxes. This tax was established as part of the Inflation Reduction Act, which former President Joe Biden signed into law in 2022.
The CAMT was intended to close loopholes that allow corporations to minimize their tax obligations while reporting substantial profits to shareholders. According to the Institute on Taxation and Economic Policy, many corporations use various deductions and credits, enabling them to report much lower profits to tax authorities than to the public. This discrepancy benefits corporate leaders who seek to lower their tax liabilities while still attracting investors with strong profit figures.
Since Donald Trump took office in January, his administration has proposed regulatory modifications that critics argue will undermine the CAMT. Reports indicate that these changes would primarily benefit wealthy corporations and private equity investors while simultaneously targeting social support programs for low-income Americans, including Medicaid and nutrition assistance programs.
The New York Times reported on September 30, 2023, that the administration’s tax relief measures could lead to an additional burden of hundreds of billions of dollars in tax breaks for large businesses. This comes in addition to the trillions of dollars in tax cuts enacted under the Trump-GOP budget law earlier this summer. Such actions have prompted concerns among lawmakers regarding the administration’s adherence to legal boundaries in the implementation of tax laws.
Congressional Response to Regulatory Changes
The administration’s efforts to modify the CAMT have not gone unnoticed by members of Congress. On September 8, 2023, a coalition of Democratic lawmakers, along with Senator Angus King of Maine, sent a letter to U.S. Treasury Secretary Scott Bessent. The letter raised alarms about the potential creation of new loopholes that could allow the wealthiest corporations to evade their tax responsibilities.
The lawmakers expressed particular concern regarding Notice 2025-27, issued in June, which allows companies to avoid the CAMT if their income falls below $800 million under a simplified accounting method. In contrast, the Biden administration had previously suggested a safe harbor threshold of $500 million, which they calculated would prevent corporations that should be subject to the CAMT from being exempt.
The letter stated, “We are seriously concerned that this cursory loosening of CAMT enforcement will simply allow more wealthy corporations to avoid paying their legally owed share.” This shift in policy has sparked debates about accountability and fairness in the corporate tax system.
As the administration continues its regulatory changes, the battle over corporate taxation remains a contentious issue, with significant implications for both the economy and social welfare programs. The outcome of these efforts will likely shape the financial landscape for corporations and individual taxpayers alike in the years to come.
