The Biden administration has put forth a new rule that would mandate the largest U.S. companies to pay a minimum of 15% of their profits in taxes. This proposal, part of the administration's 2022 Inflation Reduction Act, targets approximately 100 of the biggest corporations with annual profits exceeding $1 billion.
The aim of this provision is to prevent these large corporations from exploiting tax loopholes and exceptions to avoid paying substantial taxes on their extensive profits. Similar to the alternative minimum tax for individuals, the corporate AMT seeks to ensure that these companies contribute their fair share to the tax system.
Treasury Department officials estimate that implementing the corporate AMT would generate $250 billion in tax revenue over the next decade. Without this rule, the top 100 companies would only be paying an average of 2.6% in taxes on their profits, with some even managing to evade taxes entirely.
Former President Donald Trump, who had previously reduced the corporate tax rate to 21% from 35% during his tenure, has expressed opposition to the corporate AMT. He has advocated for further reducing the corporate tax rate to 15% if re-elected.
Democratic lawmakers, including Senator Elizabeth Warren, have been vocal supporters of the corporate AMT, emphasizing the importance of ensuring that the largest corporations and wealthiest individuals pay their fair share of taxes.
The proposed rule by the Treasury Department is currently open for public comment until December 12, with a scheduled hearing on the matter set for January 16. If enacted, this new tax regulation could significantly impact how major corporations contribute to the U.S. tax system.
