The corporate alternative minimum tax, established as part of the 2022 Inflation Reduction Act, applies to around 100 companies with over $1 billion in profits. Its purpose is to ensure these companies contribute at least 15 percent of their adjusted profits to federal revenue, countering the tendency to pay little to no taxes thanks to existing deductions and credits.
Despite the intention behind the new corporate tax regime, the complexities involved in its administration highlight that what constitutes a loophole to one perspective might be seen as a necessary economic incentive from another, muddling the path to tax fairness.
Although designed to address tax advantages that allow corporations to significantly reduce their tax bills, the new tax retains several deductions and credits. Consequently, many companies may still pay below the 15 percent minimum tax, undermining the legislation's objective.
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