Senate blocks resolution to overturn CAMT guidance

The Senate blocked a resolution Tuesday that would have disapproved of recent guidance from the Treasury Department weakening the corporate alternative minimum tax under the Inflation Reduction Act of 2022.

Last year, the Treasury and the Internal Revenue Service issued notices and revised proposed regulations on the CAMT, which had imposed a 15% minimum tax on a small number of corporations earning over $1 billion in "adjusted financial statement income." The CAMT differed in many respects from the so-called Pillar 2 global minimum tax of 15% under the Organization of Economic Cooperation and Development's efforts to impose some taxes on multinationals, but was seen as a step in that direction. However, the new guidance from the Treasury and the IRS would allow them to mostly avoid such taxes. The OECD has already moved to exempt most U.S. corporations from its global minimum tax under pressure from the Trump administration.

Senate Democrats have been protesting the move to water down the CAMT, pointing out that it would allow companies to avoid CAMT if their income under a simplified accounting method is below $800 million. Sen. Ron Wyden, D-Oregon, and Angus King, I-Maine, introduced a resolution disapproving of the guidance, co-sponsored by Sen. Gary Petters, D-Michigan, but it was blocked in the Senate on Tuesday.

"The ink is barely dry on the megabill Trump and Republicans passed to give $1 trillion in new tax breaks to giant corporations, and now his Treasury Department is throwing another $10 billion handout to the most profitable corporations in America," Wyden said in a statement. "The pattern we're seeing is that the Trump administration gives big corporations and ultra-wealthy donors whatever tax benefits they want the second they walk through the door at the Treasury Department, but that doesn't mean the Senate has to allow this giveaway to happen. Stuffing $10 billion into the coffers of corporations that are already raking in enormous profits is indefensible at a time when so many Americans are getting battered by inflation and barely staying afloat."

According to the Joint Committee on Taxation, the loopholes within IRS Notice 2025-28 would cost taxpayers over $10 billion, said the senators. The notice makes changes to the rules governing how large and wealthy corporate and private equity firms can count income from partnerships they own, basically giving corporations a "choose-your-own-tax-rate" advantage. Under the new system, a multi-billion-dollar corporation or private equity firm would be able to choose one of six different ways to count how much money it made in a partnership. 

"It's downright unfair to give billions in tax relief to America's most successful corporations when Maine people are struggling to afford their prescription drugs, childcare and groceries," King said in a statement. "This Congressional Review Act resolution would block the administration's harmful tax policy that provides a loophole for corporations looking to skirt paying their taxes. This is a commonsense step toward a fairer tax policy that prioritizes people over profits and levels the playing field."

A watchdog group, the Committee for a Responsible Federal Budget, also criticized the guidance. It noted ahead of the vote that based on estimates from the Joint Committee on Taxation, the guidance would diminish the savings from the CAMT by $10 billion over 10 years. CRA resolutions require only a simple majority in the Senate but also need to pass the House and be signed by the president to take effect.

The guidance gives large corporations flexibility in how they calculate income from partnership investments when determining their CAMT liability. Analysts have warned this allows corporations to reduce taxation of partnership income and would encourage the abuse of partnerships as a tax-avoidance strategy, the group noted.

"The administration is eroding the tax code through executive action," said CRFB president Maya MacGuineas in a statement. "It wasn't right when the last president enacted unilateral deficit increases, and it isn't right when this one does. Policymakers enacted the corporate alternative minimum tax in 2022 to generate new revenue from low-taxed corporations. If current policymakers don't like that tax, they should repeal and replace it through legislation. Instead, the administration is taking a 'death by a thousand cuts' approach to weaken the tax little-by-little. We ought to be strengthening the tax base and improving tax enforcement, not opening up new loopholes that undermine the intent of the law. The current Congressional Review Act measure would help restore the corporate alternative minimum tax to its intended design. It would be a small first step — a baby step really — toward beginning to get our fiscal house in order."