This week, the nation’s crisis of democracy further escalated as the Trump administration again claimed for itself powers that are clearly reserved to Congress under the Constitution. This time, the Treasury Department is unilaterally cutting corporate taxes for billion-dollar corporations with regulations that ignore the statute they claim to implement, disregarding the separation of powers between the branches of government that has defined how America works for more than two centuries.
President Trump’s so-called One Big Beautiful Bill Act (OBBBA), enacted this past summer, provided trillions of tax breaks mostly for corporations and wealthy individuals. Now the administration proposes regulations that will cut corporate taxes even further than an otherwise compliant Republican Congress was willing to do, achieving through regulatory changes what its allies in Congress would not enact through proper legislation.
Through some unknown combination of strategy, dishonesty, or simple incompetence, the drafters of OBBBA included corporate tax breaks in the legislation but did not repeal a provision known as the Corporate Alternative Minimum Tax (CAMT), which was enacted in 2022 to limit how much corporations could benefit from special tax breaks and loopholes. Soon after enactment of OBBBA, corporate lobbyists complained that the CAMT – a critical backstop to a loophole-ridden corporate income tax base – would limit the tax breaks they expected to receive under the 2025 tax law.
OBBBA provides research expensing, a permanent tax break that proponents argue encourages companies to do beneficial research. But the OBBBA provision providing this tax break retroactively, for research already done, obviously does not encourage companies to do anything and is instead a windfall with no clear rationale. This retroactive application, because of the way it piles up deductions for several previous years of research in a way that differs from how profits and taxes are reported to investors, triggers the CAMT for some companies.
Trump’s Treasury Department now proposes regulations to implement the CAMT that simply pretend that it was written to exempt this retroactive “tax incentive” for research. This proposed regulation can only help corporations that with average profits exceeding $1 billion a year (because all other companies are already exempt from CAMT). The potential savings for the biggest corporations could be enormous. Meta alone recently announced that the CAMT would restrict the tax breaks the company thought it would receive from OBBBA by $16 billion.
This is not the first regulatory change the Trump administration has used to illegally weaken CAMT: the Joint Committee on Taxation estimated that another change the Treasury Department has already promulgated would reduce corporate income collections by $10 billion over the next decade.
Regulations are a vital part of how our government works: the laws passed by Congress routinely involve policy areas where executive agencies must write rules that clarify details of those laws. But the purpose of regulations is to clarify the laws, not change them. Now the Trump administration appears intent on achieving through illegal regulations what it was unable to do through the legislative process last summer: a gradual repeal of an important bulwark against corporate tax avoidance.
