In quarterly earnings reports released this week, Meta and Qualcomm disclosed saving $8 billion and $5.7 billion respectively from the Trump administration’s recent regulations weakening a 2022 tax provision intended to reduce corporate tax avoidance. While also confirming their skyrocketing revenues and profits, both companies acknowledge that they will save billions because of the Trump administration’s weakening of the Corporate Alternative Minimum Tax (CAMT). Meta and Qualcomm are just two of the corporations that will benefit from this corporate tax cut provided unilaterally by the Trump Treasury Department.
Months earlier, both companies had complained that the tax breaks provided to them by the so-called “One Big Beautiful Bill Act” (OBBBA) were not quite as large as they expected because some were limited by the CAMT, which is a backstop tax meant to ensure companies pay at least a minimum amount of tax. Of course, Republican lawmakers who drafted OBBBA could have included provisions amending the CAMT so that it would not limit whatever tax breaks they wished to bestow on corporations. Either they wanted to avoid increasing the official revenue cost of OBBBA, or they knew how unpopular corporate tax cuts are, or they were just incompetent in drafting their legislation, but either way the result was that corporations that had backed OBBBA eventually realized that it would not benefit them quite as much as they expected.
This was, as we noted at the time, precisely what CAMT was designed to do: ensure that no matter how many tax breaks a profligate Congress chose to create, the very largest companies should have to pay at least a token amount of tax in profitable years. It may have also reflected Congressional intent: if lawmakers had wanted to allow R&D expensing to apply to CAMT, they would have done so. (This is certainly an option lawmakers were aware of, since Congress went out of its way to give oil companies a special new CAMT exemption in last year’s law.)
But the Trump administration, displeased with the amount of corporate tax cuts Congress had enacted last year, decided that the very biggest tech companies needed more. So they issued regulations that simply rewrote the tax laws by allowing R&D expensing to reduce CAMT. Even conservative analysts lately have acknowledged that Trump’s Treasury Department “has clearly been enacting unlegislated tax cuts.”
By fast-tracking this unauthorized regulatory tax giveaway, the Trump administration is sending a clear signal about who they believe is most deserving of tax cuts—as if such a signal was needed after last year’s top-heavy tax cuts for corporations and the wealthiest Americans. CAMT only applies to companies whose average profits exceed $1 billion a year over a three-year period, a ludicrously high bar that exempts all but a handful of the biggest corporations in America. So only companies living in the economic stratosphere can see even a dime’s worth of tax breaks from the new Treasury tax cuts.
President Trump has repeatedly pooh-poohed voter concerns over the rising cost of living, calling affordability issues a “hoax.” But the administration appears to believe that at least one of its constituencies, the tiny cadre of tech corporations that enjoy over $1 billion of profits each year, are facing an affordability crisis of their own. How else to explain the Trump administration’s casual willingness to rewrite the tax laws in defiance of Congress?
