A Critical Analysis of the Corporate Alternative Minimum Tax

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ABSTRACT The corporate alternative minimum tax, enacted as part of the 2022 Inflation Reduction Act, intends to impose a minimum level of taxation on profitable large corporations using financial statement income as a tax base. Although both alternative tax bases and the usage of financial statement income in taxes have a long history in the United States, the tax represents a substantial change in the current corporate tax law. Although the corporate alternative minimum tax is predicted to raise billions of dollars from a small subset of the largest corporations, its design raises concerns about long-term efficacy. In this article, we summarize the development of the corporate alternative minimum tax in light of its historical predecessors and compare its design against accepted standards of good tax policy, ultimately identifying multiple inadequacies in its construction and implementation. We conclude by making policy recommendations. JEL Classifications: H21; H25; K34.