Trump Administration Expands Tax Breaks for Wealthy Corporations

The Trump administration has initiated significant tax breaks for wealthy corporations, utilizing low-profile regulatory notices to implement these changes. According to a report from the New York Times, the U.S. Treasury Department is offering tax relief primarily targeting private equity firms, cryptocurrency companies, and foreign investors in U.S. real estate.

In October, the IRS proposed new regulations that would grant tax breaks specifically to foreign investors involved in U.S. real estate transactions. Following this, in August, the IRS suggested rolling back existing rules designed to prevent multinational corporations from evading tax obligations by claiming duplicate losses in multiple jurisdictions. While these regulatory changes have not garnered widespread media attention, they have been highlighted by various accounting and consulting firms.

Kyle Pomerleau, a senior fellow at the American Enterprise Institute, emphasized the implications of these actions, stating, “Treasury has clearly been enacting unlegislated tax cuts. Congress determines tax law. Treasury undermines this constitutional principle when it asserts more authority over the structure of the tax code than Congress provides it.”

The recent IRS notices build upon the tax relief established in Trump’s “One Big Beautiful Bill” Act. This legislation extended the controversial “Trump tax cuts” from 2017, which the Congressional Budget Office estimated would result in a reduction of tax revenue by approximately $4 trillion over the next decade. Notably, the Center for American Progress reported that the proposals could yield over $1.5 trillion in tax cuts for the wealthiest 5 percent of Americans.

The new proposals challenge the provisions established under President Joe Biden’s 2022 Inflation Reduction Act. This law aimed to ensure that profitable corporations paid a minimum tax rate to help address inflation and reduce the federal deficit. Specifically, it mandated that corporations with over $1 billion in annual revenue pay at least 15 percent of their adjusted financial statement income. A study conducted in 2022 suggested that only around 80 corporations would be subject to this minimum tax requirement. The Joint Committee on Taxation estimated that the Inflation Reduction Act could generate $200 billion in revenue over a ten-year period.

In September, the IRS released interim guidance concerning the minimum tax, allowing corporations to exclude unrealized gains and losses from digital asset holdings when calculating their adjusted financial statement income. Following this guidance, Strategy Inc., a cryptocurrency firm, stated in a filing with the SEC that it “no longer expects to become subject to” the minimum tax. Similarly, Cheniere Energy, a natural gas exporter, indicated that it was entitled to a refund of $380 million for previously paid minimum tax due to this new guidance.

A spokesperson for the Treasury Department defended the proposed regulations, describing them as “a practical approach that supports American investment and competitiveness.” They argued that the changes are intended to simplify compliance burdens that would otherwise overwhelm taxpayers.

Concerns have been raised by some experts regarding the potential implications of these proposals. Critics argue that the Treasury’s actions could contribute billions to the federal deficit and may overstep its authority, as the responsibility for enacting federal tax laws rests with Congress. Daniel Hemel, a law professor at New York University, remarked that using regulatory proposals rather than legislative processes allows for selective benefits to specific groups without necessitating concessions from others. He noted, “It’s a route that previous administrations have exploited and which the Trump administration is exploiting more aggressively.”

In a related development, Donald Trump has recently solicited contributions from wealthy allies to fund a $300 million ballroom renovation project at the White House. Corporations such as Amazon, Apple, Google, HP, and Microsoft are among the donors supporting this initiative.

As these developments unfold, the implications for U.S. tax policy and corporate accountability continue to be scrutinized. The administration’s approach raises critical questions about the balance of power between executive action and legislative authority in shaping tax laws.