Document Type

Article

Publication Date

2-13-2023

Publication Citation

107 Tax Notes State 601

Abstract

In 2022, as a key component of the Inflation Reduction Act, Congress enacted a new corporate alternative minimum tax (CAMT). With the possible exception of Alaska, states with corporate income taxes will not automatically conform to this change. But should they? Although states may not currently be seeking additional tax revenue, seasons change quickly when it comes to revenue needs. Further, there is increasing reason to believe that the corporate income tax is a progressive tax, and if so, a state might consider conforming to the CAMT as part of a revenue-neutral change to make its tax system more progressive. Accordingly, in this article we explain why states should and how they could conform to the CAMT. Essentially, we argue that states should take further steps to combat international profitshifting forms of tax avoidance (such as moving in the direction of worldwide combined reporting) and that conforming to the new CAMT is a good step in that direction.

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