Corporate tax payments plunge as AI feasts on new incentives
Corporate tax payments are plummeting even as profits soar.
A big reason: all that AI spending.
The tech world is pouring oceans of money into chips, data centers, power supplies and other components of the artificial intelligence infrastructure. And that’s eligible for generous tax breaks on investments Republicans included in their 2025 tax cuts.
The tax incentives weren’t designed with AI in mind specifically — they’re available for all kinds of business investments. But it’s the tech industry that’s making the most of them, putting a major dent in corporate tax receipts.
Budget forecasters say payments are down 25%, or $96 billion, after falling 15% last year. That’s fueling complaints those investment breaks are providing a windfall for the tech world, and giving a bad deal to taxpayers as Google, Microsoft and others would be spending oodles of cash on AI regardless of the tax incentives.
“The notion that they’re doing this because of the tax laws doesn’t pass the laugh test,” said Matt Gardner, a senior fellow at the liberal Institute on Taxation and Economic Policy.
The AI-fueled hit to the Treasury comes amid a voter backlash against the data hub-building boom that’s now roiling Congress ahead of the midterm elections. Lawmakers are pointing fingers over who is responsible, with some Democrats blaming Republicans’ tax cuts. A July POLITICO poll found more Americans oppose data centers than support them, a reversal from earlier this year. The budget impact also comes amid mounting concerns over the government’s towering debt, which now tops $40 trillion. Wall Street is increasingly worried about red ink, with bond traders steadily pushing up the government’s borrowing costs. [Continue reading…]