On Thursday, Democrats struck a deal with Sen. Kyrsten Sinema (D-Ariz.), securing her pledge to vote on their climate and health care bills in exchange for several changes to the legislation.
“We have agreed to remove the carried interest tax provision in the Senate’s budget-adjustment legislation, protect advanced manufacturing, and promote our clean energy economy. I will move forward based on the lawmakers’ scrutiny,” Sinema said in a statement Thursday. Announce.
Her support clears the way for the bill to pass as soon as next week, giving President Joe Biden another major legislative victory ahead of November’s midterm elections.
Sinema opposes a provision in the bill that would tighten tax loopholes associated with hedge fund managers and private equity executives. She also expressed concern about the 15 percent minimum corporate tax included in the bill. Business groups have lobbied her hard on both measures, arguing that they would depress business investment.
In a statement, Sinema said she plans to reform investor tax rules, known as carried interest, after the bill is signed into law.
“Following this effort, I look forward to working with the Senators [Mark] Warner will implement carried interest tax reforms to protect investment in the U.S. economy and encourage continued growth, while closing the worst loopholes that some abuse tax avoidance. “
The bill would now include a new excise tax on share buybacks, which would generate more revenue than a carried interest provision, according to a Democrat familiar with the deal. Democratic lawmakers have long wanted a tax on share buybacks, a form of executive self-enrichment that erupted after Congress slashed corporate taxes in 2017.
The Inflation Reduction Act is much narrower than Biden’s original “build back better” proposal and includes paid time off, monthly child allowances, affordable housing and free community college tuition.
Still, its passage would represent a huge victory for Democrats midway through the campaign season.
The bill would allow Medicare to negotiate lower prescription drug prices with the drug industry, a very popular policy change Democrats have been seeking for years. It will also invest more than $300 billion in green energy grants and tax incentives, and ultimately save the government hundreds of billions of dollars by funding stricter IRS enforcement.
Democrats hope to begin voting on the bill Saturday under the settlement process, which would allow them to pass it with a simple majority because of its budget implications.
“I am pleased to report that we have Inflation Reduction Act I believe this will have the support of the entire Senate Democratic conference,” Schumer said in a statement Thursday. “The final version of the settlement bill, which will be introduced Saturday, will reflect this work and bring us one step closer to bringing this Historic legislation was enacted into law. “