Sens. Schumer (D-NY) and Manchin (D-WV) released a joint statement (included below) and one-page summary for a new reconciliation bill framework that includes a three-year extension of the premium ACA subsidies and $369 billion in funding for energy security and climate provisions. The framework also includes $739 billion in pay-fors, including a 15% domestic book profits minimum tax on large corporations, prescription drug pricing reform, additional funding for IRS enforcement, and a limitation on carried interest. The framework summary notes that the estimate would also reduce the deficit by at least $300 billion. Crucially, the framework has no mention of inclusion of any expansion to the net investment income tax (NIIT), enactment of the high-income surtax, or any other movement on the passthrough-adverse provisions on our radar. On the contrary, Manchin made clear in his extended press release (linked below) that he would not support any legislation that included a tax on small businesses (likely in reference to NIIT).
President Biden has signaled his support for the framework, urging the Senate to take up the bill as soon as possible.
The estimates provided in the bill framework suggest that some provisions, such as the 15% domestic book profits minimum tax likely contain changes from the House-passed version. Sen. Sinema (D-AZ) had previously raised concerns on the minimum tax, as had Manchin.
Importantly, Sinema has not been consulted on the agreement and has previously indicated that she may not fully support the domestic minimum tax without certain modifications or the limitation on carried interest. Her office has indicated that they are currently waiting to review the text.
As far as the timing for passage, the White House and Senate Democratic leadership have announced that they hope to get this bill through the Senate next week. However, the Senate Parliamentarian is yet to issue a ruling on the health care provisions and has not started to consider the tax and energy provisions in the bill. Given the procedural hurdles, the timeline for passage may slip later into August or September. More information on a potential timeline for the framework may come out of the Senate Democratic Caucus Meeting that is scheduled for tomorrow morning.
“Today, we are pleased to announce an agreement to add the Inflation Reduction Act of 2022 to the FY2022 Budget Reconciliation bill. After many months of negotiations, we have finalized legislative text that will invest approximately $300 billion in Deficit Reduction and $369.75 billion in Energy Security and Climate Change programs over the next ten years. The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations. In addition, the expanded Affordable Care Act program will be extended for three years, through 2025. The revised legislative text will be submitted to the Parliamentarian for review this evening and the full Senate will consider it next week.
“The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. The bill will finally allow Medicare to negotiate for prescription drugs and lower health care costs for millions of Americans. Additionally, we have reached agreement with President Biden and Speaker Pelosi to pass comprehensive permitting reform legislation before the end of this fiscal year. We urge every member of the U.S. Senate to support this important legislation.”
Our thanks to Brownstein Hyatt Farber Schreck for this report.
Policy and Taxation Group is your voice in Washington on economic freedom. We advocate for policies that allow American families to fully enjoy the economic liberties and benefits of a robust free market unique to our nation. For over 25 years, we have been the loudest voice in the nation’s capital on eliminating the death tax. This ill-conceived tax has a destructive impact on families, family businesses, job creation, and the national economy.
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