First, you need to know this about the Manchin-Schumer climate and tax compromise. TPC’s Howard Gleckman outlines the main points of the Inflation Reduction Act of 2022, the deal between Sen. Joe Manchin and Senate Majority Leader Chuck Schumer. It includes a new tax on corporate book income, $370 billion in energy subsidies, new health insurance subsidies, and lower Medicare drug prices. But it drops nearly all of President Biden’s proposals to raise taxes on high-income households and fails to address international tax reform. Will it reduce inflation? (Probably, a little.) The big question: Will it pass? Tune in next week.
“Close the loophole.” Sen. Joe Manchin says he is “firm” on retaining the bill’s tax increase on carried interest, compensation to general partners of private investment funds. Sen. Kyrsten Sinema has opposed the change but her office so far has been silent on the Manchin-Schumer bill.
Cue the lobbying… Large corporations and their lobbyists are targeting the reconciliation package’s 15 percent minimum tax on income that large corporations report to their shareholders. They argue the tax would undermine competitiveness and innovation. Sinema has in the past supported a minimum corporate tax.
Send the chips bill to the White House. The House easily passed the Senate version of the Chips bill that provides $52 billion in subsidies to the semiconductor industry, including a temporary 25 percent investment tax credit for chip makers. Two dozen House Republicans supported the measure even though their leadership urged members to oppose it. President Biden will sign the bill.
Meanwhile, make a wish. Senate Democrats released 12 appropriations bills for the fiscal year beginning Oct. 1, but they’ll go nowhere given the partisan impasse on issues from defense to abortion. The $1.67 trillion in discretionary spending is one step in a long negotiation towards an inevitable bipartisan compromise. Appropriations Committee Chair Pat Leahy predicts the bill won’t pass until December.
In New York, a windfall profits tax? State Sen. Kevin Parker, a Senate Finance Committee member, introduced a 25 percent tax on companies whose profits exceed a benchmark. The bill would allow municipalities to piggyback their own profits tax on the state levy. Revenues would go to a “Protect New Yorkers From Surges Fund” and be returned to residents as tax rebates or credits.
Maybe a windfall for folks in Massachusetts, too. Gov. Charlie Baker surprised residents yesterday, announcing that a 36-year-old law could allow the distribution of over $2.5 billion in tax credits. In 1986, voters limited state revenue growth to the growth of total wages and salaries. State coffers are overflowing, and some money could be returned to taxpayers. Lawmakers still are negotiating details of $1 billion in tax breaks and rebates; their formal session ends Sunday.
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