On Wednesday night, Sens. Chuck Schumer (D-NY) and Joe Manchin (D-WV) surprised Washington with a deal that would fight climate change, empower Medicare to negotiate drug prices, extend provisions of Obamacare, and institute a new electric vehicle tax credit.
The agreement would also levy a new minimum tax on the country’s biggest corporations — and make other changes to the tax code that seemed to be off the table in recent weeks. The full Senate is likely to vote on the $739 billion, 725-page proposal next week.
The bill “will very much improve tax fairness, which has been sorely missing from that part of our tax code,” Jared Bernstein, a member of Biden’s Council of Economic Advisers, told Yahoo Finance on Thursday. Moreover, he said that the minimum tax on corporations would help tackle inflation.
During remarks on Thursday, President Joe Biden said the bill will “begin to restore fairness to the tax code,” noting that 55 of the Fortune 500 companies paid no federal income tax in 2020. “Now you’ve only heard me say that about 10,000 times,” he joked, after repeating the oft-cited stat.
He then turned to address Congress and said: “Pass it, pass it for the American people.”
The coming reconciliation bill — dubbed the Inflation Reduction Act of 2022 — includes multiple changes to the tax system. The new minimum corporate tax would apply to corporations that have made $1 billion in book profits in recent years; it’s projected to raise $313 billion.
“It is wrong that some of America’s largest companies pay nothing in taxes while freely enjoying the benefits of our nation’s military security, infrastructure and rule of law,” Manchin said when announcing his support for the deal.
The deal would also put aside $80 billion to assist the IRS in finding tax dodgers, an effort that’s projected to raise $203 billion over the decade.
That effort has long been a Democratic priority but was dropped from the Bipartisan Infrastructure Bill last year amid Republican objections. Republicans have been wary of boosting funding for the IRS, regarding the agency with suspicion after it scrutinized the tax-exempt status of some conservative groups.
The deal also would remove the so-called “carried interest loophole,” which money managers can use to pay lower taxes on their capital gains — potentially adding another $14 billion to U.S. coffers.
That new money would largely go towards the investment of $369 billion in clean energy and help reduce the federal deficit. The Committee for a Responsible Federal Budget estimates the bill would reduce the deficit by $305 billion over the next decade.
Republicans appear to be blindsided by Wednesday night’s deal. They immediately tried to focus on the tax portion to push against the overall package. Senate Minority Leader Mitch McConnell (R-KY) said the bill will “pile on giant tax hikes that will hammer workers.”
Democrats have already crushed American families with historic inflation.
Now they want to pile on giant tax hikes that will hammer workers and kill many thousands of American jobs.
First they killed your family’s budget. Now they want to kill your job too.
— Leader McConnell (@LeaderMcConnell) July 27, 2022
Brooke Rollins, the president of the Trump-aligned America First Policy Institute, also criticized the deal in a statement, noting: “The commonsense solution is to immediately cut excessive government spending, increase domestic energy production, and encourage greater supply through less burdensome taxes and regulations.”
Meanwhile, many liberal lawmakers celebrated the tax provisions. Sen. Elizabeth Warren (D-MA) said Wednesday night on MSNBC that the provisions would bring down costs for regular Americans. She lauded the 15% corporate minimum and the carried interest loophole provision, contending the deal would “put the country on a sounder economic footing.”
Just a few weeks ago, Democrats outlined a range of tax increases they were looking to include in a reconciliation package, only to see Manchin thwart those efforts.
While some of those provisions are back and now endorsed by Manchin, Democrats still have many questions to answer in the coming days before they can ensure the deal will actually get passed.
The first is whether they will have the support of key voter Sen. Kyrsten Sinema (D-AZ), who criticized tax increases in the past and didn’t participate in secret talks in recent weeks. She has yet to weigh in on the deal and so far, her spokesman says she can’t comment on the deal until she reads it.
A second question is whether all 50 Democratic Senators will be available to push it over the finish line. The complicated reconciliation process requires all 50 Democrats to be present and vote multiple times. A single absence could kill the bill’s prospects. Thursday provided a reminder of the tenuous path ahead with the news that Sen. Dick Durbin (D-IL) has come down with COVID and will be isolating in the coming days.
Nonetheless, Schumer said Thursday that he expects the work with the Senate parliamentarian — which kicks off the process — will only take a few days and lead to a full Senate vote next week.
Still, another hurdle could come after that in the U.S. House of Representatives where a vocal group of Democrats have vowed to oppose any deal if it doesn’t include money for the state and local tax (SALT) deduction that was capped in 2017 and largely benefits residents of high-tax blue states.
Sen. Manchin has signaled that he wasn’t in the mood to negotiate on this point. “Our tax code should not favor red state or blue state elites with loopholes like SALT,” he said.
Bernstein says the focus right now is to get the passed bill on Biden’s desk. “Because trust me,” Bernstein said, “he is anxious to sign it.”
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit.
Seemingly out of nowhere, Biden now stands poised to claim some big legislative wins heading into the November midterm elections.
"I am declaring a State Disaster Emergency to strengthen our ongoing efforts to confront the monkeypox outbreak," Hochul tweeted. She added that more than one in four monkeypox cases in the United States are in New York, also having a disproportionate impact on at-risk groups. As of July 29, New York state had a total of 1,383 confirmed orthopoxvirus/monkeypox cases, according to New York Department of Health's website.
For one stunt, Democrat John Fetterman of Pennsylvania rolled out an online petition to get his Republican rival, celebrity heart surgeon Dr. Mehmet Oz, enshrined in New Jersey's Hall of Fame — a nod to Oz moving from his longtime home in New Jersey to run in neighboring Pennsylvania. For another, Fetterman paid $2,000 for an airplane to haul a banner over weekend beachgoers on the Jersey Shore welcoming Oz back home to the Garden State.
Howard still wants to play in the NBA, but he knows what he wants to do after his basketball career ends.
Kentucky's governor said it could take weeks to find all the victims of flash flooding that killed at least 16 people when torrential rains swamped towns across Appalachia. More rainstorms are forecast in coming days as rescue crews continue the struggle to get into hard-hit areas, some of them among the poorest places in America. The rain let up early Friday after parts of eastern Kentucky received between 8 and 10 1/2 inches (20-27 centimeters) over 48 hours.
"I think every day, we're proving that we should have been playing this whole time."
Conspiracy theorist Alex Jones' media company Free Speech Systems filed for bankruptcy on Friday, but his attorney said it should not disrupt the defamation damages trial underway in Texas that seeks to force Jones to pay $150 million or more to the family of one of the children killed in the 2012 Sandy Hook Elementary School attack. The trial in Austin, where Jones lives and Free Speech Systems is based, wrapped up its first week of testimony Friday and is expected to conclude next week. The bankruptcy filing was announced by Jones' attorney Andino Reynal late in the day.
In wide-ranging interview, Dunham discusses how TikTok helped inspire her new movie "Sharp Stick" and why SCOTUS's decision to overturn abortion rights was one of the "darkest days" in her life.
Ongoing supply chain pressures amid strong consumer demand make for a scary combination as Hershey warns of a Halloween candy shortage.
Lori Carlson arrived for work at the Licking County Humane Society one morning to an alarming phone call from a police officer with the Newark, Ohio, animal control division. A probation officer visited a condemned house on the morning of July 22 looking for somebody who had violated probation, and the officer discovered dozens of small dogs – all Chihuahuas and Shih Tzus – living in squalor with three people. They appeared to be hoarders, the officer told her.Subscribe to The Post Most newslett
Neither the U.S. nor Russia reported any breakthroughs after the first phone call in months between the countries' top diplomats.
It’s a deal that is set to raise over $800 billion dollars in the coming decade for everything from fighting climate change to extending Obamacare. And it’s projected to bring down the deficit to book.
Women aren’t the only ones who’ve been cooperating with the Jan. 6 committee’s investigation, but they've borne the brunt of the attacks from Donald Trump and allies.
ODESA, Ukraine/KYIV (Reuters) -Dozens of Ukrainian prisoners of war appeared to have been killed when a prison building was destroyed in a missile strike or explosion, with Moscow and Kyiv accusing each other of responsibility on Friday. The deaths, some of which were confirmed by Reuters journalists at the prison where the men were held in eastern Donetsk province, overshadowed a U.N.-brokered deal to restart shipping grain from Ukraine and ease a worldwide food crisis. The deal was discussed by the top diplomats of the United States and Russia on Friday in their first phone call since before Russia's invasion of its neighbour began on Feb. 24.
In an exclusive interview with Fox News Digital, Republican Arizona gubernatorial candidate Karrin Taylor Robson slammed her Trump-endorsed opponent Kari Lake, referring to her as a "fraud."
"Lulo Rose" is heading to auction and will likely fetch millions.
House lawmakers on Friday passed a ban on assault-style weapons for the first time in three decades.
Arizona Cardinals quarterback Kyler Murray expressed frustration over the fallout regarding a film study clause in his contract.
Ex-POTUS praises historic investment in efforts to fight climate change and inflation
The survey shows a big bump compared with last year in the number of people who expect to have to keep working in retirement because Social Security won’t be able to support them, and a big bump in the numbers planning to start claiming benefits early even while working. The propaganda scam against Social Security is proving to be a master class. Politicians used to call Social Security the third rail of American politics: “Touch it and die.”