Senate Democrats are finally united on a plan to fight climate change, limit healthcare costs, and raise some taxes, at least after Sen. Kyrsten Sinema (D-Investment Bankers) said she’d sign on to the Democratic reconciliation bill announced last week by Majority Leader Chuck Schumer (D-New York) and Sen. Joe Manchin (D?-West Virginia). The AP describes the sudden breakthrough thusly:
The announcement came as a surprise, with some expecting talks between Schumer and the mercurial Sinema to drag on for days longer without guarantee of success. Schumer has said he wants the Senate to begin voting on the legislation Saturday, after which it would begin its summer recess. Passage by the House, which Democrats control narrowly, could come when that chamber returns briefly to Washington next week.
Kyrsten Sinema “mercurial”? Yeah, about like a pre-Clean Air Act coal-powered generating station!
Sinema’s price for supporting the “Inflation Reduction Act” — which itself was named in part to play up Manchin’s constant warnings against inflation — was the elimination of a provision that would have reduced the “carried interest” loophole, which is used by investment managers and venture capitalists to reduce the amount of tax they pay. Carried interest is taxed at a far lower rate than regular American human beings pay on their income, and Democrats and even some Republicans have tried for decades to fix the loophole, under the appealing but clearly insane logic that a quirk in the tax code shouldn’t mean that an entire class of already well-compensated people should get away with paying far less tax. Hell, even Joe Manchin wanted to cut carried interest.
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Hooray for the overcompensated!
Now, it’s worth noting that the original plan wouldn’t have eliminated carried interest, but it would have made it a bit less of tax advantage over other forms of compensation.
Happily, as the AP explains, the revenue effect on the Inflation Reduction Act may actually bring in more taxes, although it’ll leave that glaring economic inequity in place. But then, it taxes another noxious corporate practice, so we won’t object!
The carried interest provision was estimated to produce $13 billion for the government over the coming decade, a small portion of the measure’s $739 billion in total revenue.
It will be replaced by a new excise tax on stock buybacks which will bring in more revenue than that, said one Democrat familiar with the agreement. The official, who was not authorized to discuss the deal publicly and spoke on condition of anonymity, provided no other detail.
So golly, it’s finally looking fairly certain that the reconciliation bill will finally pass. For all the back and forth in the last year about whether Manchin would ever support Build Back Better, he never actually said in writing that he would, but last week he was very happy to post on his Senate website an epic in praise of his own great achievement.
The New York Times reports that in addition to axing the carried interest provision, Sinema also got Democratic leadership to agree to “change the structure of a 15 percent minimum tax on corporations and include drought money to benefit Arizona,” so that doesn’t seem too terrible a price, considering all the good the bill’s climate provisions will do; in all, they’re expected to help bring about a 40 percent in greenhouse emissions by 2030, compared to 2005 levels.
In a statement, Schumer said he believes the bill will now have the “support of the entire Senate Democratic conference,” and that all that’s needed before bringing the bill to the floor tomorrow is for the Senate parliamentarian to say the changes are OK under the Senate’s weirdass Calvinball rules for a reconciliation bill, which allow measures dealing only with revenue and taxation to pass with just 50 votes plus the tiebreaker vote from Vice President Kamala Harris. Schumer said the agreement with Sinema
preserves the major components of theInflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit.
So hey, let’s have a weekend, keep our fingers crossed, and hope that Dick Durbin (D-Illinois) doesn’t just pop up out of nowhere to demand a 50 percent excise tax on wheat germ, because “something about wheat germ just pissed me off.”
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