Democrats change some tax provisions as they prepare economic bill |
WASHINGTON (AP) — Democrats have cut some of their proposed minimum tax on big business and made other changes to their economic bill, Senate Majority Leader Chuck Schumer said Friday, as they were heading for a campaign season victory over President Joe Biden on his national plan. agenda.
In an unusual preview of the closed-door negotiations, Schumer, DN.Y., said Democrats dropped a proposed tax hike for hedge fund executives after pivotal centrist Senator Kyrsten Sinema, D-Arizona, said she would otherwise vote “no”. Schumer said that in its place, the measure now has a new tax — which others say will be 1% — on shares that companies buy back from their own stock, earning the government significantly more revenue.
“Senema Sinema said she would not vote for the bill” or even vote for the debate to begin unless the private equity tax is removed from the legislation, Schumer told reporters. “So we had no choice.”
He spoke a day after he and Sinema announced compromise revisions to the environment, healthcare and tax package. With final numbers still to be calculated, the overall measure generates more than $700 billion in revenue – including more robust IRS tax collections – using most of it for energy, climate and health initiatives and by reducing federal deficits by $300 billion.
The deal puts Democrats on the cusp of a more modest but striking resurrection of many of Biden’s national aspirations that are strongly appealing to party voters. These include taxing big business, restricting prescription drug prices, slowing climate change, helping families afford private insurance and reducing federal deficits.
In another change, Schumer said a proposed minimum tax of 15% on giant corporations had been reduced and would now raise $258 billion over the next decade, down from $313 billion. The provision, which has been the legislation’s biggest revenue earner, will now allow these companies to recoup their equipment costs more quickly, reduce government tax levies and help manufacturers buying expensive machinery. . The new tax is expected to apply to about 150 businesses with revenues over $1 billion.
Democrats expect the Senate to begin considering the bill on Saturday, and the House will return next Friday for votes. The measure will certainly face unanimous Republican opposition in the Senate 50-50, where the support of Sinema and all other Democrats will be needed for its passage, as well as the decisive vote of Vice President Kamala Harris.
“This bill is a game-changer for working families and our economy,” Biden said at the White House.
Republicans say the measure will worsen inflation – a major concern of voters – discourage businesses from hiring workers and raise already high energy costs along with its taxes.
“Pump pain is going to get worse, and it’s not just about the cost of energy to drive your car,” said Sen. John Barrasso of Wyoming, GOP leader No. 3 in the Senate. “It’s also the energy to heat your home, the energy that powers our country, the energy for electricity.”
Nonpartisan analysts said the legislation would have a modest impact on inflation and the economy.
“We feel pretty good,” Schumer said of the legislation. “That’s what the country desperately needs. And that’s what Democrats will do in the next few days.”
The measure will also include $4 billion sought by Western senators to help their states deal with ruinous drought conditions, according to the senses. Mark Kelly, D-Arizona, Catherine Cortez Masto, D-Nev., and Michael Bennet, D-Colo. The group had requested $5 billion.
Still other changes are possible. Senate Congresswoman Elizabeth MacDonough is expected to say soon whether any provisions violate the chamber’s budget procedures and should be removed. Democrats are using special rules that would allow them to defeat GOP opposition and pass the package without needing the 60 votes required by most bills.
Potentially vulnerable provisions include language requiring pharmaceutical manufacturers to pay penalties if they raise prices above inflation for drugs that patients obtain from private insurers.
The bill faces a long weekend, including a “vote-a-rama” of unlimited, nonstop votes on amendments, which will come mostly from Republicans. Most are set to lose, though the GOP hopes some will lock Democrats into votes that would create campaign fodder.
Taxing the executives of private equity firms, such as hedge funds, has long been a goal of progressives. Under current law, these executives can pay significantly less than the top individual tax rate of 37% on their income, called “deferred interest.”
The measure was also a favorite of conservative Sen. Joe Manchin, DW.Va., a longtime resister against bigger versions of Biden’s national plans who helped draft the compromise legislation with Schumer.
But progressives also support taxing publicly traded companies that buy back their own shares, a move that critics say artificially drives up stock prices and diverts money away from investments. The buy-back tax will bring in $74 billion over 10 years, far more than the $13 billion the “deferred interest” plan would have generated.
In a breakthrough late Thursday, Sinema said she had agreed to changes to the legislation and was ready to “move forward” on the bill. In his own statement, Schumer said he believed the deal would “receive the support of all” of the Democratic members of the chamber.