WASHINGTON (AP) – Democrats reduced part of their minimum corporate tax proposal and made other changes to their gigantic income statement, Senate Majority Leader Chuck Schumer said Friday, as they drove President Joe Biden’s election season victory on his national agenda.
In an unusual peek at closed-door bargaining, Schumer, DNY, said Democrats dropped a proposed hedge fund executive tax hike after centrist Senator Kyrsten Sinema, D-Ariz., Said he would otherwise voted “no”. Schumer said that instead of him, the measure now has a new tax – which others have said will be 1% – on the shares that companies repurchase their shares, yielding much more government revenue.
“Sen. Sinema said she would not vote for the bill “or even vote to start the debate unless the private equity tax was removed from the legislation,” Schumer told reporters. “So we had no choice.”
He spoke the day after he and Sinema announced the compromise revisions on the environment, health care and tax package. With final numbers yet to be calculated, the overall measure raises over $ 700 billion in revenue, including the strongest IRS tax collections – using most of it for energy, climate and health initiatives and reducing federal deficits by $ 300 billion.
The deal puts Democrats on the brink of a more modest but surprising resurrection of many of Biden’s internal aspirations that strongly appeal to party voters. These include taxing large corporations, limiting prescription drug prices, slowing climate change, helping families afford private insurance, and cutting federal deficits.
In another change, Schumer said a 15% minimum tax proposal on bloated corporations was reduced and will now raise $ 258 billion over the next decade, down from $ 313 billion. That provision, which has been the legislation’s biggest source of revenue, will now allow those companies to write down the costs of their equipment more quickly, reducing the government’s tax burden and helping manufacturers who buy expensive machinery. The new tax is expected to apply to approximately 150 companies with income 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 is sure to meet unanimous Republican opposition in the 50-50 Senate, where approval will require the support of Sinema and all other Democrats, along with the casting vote of Vice President Kamala Harris.
“This bill is a game changer for working families and our economy,” Biden told the White House.
Republicans say the measure will worsen inflation – a major concern of voters – will dissuade companies from hiring workers and increase already high energy costs with its taxes.
“The pump pain will get worse and it’s not just about the cost of energy to drive your car,” said Senator John Barrasso of Wyoming, the No. 3 of the Senate. “It is also the energy to heat your home, the energy that powers our country, the energy for electricity”.
Unbiased analysts said the legislation will have a modest impact on inflation and the economy.
“We feel pretty good,” Schumer said of the legislation. “It is what the country so desperately needs. And that’s what the Democrats will offer in the coming days. ”
The measure will also include $ 4 billion requested by Western senators to help their states cope with ruinous drought conditions, according to Sens. Mark Kelly, D-Ariz., Catherine Cortez Masto, D-Nev. and Michael Bennet, D-Colo. The group had sought $ 5 billion.
Still other changes are possible. Senate MP, Elizabeth MacDonough, it is expected to say soon whether any provisions violate the House’s budgetary procedures and should be canceled. Democrats are using special rules that would allow them to overcome the GOP opposition and pass the package without needing the 60 votes required by most bills.
The potentially vulnerable provisions include language requiring pharmaceutical manufacturers to pay penalties if they raise prices above inflation for the drugs patients get from private insurers.
The bill faces a long weekend, including a “vote-a-rama” of unlimited and uninterrupted votes on the amendments, which will come mostly from Republicans. Most are doomed to lose, though the GOP hopes some will frame Democrats in votes that would create food for the hype.
Taxing the executives of private equity firms, such as hedge funds, has long been a goal of progressives. Under current law, those executives can pay significantly less than the 37% individual tax rate on their income, which is called “interest carried.”
That measure was also a favorite of Conservative Senator Joe Manchin, DW.Va., a long-standing resistance against larger versions of Biden’s internal plans that helped write compromise legislation with Schumer.
But progressives also support taxation of publicly traded companies that buy back their shares, a move that critics say artificially raises stock prices and diverts money from investing. The repurchase fee will bring $ 74 billion over 10 years, much more than the $ 13 billion the “interest-borne” plan would have raised.
On Thursday evening, at a turning point, Sinema said she had agreed to the changes in the legislation and was ready to “move forward” on the bill. In his own statement, Schumer said he believes the deal “will receive the support of the entire” Democratic membership of the chamber.