In a statement, Sinema said the Democrats had “agreed to remove” a key fiscal policy aimed at wealthy investors that aimed to address what is known as the “interest rate loophole.” He also reported making further changes to a second provision that imposes a new minimum tax on companies that currently pay nothing to the US government.
This latest round of revisions is likely to benefit some manufacturers, according to two people familiar with the matter, who spoke on condition of anonymity to describe the unpublished details. Many corporate executives, including Arizona business executives, had petitioned Sinema to consider the consequences of the tax in recent days.
With it, the Democrats opted for a new 1% tax on company share buybacks, a move that would have constituted at least some of the revenue that could have been lost due to the changes, the two people familiar with said. question. And party lawmakers have decided to set aside new money at Sinema’s request to address climate problems, including drought, according to sources.
From here, Sinema said she would be awaiting a final review by the House MP – a key step in the process of allowing Democrats to shift the bill – at which point she would “move forward” on the measure known as Inflation Reduction Act of 2022. Biden hailed the development, describing it in a statement late Thursday as a “critical step toward reducing inflation and the cost of living for American families.”
“I look forward to the Senate adopting this legislation and approving it as soon as possible,” the president said.
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The changes appear to have helped Democratic leaders thread a fine needle, satisfying Sinema while preserving the thrust of the deal that Senate Majority Leader Charles E. Schumer (DNY) worked out with another moderate: Senator Joe Manchin III ( DW .Va.) – just last week.
Sinema had not been a protagonist in those talks, even though she is a democratic key to the swing vote, sometimes skeptical of her own party’s ambitions for taxes and spending. Her public silence of her in recent days has fueled speculation that she may have harbored serious reservations about the new bill, a successor to the roughly $ 2 trillion Build Back Better Act that Democrats in the House adopted last year. . Even the Republicans at one point tried to grasp the uncertainty, urging Sinema to oppose her own party.
Over the past few days, Manchin had remained steadfast in his support for the deal reached, the original version of which was expected to generate over $ 768 billion in revenue over the next decade. Any changes to appease Sinema threatened to reduce the roughly $ 300 billion that should be available for deficit reduction, a major problem for Manchin.
The Democrats did not offer a full new estimate for their revised tax policies at the end of Thursday. In a statement, however, Schumer said he expected she would “receive the support of the entire Democratic Senate conference.” And you said the bill would cut the deficit by $ 300 billion anyway.
The agreement allows the party to proceed according to Schumer’s schedule, starting the debate on the provision with a vote already on Saturday. To prevail, the Sinema vote is critical: only by uniting together can Democrats overcome a Republican obstruction and adopt their long-stalled economic measure using the process known as reconciliation.
Under the new plan, Democrats are now seeking to impose a new tax on the money companies spend to buy back their shares, the two sources familiar with the matter said. Party lawmakers have long contested such practices, arguing that they benefit the stock prices of large corporations at the expense of workers and the economy at large.
In adding the new tax, the Democrats also appeared to be rethinking their initial plans to impose a minimum 15 percent tax on corporations. The exact details of the change are unclear, but Sinema said in a statement that his deal “would protect advanced manufacturing.”
And the Democrats have removed their proposal to target the taxes that apply to private equity and hedge fund managers, an attempt to close what is known as the “carryed interest loophole.”
Initially, the bill sought to change the way these investors are taxed on the commissions their clients pay them by subjecting them to higher rates. But they discarded their original plans in response to Sinema, who said he would work with Senator Mark R. Warner (D-Va.) To address the issue while “protecting investments in the American economy” and closing “loopholes. more striking than some abuses to avoid paying taxes ”.