Senator Joe Manchin (D.WV) and Senate Majority Leader Chuck Schumer, both Democrats, said they reached an agreement on a huge bill that includes climate and environmental initiatives and a 15% minimum corporate tax.
The agreement surprised reporters, as Manchin several weeks ago indicated that he would not support key aspects of Joe Biden’s agenda, including climate programs, because of concerns of inflation.
Schumer and Manchin jointly stated that their agreement, the Inflation Reduction Act of 2022 (or the Inflation Reduction Act of 2022), would provide $300 billion for deficit reduction and $369.75 million in energy and climate change programs in the next ten years.
This bill would also allow Medicare to negotiate for prescription medications.
The One-page Summary The bill would reduce carbon emissions by 40 percent by 2030, according to the bill.
The legislation totals $433 billion in spending, $300 billion in deficit reduction and $739 billion revenue. This would be achieved by a 15% corporate minimum income tax, which would generate an estimated $313billion. $288billion would be raised from prescription price reform, $124billion from increased IRS enforcement, and $14billion from closing the carried interest loophole.
Along with lobbyists from all industries, studios and media companies have opposed any proposal to increase the corporate tax rate beyond the current 21%. It’s unclear how a 15% minimum tax would impact major corporations, given that details have not yet been released, but Manchin indicated that it would be aimed at “billion-dollar companies or larger.” But a 15% minimum was proposed tax last year, its chief backers Sen. Elizabeth Warren (D-MA), Sen. Ron Wyden (D-OR) and Sen. Angus King (I-ME) singled out Amazon, noting that it paid 4.3% in federal tax on the $45 billion in corporate profits over the past three years.
Media and content companies have also had different effective tax rates. These include deductions as well as state and local taxes. Netflix’s effective rate was 12.39% in 2021, while Comcast’s was 27.54%, according to CSI Market data.
Manchin just two weeks ago appeared to be dashing Democrats’ hopes of advancing Biden’s agenda, as he said that the chief focus should be on curbing inflation. Manchin’s influence has been significant, with Democrats having a slim majority of the 50-50 Senate. Republicans have signaled their opposition to any major budget legislation. The process of budget reconciliation allows Democrats to move the bill to the floor. This will allow them to bypass the 60 vote threshold needed to defeat a filibuster threat, and to pass a bill with simple majority.
Manchin stated in a statement: “Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination.”
The agreement does not include a restoration of the state and local tax deduction, or SALT, that had been scaled back in 2017 under Republicans’ tax legislation. It resulted in raising taxes for some residents of larger states such as California and New York.
Biden stated in a statement that the agreement was “immediately effective.” “is the action the American people have been waiting for. This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future.”