Democrats reached an agreement with Senator Kirsten Senema (D-Arizona) on Thursday, securing her commitment to vote for climate and health care law in exchange for making several changes to the legislation.
“We have agreed to repeal the carryover interest tax provision, protect advanced manufacturing, and promote our clean energy economy in the Senate Budget Settlement Legislation. Subject to Parliamentary review, I will proceed,” Cinema announced in a statement Thursday.
Her support paves the way for the law to pass as soon as next week, giving President Joe Biden another major legislative victory ahead of the November midterm elections.
Sinema objected to a provision in the bill that would have narrowed the tax loophole associated with hedge fund managers and private equity executives. She also expressed concern about the minimum corporate tax of 15% included in the invoice. Business groups had lobbied hard on both measures, arguing that they would discourage business investment.
In its statement, Cinema said it intends to reform the investor tax clause, known as transferable interest, after the bill was signed into law.
“Following this effort, I look forward to working with the senator [Mark] Warner has implemented to enact interest tax reforms, protect investments in the American economy and encourage continued growth while closing the most egregious loopholes some abuse to avoid paying taxes.”
The bill would now include a new selective tax on stock buybacks that would generate more revenue than the transferred interest clause, according to a Democrat familiar with the agreement. Democratic lawmakers have long wanted to tax stock buybacks, a form of executive self-enrichment that exploded after Congress cut corporate taxes in 2017.
The TCA is much narrower than Biden’s initial “Build Back Better” proposal, which included paid time off, a monthly child allowance, affordable housing and free community college tuition.
However, its passage would mark a major victory for Democrats in the middle of the campaign season.
The bill would allow Medicare to negotiate with the drug industry to lower prescription drug prices, a common policy change that Democrats have sought for years. It will also invest more than $300 billion in green energy grants and tax incentives, ultimately saving hundreds of billions for the government by funding a more stringent implementation of the Internal Revenue Service.
Democrats expect to start voting on the bill on Saturday as part of a reconciliation process that allows them to pass the legislation by a simple majority due to its impact on the budget.
“I am pleased to inform you that we have reached an agreement on Inflation Reduction Act “I believe he will have the support of the entire Democratic Senate convention,” Schumer said in a statement Thursday. “The final version of the reconciliation bill, which will be introduced on Saturday, will reflect this work and bring us one step closer to enacting this landmark legislation into law.”