Senate Democrats continue to make progress with their $739 billion healthcare, climate and tax package, as Sen. Kyrsten Sinema looks set to support the measure after negotiating changes to some of its tax provisions.
Here are key changes due to Sinema:
- A provision that would have raised $13 billion and addressed the so-called carried-interest loophole is out of the package. That loophole allows private-equity firms to pay lower tax rates.
- A new 1% excise tax on stock buybacks is now included, and it’s expected to raise $73 billion.
- There has been a change to a provision that delivers a 15% corporate minimum tax, as it now features a carve out for accelerated depreciation, also called bonus depreciation or cost recovery. Capital Alpha Partners analyst James Lucier says this carve out, which is expected to take away an estimated $40 billion in revenue, represents a “big win for capital-intensive industries such as manufacturing.”
- There is now $5 billion for drought resiliency, which is expected to help the Southwest U.S.
Other key elements of the package haven’t changed since it was announced last week by Democratic Sen. Joe Manchin of West Virginia and Senate Majority Leader Chuck Schumer, the New York Democrat. They include:
- Allowing Medicare to negotiate prescription drug prices, saving the federal government an estimated $288 billion over 10 years
- Lowering costs for seniors on medications, including a $2,000 out-of-pocket cap
- Extending Obamacare (Affordable Care Act) subsidies
- New climate change-related programs, including ones focused on renewable energy production and tax rebates for buying new or used electric vehicles
Related: Pharma CEOs use earnings calls to criticize drug-pricing proposal
Plus: The Inflation Reduction Act would send $80 billion to the IRS
Analysts are sounding increasingly optimistic about this budget reconciliation bill’s chances for becoming law. If it’s passed by the 50-50 Senate, it then would need the Democratic-controlled House’s approval before getting signed into law by President Joe Biden, who has called for Congress to pass it.
“We are increasing our odds for the revised Build Back Better/Inflation Reduction Act to 75%-80% from 65%, given the provisional endorsement of Sen. Kyrsten Sinema (D-AZ) and the initial scheduled vote for Saturday,” said Benjamin Salisbury, director of research at Height Capital Markets, in a note on Friday.
In her statement on Thursday, Sinema said she would “move forward” subject to the results of the bill’s review by the Senate parliamentarian, Elizabeth MacDonough. MacDonough is scrutinizing the measure to ensure its provisions comply with Senate procedures.
From the archives: A guide to budget reconciliation, which Democrats could use to push Biden’s agenda
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