Path to Passage of Inflation Reduction Act Clears with Sinema’s Announcement of Commitment to Vote for Bill
Senator Krysten Sinema (D-Ariz) announced late August 4 that she would support the Inflation Reduction Act, the Biden administration’s climate and healthcare bill, paving the way for passage of the bill on a party-line vote that would require a tie-breaking vote by Vice President Kamala Harris.
In exchange for her support, Sinema secured Democrats’ agreement to make several amendments to the bill, including removing a provision that would have extended the holding period on investments eligible for carried interest treatment to five years, instead of the current three years.
“We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation. Subject to the Parliamentarian’s review, I’ll move forward,” Sinema said in an August 4 statement.
To replace the estimated $14 billion that would have been raised through the changes to the carried interest rules, Democrats reportedly will add a new 1% excise tax on stock buybacks that is expected to bring in an estimated $73 billion.
The agreement leaves in place the bill’s other tax provisions, including a 15% corporate minimum tax and an $80 billion increase in IRS funding. (For prior coverage of the Inflation Reduction Act, see BDO’s alert). Since the 15% corporate minimum tax will now be reduced by expanded depreciation allowances at the request of large manufacturers that would be subject to this provision, it is now estimated that it would raise $273 billion, a $40 million decrease from the originally estimated $313 billion.
The bill’s final text will be introduced on August 6, when the Senate is scheduled to convene to vote on a motion to discharge a nomination. The vote on the motion to proceed to the reconciliation legislation is expected to occur on the afternoon of August 6. If a majority votes to proceed to the legislation, the chamber will then debate for up to 20 hours before holding an open-ended series of votes, known as a “vote-a-rama,” before a final up-or-down vote, which is expected to take place August 7 or 8.
The bill was submitted to the Senate parliamentarian on July 27. The parliamentarian will determine whether all provisions in the reconciliation bill – the process Democrats are relying on to avoid the 60-vote threshold to circumvent a Republican filibuster – affect government spending or revenue, as required under Senate rules.
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