2 minute read 3 Aug 2022
Presidential podium in rose garden of the white house

President Biden, Sens. Manchin and Schumer announce climate, health, tax deal

By Washington Council Ernst & Young

Advisory services group that helps clients manage opportunities and risks associated with the legislative and regulatory process.

2 minute read 3 Aug 2022

The agreement puts tax provisions back in the reconciliation bill.

President Biden, Senator Joe Manchin (D-WV), and Senate Majority Leader Chuck Schumer (D-NY) have announced a deal on a $740 billion reconciliation bill with tax provisions.  Components of the deal include:
  • Imposing a 15% corporate minimum tax ($313 billion)
  • Implementing prescription drug pricing reform ($288 billion)
  • Increasing IRS tax enforcement ($124 billion)
  • Closing the carried interest "loophole" ($14 billion)
  • Investing in energy security and addressing climate change ($369 billion)
  • Extending the Affordable Care Act subsidies ($64 billion)

A summary focused on "tax loopholes" said, "The corporate alternative minimum tax (AMT) proposal would impose a 15% minimum tax on adjusted financial statement income for corporations with profits in excess of $1 billion. Corporations would generally be eligible to claim net operating losses and tax credits against the AMT and would be eligible to claim a tax credit against the regular corporate tax for AMT paid in prior years, to the extent the regular tax liability in any year exceeds 15% of the corporation's adjusted financial statement income."

On energy, a statement from Sen. Manchin said the bill "invests in the technologies needed for all fuel types — from hydrogen, nuclear, renewables, fossil fuels and energy storage — to be produced and used in the cleanest way possible. It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels. It invests heavily in technologies to help us reduce our domestic methane and carbon emissions and also helps decarbonize around the world as we displace dirtier products."

The bill includes two key health care provisions: one that will allow Medicare to negotiate the price of some prescription drug prices, along with other policies aimed at tamping down the rising cost of drugs, and another that will extend the enhanced Affordable Care Act (ACA) subsidies for three years, through 2025. The drug pricing provisions are projected to save $288 billion over a decade and the expanded subsidies are expected to cost $64 billion. The Senate will take up the bill the week of August 1, 2022. The House would reconvene to vote on a Senate-passed bill. 

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Summary

The Senate needs all Democrats to agree for this legislation to advance. 

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By Washington Council Ernst & Young

Advisory services group that helps clients manage opportunities and risks associated with the legislative and regulatory process.