Sen. Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY) announced Wednesday that they had reached an agreement to revive a slimmed down version of the ‘Build Back Better Act’ that Manchin had rejected in December 2021. Perhaps most surprisingly, the revived deal includes climate change expenditures and tax increases that Manchin had claimed he had ruled out earlier this month following months of negotiations between him and Schumer. Any revised deal had been expected only to include an extension of Obamacare health care plan subsidies and a drug pricing negotiation package aimed at reducing the cost of prescription drugs.
The deal now includes a minimum tax rate on corporations of 15% of their book profit, preventing them from using depreciation expenses to reduce their tax rate below 15%. It also eliminates the carried interest loophole.
Perhaps the most controversial part of the bill is the $80 billion given to the IRS over the next 10 years, the bulk of which will be used for increased audits in an attempt to raise revenue for the federal government. Proponents of the plan, such as Sen. Ron Wyden (D-OR), claim the increased audits will catch high income tax cheats and will pay for themself. Opponents, including most Republicans, claims the IRS will target ordinary taxpayers to raise the revenue, especially the self-employed. The bill’s language does not currently limit the IRS’s increased enforcement budget to only audits on high income/high net worth individuals or corporations.
This plan will need the support of all 50 Democratic senators to pass the Senate. Moderate Democrat Kyrsten Sinema of Arizona has not yet announced her position.
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