Democrats may need to make some changes to the tax portion of their budget reconciliation package to earn the support of Arizona Sen. Kyrsten Sinema, including possible removal of a tax increase on investment fund managers and softening a new minimum tax on the biggest corporations.
The bill could also undergo other tweaks as Senate Parliamentarian Elizabeth MacDonough continues her review of the bill. Changes to the prescription drug pricing provisions are already in the works, but many pieces of the package have yet to go through the formal “Byrd bath” to determine whether the language complies with budget rules.
Despite all the work still underway, several Democratic senators said they anticipated voting on the motion to proceed to the reconciliation package as soon as Thursday and beginning the “vote-a-rama” process, in which senators can offer unlimited amendments to the measure, as soon as this weekend.
“As soon as possible, but don’t count on going home on the weekend,” Michigan Sen. Debbie Stabenow, a member of Democratic leadership, said. “We’re probably going to be here all weekend, so get lots of sleep.”
It’s unclear if Sinema’s demands might change the anticipated schedule, as it’s unlikely she would vote to proceed without some assurances the bill will be tweaked to her liking.
Politico reported that Sinema wants to get rid of a provision that would lengthen the holding period for carried interest — or investment fund managers’ share of their clients’ capital gains — required to benefit from more generous tax treatment. The provision would raise an estimated $13 billion over 10 years.
Sinema’s office declined to confirm the report, which also said the Arizona Democrat is seeking to add roughly $5 billion in drought resilience funding given her state’s water supply issues.
Separately, CNN reported that Sinema has sent signals to the business community that she may want to pare back a 15 percent corporate minimum tax on businesses that report $1 billion or more in income to shareholders.
Sinema asked business groups during a call Tuesday if the minimum tax was “written in a way that’s bad,” Arizona Chamber of Commerce President Danny Seiden told CNN. Seiden, who voiced the chamber’s opposition to the minimum tax and concerns it would particularly hurt manufacturers who take advantage of accelerated depreciation write-offs, said the call with Sinema gave him “hope that she’s willing to open this up and maybe make it better.”
Senate Finance Chair Ron Wyden declined to comment on the status of the carried interest provision but acknowledged the potential for changes when asked about the corporate minimum tax.
“We’re talking to senators because that’s what you do when you’re in the homestretch,” the Oregon Democrat said. “I’m not gonna say anything more about the details and what different senators are interested in and the like. There’s 50 senators and lots of questions.”
Sen. Elizabeth Warren, one of the chief architects of the minimum tax, said the tax is about making sure giant corporations that currently pay little to nothing in taxes start contributing.
“Some of the strongest supporters of the corporate minimum tax are the small businesses that can’t take advantage of all of the loopholes and carve-outs and twists and turns that the giants can take advantage of, and that puts those small businesses at competitive disadvantage,” she said. “The corporate minimum tax helps level the playing field, and it’s important to defend it.”
Major retailers, which enjoy fewer existing tax benefits than some other industries, also back the minimum tax proposal.
Sen. Joe Manchin III, D-W.Va., who negotiated the final details of the bill with Senate Majority Leader Charles E. Schumer, D-N.Y., has similarly defended the bill’s tax increases as more about ending tax avoidance and “loopholes” than actually raising taxes. Manchin said Wednesday afternoon that he had not heard about either of Sinema’s tax demands.
“Nobody’s talked to me about that,” he said.
