Done Deal
When we first talked about the Manchin-Schumer deal last week, we mentioned that although Manchin approved of a deal, a Democrat that might go rogue is Kyrsten Sinema, the senator from Arizona. For the last few days, that fear was starting to come to reality as Sinema opposed the tax portion of the bill. The 15 percent minimum tax on large corporations and a “carried interest” tax that would affect hedge fund managers and private equity executives gave her a sour taste, and this started to become the weak link.
People lobbied for Sinema to vote “no” for the bill, but Democrats were insistent on passing this bill at all costs. Negotiations took place between the two sides, and House Democrats were able to pull through with the win as Sinema approved of the deal with some tweaks. The bill would exclude the carried interest tax and reduce the corporate tax, which would’ve raised $14 billion. Instead, they would implement a 1 percent tax on stock buybacks for corporations, which should meet the threshold for reducing the deficit by $300 billion. This will represent a scaled-down version of President Biden’s key Build Back Better plan that was shut down in 2021. Many businesses were happy with Thursday’s result as they feared that the tax plan would negatively impact not only their business but consumers as well, and it was the National Association of Manufacturers that asked Sinema to negotiate for the corporate tax to change. The bill now has to be reviewed by the Senate Parliamentarian to see if all of these provisions comply with the rules of budget reconciliation, which would allow the Democrats to pass the bill with just 50 votes. Those 50 have come through, and it is an interesting move for the economy ahead of the midterm elections.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
