Private client and tax partner Edward Renn was featured in the recent Accounting Today article, “Build Back Better born again (sort of).” The article discusses the announced proposed reconciliation bill named the Inflation Reduction Act of 2022 by Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-West Virginia.
According to the article, the main areas of the proposed legislation include:
- A 15% corporate minimum tax on company book/financial statement income;
- Additional funding for the IRS;
- Changes to the carried-interest tax break;
- Health care changes (prescription drug pricing and Affordable Care Act extension); and,
- Incentives for renewable and clean energy.
Anticipated changes and the likelihood to pass
In the Accounting Today article, Ed shares that although the bill itself is a surprise, it does not contain a lot of surprises. He adds that “the minimum tax is a book tax, and would only affect a relatively small number of corporations — those with more than $1 billion in revenue. There are about 200 corporations of that size, and many of them already pay more than 15% in tax. There will have to be significant regulations before we know how it will work. The idea is that everyone should contribute, and pay at least 15%.”
Ed goes on to say that the $14 billion repeal savings statement may not hold too much weight. “That’s for optics. It’s to prove that the rich are paying their fair share. It’s symbolic; they’re getting more than that by negotiating drug prices.”
Many are saying it’s difficult to predict which direction Democratic Sen. Kyrsten Sinema, D-Arizona will sway on this provision. “I’m not convinced that she won’t have a problem with it. It will be interesting to see if she’s willing to let it go, or decides to prove that she’s just as important as Senator Manchin.”
“If you asked me two weeks ago, I didn’t think anything like this would get done by the midterms, but it looks like this might have some life — just move a handful of votes in the House, and one in the Senate and they might actually get it through.”
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