WASHINGTON — The Senate is “on track” to start debating a roughly $300 billion deficit-reducing budget package Saturday after Democrats reached agreement late Thursday on changes to the bill needed to secure 50 votes, Senate Majority Leader Charles E. Schumer said.
The changes, the New York Democrat said at a news conference Friday, include dropping a provision modifying the taxation of “carried interest,” providing exemptions to the 15% corporate minimum tax that would reduce its estimated revenue raised over 10 years from $313 billion to $258 billion, and adding some climate provisions related to drought.
“We’re feeling pretty good,” Schumer said, noting he believes the agreement will have the votes to pass.
If so, the bill would then go to the House, which is expected to reconvene Aug. 12 to vote on it, according to a notice Friday from Majority Leader Steny H. Hoyer, D-Md.
Schumer acknowledged that the late changes to the bill were made to secure support from Democratic centrist Sen. Kyrsten Sinema of Arizona. In particular, he lamented the loss of a $13 billion revenue raiser that would have lengthened the holding period for investment fund managers’ share of their clients’ capital gains required to benefit from more generous tax treatment.
“I believe strongly in (closing) the carried interest loophole. I have voted for it. I have pushed for it. I pushed for it to be in this bill,” Schumer said. “Sen. Sinema said she would not vote for the bill, not even move to proceed unless we took it out. So we had no choice.”
Schumer did not provide details on the corporate minimum tax exemptions that would drop the revenue intake of the provision by $55 billion, but Sinema’s statement on the deal Thursday noted a plan to “protect advanced manufacturing.”
That’s likely a reference to allowing businesses to factor accelerated depreciation, or faster writeoffs of equipment purchases, when they calculate the minimum tax, which is based on income reported to shareholders. On financial statements, the cost of an asset is spread over its usable life, but the tax code allows deductions faster, so the change would likely protect that treatment in some form.
Republicans and business groups had raised alarms about the disproportionate impact the minimum tax would have on manufacturers if they could not claim those deductions. Although business groups welcomed the change, they did so qualifying that they needed to see the legislative language and that they still oppose other aspects of the bill, like the drug pricing provisions.
Neil Bradley, U.S. Chamber of Commerce executive vice president and chief policy officer, issued a statement giving Sinema credit for recognizing that “taxing capital expenditures — investments in new buildings, factories, equipment, etc. — is one of the most economically destructive ways you can raise taxes.”