August 16, 2022

Analysis Deems Biden’s Climate and Tax Bill Fiscally Responsible

“That is a pretty monumental improvement,” she added.

The bill springs from an agreement between Senator Chuck Schumer of New York, the majority leader, and Senator Joe Manchin III of West Virginia, a key centrist Democrat. President Biden blessed it last week, and it carries what remains of what was once his $4 trillion domestic agenda.

Its centerpiece is a package of measures meant to fight climate change by encouraging transitions to lower-emission sources of energy, along with expanded health insurance subsidies and a move to reduce prescription drug costs for seniors by allowing Medicare to negotiate the prices.

Over a decade, the centerpiece provisions of the deal include about $68 billion in net tax increases, according to the Joint Committee’s modeling. The bill would impose a new 15 percent minimum tax on corporations that report a profit to shareholders but use deductions, credits and other preferential tax treatments to reduce their effective tax rate well below the statutory 21 percent. It would also narrow the benefits of the so-called carried interest tax provision, which largely benefits high earners who work in private equity and other parts of the financial industry.

The Joint Committee estimates those provisions would raise about $326 billion over a decade in new tax revenue. That’s a tax increase on companies that take advantage of current tax law, even though Democrats like Mr. Manchin and Mr. Schumer insist that it is not.

Much of that increase would be offset, overall, by tax credits for clean-energy initiatives such as electric vehicle purchases, renewable electricity generation and other carrots meant to reduce the fossil fuel emissions driving climate change. That would amount to tax cuts for some people, companies and electric utilities.

Since the deal was announced, Republicans have attacked it as classic tax and spending — the same terms they have used to deride much of Mr. Biden’s agenda. Last weekend, Republican senators released a companion analysis from the Joint Committee that they said was proof the entire bill would raise taxes on the middle class, though it did not actually show middle-class Americans would pay more taxes under the plan.

Article source: https://www.nytimes.com/2022/08/02/us/politics/biden-climate-tax-bill-cost.html

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