Sen. Joe Manchin (D-WV) admits he made a mistake in supporting the so-called American Rescue Plan but vowed not to make that mistake again. This came after he threw Washington for a loop last week by suddenly agreeing to support another massive White House spending proposal.
Now it’s the so-called Inflation Reduction Act of 2022, a downsized adaptation of President Joe Biden’s Build Back Better that tanked last year.
And interestingly, Manchin said on “Fox News Sunday” that this new package does not raise taxes and will not increase inflation. This statement flies in the face of the aftereffects of the previous spending package and the inflation Americans face every day.
Incredibly, he said that he “made sure there were no tax increases whatsoever.”
The Inflation Reduction Act — which even honest Democrats admit does next to nothing to address inflation — carries a 15% corporate minimum tax. This applies to businesses worth over $1 billion.
Granted, Build Back Better carried a stunning price tag of roughly $3 trillion and likely more while the new act is “only” $433 billion. But Manchin clearly stated Sunday that the bill “does not raise taxes” and that it only closes “loopholes.”
Is it needed or justified? Experts and critics can go back and forth all day and never reach an agreement, but it’s a tough sell to say it’s not a new tax. Same goes for another interesting feature.
The carried interest “loophole” will be closed with the agreement reached by Manchin and Sen. Majority Leader Charles Schumer (D-NY). What this does is increase taxes on investment fund managers’ shares of clients’ capital gains.
This is a popular tax feature used by hedge fund and private equity managers, and closing it is anticipated to raise $14 billion in new government revenue. It is all in the definition of capital gains, which are taxes at 23.8%, vs. regular income which faces a 37.9% tax rate.
They are treated as regular income and thus taxed at the higher rate. Or, as some would call it, a “tax increase.”
Reasonable people may disagree on the value or lack thereof in closing this loophole, and Manchin certainly is adamant that it’s “long overdue to get rid of it.”
Perhaps. But don’t tell the American public that there is not a tax increase in a bill that clearly presents exactly that.