As Democrats pat themselves on the back after the Senate finally passed their massive tax, climate, and healthcare bill – the “Inflation Reduction Act,” which Senate Majority Leader Chuck Schumer called “one of the most significant pieces of legislation passed in a decade,” Bloomberg has compiled a list of winners and losers.
Not only did none of the billions in tax increases Democrats threatened high-earners with last year make it into the final version of the bill, their plans to “tax the 1%” turned out to be nothing more than a big virtue signal.
Private equity fund managers
As we noted on Friday, the landmark bill only passed after AZ Senator Kyrsten Sinema insisted on keeping the carried-interest loophole that allows investment managers (like her former bosses) to shield the majority of their income from higher taxes.
The private equity industry was able to gain an additional win shortly before the final passage of the bill when a handful of Democrats broke with their party to vote on a Republican amendment that created a carveout for private equity-owned companies in the corporate minimum tax. – Bloomberg
Manchin and Sinema were big winners – after having held their party hostage for more than a year over this legislation, “The entire contents of the bill were essentially cherry-picked by Manchin and then tweaked to fit Sinema’s preferences,” according to the report.
The two were also able to score direct benefits for their states – with Manchin securing an agreement to permit the completion of the Equitrans Midstream Corp.’s Mountain Valley Pipeline, and Sinema – who was able to secure $4 billion in drought relief for western states.
The IRS And The Green agenda
The bill will give $80 billion to the IRS over the next 10 years to expand its audit capabilities, as well as a bevy of technology upgrades.
Meanwhile, electric carmakers got an extension of a popular $7,500 per vehicle customer tax credit for EVs, but will have to comply with strict battery and critical minerals sourcing requirements demanded by Sinema and Manchin – which could render the credits useless for years.
Solar and hydrogen companies, such as Sunrun and Plug Power, Inc. will also benefit from generous tax credits, while operators of nuclear reactors such as Southern Co., Constellation Energy Corp., Public Service Enterprise Group Inc. and Energy Harbor Corp. could benefit from a $30 billion production tax credit.
87,000 new IRS agents, higher taxes, and a massive green energy slush fund.
Anyone who says this bill reduces inflation is lying.
— Tom Cotton (@TomCottonAR) August 7, 2022