Sinema plans to change tax and climate portions of reconciliation bill

Sen. Kyrsten Sinema (D-Arizona) is considering changes to the Democrats’ $740 billion reconciliation bill — including increasing climate funding and restructuring tax provisions — as the Senate moves swiftly toward final adoption before August vacation, Axios has learned.

Why is this important: Sinema is the only senator who could potentially prevent Democrats from achieving President Biden’s longstanding goal of passing an ambitious package to tackle climate change, health care and taxes – renamed the “Reduction Act”. inflation in 2022″.

  • That stance gives him enormous clout as Democrats await a Senate congressman’s verdict on the bill’s compliance with the “Byrd rule,” which controls what provisions can be included in the budget reconciliation process.
  • The fact that the negotiations were conducted entirely in secrecy between Senate Majority Leader Chuck Schumer (DN.Y.) and Sen. Joe Manchin (DW.V.) — catching Sinema by surprise — left him feeling space for an 11-hour intervention.
  • Sinema has so far refused to comment on whether or not she supports the bill until the parliamentarian decides on the measure.

What we mean: Sinema plans to significantly boost funding for the Reconciliation Bill for Droughts and Water Security in the South West, sources familiar with its thought process tell Axios.

  • She considers the current portion of the $369 billion climate and energy bill insufficient to address threat resilience funding.

on taxes, Sinema is concerned about the structure of companies’ minimum 15% “book tax” and whether the burden could be passed on to employees, the sources said.

  • Sinema supports cracking down on tax evasion, but has long expressed opposition to closing the carried interest loophole.
  • She fears the provision, which would contribute up to $14 billion towards paying off the total $740 billion bill, could undermine economic competitiveness, the sources said.

In the wings: Sinema has met privately, both virtually and in person, with key Arizona stakeholders as she continues to work on her assessment of the bill.

  • Sinema traveled to Flagstaff, Arizona last week, where she met with local officials who are still reeling from recent flooding and a wildfire that tore through the state.
  • Arizona is one of the fastest warming states in the US and the largest county in the state, Maricopa County, has already hit a record high for heat-related deaths this year.
  • “Some were surprised to learn that Kyrsten was enthusiastic about the climate provisions last year, as they rightly view her as a centrist. But first and foremost, she is a senator from Arizona,” said John LaBombard, former director of communications for Sinema and SVP at ROKK. Solutions tells Axios.

In a phone call Tuesday with the Arizona Chamber of Commerce, local business leaders and manufacturers discussed with Sinema what the proposed 15% minimum corporate tax and the elimination of the carried interest loophole would mean for arizona.

  • The private equity sector, which has contributed heavily to Sinema, is pressuring it to cut down the part of the interest carried.
  • “I remember last year she was hearing comments from small business owners who were concerned about the potential implications of any tax policy changes and how it might affect their capital investment flows,” said LaBombard.
  • “He is someone who is cautious when it comes to changing tax policies. …obviously I think [their input] shaped where it is on the economic aspects of this bill. »

What they say : “What’s clear from our conversation is that she’s taking a thoughtful and diligent approach when considering her position on this legislation,” Arizona Chamber CEO Danny Seiden told Axios’ Hans Nichols. .

  • “She was very interested in knowing the specific impacts the tax provisions will have on Arizona manufacturers – and we believe she will seriously consider those implications as negotiations continue over the next few days.”

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