Sinema’s support is essential given that the 50 Republicans will oppose a plan they say would hurt the economy and cost far more than Democrats claim – so any Democratic defection could sink.
In a statement, Sinema said it had secured several changes to the package’s tax provisions, including the removal of the carried interest tax, which would have impacted hedge fund managers and private equity. This proposal would have raised 14 billion dollars.
“We agreed to remove the deferred interest tax provision, protect advanced manufacturing and boost our clean energy economy in the Senate budget reconciliation legislation,” Sinema said. “Subject to parliamentary review, I will move forward.”
As CNN previously reported, Democrats agreed to add an excise tax on corporate stock buybacks as part of the deal.
“The deal will include a new excise tax on share buybacks that will yield significantly more revenue than the deferred interest provision, meaning the deficit reduction figure will remain at $300 billion,” he said. a Democrat familiar with the deal told CNN.
The $300 billion deficit reduction target had been a key priority for Sen. Joe Manchin, whose agreement to the deal last week revived the legislation.
“The deal preserves key elements of the Cut Inflation Act, including cutting prescription drug costs, tackling climate change, closing tax loopholes operated by big business and the wealthy and $300 billion in deficit reduction,” Senate Majority Leader Chuck Schumer said. A declaration. “The final version of the Reconciliation Bill, which will be introduced on Saturday, will reflect this work and bring us closer to the enactment of this landmark legislation.”
High stakes negotiations
Earlier Thursday, top Senate Democrats engaged in high-stakes negotiations with Sinema, actively discussing potential changes to key tax components to win the Arizona moderate’s support.
In private discussions, Sinema had expressed concern about key elements of the Democrats’ plan to pay for their climate and health care agenda – imposing a 15% minimum tax on big business and taxing so-called carried interest, which would mean imposing a new tax on hedge fund managers and private equity.
As a result, Democrats scrambled to find new sources of revenue to meet the goal of saving $300 billion over a decade.
“Failure is not an option,” said Sen. Richard Blumenthal, a Democrat from Connecticut, expressing the view of much of his caucus earlier Thursday that Sinema would eventually get on board.
It is unclear when Parliamentarian Elizabeth MacDonough will announce her decision on the package. A Democratic aide told CNN that the Senate Finance Committee’s energy provisions — including clean energy appropriations — are expected to be presented to the Senate Congressman on Friday.
It is unclear whether all of these provisions will survive parliamentary scrutiny.
Strong pressure on Sinema
Sinema was not part of the deal, having found out when the news broke last week. She had declined to comment publicly on the deal, her aides saying only that she would wait until the Senate’s parliamentary review was completed before taking a position. Still, she had made her demands clear to Democratic leaders, including seeking to add $5 billion to help the Southwest deal with its multi-year drought, according to multiple sources.
“Is it written in a way that’s bad?” Sinema asked, according to Seiden, president of the Arizona Chamber of Commerce, who relayed the call to CNN.
“It gave me hope that she’s ready to open this up and maybe improve it,” Seiden said.
Two sources told CNN that Sinema privately conveyed those concerns to leading Democrats, arguing it would hurt manufacturers, including in his state.
At issue are Democrats’ proposed changes to bonus depreciation that the GOP enacted in the 2017 tax law, which allows companies to deduct 100% of the cost of an asset in the year it is put into service. The new legislation proposes to gradually reduce this from next year.
Defending the new tax, the Democratic-led Senate Finance Committee on Thursday released the date of the nonpartisan Joint Committee on Taxation showing that up to 125 billion-dollar companies averaged just one rate. effective tax rate of 1.1% in 2019. The commission argues in its statement that this shows the “lowest tax rates” that some companies are able to pay.
“While we know that billion-dollar companies are avoiding paying their fair share, these tax rates are lower than we might have imagined,” said Senate Finance Chairman Ron Wyden, a Oregon Democrat. “We’re going to put an end to that with our 15% minimum tax.”
This story and headline were updated with additional developments on Thursday.
CNN’s Jessica Dean, Ella Nilsen, Clare Foran and Alex Rogers contributed to this report.