- Sen. Joe Manchin is defending his new proposed spending package and how it's paid for.
- The deal would raise taxes on corporations and close loopholes for wealthy investors.
- GOPers say that amounts to a tax hike, but Manchin says that that's not the case.
Sen. Joe Manchin of West Virginia on Monday tried fending off Republican attacks that the climate and healthcare bill he authored would increase taxes on many Americans.
"There's not one penny of change in taxes," Manchin told reporters. "We looked at taking everything out that could be looked at to fanning the fires of inflation or inflaming it. And there's nothing there."
"We just have to agree to disagree," he said.
It comes two days after the nonpartisan Joint Committee on Taxation released an analysis indicating many Americans face tax increases under the $740 billion bill that Manchin negotiated in secret with Senate Majority Leader Chuck Schumer. Democrats aim to pass it sometime later this week, sidestepping GOP resistance using budget reconciliation.
The legislation includes a 15% minimum tax on large companies earning $1 billion or more in annual profit. It would also close the carried interest loophole, essentially forcing ultra-wealthy investors who receive their compensation in assets — which are taxed at a lower rate than straightforward salaries — to hold onto those assets for five years if they want the preferential rate.
The JCT report analyzed how an increase in taxes would be hypothetically distributed among different income groups. Republicans seized on it to argue Democrats are breaking President Joe Biden's pledge to spare Americans earning less than $400,000 from tax hikes. They say that the large firms subject to the minimum 15% corporate tax will pass on those costs to consumers.
However, experts say the analysis didn't fully account for other parts of the legislation. It would allow Americans to qualify for thousands in tax rebates for clean energy measures like installing solar panels or swapping out home appliances for more energy efficient models. In addition, the legislation extends financial assistance for people to purchase health coverage under the Affordable Care Act for two more years.
"It does exclude these really substantial tax benefits that are worth tens of billions to help households afford health insurance coverage and would help them afford clean energy efficient homes and vehicles," Chye-Ching Huang, executive director of the New York University Tax Law Center, told Insider. "So even just factoring that in could change the picture substantially."
Climate activists have said that cutting climate spending in favor of reducing the deficit in an effort to lower inflation would exacerbate the devastating longer-term impact of the climate crisis.
"The climate crisis will bring forward immense economic and human repercussions to this country, and those who are stalling in action on this will be to blame," John Paul Mejia, the national spokesperson for climate activist group the Sunrise Movement, previously told Insider.
Notably, the Inflation Reduction Act does not contain any direct income tax hikes on high-income Americans, unlike its failed predecessors. Different iterations of the Build Back Better Act included everything from increasing the top tax rate to a surtax on millionaires.
That might be why one key voice has stayed silent so far. Sen. Kyrsten Sinema of Arizona, a fellow centrist and key vote in Democrats' razor-thin majority, hasn't commented either way on the proposed bill. Sinema repeatedly opposed prior attempts to raise taxes, and Manchin and Schumer's workarounds will likely test her willingness to make any moves on taxes. Sinema harbors objections to closing the loophole.
"For the person at home, it's not going to raise their taxes. It's a loophole closer for very highly paid people who buy and sell companies," Samantha Jacoby, a senior legal tax analyst at the Center on Budget and Policy Priorities, previously told Insider.
"As in any legislation, there's gonna be winners and losers," Marc Goldwein, policy director of the nonpartisan Committee for a Responsible Federal Budget, told Insider. "But I suspect there's gonna be a lot more winners than losers and it's going to be a broad set of winners."