Summary : Instead of limiting the package to Medicare drug pricing changes ($288bn/10yrs in savings) and two year extension of health insurance subsidies ($22bn/yr), the deal also includes $369bn/10yrs in energy and climate incentives and one additional year of health insurance subsidies, funded by a 15% minimum tax on corporate book income for companies with more than $100 million in domestic income/$1 billion in global income (raises $313bn/10yrs in tax revenue), and extending the minimum holding period for taxation of carried income at the long-term capital gains rate to 5 years from the time a fund acquired substantially all of its investments ($14bn/10yrs).
The bill is called the “Inflation Reduction Act of 2022” but the individual provisions it includes appear to be substantially the same as prior bills. We note that while the summary from Sen. Manchin’s office mentions energy permitting changes, it is unclear whether this “reconciliation” bill could include such regulatory changes, as those are generally precluded by Senate rules prohibiting non-fiscal matters from inclusion in reconciliation legislation. Additional carve-outs to the minimum tax proposal look likely, as various constituencies try to preserve the ability of corporations to take advantage of specific tax deductions and credits when companies pay the minimum tax.
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