Democrats Weigh Paring Biden Tax Hike to Win Over Manchin

Remaining intact in the Senate plan is a proposal to create a 1% excise tax on stock repurchases by publicly traded companies, according to the people. That levy has been subject to less scrutiny and pushback from companies, largely because it is a smaller tax compared to the other measures under consideration.

Spokespeople for Manchin and the Senate Finance Committee declined to comment. A representative from Schumer’s office didn’t immediately respond to requests for comment.

The $1 trillion maximum amount is also likely to serve as a reality check for Biden and his allies in Congress. Senate Democrats, who will have to pass the legislation without Republican votes, have been told in recent weeks not to expect a grand package and that it was being narrowed down, according to a person familiar with the talks.

New Spending

With Manchin’s demand for half of the total package to go to deficit reduction, that gives a maximum of $500 billion for new spending, roughly a quarter of the size of the $2.2 trillion bill that passed the House last year.

Schumer and Manchin, who have been engaged in secretive talks for two months about a scaled-back version of Biden’s signature Build Back Better agenda, have yet to come to agreement on the specifics of what to include.

Democrats have until the end of September to pass the bill before the expiration of the budget resolution that allows them to advance the bill with a simple majority. However, many Democrats believe the bill needs to pass in the next month before the August recess.

A late sticking point has been whether to extend Obamacare premium subsidies, set out in the 2021 pandemic relief package and due to expire at the beginning of 2023.

The notices of the increased premiums are to go out in October just before the election and many Democrats say allowing that would be devastating to their midterm prospects. Including the roughly $200 billion ACA premiums in a $500 billion spending package would entail scaling back the $550 billion climate provisions from the House bill.

In recent weeks, Manchin and Schumer also have been haggling over whether remaining energy and climate sticking points should be included. Other remaining areas of negotiation include details on a tax credit for electric vehicles including the value and eligibility requirements.

Manchin is also seeking to make the package more friendly to fossil fuels, efforts sure to draw the ire of progressive lawmakers and environmental groups.

One is a proposed tax credit for carbon capture that’s seen as extending the life of coal plants, and increasing drilling in the western Gulf of Mexico. Manchin also wants to increase the duration of a tax credit for so-called blue hydrogen made from natural gas.

A compromise deal to place a fee on the emission of methane from oil and gas operations is expected to be included in the package, Senator Tom Carper, the Chairman of the Senate Environment and Public Works Committee, said in an interview last week.