The first Congressional Democrat-sponsored reconciliation bill, titled, “Build Back Better” was introduced in 2021. It faced headwinds from two sources. First, Senators Joe Manchin (D-VA) and Kyrsten Sinema (D-AZ) opposed the size and cost of the bill. Second, the Progressive wing of the party opposed any and all reductions in the size and cost of the bill. The funding proposals for the Build Back Better Bill ranged from elimination of several common estate planning strategies to raising taxes on “wealthy” corporations and individuals. This bill ultimately failed to win sufficient support in the House of Representatives and efforts turned to voting rights and federal spending.
Fast forward to this summer and the new Democrat-sponsored Inflation Reduction Bill passed by the Senate on Sunday. The $730 billion package is focused on slowing climate change, lowering drug costs and providing more funding for the IRS to pursue wealthy individuals and corporations. These measures would be paid for by raising taxes on large corporations. Why did Senators Manchin and Sinema vote for this bill after blocking last year’s bill? Senator Manchin was promised support for legislation that will accelerate energy project permitting which includes a gas pipeline in his state. Senator Sinema succeeded in removing the bill’s provision preventing hedge fund managers from paying less taxes on their earnings than other individuals and winning funds to combat Arizona’s drought.
The Congressional Budget Reconciliation process provides for bill passage with a simple majority vote in the Senate. The Inflation Reduction Bill passed with the vote along party lines and Vice President Harris casting the tie breaking vote. The bill moves to the House of Representatives next, where it is expected to pass, then on to the White House where President Biden will sign it into law. The House is expected to come back from summer recess to vote on the bill, as early as this week.
Once the final bill is signed, we will update you with the specifics and how they may impact individuals, families and businesses. Stay tuned.
 The Associated Press (8/7), Reuters (8/7), The New York Times (8/7), Bloomberg (8/7)
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