PRW News

Reconciliation Bill 2.0: The Democrat’s Inflation Reduction Bill

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.[1] 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.[2]

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.

[1] The Associated Press (8/7),  Reuters (8/7),  The New York Times (8/7),  Bloomberg (8/7)
[2] Id.
NOTICE: The foregoing is not intended nor should be construed as legal advice to any particular client and may not be used to avoid US tax penalties (IRS Circular 230). Clients should always consult their attorney about their individual circumstances. Investment Advisor Representatives offer financial advice through PRW Wealth Management, LLC.  Registered Representatives offer securities through Lion Street Financial, LLC; member FINRA/SIPC.  PRW Wealth Management, LLC and Lion Street Financial, LLC are not affiliated.  PRW Wealth Management, LLC and Lion Street Financial, LLC do not provide legal or tax advice and are not Certified Public Accounting (CPA) firms. Trading instructions sent via email may not be honored.  Please contact PRW at (617)745-0900 for all buy/sell orders.  Please be advised that communications regarding trades are for informational purposes only.  Clients should continue to rely on confirmations and statements received from the asset custodian(s). CONFIDENTIAL: This communication, including attachments, is intended only for the exclusive use of addressee and may contain proprietary, confidential and/or privileged information. If you are not the intended recipient, you are hereby notified that you have received this message in error, and any use, review, copying, disclosure, dissemination or distribution is strictly prohibited. If you are not the intended recipient, please notify the sender immediately by return email, delete this communication and destroy any and all copies of the communication.


Lorem ipsum dolor sit amet, consectetur adipiscing elit pretium urna quis tortor consectetur et pretium elit