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Manchin Announcement Makes Passage of Tax Increases This Year Much Less Likely

Ruth Singleton
Published Date:
Jul 18, 2022

Late last week, Sen. Joe Manchin (D-W.Va.) said that he would not agree to President Joe Biden’s proposed economic agenda—including tax increases on high earners—until he saw another month of inflation data, Accounting Today reported. Since his vote is needed for Democrats to achieve a majority, there is now only a small window of time in which Congress can act on that agenda because the special rules allowing Democrats to bypass a GOP filibuster will expire at the end of September. 

According to analysis in the Washington Post, Senate Majority Leader Chuck Schumer (D-N.Y.) has been holding  one-on-one talks with Manchin about a slightly pared-down version of President Biden’s Build Back Better agenda, focusing on some health-care items, incentives to rein in climate change and raising taxes on the wealthy. These talks began after Manchin and other Democratic holdouts failed to agree on the full $2 trillion Build Back Better bill, which included expanded child tax credits, universal pre-K education and more. 

The Build Back Better framework envisioned a new surtax on the income of multimillionaires and billionaires—the top 0.02 percent of Americans. It would apply a 5 percent rate above income of $10 million, and an additional 3 percent above income of $25 million. The framework would also close the loopholes that allows some wealthy taxpayers to avoid paying the 3.8 Medicare tax on their earnings. Build Back Better would also envisioned a 15 percent minimum tax on the corporate profits that large corporations—with over $1 billion in profits—report to shareholders.  The framework also included a 1 percent surcharge on corporate stock buybacks.  

And if it had passed, the Build Back Better bill would have continued to provide monthly payments to most parents—$300 per month per child under six and $250 per month per child ages 6 to 17—that were initiated in July 2021 under the American Rescue Plan. Because the bill didn’t pass, these payments ceased after  December 2021. 

According to Accounting Today, Manchin is effectively given Democrats a choice: Agree to what he’s willing to vote for now—a prescription drug pricing package tied to a two-year extension of Affordable Care Act subsidies—or gamble that they can win him over in September before the special rules expire. 

Manchin said that he’d be willing to reconsider the economic package after the inflation data for July is released and the Federal Reserve acts on interest rates at its next meeting. But his statement makes it less likely that he’ll be ready to move forward at that time or that Democrats can get it finished even if he does. 

Manchin has denied that he’s voting against the package that he and Schumer have been negotiating for weeks. “As far as I’m concerned we’ve had good conversations,” he told host Hoppy Kercheval on West Virginia’s MetroNews radio. 

According to the Washington Post, Manchin is the unusual politician whose public pronouncements, whether in Capitol hallway interviews or in  prepared statements, carry more weight than whatever he tells his colleagues in private, and congressional Democrats have made the mistake of believing what he said in their private meetings, while dismissing his pessimistic comments in public as standard negotiating ploys. 

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