Efforts by Senate Majority Leader Charles Schumer, D-N.Y., and Democratic Sen. Joe Manchin of West Virginia to reach consensus on an iteration of “Build Back Better” legislation that includes robust climate change provisions, Medicare prescription drug pricing reforms, and substantial tax increases on corporations and wealthy individuals appeared to fall apart this week. Specifically, he would not accept a final package that includes climate change provisions or tax hikes. Manchin told Democratic leaders that he would only back a final product that includes certain Medicare prescription drug pricing reforms and an extension of certain enhanced Affordable Care Act premium assistance credits that are scheduled to expire at the end of this year.
Next steps are unclear as press reports on July 15, citing comments from Manchin in a West Virginia radio interview, have suggested that Manchin could be open to revisiting climate and tax provisions in the coming weeks—after he has had a chance to digest the CPI report for July—with lawmakers taking up a broader measure in September. As a practical matter, however, it is not clear whether that approach would be viable given the time that would be required to negotiate and finalize a tax-and-spending agreement with the House and the pending expiration of the reconciliation instructions at the end of September.
Stay tuned for further developments and reach out to McGuire Sponsel’s global business services team with any questions or assistance needed in the areas of international compliance, consulting, transfer pricing or IC-DISC.
Jason Rauhe, CPA is a Principal in the firm’s Global Business Services practice and is responsible for assisting clients and adding depth in all areas of the firm’s international tax consulting services including transfer pricing, and the firm’s compliance expertise.
Rauhe previously served as Director of International Tax at a Top 100 CPA Firm, where he was responsible for the firm’s international tax division and major industry alliance networks.