Business Maverick: Senate passes Democrats’ landmark tax, climate, drugs bill

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The US Senate passed a landmark tax, climate and health-care bill, speeding a slimmed-down version of President Joe Biden’s domestic agenda on a path to becoming law after a year of Democratic infighting that the White House was unable to control.

The vote on the bill was 51 Democrats in favour to 50 Republicans against, with Vice President Kamala Harris casting the tie-breaking vote after an overnight marathon of votes on amendments. It now goes to the House, where the Democratic majority is expected to pass it on Friday.

The legislation also aims to prevent large corporations from exploiting tax breaks to pay little if any tax, and it would allow Medicare to negotiate drug prices for the first time. It’s forecast to make the first substantial cut to budget deficits in more than 10 years.“It required many compromises. Doing important things almost always does,” Biden said in a statement hailing the vote.

The Senate vote was the culmination of a year and half of intra-party squabbling among Democrats about the scope of the bill, which Biden had once hoped would be so sweeping as to rival Franklin Delano Roosevelt’s New Deal. In the end it came down to two holdout moderate Democrats, Senators Joe Manchin and Kyrsten Sinema, whose votes were essential in the 50-50 Senate and who baulked at both larger tax increases and more spending.

Trimmed from its original $6-trillion price tag to one of around $437- billion, the bill will nonetheless be a cornerstone achievement of Biden’s first term and one Democrats are eager to campaign on before the November midterms where they are fighting to retain control of Congress.Medicare would be allowed to negotiate drug prices, starting with 10 high-priced drugs by the middle of this decade and expanding from there.

The minimum corporate tax would affect fewer than 150 companies in a given year. Tech companies such as Alphabet’s Google and Meta’s Facebook could face the levy. Last-minute changes narrowed its scope in an effort to protect private equity, as well as businesses that invest heavily in equipment and facilities, such as manufacturers.

Sinema demanded that the bill retain the carried interest tax break for private equity. That request irked many of her fellow Democrats who say there is little justification to provide tax benefits to highly paid investment managers.

 

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