NEW TONED DOWN INFLATION ACT
August 9, 2022 - Douglas Myser
New toned down inflation act. The bill that President Biden wanted passed, had a climate change proposal in it, to finally address the warming of planet earth. It also had some parts that several Senators questioned, and one decided a portion of the bill had to go, for her support. Key centrist Senator Joe Manchin released a statement that said he had sealed a deal with Senate Leader Chuck Schumer. Part of the deal was to gut the carried interest loophole that Sen. Synema, D-Az, said she could not support. Carried interest lets investors, especially private equity managers to pay a lower tax rate on their income. Because when they invest in a company, they may receive their cut of the profits through assets, rather than a check. When a long held asset, like stocks or a piece of real estate, is then sold, it's taxes at the capital gains tax rate, which is lower than the income tax rate that 99% of Americans pay. It essentially allows these people to pay a lower tax rate than those earnings wages, sustaining a two pronged class base system of taxation in the United States. New toned down inflation act.
The deal that Manchin has proposed, called the Inflation Reduction Act, would extend the holding period for carried interest to five years. Which means you don't get the tax rate unless you hold it for five years, a longer period of time than it had before. With the initial objection form Sen. Sinema, further negotiations were necessary to get her on board, but she finally managed a compromise and the bill moved forward.
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