Legislative Update August 2022 — General Assembly on recess

Aug 19, 2022 | Advocacy

Federal Updates:

What just happened?  The latest episode of the Manchin Diaries, guest starring Krysten Sinema doesn’t disappoint.  On Tuesday, Aug. 16, President Biden signed into law this country’s largest-ever climate change action in response to the “the carbon dioxide problem,” as first described in 1969 by the Nixon Administration.

Abrupt change is one way to describe Sen. Joe Manchin’s (D – W. Va.) late shift to support the Inflation Reduction Act, which will meet the Biden Administration’s climate change commitment to reduce American greenhouse gas production by 40% below 2005 levels – all by the end of the 2020s.  The bill journeyed to approval via the Senate’s budget reconciliation process, meaning it had to adhere to strict limits as to its budget-focused language, passing by the slimmest of a Senate majority (50 + 1, with Vice President Harris casting the deciding vote).

This $369B climate and energy bill features :

  • $62.7B in tax credits for emissions-free electricity sources and storage;
  • $51.1B in extensions of existing wind and solar tax credits;
  • $6.8B to finance energy infrastructure;
  • $37.4B for clean energy technology manufacturing incentives;
  • $14.2B for new and used electric vehicle tax credits, including a means-tested $7,500/car tax credit
  • $13.2B for investments in clean energy technology in rural areas;
  • $20B for a “green bank” to finance clean energy projects; and,
  • $16.7B for emissions reduction programs in the agricultural market.

How will this bill be paid for?  The bill seeks to raise $124B in new tax revenue.  Specifically, the bill imposes a new 15% minimum tax on “book income” reported by large corporations (i.e., the profits that publicly traded companies report on their financial statements to shareholders).  It also imposes a new 1% tax on corporate stock buybacks, and increases funding to the IRS by $80B to enhance collections from corporations and the wealthy.  Not to be outdone by her West Virginia colleague, Sen. Sinema (D – Arizona) killed the bill’s proposed elimination of the so-called carried interest preferential tax treatment for private equity firm managers.  She also acted to retain the bonus depreciation deduction used by manufacturers in purchasing equipment.

Super-sized CHIPS Act passes the Senate by wide margin.  On July 27, the Senate passed (64-33) a bipartisan measure to dramatically increase federal spending on basic R&D (ala such investments made after WWII by the Eisenhower Administration) and subsidize the domestic manufacture of semi-conductor chips.

Senator Majority Leader Chuck Schumer (D – New York) and Senator Todd Young (R – Indiana) worked together on this bill since 2019 as a way to enhance the federal government’s role in driving industrial policy at a level not seen in decades.

The bill’s elements include:

  • The original CHIPS Act’s $52B in manufacturing subsidies for domestic semi-conductor chip production;
  • $200B to support advanced R&D, including in the fields of AI, robotics, and quantum computing;
  • $10B to the Dept. of Commerce to create 20 “regional technology hubs” that partner research universities with private industry for technology innovation, with such hubs to be located in industrial regions that were particularly hard hit by globalization; and,
  • $50B to the National Science Foundation to promote basic R&D and workforce development.

 

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