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U.S. Senate's $430 billion climate bill to add tax on stock buybacks

Economic Indicators Aug 05, 2022 04:23PM ET
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2/2 © Reuters. FILE PHOTO: U.S. Senate Majority Leader Chuck Schumer (D-NY) at the U.S. Capitol in Washington, U.S. August 2, 2022. REUTERS/Jonathan Ernst/File Photo 2/2

WASHINGTON (Reuters) - The roughly $430 billion climate, drugs and tax bill that U.S. Senate Democrats are trying to push through Congress will include a new excise tax on stock buybacks, Majority Leader Chuck Schumer said on Friday.

Lawmakers agreed to add that provision after reaching a deal with Democrat Kyrsten Sinema, a maverick who has often stood in the way of President Joe Biden's priorities, to drop another provision that would have imposed new taxes on carried interest.

"We are adding in an excise tax on stock buybacks that will bring in $74 billion," Schumer told reporters. He did not provide the effective date for the new tax if the legislation is enacted into law.

"I hate stock buybacks," Schumer said, adding, "I think they are one of the most self-serving things that corporate America does." The New York Democrat said that companies instead should be investing in worker training, research, modernizing equipment and other activities.

Democrats are currently awaiting a ruling from the chamber's parliamentarian on whether they can use a special procedure to pass the bill by a simple majority, rather than the normal 60 of 100 votes required, to bypass united Republican opposition.

They currently plan to hold an unusual weekend session to push forward on the bill, which would deliver on key goals of the Biden administration ahead of the Nov. 8 midterm elections, when control of Congress is at stake.

All 100 senators will be given an opportunity over the weekend to amend the legislation, amid solid Republican opposition.

The bill, called the Inflation Reduction Act, was unveiled last week by Schumer and Senator Joe Manchin, who like Sinema has often blocked the party's agenda.

It aims to reduce prescription drug costs by allowing Medicare, the government-run healthcare plan for the elderly and disabled, to negotiate prices on a limited number of drugs.

It also would address climate change through new investments in non-carbon emitting energy, while improving tax collections on companies and wealthy individuals.

The bill as initially written would have spent around $430 billion, while reducing government budget deficits by around $300 billion.

The final price tag could change once the legislation is formally introduced this weekend, if all goes as planned.

Sinema revealed late on Thursday that she would support the bill with some changes, including adding funding for drought relief.

Sinema said she would not back the bill unless Democrats nixed the carried interest provision, a longstanding Wall Street tax break that let many private equity and hedge fund financiers pay a lower capital gains tax rate on much of their income, instead of the higher income tax rate paid by wage-earners.

In its place, Democrats added the excise tax, which is estimated to bring in over $70 billion.

U.S. Senate's $430 billion climate bill to add tax on stock buybacks
 

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Comments (13)
Jon Gr
Jon Gr Aug 07, 2022 6:59PM ET
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Just more of Democrats telling everyone from the blue collar worker on up to corporate America that they know how to spend your money better than you do.
David CA
ILoveQE Aug 05, 2022 6:46PM ET
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Wait!! I thought was called the Inflation Reduction Act"??!! Now...its called the Climate Change bill??!! History has proven time and time again, that any Congressional bill passed always has the opposite effect.
Brad Albright
Brad Albright Aug 05, 2022 6:46PM ET
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Your comprehension of history is remarkably deficient, apparently.
Ethel Basset
Ethel Basset Aug 05, 2022 5:56PM ET
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Stupidity
Jamie Kent
Jamie Kent Aug 05, 2022 5:36PM ET
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Corporation never actually pay taxes, they just pass it on to consumers through higher prices. Its a nice thought to say tax the big mean corporations more, but in truth it is a tax paid by regular people....until a competing corporation offshores or outsources their business so they can offer lower prices than those who stayed in the US eventually go out of business or have to offshore/outsource their jobs to be competitive again.
jason xx
jason xx Aug 05, 2022 4:05PM ET
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Good wall street can afford to pay more then wage earners not less. The same should be the bare minimum
Connecticut Yankee
A_Jaundiced_Eye Aug 05, 2022 3:54PM ET
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An excise tax on Success. The Dems finally got what they've been pitching since the Days of Malaise.
Adrian White
Adrian White Aug 05, 2022 3:54PM ET
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How is buying back shares "success"? Besides, a company would only be smart to buy back shares when they have fallen, which is generally not a sign of success when it comes to stocks. Taxing companies for selling their own shares for a profit would be more like a "tax on success", not buying them.
WESLEY WARREN
WSQUARED Aug 05, 2022 3:54PM ET
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it's going to cost normal ppl don't kid yourself they are stealing
Zen Cat
LittleZenCat Aug 05, 2022 2:44PM ET
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If you're an American that can vote, pls kick the dems out in the coming elections. They're making life harder for everyone, everywhere on earth.
Brad Albright
Brad Albright Aug 05, 2022 2:44PM ET
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YEAH! CREATING ALL THESE JOBS AND STUFF. JUST HORRIBLE!
carlos guo
carlos guo Aug 05, 2022 2:44PM ET
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Nothing like having to work 2-3 jobs to feed your family because Brandon created the highest inflation in 40+ years.
nick cage
nick cage Aug 05, 2022 2:44PM ET
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And mass inflation cost of living crisis. Awsome! But hay a wage price spiral is great guys
Scot House
Scot House Aug 05, 2022 2:44PM ET
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Brad Albright check the participation rate.
carlos guo
carlos guo Aug 05, 2022 2:39PM ET
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It is actually going to be adding tax on everybody, including the lower and middle class.
Roger Miller
Roger Miller Aug 05, 2022 1:41PM ET
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Remember the stockholders who benefit from the buybacks also include many middle and low income people’s retirement funds and other investments.
Glenn Young
Glenn Young Aug 05, 2022 1:37PM ET
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I hope everyone remembers all the stupid sh!+ these Dumbocrats come up with in Nov.
Show previous replies (2)
Adrian White
Adrian White Aug 05, 2022 1:37PM ET
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Carlos, did "Brandon" print all the new money? No, the Fed did. Did he spend money from the Treasury? No, Congress did. Did he start the Covid lock downs? No, Trump did. Did he start a war in Ukraine? No, Putin did. Please explain why you think it's all his fault that the world (not just the US) is experiencing inflation right now.
Brad Albright
Brad Albright Aug 05, 2022 1:37PM ET
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Adrian White Right, but somehow, while being responsible for every bad thing in the universe, he has nothing to do with America's successes -- apparently. This isn't good faith opinion, it's dogma.
Scot House
Scot House Aug 05, 2022 1:37PM ET
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Adrian White day one rolled back all of Trumps energy policies. Got the ball rolling on inflation. Printed more money when he didnt need to. Gave money for the unemployed to stay unemployed. Yeah. Id say Biden is at fault.
John Laurens
John Laurens Aug 05, 2022 1:37PM ET
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100%! Biden's minions stole the election and "took" a country that was energy independent with ample supplies of all fuels, a country that was respected and feared by ALL who really should fear us, and a country back on the rise in terms of manufacturing, innovation and self sufficiency. President Pants Pooper demolished ALL of that in less than 2 years. Biden totally defecated the bed on the Afghanistan pull out leaving billions of dollars in arms for our enemies to use or sell, Russia invaded Ukraine ENTIRELY BECAUSE they knew feckless Joe would do NOTHING! and of course they were right... Now, before the vegetable in chief leaves or croaks, China is gonna take Taiwan.. Real wages in the US are falling off a cliff, rolling brown outs are the new Biden norm, our public schools are a COMPLETE and TOTAL embarrassment because they're controlled by dems.. Criminals are taken care of while victims are blamed and tortured under Biden, AND let's not forget 2 million+ illegals here to take!
Brad Albright
Brad Albright Aug 05, 2022 1:37PM ET
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John Laurens This is supposed to be funny, right? You are spouting nonsense to make right-wingers look kooky, right? You do it to perfection.
 
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