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TAX TAKE: Where Do They Go From Here? Senator Manchin Rejects Potential Tax Increases in Advance of the August Congressional Recess

Tax Alert

Citing continuing concerns regarding inflation, late last week Senator Joe Manchin (D-WV) informed Senate Democratic leadership that he would not support the inclusion of any climate change spending or tax increases as part of a reconciliation package considered before the August Congressional recess. Senator Manchin did, however, indicate support for a slimmed-down health care package focused on prescription drug pricing and a two-year extension of enhanced Affordable Care Act subsidies in advance of the recess, as well as the potential consideration of a package focused on climate change spending and tax increases in September in advance of the September 30 expiration of the FY2022 budget resolution.

Senator Manchin's announcement will have a major shift on the tax legislative agenda as the significant tax increases proposed on businesses and wealthy individuals as part of Build Back Better (BBB) are effectively off the table until at least September. And although it might be possible as a procedural matter to process a reconciliation bill by the September 30 deadline, it may no longer be politically feasible to pass such a bill so close to the mid-term elections.  

This is obviously a fluid situation as the Biden Administration and Democratic leadership now scramble to save what they can of the BBB agenda ahead of the mid-term elections. Stay tuned as the dust settles this week and policymakers continue to discuss potential legislative next steps. #TaxTake

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