Seven Dems vote for GOP amendment, forcing Democratic scramble – PaintBallBeam

CORRECTION: Seven Democrats voted for the GOP amendment that would extend a cap on the SALT tax deduction. A previous version of this story included incorrect information.

Maverick Sen. Kyrsten Sinema (D-Ariz.) on Sunday backed a Republican amendment to shield businesses that rely on capital investment from private equity groups from the 15 percent corporate minimum tax that Senate Majority Leader Schumer (D-N.Y.) included in the Inflation Reduction Act.

Sens. Catherine Cortez Masto (D-Nev.), Maggie Hassan (D-N.H.), Mark Kelly (D-Ariz.), Jon Ossoff (D-Ga.), Jacky Rosen (D-Nev.) and Raphael Warnock (D-Ga.) also voted for the amendment.

The amendment was sponsored by Senate Republican Whip John Thune (R-S.D.) who says the 15 percent corporate minimum tax would raise taxes on businesses with less than $1 billion in profits because it would apply to private equity groups that have partnership interests in those businesses.

The amendment would be paid for by a one-year extension of the cap on state and local tax deductions (SALT) that was a key feature of the 2017 Trump tax cut and which Schumer pledged to repeal as majority leader.

The amendment could have imperiled final passage of the bill as it would hit residents of high-tax blue states such as New York, New Jersey, Connecticut and California.

However, Democrats quickly offered an amendment from Sen. Mark Warner (D-Va.) after passage of the other amendment to make changes to the bill that would make it more palatable.

The Warner amendment replaced the SALT cap extension with a different tax provision raising revenue.

Warner’s amendment was approved, with Vice President Harris casting a tie-breaking vote.

Some Democratic senators privately expressed frustration on Sunday morning that Sinema was backing away from the deal she announced with Schumer last week to narrow the 15 percent corporate minimum tax by allowing companies to continue to fully expense major capital investments.

They said the amendment could scuttle the deal after Democrats stuck together throughout more than 14 hours of vote-a-rama to defeat amendments on both sides of the aisle, including an amendment from Sen. Bernie Sanders (I-Vt.) to provide a $300-a-month expanded child tax credit for the next five years.

“If any Democratic senator signed on to any of the amendments, it could be problematic,” warned one Democratic senator who was dismayed to find out that Sinema is pushing for a change to the underlying bill.

Proponents of the Thune amendment, however, argue that the minimum tax included in the Inflation Reduction Act will wind up netting potentially thousands of businesses that accepted investment partnerships with private equity firms during the pandemic when credit from regular banks was tight.

Sinema is concerned that small businesses such as plant nurseries and car detailing shops in Arizona could be caught up in the corporate minimum tax if they have a partnership relationship with a private equity firm that together with all its subsidiaries exceeds $1 billion in profits, according sources familiar with the discussions.

A source familiar with the tense behind-the-scenes negotiations say Schumer added language to the underlying bill Saturday that expanded the scope of the $15 percent corporate minimum tax.

Technically, the revenue-raising provision is called a book minimum tax because it would require companies to declare income based on generally accepted accounting practices, which are stricter than what is required under current law, which includes various tax breaks and shelters that makes it easier for businesses to shield income from the IRS.

One person familiar with the timeline of changes to the Inflation Reduction Act said when senators first saw the new text of the bill on Saturday it included for the first time language on “common control” that would apply the minimum tax on partnerships made up of many companies that by themselves don’t earn $1 billion in annual profits.

The added language would raise an additional $35 billion in revenue over 10 years.

Thune had proposed to strip that language out and pay for it by extending the SALT deduction cap for one year — but that could imperil passage of the bill in the Senate by making it unacceptable to Schumer or another Democrat from a high-tax state such as Sen. Bob Menendez (D-N.J.).

This story was updated at 3:05 p.m.

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