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After months of intra-party squabbling, Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., came to a compromise last week that will reportedly most adversely affect coal employees.
A scaled-down version of President Biden’s Build Back Better (BBB) Act, the Inflation Reduction Act will cost an estimated $433 billion, the majority of which will go toward climate-related provisions, while boosting tax revenue by $739 billion. The bill will make it mandatory for large corporations to pay at least 15% in taxes, which is anticipated to increase tax revenue by $313 billion. It will also strengthen IRS enforcement, which is anticipated to increase tax revenue by another $124 billion, and it will close the carried interest loophole, which is anticipated to generate $14 billion in additional revenue.
Manchin’s acceptance of the arrangement put an end to a months-long impasse on Biden’s multi-trillion dollar BBB Act, which Manchin had repeatedly criticized as being excessive and inflationary.
Manchin said in December, “If I can’t go back home and explain it, I can’t vote for it.”
On March 11, 2022, in Houston, Texas, Sen. Joe Manchin, the chairman of the Senate Energy and Natural Resources Committee, addresses the media. Getty Images/F. Carter Smith/Bloomberg
Manchin claimed on Sunday that the new legislation “does not raise taxes,” a contention that Republicans vehemently contest.
Manchin will also need to justify his decision to support a plan that will disproportionately affect West Virginians, who generate the second-most coal in the country.
The coal industry has the highest pretax book income of any sector, and the 15 percent corporate alternative minimum tax, which is applied to the financial statement income that businesses report to their investors, will result in a net tax increase of 7.2 percent, according to the Tax Foundation report. According to the report, manufacture of cars and trucks will be the second hardest effected by the levy and will see a 5.1 percent increase.
On August 3, 2021, Sen. Joe Manchin adjourns from the U.S. Capitol after a vote. (Kevin Dietsch / Getty Pictures) )
“These industries are particularly severely impacted because they are at the intersection of the various book-tax gaps targeted by the book minimum tax, including permanent discrepancies between the two measures from firms paying low taxes (the intended target); temporary timing differences between financial and taxable income; purposeful tax incentives created by Congress (e.g., bonus depreciation); and special items that show up in one income definition but not the other, such as
Additionally, Section 13901 of the new bill repeals a part of the U.S. tax code that lowers the tax on coal production, which results in a rise in the tax rates for coal produced in surface mines from $0.25 to $0.55 and coal produced in deep mines from $0.50 to $1.10.
On January 18, 2022, on Capitol Hill, Senator Joe Manchin addresses the media prior to a meeting with other Senate Democrats. (Getty Images / Drew Angerer) )
In an opinion piece published on Sunday, Rep. Alex Mooney, R-W.Va., attacked Manchin for endorsing the bill and accused him of “betraying” West Virginians by hurting coal miners with more “reckless spending.”
Sen. Manchin is increasing taxes on the coal mining industry in West Virginia while giving leftists in deep blue states subsidies to buy electric cars, according to Mooney wrote . The entire coal industry, as well as the thousands of jobs and towns it supports in West Virginia, will be threatened by these drastic tax increases.
The law was also criticized harshly by the Wall Street Journal editorial board on Sunday, who suggested renaming it the “Business Investment Reduction and Distortion Act.”
Start with the 15% minimum tax on corporate book income over $1 billion, which Democrats predict will raise $313 billion through 2031, says the board wrote . Due to things like investment expensing, tax credits, and business deductions, enterprises whose taxable income is lower than the profits on their financial statements will be hit hard by this new alternative minimum tax.
The board added, “Many companies pay less than the corporation tax rate of 21 percent because they can expense investments under the tax rules upfront. “As a result, the new tax will make company investments more expensive. Irony alert: According to the Tax Foundation, the coal industry would be particularly heavily hit. However, the new tax would not apply to green energy tax credits.”
The office of Manchin did not immediately reply to a request for comment from Fox News Digital.