Biden Signs Landmark Tax, Climate, and Health Bill into LawAugust 17, 2022
On Tuesday, August 16, 2022, President Joe Biden signed into law a sweeping tax, climate and health-care bill ("the bill”), signifying major legislative victory ahead of the November midterm elections. The bill passed with majority Democratic support in both the Senate and the House.
The bill, renamed the Inflation Reduction Act, contains a wide array of tax provisions intended to raise taxes on corporations and wealthy investors. The legislation is predicted to increase taxes by about $300 billion, largely by imposing a new 15% corporate minimum tax aimed at companies that earn more than $1 billion a year. The bill also includes a new 1% excise tax on certain corporate stock buybacks and a minimum tax on large firms that use deductions and other methods to reduce their tax bills. In addition, the bill injects $80 million into the Internal Revenue Service (the “IRS”) in an effort to crack down on tax evasion and beef up the IRS’s tax enforcement efforts.
To get the bill signed into law, Biden had to give up some of his most favored provisions that were in the original Build Back Better bill introduced over a year ago, including universal child care and tax cuts for the middle class. In addition, prior to the bill being sent for Biden's approval, the legislators stuck down a provision that would have closed the so-called “carried interest” loophole that currently allows private equity managers and hedge fund executives to pay significantly lower tax rates than most taxpayers.
Cullen & Dykman tax attorneys are reviewing the newly enacted bill and will be sending out a more detailed summary of the tax provisions contained therein shortly. In the meantime, please contact your tax advisors with questions regarding how this new legislation may affect you or your business.
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Cullen and Dykman (www.cullenllp.com) has been providing legal services to institutional clients since 1850. The firm represents a wide range of clients, including banks and other financial institutions, energy, telecommunications and water companies, construction companies, insurers, educational institutions, religious organizations, and not-for-profits. With over 190 attorneys in seven offices located throughout the Northeast and Mid Atlantic regions, Cullen and Dykman is strategically positioned to meet the changing needs and demands of our clients.