Reconciliation talks yet to yield relevant progress


Democratic lawmakers failed to show any visible progress in the last two weeks toward a potential slimmed-down reconciliation bill to carry some of the tax priorities of the stalled Build Back Better (BBB) agenda.

Democrats have been stalled for months as Sen. Joe Manchin, D-W.Va., has offered the idea of resurrecting key pieces of BBB in a bill that would reduce the deficit and fund a few key priorities. Manchin emerged from a meeting with Sen. Chuck Schumer seemingly open to the idea of a bill with a corporate tax rate increase to 25%, and a top capital gains tax increased to 28%, but no concrete negotiations have occurred since.

Sen. Kyrsten Sinema, D-Ariz., also remains steadfast in her opposition to raising tax rates, recently telling reporters "You all know, the entire country knows, that I am opposed to raising the corporate income tax. That was true yesterday, that is true today."

Further complicating matters, Manchin announced several weeks ago that he was launching bipartisan talks focused on climate and energy legislation—topics that are heavily represented in the House-passed version of the reconciliation bill.

While the specifics of the Manchin’s proposed bipartisan package remain unclear, some lawmakers have expressed their doubts on the ultimate passage of such legislation. Sen. Kevin Cramer, R-N.D., noted, “Is there something that can attract 10 Republicans that doesn’t scare away 10 Democrats?” Cramer further noted, “If it starts looking like a reconciliation or Build Back Better, then obviously Republicans will be out.” Sen. Ben Cardin, D-Md., expressed a similar sentiment, stating, “I think that’s going to be a heavy lift. If he can do it, great.”

Notwithstanding the bipartisan energy package, Democrats have said significant progress will need to occur before the Memorial Day recess for passage of a party-line reconciliation bill to remain a possibility. Other members offered looser deadlines of the July 4 or August recesses. The closer the calendar creeps to the November elections, the harder it will become for Democrats to strike any deal.



Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.


More tax hot topics