WASHINGTON, Dec 22 - Corporate tax advisers are warning clients of the apparent demise of President Joe Biden's climate and social spending package, which they say could be resuscitated with a similar price tag and proposed tax hikes.
Any changes to a new version of the bill, which Biden and his fellow Democrat, Joe Manchin, will likely focus more on the spending side than on revenue-raising measures, said Ryan Abraham, a principal of Ernst & Young's Washington Council advisory practice.
With the revenue measures of the bill, the company taxes are higher and the wealthiest households are higher.
Over the weekend, Manchin told the "Fox News Sunday" program he wouldn't support the spending package. The moderate Democrat expressed concerns about its impact on inflation and some measures such as the expansion of the child tax credit program.
But while Manchin is an active advocate for a tax hike in West Virginia, one of the country's poorest state, he's constantly said that he supports a tax hike in corporation, the riches and a reverse of some of the Trump administration's 2017 tax cuts he opposed.
"I don't know whether not out of child tax credit and some discreet changes that Manchin needs, that much, really, on the tax side will change. That doesn't seem where his biggest concerns are," told Reuters.
The revenue measures in Biden's "Build Back Better" bill, which include a 15% minimum tax on corporate book income, a 15% higher tax on overseas corporate income and a surtax on individual income over $10 million, are still needed to ensure that whatever emerges from new negotiations covers the costs, said Abraham.
Tax breaks, such as the deduction for electric vehicles made by the union, would be repercussion of a drop in tax dollars, while green energy companies and other industries may be exempted from the book tax.
GLOBAL CORPORATE MINIMUM TAX.
Two days after Manchin dealt the bill what seemed to be a body blow by its latest version, Biden said on Tuesday that he and the senator were on the legislation.
An aide on Wednesday of Manchin didn't comment on the talks.
What we should have done is nagging that it won't be over until it has passed over," said Corwin, an ex-Teacher who's now the head of the Washington National Tax Practice. "There is a great reason for doing something right now, if it gets under the radar of a gun."
Even if the White House wants Manchin to support the "Build Back Better" bill, it will still need to win over Democratic Senator Kyrsten Sinema in the 100-seat Senate, which is narrowly controlled by the Democrats. Sinema and all 50 Republican senators have tax rates.
The current tax provisions, crucial to a deal between 136 countries, are not contested and will survive in a revamped version, said Corwin.
"From a global perspective, this is really whether they are successful or not getting a deal," Corwin said. "Some countries are raising alarm bells about the ability of the U.S. Treasury Secretary Janet Yellen to fulfill their promises.
A spokesperson for the Treasury said Wednesday that the department was confident that it could meet the commitment to implement the 150% global corporate minimum tax next year, with the rules in 2023 now in force.