“. . . . While many of Mr. Manchin’s changes improved the bill — such as by turning it from deficit raising to deficit lowering — it was solely Ms. Sinema’s demands that drastically weakened the tax portion of the resulting legislation.
No increase in the egregiously low corporate income tax rate. No reversal in overly generous deductions for businesses. No rise in income tax or capital gains rates paid by the wealthy.
Wealthy individuals escaped essentially unaffected by the new legislation. Ms. Sinema even objected to closing the indefensible carried interest loophole, through which many private equity executives and some hedge fund managers pay only a 23.8 percent tax rate on gains achieved on their share of investors’ capital.
Here’s how muddled Ms. Sinema’s logic was: As a House member, Ms. Sinema voted against Donald Trump’s signature $1.9 trillion tax cut of 2017, whose benefits mostly larded up businesses and wealthy individuals. That did not dissuade her from insisting that the Inflation Reduction Act not reverse any of those changes.
Consequently, Mr. Schumer and other architects of the I.R.A. were forced to resort to adopting a new method of taxing the profits of large corporations — assessing them based on a company’s reported income under generally accepted accounting principles (known as GAAP) rather than based on computations dictated by the tax code.
In addition to added complexity, this change creates the potential for companies to manipulate their tax obligations by tinkering with accounting methodologies that the Internal Revenue Service would be unable to oversee.”