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August 7, 2022

Senate approves Inflation Reduction Act

The Senate August 7 approved 51-50 the Inflation Reduction Act (IRA) of 2022 (H.R. 5376), a bill to finance climate and energy provisions and an extension of enhanced Affordable Care Act (ACA) subsidies with a 15% corporate alternative minimum tax (CAMT) on adjusted financial statement income for corporations with profits over $1 billion, a stock buyback tax, increased IRS enforcement funding, and allowing Medicare to negotiate prescription drug prices.

All 50 Senate Democrats voted in favor and VP Harris broke the tie for the bill that's been discussed by Democrats in Congress for over a year. It lost steam late last year when negotiations broke down between the White House and Senator Joe Manchin (D-WV) in December, but quickly gained traction in a much smaller form recently with a deal backed by Senate Majority Leader Chuck Schumer (D-NY) and Senator Manchin on July 27 and by Senator Kyrsten Sinema (D-AZ), with changes, on August 4. The text of that compromise was released late in the day August 6, and the "vote-a-rama" began later than anticipated — after 11 p.m. on August 6 — and lasted until 3 p.m. on August 7. The House is planning to reconvene on Friday, August 12 to consider the Senate bill.

The revised text of the measure released August 6 dropped the carried interest holding period provision in the July 27 Schumer/Manchin compromise; added a 1% stock buyback tax; and changed the CAMT language to allow MACRS depreciation for tangible assets, as well as amortization deductions allowed for qualified wireless spectrum, to reduce adjusted financial statement income for purposes of computing the tax, and for other purposes. (Note: A description in a prior Tax Alert on the treatment of NOLs for purposes of the three-year testing period for determining whether a corporation is subject to the $1 billion threshold for purposes of the CAMT should be clarified — NOLs arising during any of the three years in the testing period can be utilized for determining whether the threshold is met for that testing period.)

The last hour of the amendment process grew complicated as some senators sought to narrow the CAMT so that portfolio companies owned by private equity companies would not be considered to be part of the common ownership of the private equity companies, a change that had bipartisan support but needed to be paid for. Senator John Thune (R-SD) first offered an amendment to strike the common ownership language, which he said is a threat to small businesses, with the $35 billion loss paid for by a further extension through 2026 of the $10,000 state and local tax deduction cap. The pay-for obviously posed problems for other members from high-tax states but nonetheless was adopted. Senator Mark Warner (D-VA) then offered an amendment to strike the SALT deduction cap pay-for and replace it with extending pass-through loss limitations for two years, which was approved 51-50, also with VP Harris breaking the tie.

Attached below is the Thune amendment, along with the Warner amendment that replaced the SALT limitation extension.

In several instances, Democratic leaders called for opposing Democratic amendments, including those enhancing the Child Tax Credit and addressing the Medicaid coverage gap, in the interest of preserving the IRA and keeping the deals reached with Senators Manchin and Sinema intact. One notable vote this morning struck the private insurance insulin price cap that was part of the revised text released August 6 after Republicans asserted that it violated budget rules and Democrats could not muster 60 votes to overcome a point of order.

The following table describes select votes during the vote-a-rama overnight.


Description of amendment


Bernie Sanders (I-VT)

Establish a cap on costs for covered prescription drugs under Medicare parts B and D such that Medicare should not pay any more than the VA for prescription drugs

Failed to waive budget point of order, 1-99

Lindsey Graham (R-SC)

Strike Superfund tax on crude oil and imported petroleum products of 16.4 cents/per gallon, paid for by one-year extension of SALT deduction cap

Not agreed to, 50-50

Maggie Hassan (D-NH)

"Strike surcharge on barrels of oil"

Failed to waive budget point of order, 55-45 (60-vote threshold)

John Barrasso (R-WY)

Reduce gas prices with onshore domestic energy production

Not agreed to, 50-50


Expand Medicare to include dental, hearing, mental health coverage

Not agreed to, 3-97

Shelley Moore Capito (R-WV)

Strike provisions concerning funding for certain activities under the Clean Air Act

Not agreed to, 50-50

Jim Lankford (R-OK)

Border security

Not agreed to, 50-50

Jon Tester (D-MT)

Title 42 border policy that aims to limit spread of disease

Failed to waive budget point of order, 56-44

Mike Crapo (R-ID)

Prevent IRS audits targeting individuals and small business owners under $400k

Not agreed to, 50-50

Rick Scott (R-FL)

Motion to commit the bill to the Finance Committee with instructions to prohibit hiring more IRS agents before expanding border patrol

Not agreed to, 50-50

Roger Marshall (R-KS)

Changing drug price negotiation provisions to protect patient access to current and future treatments for a range of serious conditions

Not agreed to, 50-50


Civilian Conservation Corps jobs for young people

Not agreed to, 1-98


Expedite consideration of permits and provide regulatory certainty for infrastructure and energy projects

Failed to waive budget point of order, 49-50

Chuck Grassley (R-IA)

Modify the maximum capital gains tax rate, to provide a partial exclusion for interest received by individuals, to provide inflation adjustments for certain tax benefits, similar to Middle-class Savings and Investment Act

Not agreed to 49-51

Susan Collins (R-ME)

Ensure that IRS funding covers only employees who work in person

Not agreed to, 50-50

John N. Kennedy (R-LA)

Require oil and gas lease sales in the outer Continental Shelf

Not agreed to, 50-50

Marco Rubio (R-FL)

Motion to commit, regarding police funding

Not agreed to, 50-50

Mike Lee (R-UT)

Reduce funding for home energy performance-based, whole-house rebates and to provide funding for supplemental payments under the payments in lieu of taxes program

Not agreed to, 49-51

Richard Shelby (R-AL)

Approval of coal leases

Not agreed to, 50-50

Tim Scott (R-SC)

Motion to commit to Finance Committee to move money from IRS funding to parents for pandemic catch-up learning

Not agreed to, 50-50


Extending 2021 Child Tax Credit paid for by increasing corporate tax rate

Not agreed to, 1-97

Ted Cruz (R-TX)

Strike IRS funding

Not agreed to, 50-50

Raphael Warnock (D-GA)

Extend ACA subsidies and close the Medicaid coverage gap

Failed to waive budget point of order, 5-94


Block sales of US oil to certain foreign entities

Failed to waive budget point of order, 54-46


Eliminate provisions beneficial to the fossil fuel industry

Not agreed to, 1-99


Make discounted insulin available at community health care centers

Not agreed to, 50-50

Patty Murray (D-WA)

Keep insulin price cap in the bill

Failed to waive budget point of order, 57-43


Motion to commit bill to Homeland Security Committee to remove requirement that DC school students receive COVID-19 vaccine

Not agreed to, 49-51


Motion to commit bill to Judiciary Committee to add provisions on questioning of parents

Not agreed to, 50-50

John Hoeven (R-ND)

Motion to commit bill to Finance Committee to prevent bill from taking effect until inflation declines

Not agreed to, 50-50

Marsha Blackburn (R-TN)

Motion to commit bill to Agriculture Committee

Not agreed to, 50-50


Motion to commit bill to HELP Committee to assert that federal pregnancy programs are for biological females

Not agreed to, 50-50

Dan Sullivan (R-AK)

Border security

Not agreed to, 50-50

Bill Hagerty (R-TN)

Motion to commit bill to Judiciary Committee

Not agreed to, 50-50


Keeping the CAMT from affecting certain small businesses, paid for by extending the SALT deduction cap for one year

Adopted 57-43, then superseded by Warner amendment


Regarding Thune amendment, replace SALT pay-for by extending pass-through loss limitations for two years

Adopted 51-50


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   •  Any member of the group at (202) 293-7474.


Thune amendment

Warner amendment