US Chamber applauds Sinema, attacks stock buyback tax

The U.S. Chamber of Commerce on Friday cheered Sen. Kysten Sinema (D-Ariz.) for softening her party’s corporate minimum tax measure but criticized a new stock buyback tax proposal included in the Inflation Reduction Act. 

In a deal to appease Sinema, Senate Democrats on Thursday evening agreed to modify the 15 percent minimum corporate tax so that manufacturers can take advantage of accelerated depreciation rules to buy equipment. They also agreed to gut changes to carried interest — a win for private equity executives — and enact an excise tax on stock buybacks.

The nation’s largest business group said that Sinema “deserves credit” for fighting for changes to the minimum tax, arguing that it would have hurt growth and innovation, but warned that the stock buyback tax would damage investor returns.  

“Unfortunately, the new excise tax on stock buybacks will only distort the efficient movement of capital to where it can be put to best use and will diminish the value of Americans’ retirement savings,” Neil Bradley, chief policy officer at the U.S. Chamber, said in a statement. 

Democrats introduced the stock buyback tax to make up for the revenue lost by removing the carried interest provision and modifying the minimum tax. They couldn’t afford to lose enough funding that the bill wouldn’t significantly reduce the deficit, a key priority for Sen. Joe Manchin (D-W.Va.).

Companies on the S&P 500 bought back a record $882 billion in stock last year to reward shareholders. Critics of the practice say that companies should instead use that money to create more U.S. jobs or pay their workers better. 

Sinema fought for changes to the minimum corporate tax — which applies only to companies with $1 billion or more in annual income that currently pay less than small businesses — after intense lobbying from manufacturers and Arizona business groups. 

“We are glad to hear that accelerated depreciation provisions are removed, but we remain skeptical and will be reviewing the revised legislation carefully,” National Association of Manufacturers President and CEO Jay Timmons said in a statement, noting that the group still opposes the bill’s drug pricing provisions.