What’s In the Climate Change, Tax, and Health Care Bill, and Who Benefits?

Emissions and Energy Incentives

Over the weekend, the Senate passed a 755-page $430 billion spending bill along party lines. It includes funding for efforts aimed at combating climate change and expanding health care coverage. The bill’s supporters say it will be paid for by reducing the amount Medicare spends on prescription drugs while increasing the amount of taxes on corporations.

Most of the bill’s spending focuses on the issue of climate change and the goal of boosting clean energy production. The legislation would also launch the National Climate Bank, which would invest in energy efficiency and clean energy technologies. It includes incentives for farmers and ranchers to reduce methane emissions, as well as an extension of the electric vehicle tax credit.

Corporate Taxes

The spending bill includes a series of changes to the tax code. One notable example is a new 15% minimum tax on large corporations. Accelerated depreciation would be exempted, however, referring to the fact depreciation expenses could be higher when assets are newer. Arizona Democrat Senator Kyrsten Sinema, a key swing vote, reportedly held out for that exemption.

Senator Sinema was also a driving force behind the eliminated “carried interest tax loophole.” It is considered beneficial to hedge fund managers as well as real estate and private equity investors. In essence, the loophole allows income earned from investments to be taxed at a lower rate, similar to income from wages. A 1% tax on stock buybacks is included instead. It must be paid when corporations decide to purchase outstanding shares.

Electric Vehicles and Lithium

If the bill passes the House of Representatives and is signed into law by President Joe Biden, some analysts say electric vehicle companies could stand to benefit. That’s because the $7,500 consumer income tax credit for the purchase of a new EV has been extended. A $4,000 credit for purchasing a used EV has been added.

Some industry observers are excited about what the bill could mean for lithium miners, given the metal is vital for battery production. If passed, it would require 40% of EV battery components be sourced from US factories or free trade partners, while all batteries must be US made by 2029.

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James Flippin ABOUT James Flippin James Flippin is the son of a financial advisor who grew up hearing and learning about bond yields, interest rates, the stock market, and the ins and outs of Wall Street. After stints as a licensing and business broker for Marcus and Millichap in New York City, James moved into broadcasting and became a reporter and anchor. He covered crime, politics, finance, and tech at NBC News Radio while working part-time as a producer for SiriusXM. James graduated from the University of Delaware with a bachelor’s degree in political science and economics. He's also an accomplished podcaster with over 10-years of experience.

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