Want to receive this newsletter every weekday? Subscribe to POLITICO Pro . You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. WHAT TO WATCH FOR THIS WEEK: It's understandable that Manchin and Senate Majority Leader Chuck Schumer's proposal to further limit the tax preference for carried interest has gotten a lot of attention. Carried interest has been a Democratic bugaboo for quite some time, and former President Donald Trump railed against it, too. Sen. Kyrsten Sinema (D-Ariz.) also objected to making carried interest changes last year, before Manchin took down the broader bill known as Build Back Better, so there's a natural tension as everyone waits to see what Sinema will do with this new, more climate-focused measure. But it's also true that the book tax raises more than 20 times as much revenue — some $313 billion over a decade — as the changes to carried interest, which would raise about $14 billion by forcing private equity executives to hold investments for five years to get the preferential capital gains rate, instead of the current three. And for lots of folks outside of private equity, including plenty of lobbyists and right-leaning tax experts, the minimum tax will be the top focus as Democrats press ahead to try and pass their budget reconciliation measure in the Senate as soon as this week. The Joint Committee on Taxation recently estimated that around half of the revenues raised by the book tax would come from manufacturers, something you'll likely hear plenty of times from both groups like the National Association of Manufacturers and GOP lawmakers in the coming days. (Supporters of the book tax maintain that the definition of manufacturer in that projection is fairly broad , among other things.) For instance, Sen. Pat Toomey of Pennsylvania, a key force in writing the GOP's 2017 tax law, brought that manufacturing angle up in his appearance on "State of the Union" on Sunday. Toomey also talked about one area that lobbyists, manufacturing advocates and other business groups are hoping that Sinema can influence the Democrats' tax proposals — by pushing her party not to take such a hard line against accelerated depreciation in the book tax. The new minimum tax would hit corporations that averaged $1 billion in profits on their financial statements over a three-year period. Under financial accounting, companies write off capital investments basically for as long as they're expected to last. That's quite different than how tax accounting treats capital expenditures, where both Democrats and Republicans have worked to allow for quicker write-offs because they believe it gives a spark to the economy. Now will Sinema actually work to put any carveouts for depreciation in the book tax? Hard to say. She and her team have said next to nothing publicly about how they'll approach this new proposal, though Manchin said Sunday that he hopes she'll end up supporting it . So it's not clear how interested Sinema is in going to bat for anything, including any carried interest changes. It's also not clear how much less the book tax would raise if there is some kind of exemption for expensing — it could take a pretty big bite out of the revenue projection, while still raising a significant amount of money. OTHER STUFF IS GOING ON, TOO: There was other news in the tax world last week too, particularly for those people who care about foreign tax credits. The Treasury Department released corrections for foreign tax credit regulations that went into effect this year, which companies and tax lawyers had argued were too broad. Treasury first released the new rules in large part because of the rise of digital services taxes that countries like France and the U.K. had pursued to wring more revenues out of big tech companies like Google. The U.S. government wanted to ensure that companies couldn't get foreign tax credits, which are used to keep companies from getting taxed on the same income by multiple countries, for digital service tax payments — essentially because that would only further incentivize other governments to implement or even expand DST's. A Treasury official said the regulations were meant to offer companies a decent amount of flexibility, but that professionals in the tax community were reading them more narrowly than the department had intended. John Harrington of Dentons told Weekly Tax that the corrections were "quite positive." But companies also want more substantive changes that would need to go through the regulatory process, something that both Treasury and the tax legal community acknowledged will be a more difficult enterprise.
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