# Carta Policy: Weekly Brief for July 29 Author: The Carta Policy Team Read time: 10 minutes Published date: July 28, 2022 Major breakthrough on tax and climate package. Proposed bill includes tax hike on carried interest, but QSBS and IRA private investment spared. ## The Topline - Sen. Manchin surprises everyone, pivots on prior opposition to climate spending and tax bill - Manchin/Schumer agreement to limit carried interest tax advantage, with significant implications for private equity and venture capital - House passes modified DEAL Act, which could expand qualifying investments for venture capital funds - FTC sues Meta to block merger, while antitrust legislation addressing Big Tech lacks necessary support to move forward ## Macro matters ### Tax deal curtails carried interest, maintains QSBS Senate Majority Leader Chuck Schumer and Senator Joe Manchin shocked the policy world Wednesday night by announcing a tax deal, [the Inflation Reduction Act of 2022](https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_summary.pdf). The bill would: - Invest $433 billion in: - Energy and climate tax credits - Affordable Care Act extensions - Raise revenues by $739 billion through: - 15% corporate minimum tax - Prescription drug pricing reform - IRS tax enforcement - Carried interest limitation - Reduce the deficit by $306 billion The carried interest provision will directly affect our readers; find details below under **Taxation**. ### QSBS and IRA private asset investment both remain intact—for now The proposed legislation does not affect _qualified small business stock_ tax treatment or restrict the ability of _IRAs to invest in private assets_. Carta [worked](https://fund-forecasting@carta.com/policy/coalition-qsbs-exclusion/) with coalition partners over the last year on both of these issues and is pleased to report that our coalition efforts were successful. Thank you to all the partners who engaged to help make the case. _Next steps & politics_: Leader Schumer plans to put the bill on the Senate floor next week, while the House—assuming the Senate passes the bill—will return from August recess to vote on the bill in mid-August. That said, political dynamics are fluid. ### Economic outlook The U.S. economy contracted for the second straight quarter as growth fell at a 0.9% annual rate during Q2. The IMF cut its [global growth](https://www.imf.org/en/Publications/WEO/Issues/2022/07/26/world-economic-outlook-update-july-2022) forecast by 0.4%, projecting it will fall from 6.1% last year to 3.2% in 2022. The Federal Reserve raised interest rates another 75 basis points, and Chairman Powell reiterated that the Fed would take the necessary measures to bring inflation to 2%, which may come at the cost of contraction. ### Carta & pay transparency On Nov. 1, New York City will require employers to publish wage ranges for open roles. To help companies prepare, Carta released complete sets of [NYC salary and equity bands](https://fund-forecasting@carta.com/data/average-salary-bands-in-nyc/) for a few key job areas. ## Capital markets ### House passes DEAL Act to expand VC secondary investments This week, the House unanimously passed the [Developing and Empowering our Aspiring Leaders (DEAL) Act](https://docs.house.gov/billsthisweek/20220725/BILLS-117hr4227-SUSv1.pdf), which would ask the SEC to allow investments in qualifying portfolio companies acquired through secondary transactions to be considered “qualifying investments” under the venture capital fund rules. ### SEC advisory committee to meet to discuss liquidity challenges for small business investors Next week, the SEC’s [Small Business Capital Formation Advisory Committee](https://www.sec.gov/sbcfac-agenda-080222?auHash=5YfssntQjFsv8-ZGWLHkjj7uy_zWG3pB5bJOjRPsvO4) will meet to discuss liquidity challenges investors in small and emerging businesses are facing—both in the private and public markets. ### SEC launches educational resources to help navigate capital raising process The SEC launched its [Small Business Capital Raising Hub](https://www.sec.gov/education/capitalraising), which centralizes resources designed to help small businesses and their investors navigate the capital raising regulatory framework. ## Crypto & digital Assets ### No agreement on stablecoin framework, though negotiations continue House Financial Services Committee Chairwoman Maxine Waters and Ranking Member Patrick McHenry were [unable to come to an agreement](https://financialservices.house.gov/news/email/show.aspx?ID=KGAZWKE5P2SV3YMYRSD3RVJZN4) on a [highly anticipated bill](https://fund-forecasting@carta.com/policy/policy-weekly-07-22-22/) that would provide a regulatory framework for stablecoins before the Committee markup this week. ## Banking and financial products ### Chopra focused on BNPL, consumer data, and Section 1033 Consumer Financial Protection Bureau Director Rohit Chopra is pushing forward on an agenda that targets Big Tech’s expansion into financial services. ### OCC reviewing fintech’s impact The Office of the Comptroller of the Currency is [calling](https://www.occ.gov/news-issuances/news-releases/2022/nr-occ-2022-91.html) for new research on how fintechs are impacting the banking industry. ### Taxation ### Proposed change for carried interest tax Included in the Inflation Reduction Act is a revived proposal to narrow the advantageous tax treatment for carried interest. ## Antitrust, privacy, and technology ### Antitrust bill lacks necessary votes Senate Majority Leader Schumer has indicated that the [American Choice and Innovation Act](https://www.congress.gov/bill/117th-congress/senate-bill/2992/text) has stalled. ### DoJ partners with NLRB to protect workers In a memorandum of understanding, the Justice Department’s antitrust department [announced](https://www.justice.gov/opa/pr/justice-department-and-national-labor-relations-board-announce-partnership-protect-workers) a partnership with the National Labor Relations Board to prevent collusion among employers in their competition for workers. ### FTC sues Meta to block acquisition of VR fitness app In a 3-2 vote along party lines, the Federal Trade Commission voted to [sue](https://www.ftc.gov/news-events/news/press-releases/2022/07/ftc-seeks-block-virtual-reality-giant-metas-acquisition-popular-app-creator-within) Meta to block it from acquiring virtual-reality company Within Unlimited. ## Upcoming events - SEC [Small Business Capital Formation Advisory Committee Meeting](https://www.sec.gov/news/upcoming-events/sbcfac-080222) – Aug. 2 at 10:00 a.m. (ET) ## Notable SEC proposed rules and comment deadlines | | | | --- | --- | | [Fund names](https://www.sec.gov/news/press-release/2022-91) | 8/16/2022 | \*60-days after publication in the Federal Register, which has not occurred.