On Nov. 19, 2021, the U.S. House of Representatives passed the Build Back Better Act, which contains many of the major Biden administration policy proposals on health care, education, climate change, and other areas. To offset the cost of these proposals, the Joint Committee on Taxation has estimated that the bill contains $1.476 trillion in new federal revenues.
Many of the Build Back Better “offsets” proposed earlier in the year were not included (such as applying the payroll tax to incomes above $400,000, taxing capital gains as ordinary income above $1 million, and increasing the corporate rate to 28%), but several other significant proposals are in the bill.
The legislation now will be considered by the U.S. Senate, which is certain to make additional changes. However, it is likely that most of the proposed revenue increases will remain in any version of the Build Back Better Act considered by the Senate in the weeks ahead.
The table below lists the top 10 revenue raisers in the House-passed bill.
Other notable provisions include the following:
- Expansion of constructive sales and wash sale rules to Digital Assets (IRC 1091) (sales, dispositions, and terminations after 12/31/21) ($16.8 bil.)
- Modifications to foreign tax credit limitation (IRC § 904, 905, technical changes to §§ 250, 864, 901, 907, 6511) (generally applies to taxable years after 12/31/22) ($12.0 bil.)
- Modification to the Portfolio Interest Exemption rules (IRC 871) (obligations issued after date of enactment) ($2.1 bil.)
- Deduction for foreign source portion of dividends limited to Control Foreign Corporations (CFCs); modifications to rules for determining the status of foreign corporations as CFCs and for income inclusion under CFC rules (IRC 245A, new § 951B) (generally applies to distributions made after date of enactment) ($451 mil.)
Source: Estimated Budget Effects of the Revenue Provisions of Title XIII – Committee on Ways and Means, of H.R.5376, the “Build Back Better Act,” as Passed by the House of Representatives, Joint Committee on Taxation, JCX-46-21, Nov. 19, 2021.
Note: The Congressional Budget Office, in compiling an overall cost estimate for the bill, relies on the Joint Committee on Taxation to provide estimates of changes to the Internal Revenue Code.