Congress has passed budget resolutions that are the first step in advancing COVID-19 relief under the reconciliation process that requires only a simple majority vote for passage. House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer (D-NY) on February 1 introduced a joint budget resolution that includes reconciliation instructions for committees to draft legislation to implement President Joe Biden’s proposed $1.9 trillion COVID-19 relief plan for individuals, businesses, and communities that would build on the $900 billion COVID relief package enacted in December.
President Biden has proposed a two-part COVID recovery plan consisting of the $1.9 trillion emergency COVID relief package (the American Rescue Plan) and an economic recovery plan (the Build Back Better Recovery Plan) that he is expected to outline this month. Congress later this year could use another budget reconciliation bill to act on the second part of President Biden’s economic recovery plan. Passage of the budget resolution is the first major action as Congress moves to implement President Biden’s legislative agenda, including his economic relief and recovery plans.
Action item: Taxpayers should track the legislative process as these proposals advance and should actively be planning now for how other proposed changes -- including a corporate tax rate increase and international tax provision changes -- might impact their business. Taxpayers with an interest in specific COVID-19 relief provisions should engage with lawmakers immediately since the substantive legislation could be released as soon as next week.
The budget resolutions passed this week are the first step in passing COVID-19 relief legislation. Because the budget resolutions passed by the House and Senate are for fiscal year 2021 (ending September 30, 2021), Congress later this year could use a fiscal year 2022 budget reconciliation bill to act on the second part of President Biden’s economic recovery plan. The Build Back Better Recovery Plan, which President Biden is expected to outline in a February joint session of Congress, could propose increases in tax rates for corporations and high-income individuals, international tax law changes, and other revenue-raising measures.
With potential tax-increasing legislation one step closer to consideration, taxpayers should plan for proposed changes and engage with policymakers now to communicate their potential impact on jobs and business operations.