No Match Found
The House on March 10 voted 220 to 211 to approve the Senate-passed version of H.R. 1319, the American Rescue Plan Act of 2021. House passage of the $1.9 trillion legislative package clears the measure to go to the White House and be signed into law by President Biden.
The legislation features key relief measures proposed by President Biden, including additional $1,400 economic recovery impact payments to eligible individuals, funding for vaccine testing and distribution, significant expansions of the child tax credit and other refundable tax credits, extension of enhanced unemployment benefits, and $350 billion in aid to state and local governments.
Key business tax provisions include an extension of the employee retention tax credit and several revenue-raising measures, including repeal of a worldwide interest allocation election, changes to pension funding requirements, expanded limits on executive compensation deductions, and an extension of the $500,000 limitation on excess business losses of non-corporate taxpayers.
Action item: The swift action by Congress to pass President Biden’s American Rescue Plan during his first 100 days in office demonstrates the ability of Democrats with slim majorities in the House and Senate to enact significant legislation using ‘budget reconciliation’ procedures. President Biden soon is expected to call for Congress to act on his ‘Build Back Better’ economic recovery plan. Companies should be evaluating actions they may want to consider in anticipation of Congress using a second budget reconciliation bill to advance an economic recovery plan that may include significant tax increase proposals affecting corporations, investments, and individuals.
President Biden soon will be able to sign the American Rescue Plan legislation into law. Passage of this $1.9 trillion relief package demonstrates the ability of Democrats with slim majorities in the House and Senate to enact significant legislation using ‘budget reconciliation’ procedures. At the same time, changes that were made to the legislation in the Senate illustrate the difficulty Democrats may face in remaining united when the focus turns soon to President Biden’s Build Back Better economic recovery proposals, which include significant revenue-raising proposals affecting businesses and upper-income individuals.
In addition to examining tax changes made by the American Rescue Plan legislation, taxpayers should be preparing for potential ‘Build Back Better’ economic recovery legislation with tax increases that could be included in a second reconciliation bill later this year. This second reconciliation bill 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 model and plan for proposed changes and engage with policymakers now to communicate their potential impact on jobs and business operations.
For the 628-page bill text, click here
For the Joint Committee on Taxation staff revenue estimates, click here