Revised Build Back Better bill - Key provisions impacting asset and wealth management

In brief

The House is expected to vote the week of November 15 on a revised version of the Build Back Better reconciliation legislation (the bill). The revised legislation reflects changes made by the House Rules Committee on November 3 (through a substitute amendment) and a “chairman’s amendment” offered by House Budget Committee Chairman John Yarmuth (D-KY). Any House-passed version of the bill is expected to be revised in the Senate, which would require further House action. 

The bill calls for roughly $1.75 trillion in new federal spending, targeting tax relief provisions and ‘green energy’ tax incentives. The Joint Committee on Taxation staff have estimated that the business, international, and individual tax increases in the bill would raise more than $1.5 trillion over 10 years. Additional offsets would include increased IRS enforcement measures and savings for the repeal of a Medicare prescription drug rule. The bill also includes a provision to raise through 2030 the cap on the individual itemized deduction for state and local taxes. 

Outlined below is an analysis of some of the key provisions of the bill affecting hedge funds, private equity funds, real estate funds, and other stakeholders in the asset management industry. 

Observation: Investment managers should continue to monitor the status of the reconciliation legislation and consult with advisors on how particular provisions may impact their fund structures and investments.