Senate Finance Committee Chairman Ron Wyden (D-OR) on December 11 released 1,180 pages of draft Finance amendment bill text for Senate consideration of the “Build Back Better” reconciliation bill (H.R. 5376). The Finance amendment bill text would amend H.R. 5376 as passed on November 19 by the House. Chairman Wyden noted that the bill text is subject to further revisions.
Chairman Wyden stated that the Finance amendment includes both substantive changes and technical modifications to tax provisions in the House-passed bill, but does not address some issues, including the House provision increasing the cap on individual itemized deductions for state and local taxes. The Finance amendment also includes some new provisions.
Significant proposed Finance amendment revisions to the House-passed bill include
Senate Democrats currently are preparing for floor action on the Build Back Better legislation. As part of that effort, Chairman Wyden and other Senate committee leaders are releasing bill text for review by the Senate parliamentarian to determine if each provision of the overall legislation complies with Senate budget reconciliation rules.
Senate Majority Leader Chuck Schumer (D-NY) has stated that he wants the Senate to begin voting on amendments to H.R. 5376 during the week of December 13, but it seems increasingly likely that Senate action on the legislation could be delayed until later in the month or early next year.
Observation: Majority Leader Schumer must gain the support of all 50 Democratic Senators to agree to begin debate on the legislation. Senator Joe Manchin (D-WV) has expressed general concerns about the size of the House-passed bill as well as opposition to various specific provisions in that bill. Other Democratic Senators have been discussing potential amendments to the House-passed bill.
The Build Back Better bill as passed by the House includes more than $1.5 trillion in business, international, and individual tax increase provisions, as well as other non-tax offsets that include increased funding for IRS compliance programs. The bill would provide targeted individual tax relief that includes a one-year extension of an expanded child tax credit, clean energy incentives, and increased spending on healthcare, education, childcare, and other programs.
Observation: Senator Manchin recently expressed concern about the overall cost of the legislation if all of the temporary provisions, like the expanded child tax credit, were to be made permanent. Some economists have projected that the gross cost of the legislation would rise from $2.4 trillion to $4.7 trillion under certain assumptions.
Senate changes to the House-passed Build Back Better legislation will require further action by the House. A final identical version of the legislation must be approved by both the House and Senate before it can be signed by President Biden.
Observation: If the Senate does pass an amended version of the Build Back Better bill just before Christmas, it would remain to be seen whether there would be enough time both for the House to return for a final vote and for President Biden to sign the bill before December 31, 2021. Given the challenges of holiday travel and the enrollment process for legislation in advance of a White House signing ceremony, it is possible that even if all legislative steps are completed in 2021, the bill might not be signed into law until early in January 2022.
Action item: With the potential for Senate Democrats to have the final say in shaping the tax provisions of the Build Back Better bill, stakeholders, and especially CEOs and CFOs, should communicate with Senate policy makers on the potential effects of tax increase proposals on their employees, job creation, and investments in the United States.
House-passed version of H.R. 5376: