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November 19, 2021

The House Voted. What's Next for Reconciliation?

The House Voted. What's Next for Reconciliation?

Earlier today, the House of Representatives passed President Biden’s Build Back Better legislation by a vote of 220-213 (section-by-section summary).  This $2 trillion social infrastructure and tax increase package represents the majority of the Biden Administration’s social agenda.  Despite its passage in the House, the legislation faces changes and challenges from moderate Democrats when the Senate takes it up in December.  

Key social spending provisions include funding for childcare, universal pre-K, four weeks of paid leave, and several healthcare provisions.  The legislation also includes a significant focus on infrastructure and resilience with $30 billion for transit, affordable transportation access, and water infrastructure, as well as over $80 billion for reducing emissions, addressing climate change, and replacing lead pipes. On the tax side, the bill provides $300 billion in tax credits for renewable energy, electric vehicles, and energy efficiency.  

To pay for the BBB, the House approved over $1.4 trillion in tax increases, several of which would impact engineering firms. Publicly-traded corporations with more than $1 billion in revenues would pay a new 15% corporate minimum tax, and there would be a global minimum tax of 15% as well.  

For passthrough businesses, the 3.8% net investment income tax (NIIT) would be expanded to cover active business income for owners who earn more than $400,000. Taxpayers with income over $10 million would pay a 5% surtax, which increases to 8% for income over $25 million.  

The Senate will now take up the legislation and concerns expressed by Senators Kyrsten Sinema (D-AZ) and Joe Manchin (D-WV) about the overall cost of the package and several of the tax increases make it very likely that the Senate will revise the bill.  It will also be subject to an intensive review by the Senate Parliamentarian and some provisions may be dropped because they do not conform to the budget rules.

ACEC has already expressed our serious concerns to congressional leaders about the impact of these tax increases on the engineering firms that will be so critical to the success of the recently approved infrastructure bill, and we will continue to engage with Congress and advocate for the industry.

 

 


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