Build Back Better Tax, Spending Plan Could Be On Senate Floor Before Holiday
U.S. Senate Majority Leader Charles Schumer (D-N.Y.) is planning to bring President Joe Biden’s Build Back Better plan up for a vote as soon as this week. Last week, the majority leader told reporters, “As soon as the necessary technical and procedural work with the Senate parliamentarian has been completed … the Senate will take up this legislation.”
As a reminder, MSCI has worked with its partners at several business trade associations to oppose the tax increases, and the onerous labor and employment provisions, that are included in this legislation.
On the tax side, for corporations, the outline calls for:
- Creating a “book tax,” or new 15 percent corporate alternative minimum tax in the form of a tax on financial statement income;
- Placing new limitations on companies’ ability to deduct interest on business loans;
- Imposing a new excise tax on stock buybacks; and
- Implementing a higher global minimum tax that would be more complex and that would subject more foreign income to the tax.
For pass-through entities, the outline calls for several new surtaxes, including:
- A 3.8 percent net investment income tax applied to business income greater than $400,000 (single) or $500,000 (married);
- A five percent surtax on individuals with adjusted gross incomes (AGIs) totaling more than $10 million; and
- An additional three percent surtax on AGIs totaling more than $25 million.
Regarding labor and employment policy, the bill includes:
- Penalties for violations under the National Labor Relations Act;
- Personal liability for company officers and directors for labor violations; and
- Mandatory neutrality agreements for direct care grants.
Read the National Association of Manufacturers’ full summary of the legislation here.
MSCI asks that its member company leaders and employers use this link from the National Association of Manufacturers or this link from the U.S. Chamber of Commerce to send a letter to their lawmakers asking that they oppose this legislation.
Before the Thanksgiving holiday, Congress’ Joint Committee on Taxation released a report that estimated taxpayers with incomes of at least $1 million — including pass-through companies that pay federal income tax through the personal income tax system — would see their average tax rate increase from 29.9 percent under current law to 33.1 percent in 2022. This article in Tax Notes has more information about how the Build Back Better plan will negatively impact pass-through companies.