As we enter the last week of October, the movement on proposed tax legislation appears to be shifting faster than hillsides in rain-soaked California. The White House along with Democratic leaders in the House and Senate are working hard to agree on the size and scope of the proposed Build Back Better legislation that has stalled in the House since the end of September.
Over the weekend, Senator Joe Manchin (D-W.Va.) met with President Biden and Senate Majority Leader Chuck Schumer (D-N.Y.) in what is being described by the White House as a productive discussion about the President’s economic agenda. House Speaker Nancy Pelosi (D-Calif.) went as far as to say on Sunday that a deal appears to be close. Senator Manchin said a deal on the framework may be near. He noted that “a framework” should be agreed to this week, though “having it finished with all the ‘t’s’ and ‘i’s’ and everything crossed and dotted will be difficult from the Senate side because we have an awful lot of text to go through.”
A compromise by Democrats on the overall size of the newly proposed spending as well as the programs being developed may well be in the offing. Agreements on the size and length of spending bills will impact the tax provisions that will need to be included as revenue-raisers in any final legislation. Some of the previous focus on tax hikes resulting from increases in both corporate and individuals appear to have shifted somewhat. Revenue-replacement options may include new taxes on the unrealized capital gains of “billionaires.”
For his part, President Biden is extremely hopeful that the framework will be completed by the time he leaves for a United Nations conference on climate change in Glasgow this coming Thursday. Senator Schumer said on Monday that he wants the climate provisions to be completed before the President leaves, but there are “three to four outstanding issues” on the larger tax and spending package that remain to be settled on the larger plan.
Without new legislative text to review, however, it’s impossible to know what provisions will be added, what provisions will be removed, and what will remain from H.R. 5376 Build Back Better currently unacted upon since being introduced in the House on September 27.
As we’ve seen since April though, and as Yogi Berra once so astutely stated, “it ain’t over until it’s over.” As with all proposed tax legislative changes, taxpayers and advisors will need to monitor progress closely. We will continue to monitor developments as these proposed changes move through the legislative process. Additional articles and analyses will be provided in the coming weeks. In the meantime, if you have any questions, please reach out to your Schneider Downs tax consultant, or contact us at [email protected].
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