The Build Back Better Act appears to have been resurrected under a new name, albeit at a lower price point.
The original proposal from the Biden administration called for a slew of new taxes on businesses and the wealthy to support $3.5 trillion in spending over 10 years to fight climate change, create universal pre-kindergarten, federally fund paid family and sick leave, bolster healthcare funding, and incentivize affordable housing. The plan met opposition from both Republicans and moderate Democrats and its scope was whittled down to $1.75 trillion before it was ultimately killed by the Senate filibuster.
The proposal appeared dead until Sen. Joe Manchin (D-WV), a critical swing vote, revealed he had been working with Senate Majority Leader Chuck Schumer (D-NY) on a revised version of the bill, called the Inflation Reduction Act of 2022. The legislation purports to address record inflation by paying down the national debt and investing in domestic energy production and manufacturing. However, it includes many provisions of the earlier Build Back Better reconciliation bill, such as a 15 percent corporate minimum tax, increased IRS enforcement, prescription drug pricing reform, and climate change funding.
Total revenue raised is projected at $739 billion, with $433 billion of that going toward energy security, climate change and extending the Affordable Care Act. The remaining $306 billion would be intended for debt reduction.
“Tax fairness is vital to our nation’s economic future. It is wrong that some of America’s largest companies pay nothing in taxes while freely enjoying the benefits of our nation’s military security, infrastructure and rule of law,” Manchin said in a statement. “It is commonsense that a domestic corporate minimum tax of 15 percent be applied only to billion-dollar companies or larger ensuring that America’s largest businesses are no longer able to operate for free in our economy. Furthermore, to avoid inevitable partisan gamesmanship and increase confidence in the fairness of the tax system, tax reform should never put U.S. businesses at a disadvantage against international competitors. Our tax code should not favor red state or blue state elites with loopholes like SALT and should focus more on closing unfair loopholes like carried interest. Through the enforcement of a fair tax code, we can use the revenue to cut the deficit and lower the cost of healthcare for working families and small businesses.”
The full text of the bill is not yet available, but business groups have already warned that new taxes would harm businesses and add hardship at a time when companies are already struggling against higher prices, labor shortages and economic uncertainty. “This legislation includes taxes that would discourage investment and undermine economic growth, and price controls that would limit American innovation,” said Neil Bradley, executive vice president and chief policy officer for the U.S. Chamber of Commerce. “ Both will make our economic problems worse. Congress and the administration should reject these policies and focus on unleashing American-made energy.”
Additionally, a recent analysis from the S Corp Association shows how tax hikes can contribute to higher inflation as businesses pass on those costs increases to customers.” Would the tax hikes in the House-passed reconciliation bill make inflation worse? The answer there is an emphatic yes, and for that reason – among many – the Senate should reject them,” the association said.