In a White House briefing, President Biden has outlined a framework to help guide the drafting of legislative language for the Build Back Better bill. What once contained $3.5 trillion in spending, the BBB now has been negotiated down to about $1.850 trillion dollars.
To pay for this spend, the framework discusses the following tax provisions:
Corporate minimum tax and stock buyback surcharge. The Build Back Better framework will impose a 15% minimum tax on the corporate profits that large corporations—those with over $1 billion in profits—report to shareholders. The framework also includes a 1% surcharge on corporate stock buybacks.
OECD minimum tax. 136 countries, as part of the Organization for Economic Co-operation and Development (OECD), recently agreed on a 15% global corporate minimum tax. Consistent with that agreement, the framework would adopt a 15% country-by-country minimum tax on foreign profits of U.S. corporations.
Millionaire income tax surcharge. The Build Back Better framework includes a new surtax on the income of millionaires. It would apply a 5% rate above income of $10 million, and an additional 3% percent surtax on income above $25 million. The framework will also close the loopholes that allows some taxpayers to avoid paying the 3.8% Medicare tax on their earnings.
Investment in the IRS to increase audits of high-net-worth individuals. The framework will invest in the IRS: hiring enforcement agents who are trained to pursue wealthy evaders; modernizing outdated IRS technology; and investing in taxpayer service. The framework emphasizes that additional enforcement resources will be focused on pursuing those with the highest incomes; not Americans with income less than $400,000.
Limit business losses for the wealthy. The framework mentions this as one of the offsets to spending but does not provide any details. This could be referring to, possibly, making permanent the active pass-through loss limitation enacted in the 2017 Tax Cuts and Jobs Act (TCJA).
Update [October 28, 2021; 3:00 PM ET]: The House Rules Committee has released updated draft legislative text of the Build Back Better bill for discussion purposes.
Summary of the bipartisan infrastructure bill. The House still has not voted on the Senate-approved $1 trillion infrastructure bill. For details of the $1 trillion infrastructure bill, see Detailed tax analysis of Senate-passed $1 trillion infrastructure bill (subscription required).
For a summary of the reconciliation Build Back Better bill (prior to negotiations to bring its cost down), see Senate still negotiating cost of the Build Back Better bill (subscription required).