House Passes President Biden's Build Back Better Act
This morning, the United States House of Representatives passed H.R. 5376, the Build Back Better (BBB) Act, by a vote of 220-213 with all but one Democrat voting for the bill and all Republicans voting against it.
The BBB is the $1.8 trillion human infrastructure bill which seeks to dramatically increase the size and scope of the federal government. While this bill does not have as much direct impact on the truck renting and leasing industry as the infrastructure bill that was recently signed into law by President Joe Biden, there are several key provisions in this bill that will impact TRALA members.
By far, the most expansive part of the BBB is the tax portion which includes several tax provisions that will increase taxes on businesses. The BBB includes a 15% corporate tax on “book income” which is the amount of revenue a corporation publicly reports on their financial statements to shareholders. The BBB also changes the Global Intangible Low-Tax Income (GILTI) by removing some of the deductions included in the Tax Cuts and Jobs Act and setting an international tax rate of 15%. The BBB also expands the 3.8% Net Investment Income Tax (NIIT) to S-Corporation and Partnership income for income over $400,000 for single filers and $500,000 for joint filers.
This bill also includes $30 billion for commercial electric vehicle tax credits. The credits would cover 30% of the cost to purchase a commercial Zero Emission Vehicle (ZEV). Furthermore, this credit would be eligible for lessors. While TRALA appreciates that these credits were made available to lessors, there is concern that TRALA members might not be able to take full advantage of these tax credits which is why TRALA is working to allow the option to have these credits eligible to be passed on to lessees as well.
Additionally, the tax portion of this bill includes $80 billion in increased funding for the Internal Revenue Service (IRS) for enhanced enforcement. The Biden Administration and Congressional Democrats believe this revenue will result in a significant increase in audits which will generate more revenue for the government. Finally, this bill includes a significant increase in the State and Local Tax (SALT) deduction from $10,000 to $80,000. The SALT deduction allows state and local taxes to be deducted from a filer's federal income taxes and has been the key to gaining the support of moderate Democrats from the Northeast and the West Coast.
In addition to the tax provisions, the House version of the BBB includes a significant increase in fines for violations of the Occupational Safety and Health Act (OSH Act) and National Labor Relations Act (NLRA). In the bill, the House incorporates portions of the PRO Act to increase fines for employers who violate the NLRA to $50,000 with NLRA violation fines up to $100,000 if the employer has had similar violations within the last 5 years. Additionally, the BBB increases civil penalties for OSH Act violations from $70,000 up to as high as $700,000. TRALA remains concerned by these increased fines and the dramatic expansion of the scope of the NLRA and OSH Act civil penalties laws.
With the BBB's narrow passage in the House, the bill will now move to the Senate where it faces significant pushback from moderate Senators and the stricter rules of reconciliation over what provisions can be included in the final bill. Since the Senate is split evenly 50-50, the Democrats will need all Democrat Senators plus the Vice President to vote in support of the BBB in order for it to pass under the Budget Reconciliation process. Senator Joe Manchin (D-WV) has already indicated his concern the House bill will impact coal, the expansion of entitlements, and the SALT deduction which does not help most West Virginians. In addition, Senator Kirsten Sinema (D-AZ) has expressed concern with many of the tax increases in the House bill. She has opposed increasing rates on businesses to pay for the social spending in this bill. In addition to the opposition from individual Senators, there are procedural problems for the BBB in the Senate. The Byrd Rule requires that all measures included in a Budget Reconciliation must be entirely fiscal in nature and no policy provisions may be included in the bill. This could imperil some of the NLRA and OSH Act civil penalties in the House bill as well as many of the social spending and environmental policies.
TRALA expects the Senate to dramatically slow down the process on the BBB, and likely take this debate up in December and the deliberations could likely extend into 2022. TRALA expects the final Senate version of bill, if passed by the Senate, would likely be significantly different from the bill that has passed the House today. Furthermore, under the rules of the reconciliation process, the House can only pass a bill that can pass through the Senate parliamentarian, meaning that the House would either have to accept whatever the Senate passes, or both the House and Senate could go to a conference committee to iron out differences between the bills, but the conference report would have to pass the Senate parliamentarian before the House could accept the bill.
You may view the House passed BBB by clicking here.
If you have any questions or comments on the BBB, please contact Andrew Stasiowski at email@example.com or Jake Jacoby at firstname.lastname@example.org.