September 17, 2021
Jessica L. Jeane, J.D.
Managing Director, Public Policy
The House Ways and Means Committee has advanced by a largely party-line 24-to-19 vote a sweeping tax reform proposal of $2.2 trillion in tax increases along with approximately $1.3 trillion in tax breaks. The congressional tax-writing committee spent four days marking up the tax reform package, which Democrats hailed as their “historic” achievement when it cleared the committee this week.
Generally, the tax provisions include some of the following proposals:
- return to a corporate income tax rate structure with a top rate of 26.5 percent;
- restore the 39.6 percent top marginal individual rate for single filers making above $400,00, for head of household filers above $425,000, and for joint filers above $450,000;
- raise the capital gains rate to 25 percent;
- overhaul the international tax regime;
- extend the American Rescue Plan Act's Child Tax Credit expansion through 2025, and make the entire credit fully refundable on a permanent basis;
- over $200 billion in energy tax credits;
- expand the 3.8 percent net investment income tax(NIIT);
- limit the maximum value of the Section 199A qualified business income passthrough deduction to $500,000 for joint filers and $400,000 for single filers; and
- make permanent the active passthrough loss limitation enacted in the 2017 tax reform legislation known as the Tax Cuts and Jobs Act (TCJA).
The committee-approved measure now heads to the House Budget Committee where it will be packaged together for consideration on the House floor. The fiscal year 2022 budget resolution (S Con Res 14) allows Democratic leaders to use the reconciliation process to enact legislation that can evade the Senate’s 60-vote threshold if it adheres to certain budgetary rules.
Notably, President Biden on September 16 urged Congress to include a financial institution reporting provision in accordance with his tax compliance agenda. Under Biden’s proposal, financial institutions would be required to report bank account inflows and outflows to the IRS in line with the administration’s overall goal of closing the tax gap. However, Ways and Means Republicans, in a September 16 information release, stated that, if enacted, Biden’s new reporting requirements would impose substantial new burdens on individuals, businesses, and banks in return preparation time and costs.
Looking ahead, NSA will continue to monitor these important developments on Capitol Hill. Additionally, below members can view the congressional section-by-section summaries of the committee-approved tax provisions:
Subtitle I - Responsibly Funding Our Priorities Section-by-Section;
Subtitle F - Infrastructure Financing and Community Development Section-by-Section
NSA is providing for members a special report issued by KPMG, which includes substantive analysis of the tax reform proposals approved by the House Ways and Means Committee:
KPMG “Build Back Better Act” tax proposals as approved by Ways and Means
The core mission of the National Society of Accountants is to help members achieve success in the profession of accountancy and taxation.
NSA presents this information in the interest of its members for information purposes only and is not intended to provide, nor should it be relied upon, as legal, tax, or accounting advice.