October 29 2021

Biden Unveils Revamped Tax Reform Plans in Build Back Better Framework

Source: IBFD Tax Research Platform News

The US President Joe Biden has released the Build Back Better Framework, which includes his updated tax reform plans. The White House issued a statement dated 28 October 2021 to announce the Build Back Better Framework.

The Build Back Better Framework is intended to guide the drafting of legislative language for the Build Back Better Act. According to the White House statement, President Biden is confident that the framework can pass both chambers of the US Congress, and he looks forward to signing it into law.

Specifically, the Build Back Better Framework includes the following tax reform plans:

  • imposing a 15% minimum tax on the corporate profits that large corporations (those with over USD 1 billion in profits) report to shareholders;
  • imposing a 1% surcharge on corporate stock buyback;
  • adopting a 15% global minimum tax on a country-by-country basis;
  • ensuring other countries abide by the agreement on the global minimum tax by imposing a penalty rate on any foreign corporations based in non-compliant countries (i.e. the base erosion and anti-abuse tax or BEAT);
  • imposing a surtax on the income of multi-millionaires and billionaires at the rate of 5% on income above USD 10 million and additional 3% on income above USD 25 million;
  • closing the Medicare self-employment tax loophole by strengthening the net investment income tax (NIIT) for those making over USD 400,000;
  • continuing the limitation on excess business losses;
  • extending the expanded child tax credit (CTC) for 2022 to provide USD 300 per month per child under 6 years and USD 250 per month per child aged 6 to 17 years;
  • extending the expanded earned income tax credit (EITC) for childless workers for 2022;
  • extending the expanded Affordable Care Act (ACA) premium tax credits through 2025;
  • providing 10-year expanded tax credits for utility-scale and residential clean energy, transmission and storage, clean passenger and commercial vehicles, and clean energy manufacturing; and
  • making transformation investments in the US Internal Revenue Service (IRS) by:
    • hiring enforcement agents who are trained to pursue wealthy evaders;
    • modernizing outdated IRS technology; and
    • investing in taxpayer service.

The framework aims to set the United States on course to meet its climate goals, create millions of good-paying jobs, enable more Americans to join and remain in the labor force, and grow the US economy from the bottom up and the middle out.