TAX TAKE: It Takes Two (To Make a Thing Go Right): Controversial Provisions Now Under Consideration for the Build Back Better Act

Tax Alert
11.01.2021

After much back and forth to integrate the policy priorities of Senators Sinema and Manchin, the Administration and Congressional Democrats released a revised Build Back Better Act reconciliation proposal. The revised tax title of the bill contains a host of changes from what passed the House Committee on Ways and Means in September. Most prominently, it no longer has any corporate, individual, or capital gains/dividends tax rate increases. In their stead, the tax title introduces two new controversial provisions (among others): 1) a 15 percent minimum tax on book income, one of President Biden's signature policies from the campaign trail, and 2) an excise tax on stock buybacks, a concept championed by Senators Wyden and Warren. 

Impacted taxpayers are already raising significant policy concerns with respect to these new provisions. The 15 percent book minimum tax has consistently been highlighted by the Administration as a means of imposing taxes on corporations who book significant revenues while paying little or no federal income tax. While that messaging might be convincing to some, it ignores the fact that many corporate taxpayers may find themselves subject to the tax because of existing policy choices Congress has made to incentivize certain behavior – such as the accelerated depreciation provided for capital investment. Similarly, while proponents of a one percent stock buyback excise tax argue that these corporate tax savings inure to the benefit of the wealthy, such messaging conveniently ignores the fact that most stocks are owned by pension funds, the beneficiaries of which are retirees. It is hoped that policymakers seriously consider the concerns raised regarding these two new provisions as the legislation continues to develop despite the underlying political and revenue pressures that led to their inclusion in the revised package. #TaxTake

Upcoming Speaking Engagements and Events

On November 8, Loren will speak on the tax policy panel at the 32nd Annual Philadelphia Tax Conference.

Loren will present, "Pending Regulatory Challenges to Select International Provisions of the Tax Cuts and Jobs Act," at the 67th Annual William & Mary Tax Conference on November 12.

On November 30, Loren will speak on the North America panel at IFA's 2021 virtual event, "The Global Tax Agreement: The Two-Pillar Solution."

In the News

Loren appeared on CNBC's Squawk Box to talk about the legality of the proposed billionaire tax noting the concerns really center on the definition of income and what is actually being taxed. "What is problematic is that we don't have legislative text at this point and so it is a bit speculative to say that it is or is not constitutional," Loren said. 

Loren discussed the Facebook case and how it differs from the high-profile IRS loss against Amazon on Bloomberg's Talking Tax podcast.


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