The U.S. House today passed H.R. 5376, the $1.75 trillion budget reconciliation bill which has been marketed by Democrats as the “Build Back Better Act.” If approved as-is by the Senate, the legislation will allocate roughly $1.75 trillion in spending over a 10-year period. The bill passed largely along party lines by a vote of 220-213.
Provisions of note
Many of the provisions that would have been most harmful to independent agents were ultimately not included in the bill, thanks in large part to PIA’s advocacy on these issues. Over the last several months, PIA worked tirelessly to push back on a series of proposals that would have imposed unfair burdens on small businesses, including: the imposition of a broad new tax information reporting regime on all bank accounts over a certain amount; the reduction or repeal of the 20 percent deduction for passthrough entities (S corporations); ending the use of stepped up basis for capital gains; and the imposition of federal oversight of state workers’ compensation programs.
These provisions were all, at one time or another, under consideration for inclusion in the budget reconciliation bill, and we’re pleased to have successfully kept them out of the House-passed bill.
The bill includes several new tax provisions. For instance, capital gains earned from the sale or exchange of qualified small business stock would be included in gross income for taxpayers whose modified Adjusted Gross Income (AGI) is $400,000 or more. It also establishes a five-percent surtax on high income earners, which increases to eight percent for the highest income earners, and an expansion of the Net Investment Income Tax (NIIT).
National Flood Insurance Program
The bill forgives in its entirety the existing debt of the National Flood Insurance Program (NFIP), directs funding to support flood mapping, and provides $600 million for FEMA to develop a means-tested affordability program for NFIP policyholders whose household incomes are less than or equal to 120 percent of their area’s median income.
Now that the House has passed the package, the reconciliation bill will go to the Senate for consideration, where changes are expected. If the Senate does revise and pass a bill, its revised version will need to be considered again in the House before it can be signed by President Biden.
Further analysis of the provisions in the package that may affect PIA members will become available in the coming weeks. We will also be monitoring Senate consideration of the bill for highly anticipated changes.