Lawmakers Still Debating Build Back Better Tax Increases So Make Your Voice Heard

As MSCI’s allies at the S-Corp Association reported last week, the White House and Democrats in Congress are still trying to find a path forward to approve the Build Back Better (BBB) plan — legislation that would expand so-called “human infrastructure” spending programs like childcare and housing.

Specifically, Senate Majority Leader Chuck Schumer (D-N.Y.) continues to meet with Sen. Joe Manchin (D-W.Va.), the senator who so far has been unwilling to agree to his party’s BBB outline. (Democrats need the support of all 50 senators in their party for the legislation to gain approval in the Senate.)

As a reminder, lawmakers are considering several significant tax increases as part of the BBB. For corporations, these proposals include:

• Creating a “book tax,” or new 15 percent corporate alternative minimum tax in the form of a tax on financial statement income;
• Placing new limitations on companies’ ability to deduct interest on business loans;
• Imposing a new excise tax on stock buybacks; and
• Implementing a higher global minimum tax that would be more complex and that would subject more foreign income to the tax.

For pass-through entities, the outline calls for several new surtaxes, including:

• A 3.8 percent net investment income tax applied to business income greater than $400,000 (single) or $500,000 (married);
• A five percent surtax on individuals with adjusted gross incomes (AGIs) totaling more than $10 million; and
• An additional three percent surtax on adjusted gross income, or AGI totaling more than $25 million.

The Net Investment Income Tax alone represents a massive tax hike that would be shouldered exclusively by pass-through businesses. Click here to read more from the S-Corp Association about the impact these levies would have on small businesses.

Despite the ongoing negotiations, the S-Corp Association said, “The bottom line is that the odds of a deal remain low” because there are “numerous policy challenges to overcome and the time remaining to strike a deal is shrinking.”

Still, MSCI asks that its member company leaders and employers use this link from the National Association of Manufacturers or this link from the U.S. Chamber of Commerce to send a letter to their lawmakers asking that they oppose this legislation.