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September 13, 2021

What to expect in Washington (September 13)

House Ways & Means Committee Chairman Richard Neal (D-MA) this morning formally released the highly anticipated tax proposals to be part of the Build Back Better Act reconciliation bill ahead of continuation of the markup on Tuesday, September 14 (9 am). The linked press release includes a section-by-summary. WCEY will be issuing a detailed Alert later.

A summary of potential tax increases under consideration by the Committee was circulated September 12, showing that the tax portion of the bill calls for;

  • an increase in the top corporate tax rate to 26.5%;
  • a GILTI rate of about 16.5%, a reduction in the foreign tax credit GILTI haircut under current law to 5%, and GILTI calculation on a country by country basis;
  • accelerating the increase in the BEAT rate to 12.5% and BEAT modification to narrow the scope of base erosion payments to low-taxed entities, similar to the President’s SHIELD proposal and proposals being developed by the OECD;
  • removing business tax credits from the BEAT calculation and changes to the BEAT tax so it doesn’t unfairly penalize companies with losses;
  • accelerating the FDII rate reduction to 21.875% and leaving the deemed tangible income return (similar to QBAI) at 10%;
  • an anti-earnings stripping proposal to limit the interest deduction of certain inbound companies in proportion to their share of the total earnings of their international financial reporting group;
  • the top capital gains rate to be increased to 25%;
  • the top individual income tax rate to be returned to 39.6%;
  • the net investment income tax to be expanded to cover net income derived in the ordinary course of a trade or business for taxpayers with greater than $400,000 in taxable income (single filer) or $500,000 (joint filer);
  • a 3% surtax on individuals with AGI in excess of $5 million;
  • an increase in the 3-year carried interest holding period enacted under the TCJA to 5 years; and
  • expiration of the TCJA-doubled estate tax exemption after 2021 rather than after 2025.

Casting a long shadow over the Ways & Means proceedings is what size budget reconciliation bill moderates like Senator Joe Manchin (D-WV) will support, and how soon. Senator Manchin said on Sunday shows:

  • Regarding Senate Leader Chuck Schumer’s (D-NY) vow to move full speed ahead, “He will not have my vote on 3.5. And Chuck knows that…What’s the urgency that we have? It's not the same urgency that we have with the American Rescue Plan.” (CNN)
  • On whether $1 trillion-$1.5 trillion is the range he will support, “It’s not going to be at 3.5, I can assure you. But, with that, whatever it is, once you have a competitive tax code that you can compete globally, and then you should look at what the need is. What’s the urgency and the need that we have?”
  • “First of all, you can’t be at 39% as far as cap gains, capital gains. I said 28 all in, OK? You can’t be at 28 or 30 or more with corporate net. I said 25 all in. And I think that every corporation should pay a minimum of 15%.”
  • “I voted to go on reconciliation because I believed that the 2017 tax codes were weighted to the high-end wealthy. I believe it was weighted unfairly about the working people. And I thought we needed to make some adjustments. But I’m not going to make adjustments on how much I want to spend. I’m going to make the tax adjustments on what I think keeps us competitive, looking at the global rates, looking at things that we’re doing, making sure the wealthy are paying, making sure all corporations are paying something to have the privilege of doing business in America.” He said he won’t put a timetable on the process or a hard cap on the number. (ABC)

Highlights of the Ways & Means green energy and infrastructure subtitles released late Friday night include:

  • Extension through 2033 (with 2-year phasedown) of the IRC Section 45(d) production tax credit (PTC) for electricity from renewable resources including solar with an increased credit for facilities that meet domestic requirements;
  • Extension through 2033 (with 2-year phasedown) of the IRC Section 48 energy investment tax credit (ITC) with the addition of newly eligible technologies like energy storage and dynamic glass;
  • Extension through 2031 of several current clean energy tax incentives plus new credits for transmission property, zero emissions facilities, zero emissions nuclear power production, sustainable aviation fuel, and clean hydrogen, plus a revival of the IRC Section 48C qualified advanced energy property credit;
  • A refundable EV credit of $7,500 for vehicles placed in service before 2027, with additional amounts available if a facility operates under a union-negotiated collective bargaining agreement and uses at least 50% domestic content, retail price caps for different types of vehicles, and a phaseout based on AGI, plus separate credits for used and commercial EVs; and
  • Similar to Build America Bonds, issuers of qualified infrastructure bonds would receive a tax credit equal to an applicable percentage of the interest, providing direct financing support for infrastructure investments made by state and local governments, with the applicable percentage of the credit for interest paid with respect to qualified bonds determined in the year the bond is issued as follows: 2022 through 2024 = 35%, 2025 = 32%, 2026 = 30%, 2027 and thereafter = 28%.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Ray Beeman (
   • Kurt Ritterpusch (
   • Heather Meade (
   • Adam Francis (