September 15, 2021
Ways & Means approves reconciliation tax package
The House Ways & Means Committee September 15 approved by a 24-19 vote the tax and drug pricing portion of the Build Back Better Act reconciliation bill, defeating several Republican amendments and adopting none. Rep. Stephanie Murphy (D-FL) was the only Democrat to oppose the package. There was significant debate over international tax changes, and Republican amendments sought to block the global intangible low-taxed income (GILTI) tax increase and the reduction in the foreign-derived intangible income (FDII) deduction.
The Ways & Means bill is to be combined with reconciliation pieces from other committees by the Budget Committee, likely next week, but plans for floor consideration haven't been announced. Discussions among Democratic leaders in the House and Senate are expected over the coming weeks to determine what moderates in the Senate can support. It's possible, therefore, that significant changes could be made to what the committees are sending to the Budget Committee, but those will not likely come until the bill is considered by the Rules Committee, prior to being brought to the House floor.
Tax amendments — The Committee defeated amendments including those by:
During the lengthy debate on the first amendment, addressing the corporate rate, Chairman Neal said the tax increases under the bill are "not to distribute wealth, not to punish success, not to curb innovation, as much as it is simply to broaden opportunity." He also cited the global minimum tax rate of at least 15% negotiated between Treasury Secretary Yellen and other nations and said the Committee's approach to that issue is "entirely reasonable." Neal said Democrats want US companies to compete globally, but also to broaden opportunity.
During the debate on the Nunes amendment, Nunes said the GILTI increase is a "self-inflicted wound" and a boon for foreign nations. He also said it is difficult to believe other nations will keep their promises to adhere to a global minimum tax. Rep. Lloyd Doggett (D-TX) said an even higher GILTI rate would still allow US companies a competitive advantage over other nations. Ranking Member Brady said, "Let's not compound our economic surrender by moving forward on GILTI when the rest of the world, frankly, is cheering us sabotaging our economic competitiveness." Chairman Neal said the bill's GILTI rate was carefully crafted to reflect the global consensus.
Rep. Schweikert said he fears we are about to "break something" and lose jobs and investment with GILTI changes under the bill. Rep. Mike Thompson (D-CA) said Congress needs to increase GILTI to at least 15% in order to show leadership on the global stage.
IRS reporting of financial accounts — Chairman Neal announced that, while the base bill includes IRS funding and taxpayer compliance provisions, he is in discussion with the Administration on financial reporting proposals that target sophisticated tax avoidance and evasion, including a comprehensive reporting regime aimed at wealthier taxpayers who are able to use complex transactions to avoid taxes.
Health amendments — The Committee defeated amendments including those by: