Article | Tax alert

Build Back Better Act passes House, moves to Senate

Nov. 19, 2021 · Authored by Paul Dillon, Michelle Hobbs

On Friday, Nov. 19, 2021, the House voted 220-213, along party lines, to pass the Build Back Better (BBB) Act. The potential legislation, which contains a considerable number of tax provisions, now moves to the Senate for consideration, where they are expected to begin deliberations in early December and vote before the holidays.

Tax provisions included in the BBB Act

Earlier in November, we covered the largest tax provisions included in the BBB Act in an alert, House passes infrastructure bill, advances Build Back Better bill. The potential legislation remains largely unchanged, with no notable changes to relevant tax provisions.

The several week delay in the BBB Act vote was not for continued negotiations, but to allow time for the Congressional Budget Office to “score” the bill, giving legislators a more accurate picture of revenue raised and spent within the bill.

Next steps

The BBB Act now moves to the Senate, where it will almost certainly encounter changes. At a minimum, the legislation must undergo review by the Senate parliamentarian to ensure it retains its privileged status and does not violate the Byrd rule, meaning each provision included must have a budgetary impact to be eligible for passage via reconciliation.

Two Democratic senators — West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema — have been the primary drivers of recent changes to the BBB agenda. Sen. Manchin’s objections effectively cut the total cost of the proposed legislation in half from $3.5 trillion to $1.75 trillion in recent negotiations. Sen. Sinema’s objections have removed several planned revenue-raisers, namely individual and corporate tax increases.

While the current House legislation takes into account many of Sen. Manchin and Sen. Sinema’s objections, neither have publicly signaled support for the current legislative text. Consequently, we expect additional changes to the bill in the Senate beyond those required by the Senate parliamentarian. If the Senate does alter the BBB Act, it will need to go back to the House for a final vote before it can be enacted.

Enactment prospects

Though nothing is certain, it does seem likely some form of the BBB Act will be passed either by the end of the calendar year or in early 2022.