The bill’s passage and any tax changes are likely delayed until 2022.
After all of the anticipation and speculation these past few months over changing tax laws, we are heading into 2022 without any major tax changes because the $2 trillion Build Back Better Act has reached a snag. The Biden administration, needing to secure the support of all 50 Democratic senators to pass the bill, has been unable to earn Sen. Joe Manchin’s backing. However, don’t consider all of that reading you did on the tax proposals in the earlier bills a waste of time. The Democrats are determined to restructure the bill in a way that will satisfy Sen. Manchin and gain his support.
Speculating on possible revisions to the tax portion of the bill, Sen. Manchin has been hesitant on the inclusion of a one-year extension of the expanded federal Child Tax Credit. He has stated he believes the temporary credit expansion will be extended annually, and that not including the full ten-year cost of the program is understating the true price tag of the bill.1 His other major concerns include the bill’s potential impact on the nation’s debt and rising inflation.
Democrats have stated a vote on the revised bill is expected to occur early in the new year. What changes are made, and whether they are enough to satisfy Sen. Manchin, will remain to be seen. We will continue to update you about any important changes to the legislation, and please reach out to your wealth manager if you have any questions.