On October 28, House Democrats unveiled a new draft of H.R. 5376, the Build Back Better Act. Democrats hope to pass the $1.75 trillion package through the filibuster-proof reconciliation process without any Republican support. You can read the entirety of the bill here, or a section-by-section summary here.  

The new draft of the Build Back Better Act contains dramatic changes to the revenue and spending provisions compared to an earlier draft that was approved by the House Ways and Means Committee on September 15. You can read our alert summarizing the tax portions of September 15 draft here. Since September, various lobbying groups plus moderate Democrats including Sen. Kyrsten Sinema (D-AZ) and Sen. Joe Manchin (D-WV) have chipped away at the bill’s revenue-raising provisions, citing concerns about impacts on business. Without the “pay-fors” they wanted, Democrats have been forced to scale back spending on tax breaks for climate-friendly energy and for low-income Americans.


The September 15 text contained increases in the top corporate and individual tax rates, an increase in the capital gains rate, and many other tax hikes affecting corporations and those making over $400,000.  

The text released yesterday practically started from scratch. Gone are the older bill’s corporate, individual, and capital gains tax hikes, in large part due to opposition from Sen. Kyrsten Sinema (D-AZ). Included are a new corporate alternative minimum tax (AMT), a tax on stock buybacks, and an increased surtax on millionaires and billionaires. Thus, the revenue provisions still target corporations and the wealthy but go about it in a different way.  

The new draft also notably dropped an increase in the tobacco tax and a new vaping tax, which had come under fire for violating President Biden’s pledge not to raise taxes on those making under $400,000/year.  

A pressure point that remains unaddressed in both drafts is raising or eliminating the $10,000 limitation on the state and local tax (SALT) deduction, which is a key demand of lawmakers in high-tax states like New York and New Jersey. 

Below are a few highlights of the revenue provisions: 


  • Creates a new Corporate Alternative Minimum Tax (AMT), which would impose a 15% minimum tax on corporations with profits over $1 billion, effective in the 2023 tax year. 
  • Creates a new 1% excise tax on stock buybacks, effective January 1, 2022. 
  • Creates a 15% country-by-country global minimum tax on foreign profits of U.S. corporations, consistent with the recent agreement reached at the Organization for Economic Cooperation and Development (OECD). 


  • Creates a new 5% surtax for modified adjusted gross income in excess of $10 million, with an additional 3% surtax for modified adjusted gross income in excess of $25 million, effective in the 2022 tax year. 
  • Expands the Net Investment Income Tax (NIIT) to capture more income, effective in the 2022 tax year: 
  • Expands the net investment income tax 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). By closing this gap, all income, be it from wages (currently subject to 3.8% HI tax), investments (currently subject to 3.8% net investment income tax), or earnings from pass-through businesses, will be subject to the same amount of tax, for those with higher incomes. 
  • Permanently disallows excess business losses for non-corporate taxpayers. 


  • Provides $78.8 billion for the IRS to improve tax enforcement and pursue tax evaders.
  • Extends the tax that funds the Black Lung Disability Trust Fund through December 31, 2025.
  • Reinstates and indexes to inflation the 16.4 cents-per-gallon tax on crude oil and imported petroleum products to fund Superfund cleanups of hazardous sites, effective in the 2022 tax year. 


The spending side of the tax title took a major hit as Democrats jettisoned provisions and lowered their ambitions in order to halve the cost of the legislation from $3.5 trillion to $1.75 trillion, a key demand of Sen. Joe Manchin (D-WV). The infrastructure and social safety net provisions were particularly hit hard so as to leave the generous green energy provisions largely intact. 

Green Energy 

The green energy tax provisions remained quite robust in the updated Build Back Better Act. You can read more about those in the MBS deep dive into energy provisions here


The robust infrastructure title that had been included in the September 15 draft was gutted. The new bond program, tax credits, and extensions of other infrastructure tax incentive programs were all dropped due to their cost. Only two minor programs – one for U.S. territories and possessions, the other a technical correction from the American Rescue Plan. 

Social Safety Net 

The social safety net was another area that took a major hit due to costs. The expanded Child Tax Credit and Earned Income Tax Credit are each extended for only a year. They had been extended through 2025 and made permanent respectively in the previous draft. The bill also extends expanded Affordable Care Act premium tax credits through 2025 and makes them available to those in uncovered states, which had also been made permanent in the previous draft. 

What’s Next 

The Build Back Better Act’s future is unclear. It seems possible, even likely, that the tax title could be subject to further alterations.  

House Democratic leaders had hoped to win enough support from their members to quickly advance a Senate-passed bipartisan infrastructure bill paired with the new slimmed-down version of Build Back Better Act. However, progressives are unhappy that leaders have backed off their ambitious plans for social safety net spending.

Sens. Manchin and Sinema do not appear to have not fully signed off on the new provisions before the text was unveiled, though they have expressed openness. With a thin margin in the House and a 50-50 Senate, other Representatives and Senators could also chime in for changes. For instance, as was mentioned earlier, resolution on SALT remains elusive. However, it is a must-have for a number of lawmakers from New York and New Jersey, with Rep. Tom Suozzi (D-NY) going so far as to say, “No SALT, no deal!”  Another key question is whether the Joint Committee on Taxation (JCT), which is the official scorekeeper on the revenue impact of tax changes, will release revenue projections (a “score”) in line with Democrats’ projections. If the JCT score shows a shortfall, Democrats will need to backfill the amount in order to meet the White House goal to have a bill that’s fully paid for. Unofficial scorekeepers are already warning of potential trouble – the University of Pennsylvania’s Penn Wharton Budget Model showed a $486 billion shortfall.  

Michael Best Strategies (Strategies) helps companies accelerate their success through a combination of strategic business consulting, lobbying, government relations, public affairs, and communications. The firm has thrived by providing a diverse team of professionals with the experience, skills, and relationships necessary to help each client achieve their goals more quickly and fully.