This week on Facing the Future, we focused on the political environment facing President Biden’s Build Back Better Act (BBBA) now that it has passed the House and moved onto the Senate. Joining me in that discussion were The Concord Coalition’s Policy Director, Tori Gorman, the Coalition’s Chief Economist, Steve Robinson, and Communications Director Av Harris. We also had an in depth discussion on Steve’s latest issue brief entitled Will President Biden Raise Your Taxes and How Will You Know? Just prior to the House voting to approve the massive BBBA, the Congressional Budget Office scored the bill as adding another $160 billion in deficits over the next 10 years.
Moderate Democrats such as West Virginia Senator Joe Manchin have expressed concerns over the cost of the bill and how it is being paid for, specifically calling on the bill to be fully paid for as President Biden has consistently promised it would be. The Concord Coalition has called on Congressional Democrats to fix the BBBA by finding additional revenue or cost savings to make it deficit neutral over the life of the bill.
Finding solutions to some of these funding gaps, however, may be complicated, as Gorman explained:
“You’ve got a double whammy this year in that you’ve got Republicans who in general do not support tax increases of any kind, and at the same time you’ve got promises made by President Biden when he was a candidate for office that he would not raise taxes on anyone earning less than $400,000 a year,” said Gorman. “So when you combine those together, it doesn’t leave a lot of revenue options at this point. Given that the infrastructure bill went first, it picked a lot of the remaining low hanging fruit of easy revenue increases that show a lot of revenue on paper but don’t impact you or me. So closing this $160 billion revenue gap is going to require some tough decisions.”
Among changes being considered to close the existing gap in the BBBA as passed by the House include: removing the provision establishing a federal paid family leave benefit, removing the increase in the cap of state and local taxes that can be written off on federal IRS returns, and removing the new coverage of hearing assistance from Medicare.
Gorman added, “The question is, if some of those things that cost money are jettisoned for some reason, will Senate Democrats be satisfied enough now that the bill is paid for according to the scoring conventions of the Congressional Budget Office? Are they going to be complacent to leave the bill as is or are they going to try to take that money from the programs that will be jettisoned and redirect that somewhere else?”
We also looked at a key question raised by Robinson in his recent issue brief: will President Biden raise your taxes, and how will you know? As we discussed earlier, President Biden promised not to raise taxes on any taxpayers earning less than $400,000 per year, while enacting these sweeping expansions of the social safety net. But as Robinson points out, with the Trump tax cuts for individuals enacted by Congress in 2017 set to expire in 2025, a closer look at BBBA reveals a more complicated reality.
Much of the tax provisions in BBBA are targeted to higher income individuals and corporations, though there is a new federal tax on nicotine that is applicable across the board for both combustible tobacco and e-cigarette products.
“You get into these questions of what is a direct tax, like the tax on nicotine, and what is an indirect tax such as the tax on stock or the tax on corporations,” said Robinson. “And you get into a much more difficult conversation about how taxes on corporations impact the rest of us. Ultimately, the taxes on corporations are going to affect everyone else. Will people have to pay higher prices? Will corporations be less profitable and hire fewer workers, so worker wages will be lower?”
Hear more on Facing the Future. I host the program each week on WKXL, NHTalkRadio.com (Concord N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.