After Senate Democrats failed to achieve consensus on the Build Back Better bill (BBB) by the end of 2021, what are its prospects for passage in 2022?
As the Senate resumes work in January, the BBB has been sent to the back burner for at least a few weeks, while the upper chamber prioritizes voting rights legislation.
Senate Majority Leader Charles Schumer, D-N.Y., told members he expects some version of the BBB to pass eventually. Considering Sen. Joe Manchin, D-W.Va., rejected the $1.7 trillion House-passed package, it is widely accepted the bill will require a major rewrite before coming up for a vote. Schumer, however, remains adamant it will all work out in the end.
Some Senate Democrats indicated they expect President Joe Biden to restart talks with Manchin after a “cooling-off” period that will extend until the Senate finishes debate on voting rights legislation and rules reform.
Earlier this week, Schumer echoed that expectation, stating he anticipates Biden and senior White House officials to resume negotiations with Manchin in the near future. “I believe the Biden administration will be having discussions with Manchin, with his cooperation and participation on BBB as we move forward,” he said.
With that as a prelude, given Manchin’s opposition to numerous provisions, expect there will be a very significant reworking of the bill, including revisions to the state and local tax (SALT) cap, modifications to or removal of the expanded child tax credit plus numerous other changes. If Senate Democrats are able to come to an agreement, the BBB will still face the hurdle of proving acceptable to the progressive wing of the Democratic Party in the House of Representatives, as a Senate-changed BBB would require another vote in the lower chamber in order to become law.
Given this delay, we anticipate that if the BBB does pass, any changes to the SALT cap would no longer be retroactive to Jan. 1, 2021, and possibly take effect Jan. 1, 2022, instead. The effective date of most provisions in the BBB will likely depend on how quickly the Senate Democrats are able to reach a consensus; provisions could be effective anytime in the near future or possibly retroactive for the first of the year.
We encourage you to connect with your Baker Tilly advisor regarding how the above may affect your tax situation.
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