November 3, 2021

New Build Back Better Bill Includes Key Whitehouse Tax Priorities

Whitehouse provisions account for $520 billion in revenue to advance the president’s ambitious agenda

Washington, DC – Senator Sheldon Whitehouse (D-RI), Chair of the Senate Finance Subcommittee on Taxation and IRS Oversight, applauded new legislation to deliver on President Biden’s Build Back Better agenda that includes a number of Whitehouse’s tax priorities. Over a quarter of the revenue generated by the bill — roughly $520 billion — comes from provisions based on Whitehouse tax proposals. A version of Whitehouse’s fee on harmful methane pollution is also in the bill. So too are other key Whitehouse provisions, such as a boost for a tax program to encourage the capture and safe storage of harmful carbon pollution, and provisions to make Pell Grants tax free for students and ensure Pell recipients can receive the full benefit of the American Opportunity Tax Credit (AOTC). The new legislation currently awaits action in the House.

“I’m thrilled to see my tax priorities included in this bill,” said Whitehouse. “I’ve fought hard to level the playing field for American workers and small businesses, and to end the complicated giveaways to multinational corporations and the ultra-wealthy that make our tax system so unfair. I’ve also been fighting to make sure our tax system benefits future generations by promoting education and helping to preserve a livable planet. If we achieve these priorities, we can create much-needed revenue to deliver on President Biden’s Build Back Better agenda – that’s a clear win-win.”

Whitehouse’s success spans a number of areas.

Stop Rewarding Companies for Sending Jobs Overseas: The part of the new legislation that generates the most revenue is drawn from legislation by Whitehouse and Congressman Lloyd Doggett (D-TX). The Build Back Better Act would roll back tax incentives created by the 2017 Trump tax giveaway bill to send jobs and profits overseas, and create a more even playing field for American workers and small businesses. This would generate roughly $320 billion over ten years, according to JCT estimates.

Permanently Close the Excess Business Losses Loophole: Another revenue-raiser is a provision based on Whitehouse and Congressman Doggett’s bill to repeal a massive tax giveaway for a small group of wealthy taxpayers, which Republicans included in the March 2020 coronavirus relief bill. Following Whitehouse and Doggett’s lead, the Build Back Better Act will prevent the ultra-wealthy from using excessive losses to avoid paying taxes on large amounts of income, a break unavailable to typical working families. According to previous JCT estimates, this will yield roughly $170 billion in revenue over ten years.

Place a Charge on Excess Methane Pollution: The bill includes a program based on Whitehouse’s legislation to curb the potent methane emissions that are responsible for about 25 percent of global warming. To help meet the Build Back Better agenda’s ambitious climate goals, the bill would create incentives for oil and gas companies to reduce methane emissions rapidly. Those that do not reduce their emissions below an agreed-upon threshold would pay a fee on any excess emissions. This charge would further incentivize emissions reductions. The program would help to slow climate change and dramatically improve air quality in communities located near oil and gas facilities.

Reduce Carbon Pollution: Whitehouse has long championed bipartisan legislation to encourage the capture, utilization, and storage of carbon emissions. Included in the Build Back Better Act is a significant boost to the 45Q tax credit for the deployment of carbon-capture technology to limit carbon pollution. The provision tracks legislation championed by Whitehouse that would increase the value of the 45Q credit, which Whitehouse previously expanded. In addition, the bill includes $4 billion for the Department of Energy to encourage energy-intensive industrial and manufacturing facilities to adopt technology that reduces emissions.

Additional Carbon-Free Energy Tax Credits and Funding: The Build Back Better Act also includes proposals championed by Whitehouse to boost existing carbon-free nuclear energy, decarbonize the aviation sector, and incentivize the production of clean hydrogen.

Tax-Free Pell Grants: To help deliver on the Build Back Better plan’s promise of affordable higher education, the new legislation includes Whitehouse’s proposal to make all Pell Grants tax free. The tax-free Pell provisions in the Build Back Better legislation would remove financial barriers to higher education by ensuring Pell Grant recipients can fully benefit from the AOTC and fully excluding Pell Grants from taxable income.

Full text of the new legislation is available here.

Rich Davidson (202) 228-6291 (press office)

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