Building Back Better, April 13, 2021
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Building Back Better, April 13, 2021

Browntein Client Alert, April 13, 2021
  • White House Selling AJP. As the administration seeks to gain bipartisan support for its American Jobs Plan (AJP), President Joe Biden will be holding a series of meetings with lawmakers to discuss the plan. The first of these meetings was held yesterday, during which President Biden and a bipartisan group of lawmakers discussed broadband funding. Subsequent meetings are expected to similarly focus on other specific policy areas.
  • American Families Plan. The administration originally planned to release the second leg of its infrastructure package, the American Families Plan, two weeks after the AJP. Under this timeline, the proposal, which will focus on “human infrastructure,” could be introduced this week, although a delay is possible.

  • Biden Releases Topline Budget. The Biden administration unveiled its topline spending numbers on Friday, allowing lawmakers to kick off the months-long appropriations process. A comprehensive analysis of the budget proposal is below.
  • Senate Parliamentarian Issues Ruling on Additional Reconciliation Legislation.  Per section 304 of the Congressional Budget Act of 1974, budget resolutions can be revised if updated before the end of the fiscal year that they cover. According to Senate Majority Leader Chuck Schumer (D-NY), the Senate parliamentarian ruled last week that Democrats could modify the budget resolution. However, it is unclear as to whether she has ruled on whether the modified resolution would in fact authorize another reconciliation bill. The parliamentarian’s official rule has not yet been made public, and according to Schumer, there is no decision yet “on a legislative path forward using Section 304 and some parameters still need to be worked out.”
  • Hospitality Pushing for Food Loss Tax Credit. The hospitality industry is ramping up its efforts to include a targeted tax credit for restaurants and bars that would cover 90% of lost perishable food and beverage inventory from March 13 through Sept. 30, 2020. The credit is included in the Hospitality and Commerce Job Recovery Act (H.R.1346), and the industry is seeking to include the language in the AJP.


Paying for the American Jobs Plan. Democrats have had a busy month, between the unveiling of President Joe Biden’s American Jobs Plan (AJP) and the release of international tax proposals from both the Biden administration and Senate Finance Committee (SFC) Democrats. The international tax proposals would partially finance an infrastructure bill.  On April 5, SFC Chair Ron Wyden (D-OR), as well as Sens. Sherrod Brown (D-OH) and Mark Warner (D-VA), released an international tax framework (SFC Framework) as a starting point to discussions on revamping the current system put in place by the 2017 Tax Cuts and Jobs Act. The Biden administration’s Treasury Department subsequently released more details on the Made in America Tax Plan (MATP) on April 7. Treasury Secretary Janet Yellen subsequently released an op-ed in the Wall Street Journal on April 8, with more details on a global minimum tax, a key proposal in the MATP. Currently, neither the Biden Administration nor the SFC has provided any legislative language, but the proposals have included a number of important details.

While both the SFC Framework and the MATP seek to address the same issues, the two proposals have major differences on how to achieve this result. On the international tax front, the SFC Framework makes changes to the existing global intangible low-taxed income (GILTI) regime, the foreign-derived intangible income (FDII) tax, and the base erosion and anti-abuse tax (BEAT). However, it stops short of repealing these provisions in their entirety and replacing them with a new system. Unlike the SFC Framework, with the exception of its approach to GILTI, the MATP is a complete overhaul of the current system. The MATP would repeal the FDII, replacing it with a foreign derived innovation income system and it repeals the BEAT, replacing it with the SHIELD (Stopping Harmful Inversions and Ending Low-tax Developments) regime. Most multinational companies are likely to prefer the SFC Framework’s approach.

Major differences between the SFC Framework and MATP suggest that there is little to no coordination between the administration and the Senate’s tax writing committee. This has resulted in two very different approaches to overhauling the international tax system and no details from the SFC on domestic corporate tax reform. However, after the release of the MATP, Wyden came out in support of the administration’s global minimum tax of 21% on companies exceeding $20 billion in revenue annually. The OECD was previously considering a 12.5% rate. For Wyden, this could ensure that U.S. corporations “pay their fair share” at home, without becoming uncompetitive globally. Additionally, a global minimum tax could eliminate the need for digital service taxes imposed by some foreign governments, targeting large American technology companies. Of course, the ability to sell this proposal in the U.S. may depend on whether Treasury Secretary Janet Yellen can win broad international support for a global minimum tax in international Organization for Economic Cooperation and Development (OECD) negotiations.

Wyden has not released a statement on other pieces of the MATP. However, international tax scholar and current Deputy Assistant Secretary at Treasury, Kimberly Clausing, has an established working relationship with Wyden. Clausing was a professor of economics at Reed College in Portland, Oregon for over 20 years and has often advised Wyden in an informal capacity in the past.

While Senate Democrats might be applauding the MATP, Republicans have released critiques. In an April 8 letter to Yellen, House Ways and Means GOP members wrote “[w]e are concerned that the OECD changes could directly reduce U.S. tax revenues and also leave the door open to other countries’ continued attacks on U.S. companies and our domestic tax base.”  They also questioned whether other countries might enact minimum taxes at rates lower than the current GILTI effective rate, let alone the MATP’s higher GILTI rate. This would place American workers and companies at a competitive disadvantage versus their foreign peers.

If the administration and Senate Democrats continue to use international and domestic corporate tax reform to pay for infrastructure spending, reconciliation will be the only way to enact legislation, making bipartisan overtures largely symbolic.

If Democrats choose to pursue enacting the American Jobs Plan through budget reconciliation, they must be prepared to secure support from all Senate Democrats and they can only afford to lose three House Democrats. Sen. Joe Manchin (D-WV) has already signaled that the administration’s 28% corporate rate proposal is too high. He has suggested a 25% rate instead. On the House side, a few moderates have expressed similar concerns on the corporate rate. Additionally, a group of House Democrats, including Problem Solvers Caucus Chair Rep. Josh Gottheimer (D-NJ), have indicated that they will not vote for an infrastructure bill that does not repeal the Tax Cuts and Jobs Act’s State and Local Tax cap. With slim margins, Democratic leadership has an uphill task in uniting the caucus behind spending proposals and revenue raisers in the next bill.

Below is a chart comparing the SFC Framework and the MATP.


Senate Finance Committee Framework

Made in America Tax Plan (MATP)


Eliminates the tax exemption for foreign earnings up to 10% of the adjusted basis of tangible depreciable assets owned abroad (i.e., qualified business asset investment or QBAI).


Proposes a GILTI minimum tax rate that is 60%-100% of the U.S. corporate tax rate. With a 28% corporate rate, the GILTI rate would range from 16.8% to 28%.

Proposes a GILTI minimum tax rate that is 75% of the U.S. corporate tax rate. With a 28% corporate rate, the GILTI rate would be 21%.

Shifts to a country-by-country system for applying the GILTI or only applying the GILTI to income from low-tax jurisdictions.


Shifts to a country-by-country system for applying the GILTI.

Add an incentive to onshore research and management jobs by treating expenses for research and management that occur in the U.S. as domestic expenses for foreign tax credit purposes.

No similar proposal.


Eliminates the 10% exclusion of QBAI.

Repeals the FDII.


Rebrands the current FDII as “foreign derived innovation income” focused on U.S. innovation to reward companies that continually invest in the economy and strengthen the workforce. To do so, FDII’s “deemed intangible income” would be replaced with a new metric—deemed innovation income.

Equalizes the GILTI and FDII rates.


Restores the full value of tax credits that support domestic investment and opportunity.

Repeals the current BEAT and replaces it with the Stopping Harmful Inversions and Ending Low-tax Developments (SHIELD) system, which denies multinational corporations U.S. tax deductions for payments made to related parties that are subject to a low effective rate of tax. The rate at which the SHIELD system is triggered would be the 21% modified GILTI rate. Once a global minimum tax is established under a multilateral agreement, this would be the new trigger rate.



A report on the latest intel and proposals as lawmakers start to outline a legislative framework for Build Back Better legislation.

Biden Releases Budget Request. On Friday, Biden unveiled the first discretionary budget request of his presidency. The streamlined budget calls for $796 billion in non-defense spending and $753 billion for defense programs, bringing the total to $1.52 trillion of total base discretionary appropriations for fiscal year (FY) 2022. The request is 8.4% ($118 billion) larger than the funding levels enacted in FY 2021. The increase is notably larger for non-defense spending (16%) than defense spending (1.7%). The discrepancy drew swift opposition from Republican defense hawks, while the Democratic leadership were equally quick to praise the budget proposal.

The budget does not contain discretionary spending proposals for future years; those will be included in the more robust budget the agencies will release later this year. The full budget will also likely include proposals to offset, to an extent, the cost of the plans. Current government funding expires on Sept. 30, giving congressional appropriators less than six months to craft and pass spending bills. Lawmakers have not met this deadline in over a decade; they typically enact continuing resolutions to punt the funding cliff, often until after the Thanksgiving holiday or into the new year.

Proposed funding levels for FY 2022 are outlined below.

President Biden’s FY22 Discretionary Request


FY22  Proposed

FY21 Enacted



$27.8 Billion

$24 Billion



$11.4 Billion

$8.9 Billion



$715 Billion

$703.7 Billion



$102.8 Billion

$73 Billion



$46.1 Billion

$41.8 Billion


Health and Human Services

$133.7 Billion

$108.6 Billion


Homeland Security

$52 Billion

$51.9 Billion


Housing and Urban Development

$58.2 Billion

$50.8 Billion



$17.4 Billion

$15 Billion



$35.2 Billion

$33.4 Billion



$14.2 Billion

$12.5 Billion



$63.5 Billion

$56.7 Billion



$25.6 Billion

$25.3 Billion



$14.9 Billion

$13.5 Billion


Veterans’ Affairs

$113.1 Billion

$104.6 Billion


Environmental Protection Agency

$80.4 Billion

$71.5 Billion


Transportation Highlights

  • Department of Transportation (DOT): The agency would receive a $317 million boost under President Biden’s proposal, which calls for a total of $25.6 billion in discretionary funding for DOT. The plan separately calls for a 14% increase in the agency’s discretionary programs, with the exception of mandatory formula grant programs. Funds would be used for Amtrak modernization efforts ($2.7 billion), an increase in the Capital Investment Grant program ($2.5 billion), Better Utilizing Investments to Leverage Development (BUILD) grants ($1 billion), a new passenger rail competitive grant program ($625 million), grants to support transit agencies’ purchases of low- and no-emission buses ($250 million), and the creation of a Thriving Communities Initiative Pilot ($110 million). Unspecified investments would be made to increase the budget for DOT’s Office of Civil Rights, purchase the Maritime Administration’s final academy training vessel, fund the Port Infrastructure Development Program, and support initiatives to manage and secure the national airspace system (NAS).

Energy Highlights

  • Department of Energy: The department would be provided $46.1 billion in discretionary funding in the president’s budget, representing a $4.3 billion or 10.2% increase over the fiscal year 2021 enacted level. The proposal includes funding for clean energy technology research ($8 billion); foundational climate and clean energy science research within the Office of Science ($7.4 billion); clean energy projects and energy efficiency retrofits ($1.9 billion), a new Advanced Research Projects Agency for Climate and the existing Advanced Research Projects Agency-Energy ($1 billion); and the Uranium Enrichment Decontamination and Decommissioning Fund ($831 million). Unspecified investments would be made to support the new Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization; the Office of Fossil Energy and Carbon Management; and research funding opportunities and infrastructure investments for Historically Black Colleges and Universities (HBCUs) and Minority-Serving Institutions (MSIs).
  • Department of the Interior: The president’s budget would provide $17.4 billion in discretionary spending for the department, which is an increase of $2.4 billion or 16% from 2021 enacted levels. The budget request would increase investments in tribal programs ($600 million, for a total of $4 billion); address the impacts of climate change and accelerate the deployment of clean energy on public lands ($550 million); remediate and reclaim abandoned oil and gas wells and mines ($450 million); reduce the risk of wildfires ($340 million); advance climate science within the U.S. Geological Survey and other bureaus ($200 million); promote conservation efforts, including the 30/30 initiative and the Civilian Climate Corps ($200 million); and expand access to National Park units that tell the story of historically marginalized groups ($20 million). Unspecified investments would be made in western water conservation programs, embedding environmental justice and racial equity goals in programs across the department, and restore core functions and capacities across Interior that have diminished in recent years.

Tax Highlights

  • Department of the Treasury: The Department of the Treasury would receive a $1.4 billion boost under President Biden’s proposal, a 10.6% increase from the 2021 enacted level. The funds would be dedicated to (1) supporting a fair and equitable tax system by ensuring corporations pay their fair share. To accomplish this, the budget requests $13.2 billion in discretionary funding for the Internal Revenue Service—a $1.2 billion, or 10.4%, increase above the 2021 enacted level. The increased funding would allow the agency to ensure tax compliance and improve taxpayer service. The request also includes a $417 million increase for tax enforcement. The Department funds would also be used (2) to invest in small businesses, particularly for those in rural areas, by requesting $330 million, a 22.2% increase above the 2021 enacted level, for Community Development Financial Institutions. Finally, the request calls for (3) additional efforts to safeguard the financial system through heightened transparency. Funds—including $191 million for the Financial Crimes Enforcement Network, a $64 million increase from 2021 enacted, would be dedicated to establishing a database that tracks the ownership and control of certain companies to combat illegal activity.

Infrastructure Updates

DOT Official Breaks Down AJP Funding. According to DOT Deputy Assistant Secretary for Congressional Affairs Edward McGlone, the agency would allocate the AJP’s $621 in transportation infrastructure and resilience funding as follows:

  • $160 billion for initiatives related to electric vehicles and charging infrastructure;
  • $115 billion for roads, bridges, and mitigation of both carbon emissions and congestion;
  • $85 billion for transit;
  • $80 billion for rail;
  • $44 billion for various grant programs, including INFRA, BUILD and an ARPA-I program, as well as to reinstate and expand Private Activity Bonds (PABs);
  • $25 billion for community programs;
  • $25 billion for aviation;
  • $20 billion for safety programs;
  • $17 billion for ports and waterways,
  • $14 billion for electric vehicle tax credits; and
  • $8 billion for resilience.

The remaining $50 billion would be used for "cross-cutting resilience investments." The draft funding breakdown was shared with Republican congressional staffers last week with the caveat that the allocations are meant to serve as a starting point for conversations on the AJP. The document was circulated in advance of a briefing with Hill staff, DOT officials, and representatives from the National Economic Council and the White House Office of Legislative Affairs.

Psaki Clarifies Grant Processes. After telling reporters that the AJP’s transportation funds would be distributed through a “competitive bidding process,” White House Press Secretary Jen Psaki was quick to revise her statement, explaining that they would actually be allocated through a mix of competitive and formula programs. Her initial comments drew concern from House Transportation and Infrastructure Committee Chair Peter DeFazio (D-OR), who told attendees at the Georgia Transportation Summit that members of Congress pushed back on Psaki’s remarks, adding that she “misspoke.”

Progressives Outline Infrastructure Priorities. The Congressional Progressive Caucus last week circulated a list of its top five priorities for the AJP. The 95-member group is focusing on (1) strengthening the care economy, (2) bold investments in affordable housing, (3) lowering drug prices and using the savings to fund public health expansions, (4) bold investments in climate jobs and impacted communities, and (5) providing a roadmap for citizenship and inclusion for immigrant communities. The group did not include any traditional infrastructure goals among their priorities, many of which are expected to be addressed, at least partially, in Biden’s forthcoming American Families Plan.

Green Energy Updates

General Energy Updates

Offshore Wind Power Expansion. On March 29, the Biden administration announced a goal to add 30 gigawatts of offshore wind generation to U.S. coastal waters by 2030, a target the White House said would require more than $12 billion per year in capital investment in projects on both the East and West coasts that would employ 44,000 workers in wind industry jobs. Those wind farms could supply power to more than 10 million homes and cut carbon dioxide emissions by 78 million metric tons.

Energy Tax Updates

American Jobs Plan and Made in America Tax Plan. On April 12, President Biden met with a bipartisan, bicameral group of lawmakers to work on the proposals outlined in the AJP and the Made in America Tax Plan, both of which include a number of energy-related provisions. With respect to green energy taxation, the AJP and the Made in America Tax Plan would:

  • Remove subsidies for fossil fuel companies;

    Climate activists and progressive Democrats are gearing up for a fight over the elimination of fossil fuel subsidies, which President Biden has proposed but which some centrist Democrats could push back against. Senator Joe Manchin (D-WV), who has spent much of his career defending the coal industry of his home state, was one of three Democrats who voted against a failed amendment in 2016 that would have phased out the subsidies.
  • Provide a 10-year extension of the production tax credit and investment tax credit for clean energy generation and storage, and make those credits direct pay;

    The production and investments credits have been huge boons for wind and solar projects. Adding a direct-pay option for these credits will allow investors to receive their tax credits in a lump-sum rebate, which will increase the pool of potential investors and also make smaller projects more attractive. However, Senator Manchin has suggested that an extension isn’t necessary.
  • Create a new tax incentive for long-distance transmission lines to ensure clean energy can be carried to cities, homes and businesses;

    A transmission ITC would be a major incentive to build the transmission lines needed to get more renewable energy on the grid.
  • Expand the bipartisan section 45Q tax credit, making it direct pay and easier to use for hard-to-decarbonize industrial applications, direct air captures, and retrofits of existing power plants;
  • Provide specific supports for clean energy manufacturing, including an extension of the section 48C tax credit program;
  • Include a blender’s tax credit for sustainable aviation fuel;
  • Provide incentives to encourage people to switch to electric vehicles and efficient electric appliances;
  • Provide tax incentives for investments to increase the resilience of households and small businesses to droughts, wildfires, and floods; and
  • Penalize polluters by restoring a tax on polluters to pay for EPA clean-up costs.

Energy Innovation and Carbon Dividend Act of 2021. On April 1, Reps. Ted Deutch (D-FL), Scott Peters (D-CA), Judy Chu (D-CA) and Charlie Crist (D-FL), along with 24 co-sponsors, reintroduced the Energy Innovation and Carbon Dividend Act.

The bill would impose a carbon fee on the use, sale, or transfer of a covered fuel (oil, natural gas, coal, or other product derived from the foregoing that when used emits greenhouse gases) by a covered entity (refineries, importers, and those entities transporting, selling, or otherwise using covered fuel in a manner which emits a greenhouse gas which is not otherwise covered by the carbon fee). The carbon fee would initially be set at $15 per metric ton, increased $10 per year, with all revenues returned to the general public through monthly dividend checks. The fee would remain in place until greenhouse gas emissions are less than 10% of 2010 levels or until monthly dividend payments to any individual are less than $20 for three straight years.

When introduced in 2019, this proposal garnered bipartisan support, but this year’s proposal has yet to do so. However, Deutch provided that sponsors are continuing discussions with several GOP lawmakers and he expects some to join onto the legislation.

Tax and Finance Update

Washington Reacts to AJP. It has been almost two weeks since the White House unveiled its American Jobs Plan (AJP), giving lawmakers plenty of time to provide initial reactions and input. Below is an overview of how lawmakers have already responded to the administration’s initial proposal.

Republican Reaction

The response from Republicans thus far been unanimous agreement that the AJP as currently drafted will not work. After dolling out trillions for COVID-19 response, Republicans are reluctant to support another $2 to $3 trillion for infrastructure projects and a proposal they view as comprised of top Democratic legislative priorities.

Republicans argue that only a small portion of the $2.2 trillion proposal is dedicated to traditional infrastructure projects, such as rebuilding highways, bridges and roads. Making this argument shortly after the proposal was unveiled was outgoing Sen. Roy Blunt (R-MO), who said only $615 billion, or just 30%, of the proposal could be considered infrastructure spending. He suggested that if Democrats put forth a package of only this funding in the package, it could potentially win the support of enough Republicans to pass with strong bipartisan numbers.

Senate Minority Leader Mitch McConnell (R-KY) has taken a more hardline approach. Shortly after President Biden introduced the AJP, McConnell indicated the proposal “is not going to get support from our side. Because I think the last thing the economy needs right now is a big, whopping tax increase.”

Democratic Reaction

Democrats have had mixed reactions to the proposal. While generally much more aligned with the administration, there are early signs of potential defectors, and there is a definitive lack of uniformity among the party.

One of the primary sticking points among Democrats is the proposal’s silence on the $10,000 cap on state and local tax (SALT) deductions, which were enacted under the Tax Cuts and Jobs Act (TCJA, P.L.115-97). Repealing the SALT cap, which affects high-income states like New York and New Jersey, has been a top target for Democrats since the passage of the TCJA. A trio of House Democrats—Reps. Bill Pascrell (D-NJ), Josh Gottheimer (D-NJ) and Tom Suozzi (D-NY)—have joined together in recent weeks, vowing to vote against the package if it fails to include the SALT cap repeal. Should the group hold firm in their opposition, Democrats will be in serious jeopardy of passing the measure through the House.

Another potential snag for the Biden administration is the 28% corporate rate proposal. Republicans are universally opposed to the measure, arguing it will make the U.S. uncompetitive among industrialized countries. Pouring more cold water on the increased rate was Sen. Joe Manchin (D-WV), who has explicitly said 28% is too high. Instead, Manchin said he prefers a rate closer to 25%.

Neal Outlines Individual Priorities. House Ways and Means Committee Chair Richard Neal (D-MA), whose committee will again play a central role in crafting the administration’s policy agenda, is looking ahead to the rollout of the American Families Plan, the second leg of the administration’s infrastructure proposal. This second proposal, which will focus on “human infrastructure” and is expected in the coming weeks, will contain many of the Democratic priorities most likely to see Republican opposition given that its contents are not viewed by many Republicans as traditional infrastructure.

Nevertheless, Neal has already begun outlining the contours of the committee’s work on this package. In a letter to committee members last week, Neal said he wants to increase wages, particularly for essential workers, and expand access to paid family and medical leave. The letter also highlighted Neal’s interest in permanently extending the changes to the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC) and the Child and Dependent Care Tax Credit (CDCTC) enacted under the American Rescue Plan Act (ARPA).

Neal will look to two bills from last Congress to serve as “starting points” for these efforts: the Economic Mobility Act—which would increase the CTC for children under four, increase the EITC for individuals with no qualifying children and make the CDCTC fully refundable—and the Child Care for Economic Recovery Act, which would increase and make refundable the CDCTC and increase the exclusion from employee income for employer-provided dependent care assistance, among other things.

Both bills advanced through the House last year, with the Economic Mobility Act favorably reported by committee, while the Child Care for Economic Recovery Act passed the House 250-161.

Yellen’s Global Tax Efforts Concern Republicans. House Ways and Means Committee Republicans sent a letter last week to Treasury Secretary Yellen outlining their concerns with the administration’s approach to global tax negotiations. The letter was in response to a recent speech by Yellen in which she endorsed a global minimum tax of 21%, which the committee Republicans opposed.

In the letter, the lawmakers expressed concern that the Organization for Economic Cooperation’s (OECD) changes could reduce U.S. tax revenues and allow other countries to continue targeting U.S. companies. The Republicans outlined their reservations related to both Pillar One and Pillar Two, saying on the former that countries must agree to withdraw unilateral digital services taxes, and on the latter that the administration’s negotiating position will allow other countries to enact minimum taxes at rates lower than the GILTI rate while the U.S. seeks to double the GILTI rate paid by U.S.-headquartered companies. These policies will result in a competitive disadvantage to U.S. companies, the lawmakers claimed.

Next, the committee Republicans requested a briefing by Treasury Department officials on the administration’s goals related to these efforts.


Over the course of the next few months, members will introduce several pieces of legislation, with the hopes that their proposals will be considered for inclusion in the next package. While significant developments are discussed in the legislative updates section, click here for a running list of other relevant legislation introduced this week.


Click here to view congressional activity for the week.

For additional information or assistance with a particular issue, please contact a member of the Brownstein Tax Policy Group.

This document is intended to provide you with general information regarding infrastructure policy updates. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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