Building Back Better, March 30, 2021
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Building Back Better, March 30, 2021

Brownstein Client Alert, March 30, 2021


  • Administration Proposal. President Joe Biden will travel to Pittsburgh, Pennsylvania, on March 31, where he will unveil the contours of the infrastructure package.
  • Biden Preliminary Budget Outline. This week, the Biden administration will release a preview of its Fiscal Year 2022 budget. The figures will allow lawmakers to begin the appropriations process and give Congress information about the president’s discretionary funding priorities. The final budget request is currently expected in May.
  • Congress Continues Work. Although both chambers will be out of session for the next two weeks on a district work period, lawmakers will continue discussions on the contents of the infrastructure package.


  • Hearings Aftermath. Congressional panels—including the House Ways and Means Committee, the House Transportation and Infrastructure Committee, the Senate Budget Committee and many others—held hearings to consider potential policies to be included in the infrastructure package. For a summary of these hearings, please contact a member of the Brownstein Tax Policy Team
  • Moderate Hesitation. Several House and Senate Democrats have expressed concerns about big tax hikes to pay for a massive infrastructure package. On the Senate side, Sens. Joe Manchin (WV) and Kyrsten Sinema (AZ) have expressed reluctance to enact major tax hikes. Similarly, on the House side, Reps. Josh Gottheimer (NJ), Tom Suozzi (NY) and Scott Peters (CA) have said they are wary of tax increases that could slow economic recovery. Both Gottheimer and Suozzi claim that they would not consider Biden’s plan unless he eliminates the State and Local Tax (SALT) cap. Peters has indicated support for increasing the corporate rate to 25%, up from the current 21% rate, but significantly lower than the pre-Tax Cuts and Jobs Act rate of 35%.  
  • Regular Order. The Problem Solvers Caucus, a bipartisan group of 58 House lawmakers, sent a letter to Speaker Nancy Pelosi (D-CA) and House Minority Leader Kevin McCarthy (R-CA) on Monday demanding legislation move through regular order—where bills will receive hearings, markups and floor amendments, as opposed to being fast-tracked to the floor.


About three weeks after the enactment of the $1.9 trillion American Rescue Plan Act (ARPA), President Biden is set to outline his Build Back Better agenda on Wednesday during a public address in Pittsburgh, Pennsylvania. The package is expected to be split into two parts—the first part, to be unveiled later this week, will focus on infrastructure. This includes improvements to traditional infrastructure, such as roads, bridges and water systems, as well as green energy incentives and rural broadband. It might also include incentives to spur domestic manufacturing. The president’ s infrastructure plan is tied to a plan to create millions of jobs—on the campaign trail, Biden touted a clean energy plan that created “10 million good-paying jobs.” The second part of the agenda, to be unveiled in April, will be focused on human capital—proposals for paid family leave, free community college, health care and childcare.

Unlike the ARPA, the administration has indicated it would like the first part of Biden’s agenda to pass with bipartisan support, though the second part, if considered, will likely have to move through reconciliation.

As of now, key committees are working on bipartisan priorities. House Transportation and Infrastructure Committee Chair Peter DeFazio (D-OR) and Senate Environment and Public Works Chair Tom Carper (D-DE) hope to pass bipartisan surface transportation reauthorizations out of their committees in May. Transportation Secretary Pete Buttigieg appeared before the House Transportation and Infrastructure Committee on March 25 and discussed several areas of potential bipartisan interest from traditional infrastructure priorities to securing the supply chain. Additionally, the reintroduction of earmarks also enhances chances of bipartisanship, with lawmakers potentially being able to include various parochial interests in the next package.

The stumbling block remains whether bipartisan agreement on revenue raisers to pay for the package is possible. Democrats currently propose to pay for the plan with increases to the corporate tax rate and changes to the Tax Cut and Jobs Act’s (TCJA) international tax system, including modifications to the Global Intangible Low-Taxed Income (GILTI) rate, potentially doubling it to 21% and moving to a country-by country calculation. Democrats believe this would reduce the incentive for large multinational companies to relocate their principal places of business to lower their tax bills. During a series of Senate Finance Committee hearings over the past few weeks, there seems to be a potential framework to begin negotiations. With certain TCJA tax breaks expiring, Democrats might be willing to extend provisions like immediate deductions for research and development expenses and full expensing for equipment, in exchange for a 25% to 26% corporate tax rate. This could be coupled with incentives for domestic manufacturing and harsher penalties for companies that offshore operations.

Regardless, a bipartisan package has a tough road ahead. Democrats would like to pass a bill before August recess—an ambitious and potentially unlikely timeline given that there is a lack of bipartisan and intraparty consensus on both priorities and payfors. Prominent Republicans are already attacking Democrats, accusing them of proposing tax hikes that will damage businesses and the economy. When some Democrats floated the idea of a bipartisan infrastructure package, to be paid for in a Democrat-only reconciliation bill, Senate Majority Leader Mitch McConnell (R-KY) immediately rejected this idea. Similarly, during a Ways and Means Committee Members’ Day hearing, Ranking Member Kevin Brady (R-TX) refused to participate, calling it a sham to “check the box to satisfy regular order on a major infrastructure overhaul.”

If bipartisan efforts fail, Democrats will be forced to pick and choose among their priorities since moderates are unlikely to agree to $3 trillion in spending or revenue raisers to cover new programs. Additionally, this will jeopardize Democrats’ human capital agenda since the party will likely eliminate costly paid leave and childcare initiatives—Democratic proposals for universal childcare cost upwards of $450 billion. It will also force Democrats to use budget reconciliation for both packages, limiting what they are able to include in the bill.

Wednesday’s plan release will offer policy watchers a first glimpse into the administration’s priorities in the next package, as well as how they plan to pay for a multitrillion dollar proposal and whether Democrats are serious about working across the aisle. 


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

Infrastructure Updates

President Biden’s Infrastructure Plans. Details of the infrastructure plan President Biden will release tomorrow remain closely guarded. Though the final draft is still in flux, its provisions are expected to address some of the key promises included in his Build Back Better campaign plans: 

  • Update roads, bridges and electric grids;
  • Expand access to broadband;
  • Upgrade 4 million buildings and weatherize 2 million homes over 4 years by providing homeowners with direct cash rebates and low-cost financing;
  • Provide cities with high-quality, zero-emissions public transportation options, such as light rail networks;
  • Achieve a carbon pollution-free power sector by 2035;
  • Enable the creation of 1.5 million sustainable homes and housing units;
  • Create union jobs in the construction industry;
  • Create one million jobs in the auto industry and increase the demand for American-made, American-sourced clean vehicles;
  • Provide consumers with rebates for trading in old, less-efficient vehicles for newer American-made vehicles; and
  • Construct 500,000 electric vehicle charging stations.

Biden’s Wednesday speech is likely to focus on the traditional aspects of his infrastructure plans over the human capital-focused provisions, which are expected to be unveiled in April.

Buttigieg Goes to the Hill. Transportation Secretary Pete Buttigieg appeared before the House Transportation and Infrastructure Committee for over five hours on March 25. The wide-ranging hearing began with Buttigieg’s calls for “a generational investment in infrastructure,” later touching on the substance and funding source for such investments, climate change, electric vehicles, ports, securing the supply chain, diversity in the transportation workforce and the federal permitting process, among other topics. Buttigieg tied in China and strategic competition, often areas of bipartisan interest, noting that “China spends more on infrastructure every year than the U.S. and Europe combined,” he added, “the infrastructure status quo is a threat to our collective future.”

Ranking Member Sam Graves (R-MO) cautioned Democrats against aligning their legislation with the Green New Deal, adding that “the more massive any bill becomes, the more bipartisanship suffers.” Conversely, Chair Peter DeFazio (D-OR) called for “investing heavily” in infrastructure, linking such investments closely with recovery efforts.

Infrastructure legislation will come together quickly in the weeks after Congress returns from recess on April 12; Chair DeFazio and Chair Tom Carper (D-DE) of the Senate Environment and Public Works Committee both intend to pass surface transportation reauthorizations out of their committees in May. Members of the two House and Senate committees were asked to submit their priorities for the bill by April 14 and March 19, respectively.

T&I Begins Accepting Earmark Requests. Reps. Eleanor Norton Holmes (D-DC) and Rodney Davis (R-IL), the leaders of the House Transportation and Infrastructure Subcommittee on Highways and Transit, announced last week that the committee will begin accepting project funding requests on Thursday, April 1. The window will close on April 16.

The subcommittee leaders provided members with additional information about the renewed earmarks process via a Dear Colleague letter circulated on March 23. According to the letter, members will have the opportunity to attend two virtual briefings on the submission process and relevant legislative policy. Though members can submit an unlimited number of project funding requests, they were asked to rank their top five priorities.

The letter also reiterates previously established safeguards, including that members will be required to post their submissions online and certify that neither they nor their immediate family has a financial interest in the project. The full committee will host a hearing on April 14 to consider members’ policy priorities for earmarks and the broader surface transportation reauthorization.

Green Energy Updates 

Looking Ahead to Energy Priorities in the Infrastructure Plan. The last week of session before the Easter district work period included significant engagement between the White House, the Department of the Interior, and the oil and gas industry. The Department of the Interior held a forum on March 25 to discuss the future of the federal leasing program. Representatives from the energy, tribal, labor, and environmental communities all joined to share their input. The forum follows the expiration of a 60-day moratorium on regulatory actions, under which changes to Interior’s leasing program was affected. The Interior Department is currently reviewing the leasing program and has not announced how the Bureau of Land Management and the Bureau of Ocean Energy Management will manage leasing going forward. Comments in response to the forum are due April 15, 2021. Republicans have criticized the forum for excluding local governments and small businesses in the energy sector.

Following the Interior leasing forum, the Biden administration announced several new policies intended to expand offshore wind in the United States on Monday. This includes opening more areas for offshore wind, improved environmental review processes, and investments in ports and the wind industry. “We are ready to rock-and-roll,” stated national climate advisor Gina McCarthy. McCarthy will also be leading the advocacy efforts for the climate-related provisions of the Biden infrastructure plan that will be revealed on Wednesday.

The contents of Wednesday’s infrastructure plan are expected to be high-level but will signal the direction the administration will take in how to approach energy and environmental policy going forward. Oil and gas industry leader, the American Petroleum Institute, came out in support of a carbon tax last week. It remains to be seen if a carbon tax will be a primary focus of the plan, as that policy proposal has fallen out of favor with many environmentalists who want to discourage oil and gas production entirely. The Biden campaign promised significant renewable investments, improved electric vehicle infrastructure, and ensuring union jobs are a key part of the clean energy transition.

Energy Tax Updates

Tar Sands Tax Loophole Elimination Act. On March 8, Sen. Edward Markey (D-MA) and Rep. Earl Blumenauer (D-OR) reintroduced the Tar Sands Tax Loophole Elimination Act. The bill would reverse a 2011 IRS Technical Advice Memorandum concluding that oil derived from tar sands is not considered crude oil and therefore is not subject to the excise tax that goes into the Oil Spill Liability Trust Fund. The bill would provide that products derived from tar sand are crude oil for purposes of petroleum excise taxes. In 2017, the Joint Committee on Taxation estimated this bill would generate approximately $665 million in revenue over 10 years. 

Markey has stated “the dirtiest fuels must have the strictest requirements, not the largest regulatory loopholes. We need to close this tax loophole for tar sands and make sure every Big Oil company pays for their clean-up costs.” Markey has proposed this bill on five prior occasions, but in each instance, the proposal was read in the Senate and then referred to the Committee on Finance. Blumenauer has joined Markey with companion legislation on three of those instances, and similarly, those bills were referred to the House Committee on Ways and Means without further action.

Energy Storage Tax Incentive and Deployment Act. On March 9, Reps. Mike Doyle (D-PA), Vern Buchanan (R-FL), and Earl Blumenauer (D-OR) introduced the Energy Storage Tax Incentive and Deployment Act. Companion legislation was also introduced in the Senate by Sens. Martin Heinrich (D-NM) and Susan Collins (R-ME). The bipartisan bills allow tax credits for energy and battery storage technologies.

The bills expand the IRC sec. 48 tax credit for investments in energy property to include equipment that (1) receives, stores, and delivers energy using batteries, compressed air, pumped hydropower, hydrogen storage (including electrolysis), thermal energy storage, regenerative fuel cells, flywheels, capacitors, superconducting magnets, or other technologies identified by the Internal Revenue Service; and (2) has a capacity of at least five kilowatt hours.

The bills also expand the IRC sec. 25D tax credit for residential energy efficient property to include expenditures for battery storage technology that (1) is installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and (2) has a capacity of at least three kilowatt hours.

With the Biden administration’s desire to prioritize investment in clean energy projects and bipartisan support, these proposals might be high on the list for inclusion in the next package.    

Rural Wind Energy Modernization and Extension Act. On March 8, 2021, Sens. Michael Bennet (D-CO) and Amy Klobuchar (D-MN) introduced the Rural Wind Energy Modernization and Extension Act, to expand the IRC sec. 48 small wind investment tax credit to help offset the up-front costs of developing and owning small wind turbines that generate electricity. Companion legislation was introduced in the House by Representative Earl Blumenauer (D-OR).

These bills would expand the small wind investment tax credit by increasing the nameplate limitation from 100 kilowatts to 10 megawatts, modify definitions to ensure that innovative small wind models qualify for the credit, and extend the credit to cover 30% of the project’s cost until 2028, before phasing-down to a permanent 10%.

Carbon Capture Modernization Act. On March 10, Sens. John Hoeven (R-ND) and Tina Smith (D-MN) and Rep. David McKinley (R-WV) reintroduced the Carbon Capture Modernization Act, bipartisan legislation to modernize the section 48A tax credit for coal facilities to better support the use of carbon capture, utilization and storage (CCUS) technology.

Prior legislation from 2005 and 2008 created and expanded the IRC sec. 48A credit for investment in clean coal facilities and projects. Though not intended, the standards in the legislation make it impossible for taxpayers to make use of the credit for CCUS retrofits. To incentivize investment in CCUS technology, these bills would relax efficiency requirements to reflect the capabilities of existing technology, so long as projects include carbon capture storage equipment.

Smith said “[o]ur legislation helps ensure that carbon dioxide released by fossil fuel power plants is captured and stored before it can be emitted into the atmosphere.”  McKinley added “Modernizing the 48A credit will make it easier for businesses to retrofit coal facilities around the nation with carbon capture technologies.” Sen. Shelley Capito (R-WV), Ranking Member of the Senate Environment and Public Works Committee, added that the bill would “allow America to reach its full energy potential, promoting innovative ways to use even old resources like coal.”

Clean Energy for America Act and Pollution Payments Proposal. Senate Finance Committee Chair Ron Wyden (D-OR) plans to reintroduce the Clean Energy for America Act. In Wyden’s view, the tax code provides too many incentives for fossil fuel companies, so this bill would “take the outdated energy tax code, 44 different tax breaks with too many subsidies for oil and gas, and we basically just throw them in the trash can.”

The bill modifies, extends, or terminates several energy-related tax incentives to provide consolidated tax deductions and credits for the production of or investment in clean electricity, the production of clean transportation fuels, and energy efficient homes and commercial buildings.

The new tax incentives are technology-neutral, and the amounts of the credits or deductions vary based on the levels of carbon emissions for the incentives for electricity and fuels or energy efficiency in the case of the incentives for energy efficient homes and commercial buildings.

The bill also establishes tax credits for certain bonds issued by a governmental body, a public power provider, or a cooperative electric company for facilities producing clean electricity or clean transportation fuels.

At an American Council on Renewable Energy forum earlier this year, Wyden admitted it would be difficult pass clean energy legislation. However, he pointed to the recent grid failure in Texas as a call for Congress to support infrastructure and clean energy legislation.

Wyden also said he is developing a proposal to “make polluters pay for the cost of climate change” and send part of that revenue to Americans in annual cash payments.

The Nuclear Energy Institute is in favor of a federal clean energy standard that would put nuclear on an even playing field with other carbon-free resources. President and CEO Maria Korsnick said during the group's annual address, “When a clean energy standard is in effect, it will absolutely help those (nuclear) plants that are challenged in the marketplace.”

Methane Emissions Reduction Act of 2021. On March 9, Sens. Sheldon Whitehouse (D-RI), Corey Booker (D-NK) and Brian Schatz (D-HI) introduced the Methane Emissions Reduction Act of 2021, to place a fee on methane emissions from producing, gathering, processing or transmitting oil and natural gas, beginning in 2023.

The fee would be determined on a basin-by-basin basis, based on a formula factoring in the company’s gas production and methane rate, and a base methane price of $1,800 per ton. Companies that already reduce methane voluntarily may opt out by showing that they have installed state of the art technology to detect and eliminate methane leaks from all oil and natural gas facilities the company owns or operates.

Whitehouse provided that the new bill would “put a stop to virtually all methane emissions from the industry.”

Tax and Finance Updates

Members Outline Priorities to Ways and Means. Last week, the House Ways and Means Committee held a Members’ Day hearing, during which it received input from members on their top legislative priorities. The meeting was meant to inform the tax writing committee of the top concerns of other lawmakers as they prepare to advance the Build Back Better infrastructure package.

Republicans did not participate in the hearing and accused Democrats of partisanship. House Ways and Means Committee Ranking Member Kevin Brady (R-TX) said the “hearing is nothing more than another partisan exercise so Democrat House leadership can set up yet another multi-trillion-dollar one-sided spending bill.” Brady claimed the “pretend hearing” served only “to check the box to satisfy regular order.”

Ultimately, 17 Democrats offered legislative suggestions to the committee, with some advocating for specific bills and others raising policy concerns for the committee to examine. A comprehensive overview of the proposals offered during the hearing can be found here. Below are some key takeaways.

  • State and Local Tax Deduction. Many members expressed an interest in repealing the $10,000 limit on state and local tax deductions (SALT) passed under the Tax Cuts and Jobs Act (TCJA). The most popular legislative proposal was Rep. Tom Suozzi’s (D-NY) SALT Deductibility Act (H.R.613), which would repeal the SALT deduction cap.
  • Climate Change. Another common theme was the need to address climate change. A solution often discussed during the hearing was carbon pricing. There was support from multiple members for Rep. Ted Deutsch’s (D-FL) Energy Innovation and Carbon Dividend Act (H.R.763), which would initially price carbon at $15 per metric ton and increase it by $10 every year.
  • Family Assistance. There were multiple legislative proposals related to individual and family financial assistance, such as using the tax code to effectively raise the minimum wage. However, the most discussed policy was the Child Tax Credit, with most members touting the increase of the credit under the American Rescue Plan Act (ARPA, P.L.117-2) and calling for further expansions in future legislation.

Senate Finance Goes Global. The Senate Finance Committee held a hearing last week to explore how U.S. international tax policy affects American workers, jobs and investment. The hearing provided a glimpse into how congressional Republicans and Democrats and the Biden administration are approaching international taxation policy changes ahead of the infrastructure package, which is expected to contain international and corporate tax provisions.

Among the witnesses appearing before the committee was Kimberly Clausing, the current Deputy Assistant Secretary for Tax Analysis in the Treasury Department. In her testimony, Clausing said that while the Tax Cuts and Jobs Act (TCJA, P.L.115-97) contained two modest measures to reduce profit shifting—the Global Intangible Low Taxed Income (GILTI) minimum tax and the Base Erosion and Anti-Abuse Tax (BEAT)—the law has encouraged profit shifting in other ways. She specifically cited to two problematic provisions: (1) the GILTI’s 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), minus interest costs; and (2) the GILTI’s 10.5% rate for foreign earnings—half of the 21% rate for U.S. income. Clausing noted that if companies can move their profits abroad to avoid tax, the U.S. is missing its chance to tax most capital income since about 70% of equity income is untaxed at the individual level. To address this issue, Clausing recommended a much stronger minimum tax to curb profit shifting, citing an international effort led by the Organization for Economic Development (OECD) to achieve the same goal.

Republicans defended the TCJA, saying that since the law brought the corporate tax rate from 35% to 21%, it increased the competitiveness of the U.S. among OECD countries. Despite this reduction, however, Republicans maintained that, because of provisions like GILTI, U.S. companies are still subject to a higher tax rate than many OECD countries after both federal and state taxes are taken into consideration. Making this argument was Sen. Pat Toomey (R-PA), who said during the hearing that the TCJA “actually put our multinationals based in the U.S. at a competitive disadvantage with the respect to the tax code, with respect to other countries — but it’s not so onerous that it drives everybody out of the country.”

The top Republican on the committee, Sen. Mike Crapo (R-ID), cautioned Democrats against increasing the corporate rate simply to raise revenue. Instead, Crapo suggested that any policy change should consider whether the U.S. tax base will be strengthened, whether it will encourage economic growth and better job opportunities and whether workers will see their wages increase and retirement savings rise.

Democrats, on the other hand, expressed concern that the government would have difficulty making necessary investments if corporate revenues remained low. During the hearing, Sen. Ron Wyden (D-OR), who chairs the committee, said Congress should approach international tax reform with the following foundations: (1) elimination of opportunities for profit shifting so multinationals pay their “fair share” of taxes and (2) rewarding companies that invest and create good-paying domestic jobs. To address perceived shortcomings of international taxation, Wyden said he and Sens. Sherrod Brown (D-OH) and Mark Warner (D-VA) will soon be releasing a framework related to taxing multinational corporations. The framework is expected next week.


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:


Tuesday, March 30

Department of Labor
Maritime Advisory Committee on Occupational Safety and Health

Environmental Protection Agency
White House Environmental Justice Advisory Council

Private Sector

Monday, March 29

Woodrow Wilson Center
Building Ocean Resilience in the Face of Climate Change

Tuesday, March 30

New America
Reimagining Early Care and Education

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