Skip to main content

Build Back Better Gets Through the House

9th December 2021

It’s been a political tug-of-war, but on November 19—less than a week before Thanksgiving—the House of Representatives passed the Build Back Better Act. Something to be thankful for? Well … yes and no. Since the House Ways and Means Committee passed it on September 15, the proposal, which includes a slew of tax proposals for high-income individuals and corporations, has been revised, tweaked, and then renegotiated some more. Where does it stand now? Here, a few corporate tax highlights:  A 15% minimum tax on corporate book income will target companies that report high earnings to investors but pay little or no taxes thanks to a strategic use of deductions and credits. Taxpayers may not feel so grateful for that. There’s also a 1% excise tax for when companies buy back their own stock. However, the corporate tax rate—which in earlier versions of the bill proposed a tiered rate structure and an increase of up to 26.5%—remains the same at 21%. That’s certainly something to be thankful for—but you might feel less so about revisions to the foreign-derived intangible income (FDII) and the global intangible low-taxed income (GILTI). The FDII deduction goes from 37.5% to 24.8% essentially bringing FDII to a rate of 15.8%.  The GILTI deduction goes from 50% to 28.5%, essentially bringing GILTI to 15%, and will be amended to apply on a country-by-country basis (consistent with the OECD Pillar 2). The base-erosion-and-anti-abuse tax increases (BEAT) from 10% to 12.5% in 2023; 15% in 2024; and 18% after 2024. So, even without an increase to the corporate rate, multinational companies may still end up paying more taxes.