White House Releases Build Back Better Agenda

The latest text of the House infrastructure bill doesn’t include a FET hike on tobacco or changes to the 199(A) deduction.

October 29, 2021

White House

By Jon Taets and Paige Anderson

ALEXANDRIA, Va.—President Joe Biden released the framework for his “Build Back Better (BBB)” agenda yesterday. The framework represents the broad-brush agreement between the White House and congressional Democrats on what will be included in their social spending bill and how they intend to pay for it. The legislation, often referred to as the “reconciliation package,” will only need 50 votes in the Senate to pass.

House Democrat leadership was hoping this framework would clear the way for the House to pass the Senate’s Bipartisan Infrastructure Bill (BIB) this week. However, progressives in the House Democrat Caucus refused to allow a vote on the Senate bipartisan infrastructure bill until there is a vote on the reconciliation. House progressives were also concerned whether or not the framework will be supported by all 50 Senate Democrats. Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) remain the key votes necessary to pass a reconciliation bill, and they have yet to weigh in on the latest text.

With the House unable to vote on the BIB, the Senate passed a temporary extension for the highway trust fund until December 3, 2021, which the House passed later the same day. The last extension was set to expire on October 31, 2021.

While there are certainly additional changes to come, the BBB framework released yesterday, along with the House legislative text itself, reflects some significant wins for the convenience and fuel retailing industry. Most notably, the House bill does not include any increase in the Federal Excise Tax on Tobacco (FET). Originally, the House’s version included language to double the FET on cigarettes and apply tax parity to all other tobacco and nicotine products. NACS strongly opposed the increase and organized a coalition of retail groups to publicly oppose it. NACS met with moderate Democrats in the House and Senate and encouraged them to go to their leadership and ask that it be removed from the bill, which a number of them did. Additionally, NACS called the industry to action sending hundreds of retail letters to the Hill. These efforts appear to have been successful as there is no FET increase in the latest text of the bill.

Additionally, some Democrats had targeted changes to the 199(A) deduction of business expenses for pass-through businesses as a way to raise additional revenue. NACS strongly advocated against any changes to the 199(A) deduction in letters to the members of the House and in activating our grassroots network again on this issue. As with the FET, these efforts appear to have been successful as the legislation does not include any changes to the 199(A) deduction.

The legislation also does not change either the top individual tax rate or the corporate tax rate directly, two issues of importance to convenience operators. The bill does create surcharges on individual income over $10 million and a second surcharge for income over $25 million. It also creates an alternative minimum tax on corporations making over $1 billion of 15%. 

While these, and other provisions such as changes to the estate tax and Last-In, First-Out (LIFO) accounting were left out of the House language, there is still time for the legislation to change. It is assumed the Senate will have changes to the House text on BBB, so negotiations will continue between Democrats in the House and Senate and the White House before it becomes law. NACS will keep our members apprised of any significant changes that may come from those negotiations.

Jon Taets and Paige Anderson are directors of government relation for NACS.