Biden administration’s budget bill tax revenue estimates confirmed, partly

By Doug Connolly, MNE Tax

The revenue expected to be raised from the tax provisions included in the current draft of the Democrats’ Build Back Better budget is largely in line with the Biden administration’s claims, based on estimates released November 4 by the non-partisan US Congressional Joint Committee on Taxation.

The US Treasury announced in a related statement that “[t]he legislation would, as the President proposed, generate more than $2 trillion in savings … from ensuring large multinational corporations and wealthy Americans pay their fair share.” 

“The bottom line,” the statement added, “is that the Build Back Better Act under consideration in the House of Representatives will be fully paid for and reduce the deficit.”

However, there is still one big gap in the tax revenue estimates. The Joint Committee on Taxation has deferred to the Congressional Budget Office on the revenue gains to be expected from increased resources for Internal Revenue Service enforcement. The administration had listed that provision as the single biggest revenue raiser in the bill, estimating it would raise USD 400 billion over 10 years.

Moreover, even if the tax revenue estimates are accurate, the bill being fully paid for would require that the administration’s estimates of the spending portions are accurate as well.

While how further estimates shake out remains to be seen, the estimates released today for the major revenue provisions are largely in line with estimates from the administration. This is important because some moderate Democrats, like Senator Joe Manchin (D-W.Va.), have suggested their continued support for the bill could hinge on confirmation of the estimated revenue effects.

The Biden administration had claimed that the international tax changes, including those to align with the OECD tax deal, would raise USD 350 billion in additional tax revenues over 10 years. The Joint Committee on Taxation predicted a bit higher USD 371 billion.

For the alternative minimum corporate tax, the administration claimed USD 325 billion in additional revenues. JCT said USD 319 billion.

For the stock buyback tax, the administration claimed USD 125 billion. JCT said USD 124 billion.

For the individual tax changes targeting high earners, taken together, the administration claimed a sum total of USD 650 billion in additional revenues. JCT said USD 640 billion.