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Posted by Bill Smith and Nate Smith on Thu, Aug 26, 2021 @ 02:24 PM


The House of Representatives passed a fiscal 2022 budget resolution (H. Res. 601) on August 24 that paves the way for President Biden’s “Build Back Better” (BBB) plan to be passed into law, potentially by the end of September.

Included in the $3.5 trillion bill are infrastructure programs to fight climate change, expand education access, and expand Medicare, with new funding “pay-fors” coming from tax increases on corporations and individuals with higher incomes. It is designed pursuant to the Senate’s budget reconciliation procedures, which enables the resulting budget reconciliation bill to pass in the Senate with a simple majority vote.

All Eyes Are on September

House Speaker Nancy Pelosi (D-CA) structured passage of the budget resolution – approved by the Senate on August 11 – without a direct vote. Instead, she used a “roll call” procedure that deemed the resolution passed once the House adopted debate parameters for separate legislation. The House has not yet voted to approve the “hard infrastructure” initiatives under the Infrastructure Investment and Jobs Act (Infrastructure Act) that seeks to rebuild roads, bridges, and airports, which the Senate passed on August 10.

In brokering a deal with moderate Democrats in the House, the budget resolution establishes that the House “shall consider” the Infrastructure Act on Sept. 27, 2021 unless it was already voted upon. While this does not represent a commitment to pass that bill by September 27, its underlying provisions have bipartisan support. Nevertheless, progressive Democrats in the House indicated that they may withhold support for the Infrastructure Act unless the budget reconciliation bill is also under consideration. This likely elevates the importance of September 27 as a major deadline to have the budget reconciliation bill ready for consideration in the House.

The Mechanics of the Budget Resolution

The $3.5 trillion budget resolution provides the various committees in Congress with general instructions on how much they can spend, and how much revenue they must raise for the items within their committee’s jurisdiction. For tax purposes, this generally means that the Senate Finance Committee and the House Ways and Means Committees have general instructions to raise a minimum amount of revenue (through tax increases) to offset the cost of the infrastructure spending provisions. A budget resolution is nonbinding and does not have to be signed by the President.

There are many elements of President Biden’s BBB plan pertaining to infrastructure programs and tax increases, and Congress will negotiate which of these elements are included in the budget reconciliation bill. For instance, moderate Democratic Sens. Joe Manchin (D-WV) and Krysten Sinema (D-AZ) are opposed to the size of the $3.5 trillion budget resolution, and favor a smaller package.

The Fate of Capital Gains Taxes and Other Implications from the House Budget Vote

There are also critical nuances of these elements that Congress must resolve. For example, the President’s budget proposal calls for an increase in capital gains tax rates to ordinary income tax rates for taxpayers with adjusted gross income that exceeds $1 million. This proposal would be effective “for gains required to be recognized after the date of announcement.” But what is the date of announcement?

It could be the day that the Treasury Department’s “Green Book” explanation of the proposals was released (May 28, 2021), the day the President generally outlined this proposal in his “American Families Plan” (April 28, 2021), the day that Congress introduces a budget reconciliation bill (which has not happened yet), or it could be changed to make the capital gains rate increase effective on Jan. 1, 2022.

These unknowns create planning challenges for taxpayers with substantial unrealized long-term capital gains. Those affected taxpayers who favor taking a conservative approach should consult their financial advisors to determine whether they should sell those positions before the rate increase takes effect (assuming it is not already too late).

Next Steps for the BBB Plan

Details on potential capital gains tax increases and many others tax law changes will need to be resolved in the final budget reconciliation bill, which is subject to the tight timeline previously discussed. If the Senate chooses to separately vote on a substitute budget reconciliation bill, the House’s timing would be further constrained as the House would need to subsequently vote on the Senate’s bill. Also, any changes made by the House to the Infrastructure Act will require the Senate to vote on that measure again, or the two chambers would have to form a conference committee to iron out the differences. And any subsequent Senate vote on the Infrastructure Act could complicate the bipartisan support that the bill previously enjoyed.

Ongoing negotiations over the Infrastructure Act and the budget reconciliation bill will ultimately define the size and scope of President Biden’s infrastructure and tax plans. For more information about how these plans may impact you or your business, please contact us.


Headshot_Bill SmithBill Smith is a Managing Director for CBIZ MHM’s National Tax Office. He can be reached at 301.907.2412 and




Headshot_Nate Smith_2Nate Smith is a Director for CBIZ MHM’s National Tax Office. He can be reached at 727.572.1400 and



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Tags: Taxes, excess business loss limitation, American Jobs Plan, AJP, American Families Plan, Build Back Better, Step-Up in Basis, Long-Term Capital Gains, AFP, Budget Resolution, BBB Plan

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