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The Build Back Better reconciliation bill is at a boiling point. Some Washington insiders are saying the House could vote on it this week. Others are skeptical that a final bill could come together that quickly. Either way, it will take considerably longer for the Senate to vote. The rules of reconciliation allow for time-eating “vote-a-rama” amendments as well as up to 50 hours of debate, and it is highly likely opponents of the measure in the Senate will take all that time. But things are hot and getting hotter. Here’s the state of play currently.

The Biden Framework 

This past Thursday, President Biden released a “framework”  of a $1.75 trillion package. Within 48 hours, the Biden framework generated an overwhelming number of statements of support from Democrats in both the House and Senate. The framework came with draft legislative language that was the subject of a House Rules Committee hearing.

The framework is not an agreement, and its contents are still being negotiated. But at the moment, it is a significant win for NAIFA. Most of NAIFA’s concerns were addressed in the Biden framework. There are still risks. Negotiations to add dropped provisions (potentially including adverse tax proposals) could result in new taxes harmful to NAIFA members and their clients.

Here is a summary of what, as of November 1, the Biden Framework contains, what it leaves out, and what may still be added back in or changed.


Adverse tax increases that have (so far) been left out of the emerging package:

  • The Wyden proposal that would have forced billionaires to pay annual taxes on their investment gains whether or not they sold or traded those investments. This proposal included a direct hit on private placement life insurance and annuities. The Wyden proposal would have imposed this new tax liability on people with incomes of $100 million or more for each of three consecutive years and/or with capital assets in excess of $1 billion. Thanks to NAIFA’s careful educational efforts with Sen. Wyden, with the exception of private placement life insurance and annuities, the proposal did not pull in life insurance or annuities because neither of these products is a “capital asset.” Rather, both are subject to ordinary income tax rules when they’re surrendered or when a withdrawal is taken.
  • The adverse grantor trust rule changes
  • The adverse mega-IRA tax rule changes
  • Adverse changes to the Section 199A deduction for noncorporate business income
  • Increases in corporate, individual, and capital gains tax rates

New taxes that would be enacted into law if Congress passes this framework:

  • An expansion of the reach of the Medicare tax and the net investment income tax to capture more pass-through business income in the base on which the taxes are assessed
  • A 15% minimum tax on corporate profits that they report to shareholders on corporations with profits in excess of $1 billion
  • A new millionaire’s tax of 5% on income over $10 million, and another 3% on income over $25 million
  • More funding for IRS enforcement of existing tax laws

Spending Programs

Programs excluded from the framework:

  • Both retirement savings proposals were dropped from the Biden framework. One would have required employers that do not offer retirement plans to automatically enroll their workers (subject to an employee opt-out election) in either a payroll deduct IRA or a 401(k)-salary deferral type plan; the other would have made the Saver’s Credit refundable.
  • The $550 billion House package’s federal paid leave program was dropped entirely from the package, despite concerted effort to save at least some of it by shrinking the benefit period from 12 to four weeks, delaying the date by which it would take effect, subjecting it to a sunset (expiration), and imposing stricter income limits on eligibility for the benefit.

Programs included in the framework

  • ACA premium and tax subsidies—the Biden framework includes an extension of Affordable Care Act (ACA) premium subsidies and tax credits.
  • Medicare expansion—The Biden agreement includes a new, limited hearing benefit but excludes proposals to add dental and vision benefits to Medicare.

Programs and Proposals Still Being Negotiated

  • Medicare expansion—Supporters of expanded Medicare benefits have not given up; they are still trying to get more benefits added to Medicare (perhaps vision in addition to hearing; perhaps a voucher for a limited amount of dental benefit under Medicare Part B).
  • Paid leave—There is still a vigorous effort underway to add back some kind of federal leave program. One possibility is to limit the benefit to family leave (i.e., dropping only paid sick leave). Another is to establish a refundable tax credit for paid leave rather than a federal program that would pay for the leave.
  • Refundable tax credit for paid leave—Negotiators are looking at using a tax credit, refundable against payroll taxes, as a way to provide paid family and medical leave to U.S. workers.
  • Authority to negotiate prescription drug prices—There is still a huge effort underway to win at least some negotiating authority for Medicare-paid prescription drugs.
  • State and local tax (SALT) deduction—Some kind of relief from the $10,000 limit on the deductibility of state and local taxes is in the negotiations mix. One proposal under discussion is to eliminate the $10,000 SALT cap for 2022 and 2023, but then extend its current expiration date from the end of 2025 to the end of 2027. Another is to impose an income limit on the taxpayers who qualify for a new, higher SALT cap.
  • Offsets—Any of the offsets dropped from the House Ways & Means Committee-approved offset package could be added back in if revenue is needed to pay for other changes made in the negotiations. At particular risk are the mega-IRA and grantor trust rule proposals.

The Biden framework contains more than $500 billion for climate change initiatives, a one-year extension of the child tax credit, a short-term childcare tax credit, “free” pre-kindergarten for all for a limited timeframe, elder care program funding, low-income housing program funding, and—if they fashion something that complies with the Senate’s Byrd Rules—immigration reform provisions. It also contains significant international tax rule changes, some of which may impact some life insurance carriers.

What’s Next?

Right now, technical staff is drafting new legislative language and revising the draft language released last week. Negotiators are discussing modifications. If any are accepted, they will come in the form of a manager’s amendment from each committee of jurisdiction.