United States (US) President Joe Biden gave his first State of the Union address on 1 March during which he called on Congress to enact many of the individual provisions of his proposed Build Back Better (BBB) plan, although not mentioning BBB by name. The President tried a different approach given the country’s current economic climate, making the argument that the provisions would reduce inflation by lowering costs and reducing the deficit. The President also targeted tax fairness, saying the Administration would work to close what he called corporate tax loopholes. “The one thing all Americans agree on is that the tax system is not fair. We have to fix it.” He also made a pitch for a 15% minimum corporate tax rate.
The next day, Senator Joe Manchin suggested that he could support a substantially pared down budget reconciliation package that tackles reforming the tax code and reducing the cost of prescription drugs, if most of the revenue raised is used for new climate proposals and reducing the deficit and inflation. Senator Manchin was quoted as saying he does not have any concrete proposals, only the outline of what he could support, and said he had had informal discussions with the White House. The Senator further reiterated prior comments made in the past in regard to reconciliation: “I’m just saying reconciliation is for getting your financial house in order.”
There reportedly was considerable dissatisfaction with Senator Manchin among progressive Senate Democrats following his statement about BBB after the State of the Union address. His statement is seen as casting significant doubt as to the future of most of the social spending in the original bill.
The press this week quoted Senate Democrats as saying they are considering the possibility of taking action in regard to the 1992 US-Russia income tax treaty, as a response to the ongoing Ukraine crisis. Treasury reportedly declined to comment on the possibility of terminating the tax convention.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
- Arlene Fitzpatrick
- Joshua Ruland
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
