The US Senate this week is expected to begin consideration of the $1.9 trillion ‘American Rescue Plan Act’ that was approved by a House vote of 219 to 212 in the early hours of February 27. The House-passed legislation includes tax relief and tax increase provisions that are estimated by the Joint Committee on Taxation (JCT) staff to reduce overall federal revenues by $590.7 billion over 10 years.
The House legislation reflects COVID relief measures proposed by President Biden, including additional $1,400 economic recovery impact payments to eligible individuals, funding for vaccine distribution, refundable tax credits, expanded unemployment benefits, and $350 billion in aid to state and local governments. Additional House tax provisions include an extension of the employee retention tax credit and a proposal repealing a long-delayed worldwide interest allocation election that was set to be effective in 2021.
Senate Democratic leaders hope to complete action on the American Rescue Plan legislation (H.R. 1319) under ‘budget reconciliation’ procedures before March 14, when current expanded unemployment benefits are set to expire. Senate changes to the House-passed bill are expected to include removing a provision increasing the federal minimum wage to $15 per hour that the Senate parliamentarian has ruled a violation of budget reconciliation rules. A final version of the legislation will have to be approved by both the House and Senate before it can be sent to the White House.