David has been tracking Joe Biden’s Build Back Better plan for the last 6 months – and the sticking points have been Joe Manchin and Kyrsten Sinema.
Joe Manchin, in particular, has always been the one senator having issues with Biden’s signature bill. He has had issues with the size of the bill, and whether it was going to have an effect on inflation which is something that has already been ruled by many economists as no longer transitory.
Jerome Powell, the Chair of the Federal Reserve, has indeed confirmed that inflation is here to stay.
There’s been big news out of Washington: Joe Manchin has finally weighed in on whether or not he’ll vote for the Build Back Better plan.
After months of speculation on whether Manchin would fall in line with his fellow democrats or not, he has made it known that he won’t back the BBB.
One of the things Senator Manchin did was check what the Congressional Budget Office had to share in regards to the impact on inflation and other facets of the economy.
Even though Jeff Levine (@CPAplanner on Twitter) seems to think that democrats could circle back after the New Year and could bring Manchin back on board, David finds that unlikely.
Senate Minority Leader of the Republicans, Mitch McConnell, said that if Manchin became a Republican he would welcome him among the Republicans — this could cause a debate on whether Manchin is a Democrat at the end of the day.
The Trump tax cuts will expire in 2025, and we’ll see the same tax rates we saw in 2017. The 12% tax bracket will become 15%, the 22% will become 25%, and the 24% tax bracket will become 28%.
Starting in January 2022, you’ll now have 4 years (2022-2025) to be able to reposition to take advantage of these historically low tax rates – instead of having the 8 years that were thought to be possible under Joe Biden’s BBB tax change legislation.
According to David, this isn’t great news for those trying to get to the 0% tax bracket. The goal is to stretch the tax allocation out over as many years as possible before tax rates go back up for good. As of today, it looks like that’s going to be in 2026.
If your listeners would like to get all the heavy lifting done, there’s a greater likelihood that they would rise into a tax bracket that would give them “buyer’s remorse” (as opposed to being able to stretch out those tax allocations over 8 years).
Those who like government restraints would find significant the fact that, despite being paid for under its current iteration, the BBB would add $3 trillion of debt over a 10-year timeframe, were they to extend a lot of the spending initiatives that expired a couple of years into the program.
This isn’t good news for those who were hoping to stretch the tax obligation out over a longer period of time.
David’s gut tells him that Biden’s signature legislation, his legacy as it were, has one chance to leave his footprint on America. However, it looks like it’s just not going to happen.
According to prognosticators, Democrats will lose majority in the House and majority in the Senate come midterms in 2022.
Mentioned in this Episode:
Joe Manchin’s words on Fox News Sunday – youtube.com/watch?v=h61hhGMe_oA
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