The US government may give a tremendous Christmas gift to working families across America: by Christmas, the Senate intends to vote on HR 5376, better known as the Build Back Better Act. While many of the bill’s original features, like community college for all, have been gutted, what remains is still a bill full of provisions that can help increase family income and health care outcomes, and ensure increased tax revenue is available from the wealthy and corporations to help pay for it. Wall Street is confident that it will pass, but with 50 Republican Senators opposed, and one Democrat on the fence, Senator Manchin of West Virginia, that’s not quite so clear. \We have basically 49 of us in agreement to move forward. So we have one colleague we\’re continuing to work with, and he\’s been successful at making a number of changes. And so hopefully he\’ll be joining us,\ Senator Debbie Stabenow, D-Michegan, told NBC.
Particular attention has been given to the needs of red states in Build Back Better. Most of the states struggling with deep-rooted poverty are historically conservative, and stand to benefit from what will be close to $2 trillion invested in human needs and infrastructure. Build Back Better specifically helps the working poor throughout the Deep South and Midwest. Senator Manchin’s West Virginia is next-to-last of all states by median income . Hundreds of thousands of working West Virginians living paycheck-to-paycheck could critically use these resources.
Here are just a few of the reasons why this will benefit Americans, and why the Senate and West Virginia Senator Manchin would be wise to enact this legislation.
1. Working Families Will Have More Cash
Since the American Rescue Plan expanded the Child Tax Credit in March of 2021, the families of over 65 million children have benefited. Notably the impact on child hunger has been great—according to the Center for American Progress, the US Census Bureau found that “After just one payment, food insecurity in households with children dropped by 24 percent.”This will run out in December unless Build Back Better passes, and could plunge close to 10 million children back into poverty. Build Back Better will extend the Child Tax Credit (CTC) for another year, sending $300/month per child to help ease the burden of childcare and necessities.
It will also extend the expanded Earned Income Tax Credit (EITC) for another year, a program that the IRS explains “helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.” EITC is a critical piece of the American social safety net, with the IRS noting that they “estimate that four out of five workers claim the EITC, which means millions of taxpayers are putting EITC dollars to work for them.”
2. Comprehensive Health Coverage For New Moms
The US has long struggled to provide adequate care to new mothers, with maternal mortality on the rise, especially for poor women of color. Build Back Better would add full coverage through the Medicaid program to mothers for a year after birth.
What’s unique about this provision is that it will apply to parents in all states, not just those with broader Medicaid coverage. In most states (and DC), people who make 133% the Federal Poverty Line—about $29,000/year for a family of three—qualify for Medicaid. However there are 13 states that have kept stricter guidelines for Medicaid—in Alabama, for instance, a family of three would have to be under $3,952 in annual income to qualify in 2021. This means that many families in the Deep South, as well as Wisconsin, South Dakota, Wyoming, and Kansas have been locked out of Medicaid.
Build Back Better would extend these programs to all new mothers, regardless of the state’s Medicaid expansion status. According to the Kaiser Family Foundation, for the millions of women living in these states and much of the South, the added Medicaid coverage for natal and post-natal care is essential for giving American children a healthy start in life.
3. Insulin Will Be Cheaper
Insulin has infamously been sold in the US at a remarkably high, and to many, seemingly inexplicable markup. It is not scarce. It is not expensive to produce. It is required by 10% of diabetics to survive. And yet, in the US it has become a catastrophic and tragic symbol of the failures of the American health care market. As Senator Dick Durban noted, one manufacturer historically charged close to ten times the price to US consumers as they did to Canadian consumers for the exact same vial of insulin. We could spend a lot of time unpacking how this problem began—or with the Build Back Better Act, just fix the problem.
Even “expensive” types of insulin cost just over $6 to produce, yet monthly supplies can range from $350 to over $1,000 for some people, a surcharge on life. The Build Back Better act would enforce a $35 cap for those on medicare or on private insurance. This still leaves room for a reasonable profit margin, and guarantees that people will not be literally price gouged to death.
4. The Wealthiest .01% of Americans Will Pay More Taxes
Build Back Better establishes a 5% surtax on income above $10M, and 8% for income above $25M. This increase, impacting just over .01% of Americans will help shore up many social programs, bringing back tax revenue lost from Trump-era tax cuts.
IRS enforcement would also get a huge boost with the act, something that is desperately needed. This would mostly be focused on “modernizing” the IRS to help officials close the tax gap — the difference between what the government is owed, and what the government successfully collects.
A 2019 ProPublica study found IRS workers simply don’t have the resources to pursue wealthy individuals or businesses who require more complicated audits, which then contributes to the challenge of ensuring that everyone pays their fair share.
5. Corporations Will Pay A Fair Share
The current American tax system is dominated by loopholes that undermine the intentions of the tax code. Warren Buffet infamously pays a lower tax rate than his secretary (though has thoughtfully used this fact publicly to argue for tax reform, a tactic pioneered by groups like Responsible Wealth who organize wealthy individuals to advocate for higher taxes). Many corporations enjoy similarly cushy positions: in 2020, 55 of the nation’s largest corporations like Nike and FedEx paid zero federal income tax on $40B of profits.
To add insult to injury, given various federal rebates, these corporations actually had a 9% negative tax rate! The Build Back Better act should largely pay for itself in large part by ensuring minimum taxes on large companies. It will introduce a 15% domestic minimum tax on large corporations, a 15% global minimum tax for international corporations (in line with the movement to help hold megacorps responsible globally), and a 1% tax on corporate stock buys.
6. Companies That Hurt Will Be Held Responsible
In the US’ rush to industrialize the country, industries left in their wake numerous heavily polluted sites. Between copper mining, nuclear fuel refining, oil production and much more, the US is peppered with them. Dubbed Superfund sites by the 1980 CERCLA, the EPA set up plans to invest in cleaning up and restoring communities impacted by the 1,322 most contaminated sites.
Much of this was intended to be paid for by those responsible — often petrochemical companies, refinery groups, etc. — but those taxes expired in 1995. Since then, it’s typically been on American taxpayers to foot the bill. The Build Back Better act will reinstate the original Superfund taxes, putting the onus on those who made a mess of communities to pay for their cleanup.
7. Clean Energy Investments For All
Build Back Better will dramatically expand who can claim solar tax credits, as well as offering rebates for installing new green tech like heat pumps, advanced insulation and HVAC system upgrades. Even better, they’re scaled to the effectiveness of the upgrade, instead of the cost, which was a loophole in prior plans. It would also provide an additional 20% tax credit if the installed solar facility is connected to low-income housing, or 10% if it’s located within a low-income community.
Expanding solar tax credits and extending the program for at least ten years will empower thousands of communities and millions of people to gradually help restructure the US’ grid to a decentralized, adaptable one. If people take full advantage of the programs offered, even poor homeowners and renters will be able to build property value, save on energy, and enjoy a more reliable grid — all without pumping poison into the air or risking the lives of energy workers. These provisions in particular have been celebrated by the solar industry in Joe Manchin’s West Virginia.
In summary: we have a bill providing massive benefits to low-income families in red states, despite Republican opposition. A bill that largely pays for itself and ensures the wealthy “pay their fair share,” as Senator Manchin has stated as a positive before—he even voted for the Paying a Fair Share Act back in 2012. The Senate has a critical choice to make: they can offer Americans healthcare and income, and invest in our future, or plunge ten million children or more back into poverty. Hopefully the Senate does the right thing—so that families who chose to celebrate can ensure there is food on the Christmas table.
Thanks to Starkey Baker for their contributions to this piece. Full disclosures related to my work here. This post does not constitute investment, tax, or legal advice, and the author is not responsible for any actions taken based on the information provided herein.