Biden’s big signature agenda – The Build Back Better Act and Infrastructure Bill

Biden’s big signature agenda includes 2 spending bills, the $1.75 trillion Build Back Better Act and the $1.2 trillion Infrastructure Bill. Here are the details on both proposed legislations.

1. Build Back Better Act – A social safety net and climate change bill

What’s in the bill? Who does it help?

• The social safety net half of the bill (50% of spending)

  • Provisions that help parents with young children
    • Universal preschool for all 3- and 4-year olds.
    • A year of expanded Child Tax Credits.
  • Provisions that help people on affordable health care
    • Extended Affordable Care Act subsidies.
    • People on Medicare
      • Medicare members will now have access to additional hearing benefits, including coverage for a new hearing aid every five years.
      • Insulin prices are capped at $35 per month under Medicare, while out-of-pocket prescription drug costs are capped at $2.000 per year.
  • Provisions that help households
    • 4 weeks of federal paid sick, parental or caregiver leave.
    • Raising the State and Local Tax (SALT) deduction limit from $10,000 to $80,000. The lifting of the SALT deduction cap is hotly debated because it primarily benefits high earners.

• The climate change half of the bill (50% of spending)

  • Provisions that help the environment
    • $500 billion to combat climate change, largely through clean energy tax credits.

2. $1.2 trillion infrastructure bill to repair, modernize, and green-ify our countries infrastructure

The main components of our countries infrastructure being addressed in the bill include

• The transportation system
• The communications system
• Utilities: water and electrical

Not addressed is the sewage system 

So what’s in it:

• Funding for roads and bridges
  • Especially for bridge repair
• Money for transit and rail
  • Modernizing rail and bus fleets, including replacing vehicles with zero-emission models
• Broadband upgrade
  • Improving the broadband infrastructure
  • What is broadband?
• Upgrading airports, ports and waterways
  • To address repair and maintenance backlogs
• Electric vehicles
  • Especially creating a nationwide network of plug-in electric vehicle chargers
• Improving power and water systems
  • Building new power lines and and expanding renewable energy

Side notes

• What is the SALT deduction?
  • State and Local Tax (SALT) deduction – The SALT deduction permits taxpayers who itemize when filing federal taxes to deduct certain taxes paid to state and local government. Initially, all state and local taxes could be deducted from your federal taxes. In around 2017, The Tax Cuts and Jobs Act (TCJA) capped it at $10,000 per year, consisting of property taxes plus either state income or sales tax, but not both.
• What is a tax deduction vs a tax credit?
  • Tax credits – Tax credits directly reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability. A tax credit valued at $1,000, for instance, lowers your tax bill by the corresponding $1,000.
  • Tax deductions – Tax deductions, on the other hand, reduce how much of your income is subject to taxes. Deductions lower your taxable income. So if you fall into the 22% tax bracket, a $1,000 deduction saves you $220.
  • They are two different things that both reduce the amount you owe in taxes.