JOINT COMMITTEE ON TAXATION November 23, 2021 JCX-47R-21DISTRIBUTIONAL EFFECTS OF THE REVENUE PROVISIONS OF TITLE XIII - COMMITTEE ON WAYS AND MEANS, OF H.R. 5376, THE "BUILD BACK BETTER ACT," AS PASSED BY THE HOUSE OF REPRESENTATIVES Calendar Year 2022  CHANGE INFEDERAL TAXES (3)FEDERAL TAXES (3)Average Tax Rate (4)INCOMEFEDERALUNDERUNDERPresent CATEGORY (2)TAXES (3) (7)PRESENT LAWPROPOSALLawProposal MillionsPercentBillionsPercentBillionsPercentPercentPercentLess than $10,000...........-$10,604-280.3%$3.80.1%-$6.8-0.2%7.3%-13.2%$10,000 to $20,000........-$25,092(5)-$1.4(6)-$26.5-0.8%-0.6%-10.7%$20,000 to $30,000........-$19,595-101.2%$19.40.5%-$0.2(6)4.0%0.0%$30,000 to $40,000........-$12,721-28.3%$44.91.2%$32.21.0%7.6%5.4%$40,000 to $50,000........-$11,392-17.1%$66.61.8%$55.21.6%10.2%8.4%$50,000 to $75,000........-$19,806-8.6%$231.26.4%$211.46.3%12.8%11.7%$75,000 to $100,000......-$12,963-5.1%$252.67.0%$239.77.1%15.6%14.8%$100,000 to $200,000.....-$28,742-3.2%$902.025.0%$873.225.9%18.9%18.3%$200,000 to $500,000......-$27,484-3.1%$887.324.6%$859.825.5%23.7%22.9%$500,000 to $1,000,000...-$15,399-4.7%$328.69.1%$313.29.3%28.1%27.2%$1,000,000 and over........-$46,803-5.4%$867.424.1%$820.624.3%29.9%33.1%Total, All Taxpayers.......-$230,602-6.4%$3,602.4100.0%$3,371.8100.0%20.0%19.2% Source: Joint Committee on Taxation Detail may not add to total due to rounding.  (1) This table is a distr butional analysis of the proposals in JCX-46-21, except the following: Subtitle E: Part 3 and Part 4 items 2 and 3; Subtitle F: Part 3 items 1, 2, and 4, Part 4 items 1, 6, and 7, and Part 6; Subtitle G: Part 2 item 2, Part 3, Part 4, and Part 5 items 2 and 3; Subtitle H: Part 3, Part 4, and Part 5 items 2-4, 6, 8, 9, and 12. For an explanation of the distr bution methodology used in this table, see JCX-15-12 and JCX-14-13. (2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2021 levels. (3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), excise taxes (attr buted to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis. Does not include indirect effects. (4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income descr bed in footnote (2). (5) For returns in the $10,000 to $20,000 income category, Federal taxes would decrease from -$1.377 billion to -$26.469 billion. (6) Less than 0.05% (7) All estimates in this table include behavioral effects. The effects are particularly pronounced in 2022 for the $1 millon and over income class. We estimate that the surcharge on high income individuals will casue a shift of income from 2022 into 2021 by taxpayers in the top income class.  Page 1 JOINT COMMITTEE ON TAXATION November 23, 2021 JCX-47R-21DISTRIBUTIONAL EFFECTS OF THE REVENUE PROVISIONS OF TITLE XIII - COMMITTEE ON WAYS AND MEANS, OF H.R. 5376, THE "BUILD BACK BETTER ACT," AS PASSED BY THE HOUSE OF REPRESENTATIVES Calendar Year 2023  CHANGE INFEDERAL TAXES (3)FEDERAL TAXES (3)Average Tax Rate (4)INCOMEFEDERALUNDERUNDERPresent CATEGORY (2)TAXES (3)PRESENT LAWPROPOSALLawProposal MillionsPercentBillionsPercentBillionsPercentPercentPercentLess than $10,000...........-$3,812-98.3%$3.90.1%$0.1(6)7.3%0.1%$10,000 to $20,000........-$6,960(5)-$1.3(6)-$8.3-0.2%-0.5%-3.3%$20,000 to $30,000........-$4,755-22.2%$21.40.6%$16.70.4%4.3%3.3%$30,000 to $40,000........-$1,542-3.2%$48.31.3%$46.81.2%7.8%7.6%$40,000 to $50,000........-$555-0.8%$70.11.8%$69.61.8%10.4%10.3%$50,000 to $75,000........$9900.4%$244.76.4%$245.76.4%13.0%13.0%$75,000 to $100,000......$2,1980.8%$268.07.0%$270.27.0%15.8%15.9%$100,000 to $200,000.....$7,6470.8%$957.625.0%$965.225.0%19.1%19.3%$200,000 to $500,000.....-$3,680-0.4%$953.324.9%$949.624.6%24.1%24.0%$500,000 to $1,000,000..-$6,490-1.8%$352.09.2%$345.59.0%28.5%28.3%$1,000,000 and over........$45,9905.1%$908.323.7%$954.324.8%30.2%34.3%Total, All Taxpayers.......$29,0310.8%$3,826.3100.0%$3,855.3100.0%20.3%20.7% Source: Joint Committee on Taxation Detail may not add to total due to rounding. ----------------------------------------------------- (1) This table is a distr butional analysis of the proposals in JCX-46-21, except the following: Subtitle E: Part 3 and Part 4 items 2 and 3; Subtitle F: Part 3 items 1, 2, and 4, Part 4 items 1, 6, and 7, and Part 6; Subtitle G: Part 2 item 2, Part 3, Part 4, and Part 5 items 2 and 3; Subtitle H: Part 3, Part 4, and Part 5 items 2-4, 6, 8, 9, and 12. For an explanation of the distr bution methodology used in this table, see JCX-15-12 and JCX-14-13. (2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] workers' compensation, [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2021 levels. (3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), excise taxes (attr buted to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis. Does not include indirect effects. (4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income descr bed in footnote (2). (5) For returns in the $10,000 to $20,000 income category, Federal taxes would decrease from -$1.336 billion to -$8.296 billion. (6) Less than 0.05%  Page 2 JOINT COMMITTEE ON TAXATION November 23, 2021 JCX-47R-21DISTRIBUTIONAL EFFECTS OF THE REVENUE PROVISIONS OF TITLE XIII - COMMITTEE ON WAYS AND MEANS, OF H.R. 5376, THE "BUILD BACK BETTER ACT," AS PASSED BY THE HOUSE OF REPRESENTATIVES Calendar Year 2025  CHANGE INFEDERAL TAXES (3)FEDERAL TAXES (3)Average Tax Rate (4)INCOMEFEDERALUNDERUNDERPresent CATEGORY (2)TAXES (3)PRESENT LAWPROPOSALLawProposal MillionsPercentBillionsPercentBillionsPercentPercentPercentLess than $10,000...........-$3,671-101.4%$3.60.1%-$0.1(6)6.5%-0.1%$10,000 to $20,000........-$6,752(5)-$2.0(6)-$8.7-0.2%-0.8%-3.3%$20,000 to $30,000........-$4,065-17.2%$23.70.6%$19.60.5%4.5%3.7%$30,000 to $40,000........-$1,210-2.4%$51.51.3%$50.31.2%7.7%7.6%$40,000 to $50,000........-$436-0.6%$74.91.8%$74.51.8%10.4%10.4%$50,000 to $75,000........$7600.3%$266.76.5%$267.46.5%13.0%13.1%$75,000 to $100,000......$1,6100.5%$294.67.2%$296.27.2%15.8%15.9%$100,000 to $200,000.....$4,1020.4%$1,046.225.6%$1,050.325.6%19.1%19.2%$200,000 to $500,000.....-$10,120-1.0%$1,031.925.2%$1,021.824.9%24.1%23.9%$500,000 to $1,000,000..-$9,472-2.5%$379.49.3%$370.09.0%28.7%28.2%$1,000,000 and over........$44,4574.8%$924.022.6%$968.423.6%30.5%33.8%Total, All Taxpayers.......$15,2010.4%$4,094.5100.0%$4,109.7100.0%20.2%20.5% Source: Joint Committee on Taxation Detail may not add to total due to rounding. ----------------------------------------------------- (1) This table is a distr butional analysis of the proposals in JCX-46-21, except the following: Subtitle E: Part 3 and Part 4 items 2 and 3; Subtitle F: Part 3 items 1, 2, and 4, Part 4 items 1, 6, and 7, and Part 6; Subtitle G: Part 2 item 2, Part 3, Part 4, and Part 5 items 2 and 3; Subtitle H: Part 3, Part 4, and Part 5 items 2-4, 6, 8, 9, and 12. For an explanation of the distr bution methodology used in this table, see JCX-15-12 and JCX-14-13. (2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] workers' compensation, [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2021 levels. (3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), excise taxes (attr buted to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis. Does not include indirect effects. (4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income descr bed in footnote (2). (5) For returns in the $10,000 to $20,000 income category, Federal taxes would increase from -$1.996 billion to -$8.748 billion. (6) Less than 0.05%  Page 3 JOINT COMMITTEE ON TAXATION November 23, 2021 JCX-47R-21DISTRIBUTIONAL EFFECTS OF THE REVENUE PROVISIONS OF TITLE XIII - COMMITTEE ON WAYS AND MEANS, OF H.R. 5376, THE "BUILD BACK BETTER ACT," AS PASSED BY THE HOUSE OF REPRESENTATIVES Calendar Year 2027  CHANGE INFEDERAL TAXES (3)FEDERAL TAXES (3)Average Tax Rate (4)INCOMEFEDERALUNDERUNDERPresent CATEGORY (2)TAXES (3)PRESENT LAWPROPOSALLawProposal MillionsPercentBillionsPercentBillionsPercentPercentPercentLess than $10,000...........-$1,354-39.1%$3.50.1%$2.1(6)5.8%3.5%$10,000 to $20,000........-$555(5)-$0.2(6)-$0.8(6)-0.1%-0.3%$20,000 to $30,000........$3851.2%$31.10.7%$31.50.6%5.5%5.5%$30,000 to $40,000........$7511.2%$62.41.3%$63.21.3%8.7%8.8%$40,000 to $50,000........$9611.1%$86.31.8%$87.21.8%11.2%11.4%$50,000 to $75,000........$3,3681.1%$311.86.7%$315.16.5%14.0%14.2%$75,000 to $100,000......$4,0411.2%$344.37.4%$348.47.2%16.8%17.0%$100,000 to $200,000.....$16,5861.4%$1,204.825.8%$1,221.425.2%20.2%20.5%$200,000 to $500,000.....$20,7591.7%$1,193.125.6%$1,213.925.0%25.6%26.1%$500,000 to $1,000,000..$13,9333.2%$442.29.5%$456.29.4%30.7%31.8%$1,000,000 and over........$125,48312.7%$985.421.1%$1,110.822.9%32.0%38.1%Total, All Taxpayers.......$184,3594.0%$4,664.7100.0%$4,849.0100.0%21.4%22.4% Source: Joint Committee on Taxation Detail may not add to total due to rounding. ----------------------------------------------------- (1) This table is a distr butional analysis of the proposals in JCX-46-21, except the following: Subtitle E: Part 3 and Part 4 items 2 and 3; Subtitle F: Part 3 items 1, 2, and 4, Part 4 items 1, 6, and 7, and Part 6; Subtitle G: Part 2 item 2, Part 3, Part 4, and Part 5 items 2 and 3; Subtitle H: Part 3, Part 4, and Part 5 items 2-4, 6, 8, 9, and 12. For an explanation of the distr bution methodology used in this table, see JCX-15-12 and JCX-14-13. (2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] workers' compensation, [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2021 levels. (3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), excise taxes (attr buted to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis. Does not include indirect effects. (4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income descr bed in footnote (2). (5) For returns in the $10,000 to $20,000 income category, Federal taxes would increase from -$0.211 billion to -$0.766 billion. (6) Less than 0.05%  Page 4 JOINT COMMITTEE ON TAXATION November 23, 2021 JCX-47R-21DISTRIBUTIONAL EFFECTS OF THE REVENUE PROVISIONS OF TITLE XIII - COMMITTEE ON WAYS AND MEANS, OF H.R. 5376, THE "BUILD BACK BETTER ACT," AS PASSED BY THE HOUSE OF REPRESENTATIVES Calendar Year 2029  CHANGE INFEDERAL TAXES (3)FEDERAL TAXES (3)Average Tax Rate (4)INCOMEFEDERALUNDERUNDERPresent CATEGORY (2)TAXES (3)PRESENT LAWPROPOSALLawProposal MillionsPercentBillionsPercentBillionsPercentPercentPercentLess than $10,000...........-$1,362-64.3%$2.1(5)$0.8(5)2.7%1.0%$10,000 to $20,000........-$410-35.2%$1.2(5)$0.8(5)0.3%0.2%$20,000 to $30,000........$5181.2%$44.30.9%$44.90.9%6.2%6.3%$30,000 to $40,000........$8551.1%$76.61.5%$77.41.5%9.1%9.3%$40,000 to $50,000........$1,1001.0%$111.42.2%$112.52.2%12.0%12.1%$50,000 to $75,000........$3,6641.0%$376.97.5%$380.57.3%14.5%14.6%$75,000 to $100,000......$4,3601.1%$399.78.0%$404.07.8%17.2%17.4%$100,000 to $200,000.....$17,0771.3%$1,346.126.9%$1,363.126.2%20.5%20.8%$200,000 to $500,000.....$21,5221.8%$1,225.024.5%$1,246.524.0%26.2%26.7%$500,000 to $1,000,000..$15,0363.4%$441.78.8%$456.78.8%30.7%32.0%$1,000,000 and over........$131,00213.4%$980.619.6%$1,111.621.4%31.8%38.1%Total, All Taxpayers.......$193,3613.9%$5,005.5100.0%$5,198.9100.0%21.2%22.2% Source: Joint Committee on Taxation Detail may not add to total due to rounding. ----------------------------------------------------- (1) This table is a distr butional analysis of the proposals in JCX-46-21, except the following: Subtitle E: Part 3 and Part 4 items 2 and 3; Subtitle F: Part 3 items 1, 2, and 4, Part 4 items 1, 6, and 7, and Part 6; Subtitle G: Part 2 item 2, Part 3, Part 4, and Part 5 items 2 and 3; Subtitle H: Part 3, Part 4, and Part 5 items 2-4, 6, 8, 9, and 12. For an explanation of the distr bution methodology used in this table, see JCX-15-12 and JCX-14-13. (2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] workers' compensation, [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2021 levels. (3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), excise taxes (attr buted to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis. Does not include indirect effects. (4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income descr bed in footnote (2). (5) Less than 0.05%    Page 5 JOINT COMMITTEE ON TAXATION November 23, 2021 JCX-47R-21DISTRIBUTIONAL EFFECTS OF THE REVENUE PROVISIONS OF TITLE XIII - COMMITTEE ON WAYS AND MEANS, OF H.R. 5376, THE "BUILD BACK BETTER ACT," AS PASSED BY THE HOUSE OF REPRESENTATIVES Calendar Year 2031  CHANGE INFEDERAL TAXES (3)FEDERAL TAXES (3)Average Tax Rate (4)INCOMEFEDERALUNDERUNDERPresent CATEGORY (2)TAXES (3)PRESENT LAWPROPOSALLawProposal MillionsPercentBillionsPercentBillionsPercentPercentPercentLess than $10,000...........-$1,499-63.5%$2.4(6)$0.9(6)3.2%1.2%$10,000 to $20,000........-$396(5)-$1.3(6)-$1.7(6)-0.4%-0.5%$20,000 to $30,000........$5661.5%$38.30.7%$38.90.7%5.7%5.8%$30,000 to $40,000........$8411.2%$72.01.3%$72.91.3%8.6%8.7%$40,000 to $50,000........$1,1321.1%$99.11.8%$100.31.8%11.1%11.2%$50,000 to $75,000........$3,9301.1%$366.26.8%$370.16.6%14.0%14.1%$75,000 to $100,000......$5,3951.3%$413.77.7%$419.17.4%16.7%16.9%$100,000 to $200,000.....$31,3672.2%$1,409.826.2%$1,441.225.5%19.9%20.4%$200,000 to $500,000.....$47,2363.4%$1,399.226.0%$1,446.425.6%25.5%26.4%$500,000 to $1,000,000..$32,4216.3%$514.19.6%$546.59.7%30.5%32.6%$1,000,000 and over........$149,26414.1%$1,058.419.7%$1,207.721.4%31.7%38.1%Total, All Taxpayers.......$270,2575.0%$5,371.9100.0%$5,642.2100.0%21.1%22.3% Source: Joint Committee on Taxation Detail may not add to total due to rounding. ----------------------------------------------------- (1) This table is a distr butional analysis of the proposals in JCX-46-21, except the following: Subtitle E: Part 3 and Part 4 items 2 and 3; Subtitle F: Part 3 items 1, 2, and 4, Part 4 items 1, 6, and 7, and Part 6; Subtitle G: Part 2 item 2, Part 3, Part 4, and Part 5 items 2 and 3; Subtitle H: Part 3, Part 4, and Part 5 items 2-4, 6, 8, 9, and 12. For an explanation of the distr bution methodology used in this table, see JCX-15-12 and JCX-14-13. (2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] workers' compensation, [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2021 levels. (3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), excise taxes (attr buted to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis. Does not include indirect effects. (4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income descr bed in footnote (2). (5) For returns in the $10,000 to $20,000 income category, Federal taxes would decrease from -$1.299 billion to -$01.695 billion. (6) Less than 0.05%  Page 6

The Joint Committee on Taxation released updated estimates (JCX-47R-21) on distributional effects of revenue provisions of Title XIII in the Build Back Better Act (<a href="/research/federal/legislative-documents/proposed-legislation/h.r.-5376---build-back-better-act---rules-committee/7ckrc" resolve="/7ckrc">H.R. 5376</a>).  The revised report corrects an error in the average tax rates for calendar year 2022 for income categories that exceed $500,000. The average tax rate for incomes between $500,000 to $1 million is estimated to be 27.2 percent, and the average tax rate for incomes exceeding $1 million is estimated to be 33.1 percent. The total average tax rate for all taxpayers under the proposal in the revised report for calendar year 2022 is estimated to be 19.2 percent, up from 18.7 percent in the original report. The JCT document corrects <a href="/research/federal/legislative-documents/congressional-joint-committee-prints/jct-releases-distributional-estimates-of-title-xiii-of-h.r.-5376/7cmhk" resolve="/7cmhk">JCX-47-21</a>.

JCT Corrects Revenue Distribution Estimates for H.R. 5376

The Joint Committee on Taxation released updated estimates (JCX-47R-21) on distributional effects of revenue provisions of Title XIII in the Build Back Better Act (H.R. 5376).  The revised report corrects an error in the average tax rates for calendar year 2022 for income categories that exceed $500,000. The average tax rate for incomes between $500,000 to $1 million is estimated to be 27.2 percent, and the average tax rate for incomes exceeding $1 million is estimated to be 33.1 percent. The total average tax rate for all taxpayers under the proposal in the revised report for calendar year 2022 is estimated to be 19.2 percent, up from 18.7 percent in the original report. The JCT document corrects JCX-47-21.