In late August 2021, by a 220 – 212 party-line vote, the House of Representatives passed a $3.5 trillion
budget resolution,1 while also advancing the $1 trillion bipartisan infrastructure bill.
On September 13, 2021, House Ways & Means Committee Chairman Richard E. Neal (D-MA) released
the initial legislative text and a summary of the proposed “Build Back Better Act” (the “Proposal”). On
September 15, 2021, the Committee approved its sections of the Proposal that mostly addressed social issues and plans to pay for them with tax increases. The Proposal contains provisions that, presumably, seek to increase taxes on the higher income and high net worth taxpayers.
The focus of this Client Alert is on estate planning changes, which include increasing ordinary income
and capital gains tax rates for high income earners, lowering transfer tax exemptions, subjecting certain
irrevocable grantor trusts to the estate tax, and attempting to overhaul the “grantor trust” income tax rules.