BIF & BBB - quick review

November 23, 2021

President Biden signed the $1.2 trillion Bipartisan Infrastructure Framework (BIF) into law last Monday. The legislation adds $550 billion to previously authorized funding for transportation, broadband and utilities over a five-year period. 

The need for massive infrastructure investment has been common knowledge for years, yet it is only now that Congress has agreed to authorize funds beyond normal annual allotments. Our investment portfolios hold stocks that will benefit from additional spending on roads, bridges, rail, seaports, airports, water and broadband. Their share prices have moved up  over the past year as investors correctly anticipated that such legislation would finally be signed into law. At this point, we think much of the “easy” money has been made. Future share price performance will be shaped by factors unique to each business. For instance, the positive effect of increased demand for infrastructure-related products and services could be negated by some combination of higher labor and materials costs. The authorized funds will ultimately be allocated by federal and state agencies – businesses with a strong history of winning awards from those agencies are especially likely to benefit in the months and years to come. This demonstrates why we believe in researching stocks one-by-one. 

Just passed in the House and headed to the Senate is the Build Back Better bill that would invest about $2 trillion in social programs and measures that address climate change. The social spending is aimed at health care and education – it is reasonable to expect the bill’s passage would benefit subsets of those industries. The “green” initiatives include:

  • Home energy efficiency and electrification rebates
  • An extension of tax credits for solar, wind and other climate friendly energy sources
  • More generous tax credits for buying electric cars (up to $12,500)

While this is a significant opportunity for businesses related to clean energy, many have attracted increasing investor attention to the point where they appear to be “priced for perfection.”

The original proposals for BIF and BBB contemplated increasing the corporate tax rate, as well as significant changes to individual income and estate tax policy. (We wrote and discarded a couple of blogs on the topic.) It is surprising how much these have been watered down or eliminated.

BIF was passed with no material tax changes. The latest version of the BBB bill largely omits increases to corporate and individual tax rates and leaves capital gains tax policy unchanged. It still targets budget neutrality through increased IRS enforcement of existing laws as well as a few tweaks aimed at the highest individual earners and those corporations paying the lowest effective tax rates. Here are the latest provisions* (the first is a tax cut, not an increase…).

Residents of high-tax states (including Vermont):

  • Raises the cap on state and local tax deductions from $10,000 to $80,000 from 2021 through 2030, at which point it would revert to $10,000. (Note this is retroactive to the start of the current year.)

Small business owners:

  • Adds pass-through income to investment income in calculating the 3.8% Net Investment Income (aka Obamacare) Tax. (This impacts subchapter S and partnership business owners earning more than $400,000, $500,000 if filing jointly).

High-income taxpayers:

  • Creates a 5% income tax surcharge on individuals with income greater than $10 million, plus 3% on income greater than $25 million.
  • Limits IRA contributions for individuals with balances over $10 million and accelerates required distributions for those accounts, effective in 2029.


  • Applies the 5% and 3% income tax surcharges to trust income over $200,000 and $500,000.


  • Establishes a 15% minimum tax for corporations reporting “book income” of $1 billion or more starting in 2023.
  • Imposes a 1% tax on corporate stock repurchases.
  • Raises the corporate income tax related to intangible assets (patents and trademarks) held outside the US from 10.5% to 15%.

While we think the impact of BIF is recognized by the market, we are not so sure about BBB. Potential changes to tax policy could be a plus for “blue-staters” and a negative for some small business owners. It is highly likely that the Senate will make changes to the recently passed House version - we are sending this quickly while it’s fresh!

Happy Thanksgiving!


  1. 1. Unless indicated otherwise, these changes will be effective January 1, 2022.
  2. 2. We are not tax experts. Please consult a professional if you need tax advice.