A state or local government that receives more than $500,000 in a year but does not spend it:
This week, the Tax Policy Center (TPC) released new estimates for how the Build Back Better Act will affect the tax burden of individuals at various points along the income spectrum. When including tax credits, the bill delivers a tax cut to low- and middle-class families as expected, while raising revenue from the very highest earners. Most of the revenue, and nearly all of the non-corporate revenue, comes from households making over $500,000 per year. Show However, because Build Back Better would raise the $10,000 cap on the state and local tax (SALT) deduction, it would cut taxes for the majority of very wealthy families as well. According to TPC, two-thirds of households making over $1 million per year would receive a tax cut under the Build Back Better Act. More than three-quarters of households earning between $500,000 and $1 million would also receive a tax cut, as would two-thirds of those earning between $200,000 and $500,000. By comparison, about one-third of those earning more than $1 million per year and one-fifth of those earning between $500,000 and $1 million per year would face a higher tax burden. While the bill does not directly increase taxes on anyone earning less than $400,000 per year, some percentage of households in every income group would end up with higher indirect tax burdens as a result of higher corporate taxes. TPC and other estimators believe corporate tax increases ultimately flow through to retirement accounts, wages, and other sources of income across the income spectrum. When the indirect effects of corporate tax increases are excluded, the bill only increases taxes on 0.1 percent of households earning between $200,000 and $500,000 per year, 8 percent of those earning between $500,000 and $1 million per year, and 22 percent of those earning more than $1 million per year. All other taxpayers – including more than 70 percent of those making more than $1 million per year – will receive a net tax cut from the individual and payroll tax provisions in the bill. The nominal size of that tax cut rises steadily with income, even after the $1 million income mark. Including the effects of the corporate tax changes, households earning less than $50,000 per year will receive an average tax cut of less than $800 in 2022 from the Build Back Better Act, while households earning between $200,000 and $500,000 per year will receive nearly $1,600 tax cuts. Meanwhile, households earning between $500,000 and $1 million per year would receive an average tax cut of more than $6,100, and households earning between $1 million and $4 million per year would receive an even larger tax cut of more than $7,300. In other words, the largest tax cuts in Build Back Better would go to households with millions of dollars of income, and likely tens of millions in wealth. It’s only very-high earners who would ultimately receive a tax increase from the bill. Those earning more than $4 million per year would receive an average tax increase of more than $585,000, driven mainly by the 5 and 8 percent surtaxes on income paid by those who earn tens or hundreds of millions per year. It is likely that most households earning less than $10 million per year would receive a tax cut under the bill, although the data is not broken out that way. That households so high on the income spectrum can expect a net tax cut from the Build Back Better Act is entirely due to the increase in the SALT deduction cap from $10,000 to $80,000.1 As we have pointed out many times, any proposal to increase or repeal the SALT deduction cap unavoidably represents a massive giveaway to the wealthy. Using households in Washington, DC as an example, we estimate the House SALT proposal would deliver no tax cut to a typical family making less than $100,000 per year, a $3,000 tax cut to families making $200,000 per year, and a $25,900 cut to families making $1 million or more per year. Policymakers could reduce the regressivity of the House SALT cap proposal, but there is no way to make SALT relief progressive. If policymakers don't want to deliver a tax cut to very high earners, they should remove changes to the SALT cap from Build Back Better. Read more options and analyses on our Reconciliation Resources page and our SALT Deduction Resources page. 1 The SALT deduction cap, which is scheduled to expire in 2026 along with much of the rest of the Tax Cuts and Jobs Act, would also be extended under the Build Back Better Act through 2030 at the $80,000 level, then through 2031 at the $10,000 level. New Biden-Harris Administration Housing Supply Action Plan To Help Close the Housing Supply Gap in Five Years As President Biden said last week, tackling inflation is his top economic priority. Today, President Biden is releasing a Housing Supply Action Plan to ease the burden of housing costs over time, by boosting the supply of quality housing in every community. His plan includes legislative and administrative actions that will help close America’s housing supply shortfall in 5 years, starting with the creation and preservation of hundreds of thousands of affordable housing units in the next three years. When aligned with other policies to reduce housing costs and ensure affordability, such as rental assistance and downpayment assistance, closing the gap will mean more affordable rents and more attainable homeownership for Americans in every community. This is the most comprehensive all of government effort to close the housing supply shortfall in history. The Plan will help renters who are struggling with high rental costs, with a particular focus on building and preserving rental housing for low- and moderate-income families. The Plan’s policies to boost supply are an important element of bringing homeownership within reach for Americans who, today, cannot find an affordable home because there are too few homes for sale in their communities. And it will help reduce price pressures in the economy, as housing costs make up about one-third of of the market basket for inflation, as measured by the Consumer Price Index. Under the Plan, the Administration will:
Today’s rising housing costs are years in the making. Fewer new homes were built in the decade following the Great Recession than in any decade since the 1960s – constraining housing supply and failing to keep pace with demand and household formation. This mismatch between housing supply and housing demand grew during the pandemic. While estimates vary, Moody’s Analytics estimates that the shortfall in the housing supply is more than 1.5 million homes nationwide. This shortfall burdens family budgets, drives up inflation, limits economic growth, maintains residential segregation, and exacerbates climate change. Rising housing costs have burdened families of all incomes, with a particular impact on low- and moderate-income families, and people and communities of color. As his Action Plan reflects, President Biden believes the best thing we can do to ease the burden of housing costs is to boost the supply of quality housing. This means building more new homes and preserving existing federally-supported and market-rate affordable housing, ensuring that total new units do not merely replace converted or dilapidated units that get demolished. The President continues to urge Congress to pass investments in housing production and preservation. One independent analysis of proposals in the House of Representatives-passed reconciliation bill found that the housing-related proposals would finance close to 1 million affordable homes. Key provisions, like the expansion of LIHTC and the Neighborhood Homes Tax Credit, have received bipartisan support. The President’s 2023 Budget includes investments in housing supply that would lead to the production or rehabilitation of another 500,000 homes. Building on the actions the Administration announced last September to build and rehabilitate 100,000 homes over the next three years, these legislative proposals and the new administrative steps being launched – in partnership with state, local, for-profit, and non-profit partners – can put the economy on a path to closing the housing supply gap in the next five years. Providing Incentives for Land Use and Zoning Reform and Reducing Regulatory Barriers One of the most significant issues constraining housing supply and production is the lack of available and affordable land, which is in large part driven by state and local zoning and land use laws and regulations that limit housing density. Exclusionary land use and zoning policies constrain land use, artificially inflate prices, perpetuate historical patterns of segregation, keep workers in lower productivity regions, and limit economic growth. Reducing regulatory barriers to housing production has been a bipartisan cause in a number of states throughout the country. It’s time for the same to be true in Congress, as well as in more states and local jurisdictions throughout the country. To that end, the Administration is taking the following immediate steps:
These actions build on the strategies that the Administration has proposed and continues to call on Congress to pass:
Piloting New Financing for Housing Production and Preservation A second, significant barrier to increasing housing supply is a lack of attractive and low-cost financing for new construction and rehabilitation – particularly for units that are affordable. While the federal government currently offers a range of financing options for large multifamily development, market gaps exist for the construction and rehabilitation of single-family homes, 2-4-unit properties, ADU construction, manufactured and modular housing delivery, and smaller multifamily properties. Financing for these housing types has the potential to boost supply in constrained markets, and create location-efficient, modest density that can improve labor market outcomes and reduce greenhouse gas emissions – particularly when paired with state and local policies that remove barriers to where these kinds of housing can be located. To that end, the Administration is taking the following immediate steps:
These actions build on the strategies that the Administration has proposed and continues to call on Congress to pass:
Improving and Expanding Existing Federal Financing Multiple forms of federal financing have played a critical role over the years in boosting affordable housing supply. But more production is needed to make up for more than a decade of underbuilding before the pandemic, and existing programs need to work more effectively and efficiently in order to boost housing production at a pace that will close the housing shortfall in 5 years. To that end, the Administration is taking the following immediate steps:
These actions build on the proposals that the Administration has proposed and continues to call on Congress to pass:
Preserving the Availability of Affordable Single-Family Homes for Owner-Occupants Beyond financing challenges, in recent years, the share of single family home purchases by investors has grown – comprising more than 25% of all purchases nationally in some months of 2021, with an even higher share in certain markets, like Atlanta, San Jose, and Phoenix. Well over half of these purchases were made by investors with more than ten properties, and almost a quarter of these purchases were made by investors with over 100 properties. Large investor purchases of single-family homes drive up home prices for lower-cost starter homes, making it harder for aspiring first-time and first-generation home buyers, among others, to access wealth-building opportunities from homeownership. To that end, and beyond the proposed investments discussed above, the Administration is taking the following immediate steps:
Addressing Other Constraints to Supply: Materials Costs and Labor Supply During the pandemic, the price of goods used in residential construction has increased, squeezing already-tight project budgets and delaying completions. And even before, there has been limited adoption of potentially cost-saving, off-site building techniques used widely in other countries. Additionally, labor supply challenges in construction have made it harder for affordable housing developers to recruit and retain workers. In the months ahead, the Administration is committed to working with the private sector to address near-term constraints to supply and production – with the goal of achieving the most completed housing units in a single year in 15 years. To that end, the Administration is taking the following immediate steps:
These actions build on the strategy that the Administration has proposed and continues to call on Congress to pass:
Why is it called single audit?A Single Audit is when a professional auditor goes over a grantee's financial management processes, including its financial management system and its compliance with all of its federal grant requirements. It is called a Single Audit because it combines one audit covering all of a grantee's federal grants.
What is a yellow book audit?Yellow Book Audit– also known as Generally Accepted Government Auditing Standards (GAGAS) audits. The purpose of this audit is to provide an opinion on the financial statement, in accordance with GAGAS. It also assesses internal controls and compliance issues.
How much does a single audit cost?The costs for a single audit option may be costlier due the requirement to perform a financial statement and compliance audit. The cost for a PRF single audit can range $25,000-$50,000. Note – A PRF single audit is not the same in scope as a not-for-profit single audit.
What is single audit report?Single Audit, previously known as the OMB Circular A-133 audit, is an organization-wide financial statement and federal awards' audit of a non-federal entity that expends $750,000 or more in federal funds in one year.
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