Build America Fund Act
- Sponsor
- Rep. Deluzio, Christopher R. [D-PA-17]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jul 27, 2026
Bottom line
The bill creates a substantial federal sovereign wealth fund aimed at revitalizing domestic manufacturing and critical supply chains, funded by a mix of direct appropriations, new fees on financial transactions and offshoring, and a corporate tax increase, while also establishing a dividend for taxpayers.
What it actually does
This bill establishes the Manufacturing Sovereign Wealth Fund (the Fund) to rebuild domestic industrial capacity, promote economic sovereignty, and create high-quality jobs through strategic investments. The Fund would make equity investments, loans, and loan guarantees in critical manufacturing, technology, and supply chain security sectors, with a unique "golden share" provision granting veto authority over certain company actions. It is funded by initial appropriations, a portion of automobile tariffs and antidumping duties, new fees on mergers and acquisitions, high-volume stock trading, stock buybacks, and production offshoring, as well as a 1% increase in the corporate tax rate. The bill also creates an Industrial Sovereignty Council to guide strategy and a "Build America Dividend" tax credit for individuals.
Proponents argue
Supporters argue this bill is a critical step to reverse decades of deindustrialization, strengthen national security by reducing reliance on foreign supply chains, and create high-quality domestic jobs. They contend that the "golden share" and other investment requirements ensure long-term domestic control and prevent offshoring, while the diverse funding mechanisms provide a sustainable revenue stream for strategic investments and even return profits to taxpayers through the Build America Dividend.
Opponents contend
Opponents might argue that the bill represents excessive government intervention in the economy, potentially distorting markets and leading to inefficient allocation of capital. They may raise concerns about the significant new taxes and fees, such as the M&A fee and stock trading fee, which could stifle economic activity and investment. Critics might also question the feasibility of the "golden share" in practice and the potential for political influence in investment decisions.
The bill is moderately complex due to its multiple funding mechanisms and governance structure, requiring careful reading to understand its full scope.
Sec. 2(a)-(b)
Establishment and Objectives of the Manufacturing Sovereign Wealth Fund
This provision establishes the Manufacturing Sovereign Wealth Fund (the Fund) as a new federal entity. Its primary objectives include rebuilding industrial capacity in critical sectors, promoting economic sovereignty by reducing foreign supply chain dependence, catalyzing innovation in advanced manufacturing, creating and retaining high-quality jobs, ensuring long-term sustainable returns, and enhancing regional development in areas affected by deindustrialization.
Supporters argue
Supporters argue that a dedicated fund with clear objectives is essential to address systemic issues of deindustrialization and foreign dependence, ensuring the U.S. remains competitive and secure.
Critics contend
Critics might contend that such a fund represents an unnecessary government intervention that could distort markets and lead to inefficient allocation of capital, rather than allowing private markets to drive investment.
Tradeoffs
The tension between direct government intervention for strategic goals versus reliance on market forces for economic development.
Sec. 2(c)
Board of Governors for the Fund
This section establishes a 13-member Board of Governors, appointed by the President with Senate consent, to head the Fund. The Board must include representatives from labor, workforce development, industry, regional development, academia, finance, and the Armed Forces. Members serve staggered 6-year terms, with the Chair compensated at Level I of the Executive Schedule. The Board is responsible for overseeing day-to-day management, approving investment plans, monitoring performance, reviewing due diligence, and ensuring community and worker representation.
Sec. 3(a)-(b)
Investment Authority and Areas
The Fund is authorized to make investments, either alone or with third parties, in the form of equity investments, loans, and loan guarantees. These investments are restricted to specific sectors: strategic manufacturing (including key technology focus areas from the CHIPS Act), technology and innovation (e.g., additive manufacturing, robotics), supply chain security (e.g., domestic sourcing, reshoring), and workforce and small- and medium-enterprise (SME) development (e.g., small manufacturers, apprenticeship programs). The Board of Governors can periodically update these eligible sectors.
Sec. 3(d)
Golden Share Requirement for Equity Investments
For any equity investment, the Fund must receive "veto authority" over critical company actions while it holds the investment. This includes veto power over offshoring, shutting down strategic facilities, transferring ownership of sensitive facilities, reducing capacity below a minimum level, selling the company to foreign persons, hostile takeovers, mergers leading to loss of domestic control, licensing intellectual property to foreign companies, selling patents/trade secrets, moving R&D abroad, ending critical component production, changing to foreign suppliers for sensitive inputs, and any lockouts or mass layoffs. This veto authority continues even during bankruptcy proceedings.
Sec. 3(e)
General Requirements for All Investments
All companies receiving Fund investments must meet several requirements. These include agreeing not to move or expand operations overseas for 50 years, using investment proceeds only for U.S. projects, being headquartered and managed in the U.S. (and not controlled by foreign entities of concern), submitting detailed applications demonstrating economic/national security alignment, commercial viability, technical feasibility, and workforce development commitments. Companies must also agree not to engage in joint research or sensitive technology licensing with entities of concern, avoid stock buybacks or dividends with investment proceeds, and adhere to prevailing wage (Davis-Bacon) and union neutrality standards. Violations lead to suspension, divestment, or clawback, and future ineligibility.
Sec. 5(a)
Initial Funding and Revenue-Based Decrease in Appropriations
The Fund receives an initial appropriation of $100 billion upon enactment, followed by decreasing annual appropriations over the next nine fiscal years, totaling $310 billion. A unique provision mandates that at the end of each two-fiscal year period, the Chair of the Board of Governors must certify whether the Fund's revenues equal or exceed its previous year's appropriations and can sustain operations. If certified, the amount of appropriations for each subsequent fiscal year is reduced by 20 percent.
Sec. 5(c)
Funding from Automobile Tariffs and Antidumping/Countervailing Duties
Beginning with the first fiscal year after enactment, all duties collected from investigations under Section 232 of the Trade Expansion Act of 1964 or Section 301 of the Trade Act of 1974 related to automobiles are transferred to the Fund. Additionally, all duties collected from antidumping or countervailing duty orders under Title VII of the Tariff Act of 1930 are also transferred to the Fund. These funds are made available without further appropriation to carry out the Act.
Sec. 5(d)
Mergers and Acquisitions Fee
A new fee is imposed on any covered transaction (acquisition of voting securities, non-corporate interests, or assets, including mergers and joint ventures) with a transaction value exceeding $1 billion. The person making the acquisition must pay a fee equal to 1 percent of the transaction value to the Fund. The Board of Governors will assess the impact of such transactions on workers and ensure they advance the Fund's objective to create and retain high-quality jobs. Rules are to be issued for valuing contingent consideration, partial acquisitions, and asset transactions, with aggregation and anti-avoidance rules for related transactions within a 24-month period or as part of a common plan.
Sec. 5(e)
Stock Trading Fee on High-Volume Traders
The Securities and Exchange Commission (SEC) is directed to issue rules requiring any person who sells an equity security, and has already sold more than $1 million worth of equity securities in the same calendar year, to pay a fee of 0.1 percent of the value of that sale to the SEC. These collected amounts are then transferred to the Fund to be used without further appropriation.
Sec. 5(f)
Stock Buyback Fee
The SEC is directed to issue rules requiring each issuer that purchases an equity security issued by itself (a stock buyback) to pay a fee of $100 to the Commission for each such purchase. These collected amounts are then transferred to the Fund to be used without further appropriation.
Sec. 5(g)
Production Offshoring Fee
Any company with annual revenue over $250 million that carries out manufacturing in the sectors eligible for Fund investment must pay a fee to the Fund whenever it engages in "offshoring." Offshoring is defined as closing/downsizing a domestic production facility with a correlation to increased reliance on imports, shifting production capacity abroad while still selling in the U.S., or contracting with foreign manufacturers for goods previously produced domestically. The Board of Governors will determine the fee amount by summing the labor cost differential between U.S. and offshore production (multiplied by offshored units) and past federal tax credits/subsidies received by the company. A tiered rate structure will be developed based on factors like non-market economy status, labor abuses, and emission rates.
Sec. 5(h)
Funding from Corporate Taxes
This provision amends Section 11(b) of the Internal Revenue Code of 1986 to increase the corporate tax rate from 21 percent to 22 percent. All tax imposed by reason of this 1 percent increase is to be transferred to the Fund, without further appropriation, to carry out the Act. This amendment applies to taxable years beginning after December 31, 2026.
Sec. 6
Build America Dividend
This section establishes a new refundable tax credit, the "Build America Dividend," for eligible individuals (not nonresident aliens, dependents, or estates/trusts). The Board of Governors of the Fund will determine the "applicable amount" for this credit annually. In aggregate, the total credits allowed in a fiscal year must equal 25 percent of the Fund's average annual proceeds over the preceding five fiscal years, subject to an income-based phaseout for higher-income individuals. Overpayments are refunded to taxpayers. This credit applies to taxable years beginning after September 30, 2032.
Sec. 7
Industrial Sovereignty Council
This section establishes the Industrial Sovereignty Council within the Executive Office of the President. Co-chaired by the Secretaries of Commerce and Treasury, with the Director of the National Economic Council as vice-Chair, it includes representatives from Defense, Energy, Labor, State, and the Chair of the Fund's Board of Governors. The Council's duties include integrating the Fund's investments with broader U.S. economic, national security, energy, and labor strategies; developing a 5-year "Industrial Sovereignty Strategy" roadmap; reviewing Fund investments for strategic consistency; coordinating industrial policies across agencies; evaluating national security implications; advising on strategic risks; recommending new industrial standards and trade policies; and publishing an annual "Industrial Sovereignty Report."
Sec. 8
Fund Termination and Liquidation
The Fund is set to continue its functions for 10 years after the date of enactment, after which it will enter an orderly liquidation phase. This does not prevent the Fund from holding obligations that mature after this date. Upon liquidation, any funds not needed for the Fund's functions will be transferred to the Secretary of Commerce. The Secretary of Commerce must then use these funds for programs assisting American manufacturing, including manufacturing grant programs, subject to prevailing wage requirements (Davis-Bacon) for construction, alteration, or repair work. The section also includes a Sense of Congress that the Fund should be reauthorized in the future.
The definition of "high-quality jobs" is not provided directly in the bill but is cross-referenced to Executive Order 14126 (89 Fed. Reg. 73559; published September 11, 2024).
Sec. 2(b)(4)
Why it matters:This is standard legislative practice to avoid reprinting lengthy definitions already established in other official documents, promoting conciseness.
Case for: Referencing an existing Executive Order ensures consistency with current administration policy regarding job quality standards and avoids redundant legislative text.
Case against: A reader unfamiliar with the referenced Executive Order would need to seek out additional information to fully grasp the bill's intent regarding job quality, potentially hindering immediate comprehension.
Estimated impact: This definition will shape the types of jobs and labor practices supported by Fund investments, influencing labor standards across funded projects.
Companies receiving investments must agree to pay prevailing wages (Davis-Bacon Act standards) for construction, alteration, or repair work and agree to remain neutral with respect to any lawful effort by employees to organize or bargain collectively, including refraining from mandatory anti-union meetings, retaliation, expenditure of company resources to oppose union representation, and interference with employee communications.
Sec. 3(e)(1)(H)
Why it matters:This is a common legislative tactic to include policy directives within broader eligibility criteria, making them conditions for receiving federal funds rather than standalone mandates, which can be less politically contentious.
Case for: Proponents argue these provisions ensure that federal investments support good-paying jobs and protect workers' rights to organize, aligning with the Fund's objective to create 'high-quality jobs' and prevent exploitation.
Case against: Opponents might argue that these labor requirements, particularly the union neutrality clause, impose undue burdens on businesses, interfere with employer-employee relations, and could deter some companies from seeking Fund investments.
Estimated impact: These provisions will significantly impact labor practices and unionization efforts in companies receiving Fund investments, potentially raising wages and increasing union density in supported sectors.
The bill includes a mechanism to decrease future appropriations to the Fund. At the end of each two-fiscal year period, the Chair of the Board of Governors must certify whether the Fund is earning revenues that equal or exceed the previous fiscal year's appropriations and can sustain its operations. If certified, the amount specified for each following fiscal year's appropriation is reduced by 20 percent.
Sec. 5(a)(2)
Why it matters:This is a technical but important fiscal safeguard, designed to ensure the Fund moves towards self-sufficiency. Placing it within the funding section is logical, but its long-term implications might be missed by a casual reader.
Case for: Proponents argue this mechanism provides a strong incentive for the Fund to operate efficiently and generate returns, reducing its long-term reliance on taxpayer appropriations and promoting fiscal responsibility.
Case against: Critics might argue that this automatic reduction could prematurely cut off federal support, potentially hindering the Fund's ability to make necessary long-term strategic investments if its revenue generation is slower than anticipated.
Estimated impact: This provision could significantly reduce the total federal appropriations to the Fund over its lifespan if the Fund becomes profitable quickly, potentially saving billions in taxpayer money.
The amendments establishing the "Build America Dividend" tax credit apply to taxable years beginning after September 30, 2032.
Sec. 6(c)
Why it matters:This timing is likely a tactical choice to allow the Fund sufficient time to accumulate capital and generate substantial proceeds before it begins distributing dividends, ensuring the dividend is meaningful. It also pushes the direct financial benefit to taxpayers beyond the immediate political horizon.
Case for: Proponents would argue that this delay is necessary to allow the Fund to mature and generate significant returns, ensuring the dividend is substantial and sustainable when it begins, rather than distributing small, symbolic amounts prematurely.
Case against: Critics might argue that delaying the dividend for so long diminishes the immediate benefit to taxpayers and makes the promise of a dividend less tangible, potentially reducing public support for the Fund in its early years.
Estimated impact: The delay means that taxpayers will not receive direct financial benefits from the Fund for several years, while the Fund will retain all its proceeds for reinvestment during this period.