Tax Reform 2.0 legislation planned for next week
House Ways and Means Committee chairman Kevin Brady, R-Texas, plans to introduce legislation next week to make permanent the individual and small business tax breaks from the Tax Cuts and Jobs Act.
In commenting Friday on the monthly jobs report from the U.S. Bureau of Labor Statistics, which showed a gain of 201,000 jobs in August, Brady said, “August was another solid month of job growth, marking over 1.6 million jobs created this year and the highest level of wage gains since 2009. And we know we can do even better to continue creating greater financial security for our workers and Main Street businesses. That’s why next week we will introduce legislation to make permanent the small business and individual tax cuts that are driving these positive economic numbers. This investment into our workers will produce over a million and a half new jobs, continue to boost wages, and increase America’s competitiveness for years to come. Our economy is growing thanks to Republican polices: let’s keep it that way.”
Brady released a two-page framework in July for “Tax Reform 2.0” whose main provisions would lock in the individual and small business tax cuts. While the corporate tax cuts were made permanent in last December’s Tax Cuts and Jobs Act, most of the provisions for individuals and pass-through businesses are set to expire in 2025.
Making them permanent, however, would also mean locking in the $10,000 limit on state and local tax deductions, which has been protested by Democrats and some Republican lawmakers in high-tax states like New York, New Jersey, California and Connecticut. The legislation would also make permanent other provisions of the tax overhaul like the elimination of personal exemptions in exchange for lower tax rates.
Other provisions in the framework include incentives to encourage families to build their savings, including a Universal Savings Account, or USA account. Families would be able to use their section 529 education savings accounts to pay for apprenticeship fees to learn a trade, cover the cost of home schooling or pay off student loan debt. Families would also be able to draw on their own retirement accounts penalty free when they have a new child, whether by birth or adoption. The bill will also encourage innovation by startup businesses, allowing entrepreneurs to write off more of their initial startup costs.
House Speaker Paul Ryan, R-Wis., said this week he plans to hold a vote on the legislation this month, although no hearings have yet been scheduled in the Ways and Means Committee. The bill is unlikely to pass in the Senate, however, since Republicans won’t be able to use the reconciliation procedure they employed last year to pass the bill by a simple majority instead of a 60-vote threshold.