House GOP Introduces “Tax Reform 2.0”
September 12, 2018
House Republicans introduced three bills this week, known as “Tax Reform 2.0,” that would make the 2017 tax cuts for individuals permanent and would make another round of tax cuts. The GOP is using the measures to highlight the signature economic policy achievement of this Congress as it risks losing control of the House in November’s midterm elections.
The three bills — the Protecting Family and Small Business Tax Cuts Act of 2018, the Family Savings Act of 2018, and the American Innovation Act of 2018 — make further changes to the federal tax code on the individual side, including the permanent, lower rates, the child tax credit, and a new tax break for businesses that file through the individual side. The legislation also would ease rules around retirement savings and write-offs by start-up companies.
The Trump administration and congressional Republicans were criticized when last year’s tax reform law made the cut in the corporate tax rate permanent, but it allowed for cuts for individuals to expire after 2025. Republicans made the individual tax cuts temporary in last year’s law in order to comply with congressional procedural rules and still enact a big, net tax cut.
“Last year we said goodbye to America’s old, broken tax code,” House Ways and Means Committee Chairman Rep. Kevin Brady (R-TX) said upon introducing the bills. “Under our new system, we’re seeing incredible job growth, bigger paychecks, and a tax code that works on behalf of families and American businesses. Now it’s the time to ensure we never let our tax code become so outdated again. We look forward to bringing these bills to the committee soon.”
The cuts proposed in Tax Reform 2.0 would add to the federal budget deficit. The non-partisan Tax Foundation estimates that making the individual tax cuts permanent will cost the Government nearly $165 billion annually in lost tax revenues.
The House Ways and Means Committee is scheduled to mark up the three bills on September 13, although Hurricane Florence could affect the timing. The legislation, however, is not expected to reach President Trump’s desk, because Senate Republicans likely will not be able to advance the measures. House Republicans still will tout their efforts this Congress to lower taxes and call out the Democrats for not voting for tax reform as the GOP fights to retain control of the House.