Ways and Means Passes Tax Reform 2.0September 19, 2018
On Sept. 13, the House Ways and Means Committee, chaired by Rep. Kevin Brady (R-Texas), approved Tax Reform 2.0; teeing up a potential vote by the full House before the end of this month.
The first measure approved by the Committee was H.R. 6760, the Protecting Family and Small Business Tax Cuts Act of 2018. It would cement cuts in personal taxes and a deduction for non-corporate businesses known as pass-throughs, as well as continue immediate write-offs for business investments, all of which are now temporary in the tax overhaul that took effect this year. The legislation would also permanently cap the federal deduction for state and local taxes at $10,000. Seven amendments were offered by the Democratic members of the committee, however, none were agreed to. The Committee approved the bill 21 – 15.
The second bill approved by the Committee focuses on helping families save more and earlier throughout their lives — H.R. 6757, the Family Savings Act of 2018, introduced by Rep. Mike Kelly (R-Pa.). This bill aims to help local businesses provide retirement plans to their workers and helps workers participate in retirement plans. The legislation also allows small businesses to join together to create a 401(k) plan more affordably and simplifies the rules for participation in employer plans. When it comes to families and workers, H.R. 6757 exempts small retirement accounts from mandatory payouts and eliminates the age limit on IRA contributions. One amendment was offered by a Democrat member of the committee. The amendment was not agreed to and the committee approved the bill 21 – 14.
The third bill, the American Innovation Act of 2018 (H.R. 6756), would allow businesses to deduct their start-up costs. Firms could deduct the lesser of their start-up expenses or $20,000. The $20,000 amount would be reduced for firms with more than $120,000 in expenses. Expenses that could not be deducted immediately would be amortized over 180 months. The Committee approved the bill by voice vote.
These three bills that collectively make up Tax Reform 2.0 will now head to the full House for consideration. Even if the House passes the legislation, it is unlikely to make it through the Senate before the midterm elections. Neither Finance Committee Chairman Orrin Hatch (R-Utah) nor Senate Majority Leader Mitch McConnell (R-Ky.) has indicated an interest in bringing up an extension of the tax cuts this year, likely because it would fall short of the 60 votes necessary for passage.