The House Ways and Means Committee is expected to pass its “Tax 2.0” package that would make permanent already-passed tax changes for individuals and small businesses and make it easier for families to save for retirement.
Ways and Means Committee Chairman Kevin Brady (R-TX) said the three bills that make up “Tax 2.0” collectively build on the economic success of last year’s Tax Cuts and Jobs Act.
“The Tax Cuts and Jobs Act changed the trajectory of our economy for the better,” Brady said. “Now it’s time to change the culture in Washington where we only do tax reform once a generation. This legislation is our commitment to the American worker to ensure our tax code remains the most competitive in the world.”
The first bill in the package (H.R. 6760) makes permanent the cuts to individual tax rates that took effect this year and locks in other changes that are set to expire at the end of 2025. That includes the $10,000 cap on state and local tax deductions, which raised an outcry in certain high-tax states like California, New York and New Jersey. Democrats in those states have made the SALT cap a campaign issue, arguing that the provision will cost their constituents billions in annual tax deductions.
The second bill in Tax 2.0 (H.R. 6757) focuses on changes to retirement and education accounts. The bill removes the age limit on individual retirement account contributions would exempt people with less than $50,000 in their retirement accounts from taking required minimum distributions.
The third bill in the package (H.R. 6756) would let new businesses deduct up to $20,000 in start-up expenses in the year they are incurred as long as they meet certain qualifications.
Speaker Paul Ryan (R-WI) has said he wants a floor vote on Tax 2.0 by the end of the month. Even if the legislation passes the House, however, it’s expected to stall in the Senate. Congressional Democrats are universally opposed to the second round of tax cuts.
“Republicans’ first tax law raised taxes on middle-class families, hiked health care costs for millions, and showered the most well-off and well-connected with massive tax cuts,” said Ways and Means Committee Ranking Member Richard Neal (D-MA). “This new tax legislation is more of the same – it disproportionately benefits the wealthiest Americans while growing the nation’s debt even more.”
The Joint Committee on Taxation estimated the cost of the Tax 2.0 package at $657 billion. That’s on top of the $1.5 trillion cost of the first round of tax cuts over the next decade.