House Republicans officially rolled out legislation Monday to make permanent the individual tax cuts that President Trump signed in December’s major tax overhaul, setting up the possibility of a vote to cut taxes in coming weeks that the party can advertise in the midterm elections.
“The Tax Cuts and Jobs Act changed the trajectory of our economy for the better,” said House Ways and Means Committee chairman Kevin Brady, R-Texas, referring to the major tax overhaul Republicans enacted in December. “Now it’s time to change the culture in Washington where we only do tax reform once a generation.”
The legislation, dubbed “tax reform 2.0” by Republicans, would get rid of the 2025 phase-out of the provisions of the tax overhaul that relate to the individual side of the tax code. Those include the lower rates, the altered child tax credit, the special new tax break for businesses that file through the individual side, and much more.
The also include the limitation on state and local deductions that taxpayers can claim, which will make the bill less appetizing to blue-state Republicans whose local governments will face fiscal pressure because of the provision.
Republicans made the tax cuts temporary in the original legislation in order to comply with congressional procedural rules and still enact a big net tax cut.
The package introduce Monday also would liberalize some rules relating to tax-privileged retirement accounts, and create universal savings accounts, advertised as a benefit for families that lack access to employer-sponsored retirement plans. A third bill would allow new companies to write off some start-up costs.
Altogether, the cuts would be a significant drain on the Treasury. Just making the individual tax cuts permanent would amount to an annual revenue loss of about $165 billion, according to the nonpartisan Tax Foundation.
The second round of tax cuts is not expected to reach President Trump’s desk, as Senate Republicans are not in a position to advance it. Nevertheless, it could help House Republicans tout their efforts this Congress to lower taxes as they attempt to retain control of the lower chamber.
Richard Neal, Brady’s Democratic counterpart on the Ways and Means Committee, quickly bashed the legislative package.
“With this second attempt at major tax legislation, congressional Republicans have doubled down on their initial tax scam and are yet again putting the wealthiest, most privileged Americans ahead of average, hardworking families,” the Massachusetts taxwriter said in a statement.
