The House Ways and Means Committee released a two-page outline of a new package of tax bills (referred to as “Tax Reform 2.0”) that Committee Chairman Kevin Brady has stated will be circulated around the House in the coming month and introduced as legislation in the House in September. A two-page outline makes it clear that Tax Reform 2.0 will be comprised of three core elements. The aim is to get votes on all three in the House before it adjourns for the midterm elections.
While it is yet unclear exactly what will be included in the final package, one major focus will be an attempt to make the individual tax cut provisions of the 2017 Tax Cuts and Jobs Act (which are set to sunset at the end of 2025) permanent. The cost of making these cuts permanent is anticipated to be in the $600 billion range. Because of this price tag it is likely that these provisions will move in a separate bill from the other two sections of Tax Reform 2.0. It is not clear whether there would be any revenue offsets to this revenue loss. It is likely that the House will pass this legislation knowing full well that it will not pass the Senate.
A second part of the Tax Reform 2.0 package will be aimed towards retirement plans, which at this juncture, are the only portions of the anticipated package which have bipartisan support. The two-page outline specifically mentions a universal savings plan proposal. The outline gives no further details but it is likely that this will be similar to the Lifetime Savings Account proposed years ago.
In a clear effort to appeal to families, the Tax Reform 2.0 outline also indicates that the package will include an expansion of 529 educational savings accounts as well as provisions to allow individuals to access their retirement savings without penalty upon the birth or adoption of a child.
Finally, the Tax Reform 2.0 outline states that the package will also include new provisions to allow start-up businesses to write off start-up costs in order to encourage new business innovation and creation.
House Passes Medical Device Tax Repeal
On July 24, the House of Representatives (by a 283-132 vote) passed the Protect Medical Innovation Act of 2018 (H.R. 184) to repeal the medical device tax. The bill will now move to the Senate for consideration.
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