The House Ways and Means Committee, chaired by Rep. Kevin Brady (R-TX), yesterday approved Tax Reform 2.0: three pro-growth bills that build on the economic successes of the Tax Cuts and Jobs Act, the first major overhaul of America’s tax code in over three decades that was signed into law late last year.
As Chairman Brady noted that Tax Reform 2.0 is the Committee’s commitment to ensuring our tax code remains the most competitive in the world:
“We must keep building off the momentum from last year’s tax reform to ensure our economy keeps booming. That’s why we’re here today to change the culture of Washington – from one that waits an entire generation to fix a broken tax code to one that keeps our code ahead of the pack and the best in the world.
“So, while Tax Reform 1.0 was about changing the trajectory of the economy, Tax Reform 2.0 is about changing the culture in Washington. That starts with today’s important update to our code.”
Providing Permanent Tax Relief for Workers and Main Street
The first measure approved by the Committee was H.R. 6760, the Protecting Family and Small Business Tax Cuts Act of 2018.
Estimated by the nonpartisan Tax Foundation to create an additional 1.5 million jobs, boost wages by 0.9 percent, and increase long-run GDP by 2.2 percent, this legislation locks in the individual and small business tax cuts from the Tax Cuts and Jobs Act.
Multiple Members described how the Tax Cuts and Jobs Act is already having a meaningful impact in communities across the country, emphasizing how now is the time to lock in these tax cuts for our families and Main Street businesses, as Tax Reform 2.0 would do.
Rep. Mike Bishop (R-MI) talked about how these policies are leading to historic small business optimism:
“Our Main Street businesses…are growing, they’re hiring workers, I hear all the time of new, expanded benefits. … It’s time to lock in these rates and give our businesses the certainty they need to grow and thrive.”
Rep. Carlos Curbelo (R-FL) echoed this, noting that tax reform, coupled with other pro-growth policies, is helping folks from all walks of life take part in this booming economy:
“Our economy is doing really well. The economic recovery that had passed over so many of our individuals in our country is now reaching them. People are moving into the workforce, switching jobs because they are getting paid more – we have more jobs available in our country than people looking for jobs at this point…and we saw a major jump in pay growth. These are all things to celebrate.”
Rep. Kristi Noem (R-SD) emphasized that this bill will give families across the country financial security:
“My colleagues on the other side throw out misleading information, but my constituents in South Dakota don’t buy it and they know the truth. They’ve seen the benefits of the tax cuts firsthand. … The facts are undeniable. The Protecting Family and Small Business Tax Cuts Act does exactly what its title implies.”
Seven amendments were offered by Democrat Members. None were agreed to.
The Committee approved the bill 21 – 15.
Helping Families Save More
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).
Rep. Kelly said:
“With so many households receiving new bonuses and bigger paychecks thanks to the Tax Cuts and Jobs Act, now is the perfect time to make the tax cuts permanent and make sure Americans have the financial security they need to handle anything that life may throw their way. Simply put: this is about helping every American citizen enjoy a happy retirement and peace of mind in the years when they deserve it the most.”
This bill helps 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. It helps military reservists by allowing them to maximize their retirement contributions.
Rep. Sam Johnson (R-TX) discussed the importance of helping our men and women in uniform save for retirement:
“America’s guard and reserve forces typically have a civilian job in addition to their military career. Because of this, they typically have a civilian 401(k) in addition to their military Thrift Savings Plan. … [This bill] allows guard and reserve forces to contribute the maximum to both their civilian and 401(k) plans and to their military TSP. … Our servicemen deserve the best and should not be penalized when it comes to saving for retirement.”
Additionally, the bill creates a new Universal Savings Account, offering a fully flexible savings tool that families may access whenever is best for them.
H.R. 6757 allows families to access their own retirement accounts on a penalty-free basis to use as they see fit when welcoming a new child into their homes, whether by birth or adoption.
The bill also builds upon the improvements for education savings in the Tax Cuts and Jobs Act by expanding 529 accounts to pay for apprenticeship fees, home schooling, and student debt.
Rep. Erik Paulsen (R-MN) said in support of expanding 529 accounts:
“By doing this, families will be able to take full advantage of their hard-saved dollars and help children mitigate the anxiety that sometimes comes with having student loans.”
One amendment was offered by a Democrat Member. The amendment was not agreed to.
The Committee approved the bill 21 – 14.
Spurring American Innovation
The third bill approved by the Committee is designed to address the fact that last year, America fell out of the top 10 in Bloomberg’s Innovation Index, which ranks the most innovative economies in the world. This is not only a problem, but a call to action.
The nation that wins the innovation race wins the future. That is why Tax Policy Subcommittee Chairman Vern Buchanan (R-FL) introduced H.R. 6756, the American Innovation Act.
As Chairman Buchanan said:
“We should be committed to making the United States the innovation leader of the world. The American Innovation Act is a down payment toward reaching that goal.”
The American Innovation Act helps entrepreneurs move from the kitchen table to Main Street and beyond by helping with startup costs and capital. Specifically, the bill allows new businesses to write off more of their initial start-up costs.
In addition, start-ups can expand by bringing in new investors without triggering limits on their access to tax benefits like the R&D credit. This bill supports innovation and entrepreneurship by helping America’s risk-takers create jobs and invest in their communities.
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.
CLICK HERE to watch the first half of the Committee’s action on these bills.
CLICK HERE to watch the second half of the Committee’s action on these bills.