Yesterday, after nearly eight hours of deliberations, the House Ways and Means CommitteeThe Committee on Ways and Means, more commonly referred to as the House Ways and Means Committee, is one of 29 U.S. House of Representative committees and is the chief tax-writing committee in the U.S. The House Ways and Means Committee has jurisdiction over all bills relating to taxes and other revenue generation, as well as spending programs like Social Security, Medicare, and unemployment insurance, among others. passed what’s commonly referred to as TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Reform 2.0, a series of bills which build upon last year’s Tax Cuts and Jobs Act.
My colleague Nicole Kaeding explains the three bills here, but here’s a quick recap.
- The first bill, Protecting Family and Small Business Tax Cuts Act of 2018 (R. 6760), would make permanent the individual provisions of the Tax Cuts and Jobs Act, which we’ve estimated would increase long-run GDP by 2.2 percent and create 1.5 million new full-time equivalent jobs. These changes are estimated to cost $166 billion a year on a static basis and $113 billion on a dynamic basis.
- The second bill in the series, the Family Savings Act of 2018 (R. 6757), would make several improvements to the way the tax code treats personal saving. This includes the introduction of a new savings vehicle, called universal savings accounts (USAs), which would in part fix the issue of double taxationDouble taxation is when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income. of saving, as well as some other improvements to retirement savings.
- And the third bill, the American Innovation Act of 2018 (R. 6756), would allow businesses to deduct up to $20,000 of their start-up costs.
The Tax Cuts and Jobs Act was a pro-growth tax reform that can help create jobs in the United States, raise wages, and expand the economy. So too, Tax Reform 2.0 is pro-growth and helps provide individuals certainty in their tax code by proposing to make the individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. provisions permanent and improving other parts of the tax code, like retirement savings.
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