The Ways and Means Committee Passes Tax Reform 2.0

Yesterday, after nearly eight hours of deliberations, the House Ways and Means Committee passed what’s commonly referred to as Tax 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 taxation 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 tax provisions permanent and improving other parts of the tax code, like retirement savings.