House Ways and Means Committee Advances Tax Reform 2.0 Legislation

By:
Chris Gaetano
Published Date:
Sep 14, 2018
Congress

Just three days after being introduced, Republicans on the House Ways and Means Committee approved the package of bills colloquially called Tax Reform 2.0 through a party-line vote, according to Accounting Today. House Speaker Paul Ryan said that he plans for a full vote sometime before the end of this month, though Accounting Today said the measure is unlikely to clear the Senate, where it needs more support from Democrats to pass. The three bills in the package are: 

H.R. 6760, the Protecting Family and Small Business Tax Cuts Act of 2018, sponsored by Rep. Rodney Davis (R-Ill.), and cosponsored by Rep. Mark Meadows (R-N.C.), Rep. Mark Walker (R-N.C.), House Ways and Means Committee Chairman Kevin Brady (R-Texas), and all other Ways and Means Committee Republicans. This would make permanent many of the temporary parts of the Tax Cuts and Jobs Act. This includes the doubled standard deduction, the doubled child tax credit and new individual income tax rates, and the 20 percent deduction for pass-through entities, all of which are set to expire in 2025. 

H.R. 6757, the Family Savings Act of 2018, sponsored by Rep. Mike Kelly (R-Pa.), and cosponsored by Rep. Paul Mitchell (R-Mich.), Ways and Means Committee Chairman Brady, and all other Ways and Means Committee Republicans. This is meant to make it easier for people to save for retirement by easing restrictions on employers pooling their resources together to build a retirement plan. First, it would provide a number of different incentives to encourage employers, especially smaller businesses, to offer retirement plans to their workers. In addition, it would expand the use of Section 529 education accounts, and allow families to access their own retirement accounts penalty-free for expenses connected to a new child in the family, and allow them to replenish these accounts in the future. It would also create a new Universal Savings Account, which sponsors say would offer a flexible savings tool for families. 

H.R. 6756, the American Innovation Act of 2018, sponsored by Tax Policy Subcommittee Chairman Vern Buchanan (R-Fla.), and cosponsored by Ways and Means Committee Chairman Brady and all other Ways and Means Committee Republicans. Among other things, it would allow startups to deduct, in the year in which active trade or business begins, the lesser of either the "the aggregate amount of startup and organizational expenditures paid or incurred in connection with such active trade or business," or "$20,000 reduced (but not below zero) by the amount which such aggregate amount exceeds $120,000." The remainder of such startup and organizational expenditures could then be allowed as a deduction amortized over a 180-month period starting when the active trade or business. A liquidating corporation or partnership would also be able to make this deduction using the same set of rules for any organizational or startup costs previously incurred or paid. 


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