Despite reports surfacing last week that House Republicans were having second thoughts about pushing a second round of tax cuts this month, they must have said, “Screw it, let’s do it anyway.”
House Republicans introduced legislation on Sept. 10 that would lock in individual tax provisions contained in the Tax Cuts and Jobs Act that are set to expire in 2025. It also includes making permanent the $10,000 annual cap for state and local tax deductions, which is unpopular in high-tax states like New York, New Jersey, and California.
The Joint Committee on Taxation estimated the cost of the new plan at $657 billion, according to Politico.
According to Bloomberg, other provisions in the legislation, which I guess is officially being dubbed “Tax Reform 2.0,” would:
[P]ermanently lower the tax rates for individuals as well as preserve a larger child tax credit and the approximately $22 million estate tax exemption for couples, which was doubled in the 2017 law.
It expands the medical expense deduction for an additional two years. Under the tax law, taxpayers can deduct medical expenses exceeding 7.5 percent of adjusted gross income — down from 10 percent — for 2017 and 2018. Tax 2.0 would allow them to use the lower threshold through the end of 2020.
The bill includes several retirement-related provisions that would allow small businesses to more easily offer 401(k) plans, as well as new individual savings accounts for education and newborns. The legislation would also allow startups to write off more of their costs.
The House Ways and Means Committee will mark up the legislation on Sept. 13. House Speaker Paul Ryan (R-WI) has said the legislation will get a vote on the House floor before the end of the month, according to Bloomberg.
The SALT cap had made unveiling the Tax Reform 2.0 legislation a little complicated for Republicans. They had been weighing the pros and cons of putting incumbent lawmakers in high-tax states in a tricky position of either supporting the cap or voting against tax cuts backed by their party.
There are 57 competitive House races in the midterm elections, according to the Cook Political Report, and about a third of those are in districts located in high-tax states where the SALT cap has been a hot-button issue, Bloomberg noted earlier this month.
And Reps. Leonard Lance (R-NJ) and Peter King (R-NY), both seeking re-election in November, said they won’t vote for a bill that includes a permanent extension of the SALT cap, according to Bloomberg.
But there was no way that cowboy boot-wearin’, tax reform-toutin’ House Ways and Means Chairman Kevin Brady (R-TX) would not push through a second round of tax cuts.
He said in a statement:
“Last year we said goodbye to America’s old, broken tax code. Under our new system, we’re seeing incredible job growth, bigger paychecks, and a tax code that works on behalf of families and American businesses. Now it’s the time to ensure we never let our tax code become so outdated again.”
Maybe Brady has chosen to ignore the fact that the Tax Cuts and Jobs Act really hasn’t been too popular with voters.
Emily Stewart of Vox wrote:
Polls show many Americans aren’t noticing tax cuts in their paychecks, and the bill has actually become less popular with voters over time. According to a RealClearPolitics average of polling, 37 percent of voters approve of the GOP’s tax cuts, while almost 42 percent disapprove.
But, let’s face it, this is all for show. Yes, the legislation will pass in the House, but there’s not a snowball’s chance in hell that it becomes law. In fact, I have a better chance of one day writing for the Wall Street Journal or becoming an anchor for Fox News than this legislation does passing the Senate.
Here’s why, according to Bond Buyer:
Passage in the Senate would require a 60-vote supermajority because the legislation would add to the already burgeoning federal deficit.
Republicans hold only a 51-49 majority in the Senate and none of the Democrats are expected to support the legislation.