On July 24, 2018, House Ways and Means Committee Chairman Kevin Brady (R-TX) released a two page document containing the House Republican’s objectives regarding the next round of tax reform that would expand upon the Tax Cuts and Jobs Act (“TCJA”) passed in December 2017.
The release, titled “House GOP Listening Sessions Framework” (the Framework) proposed annual Congressional updates to the tax code and outlines several additional reforms. The Framework has three objectives:
- Protecting Middle Class and Small Business Tax Cuts
- The Framework proposes that Tax Reform 2.0 would contain provisions that make permanent the TCJA provisions related to individuals and small businesses. This would give some certainty to individuals and small businesses with respect to their tax rates and other tax provisions similar to corporations.
- Spur New Business Innovation
- Tax Reform 2.0 will contain provisions that allow new businesses to write off initial start-up costs. This is intended to help grow new businesses by alleviating the burden associated with such costs.
- Promoting Family Savings
- Reforming retirement savings accounts and Section 529 accounts, and creating a new “Universal Savings Accounts” to provide a fully flexible savings tool for families are proposed to be part of Tax Reform 2.0.
- Creation of expanded 529 educational accounts is intended to help families save earlier and more throughout their lives by allowing tax-free withdrawals to assist taxpayers in paying for “apprenticeships to learn a trade, cover the cost of home schooling, and help pay off student debt.” The proposal also suggests allowing penalty-free withdrawals from retirement accounts upon the birth or adoption of a child.
Although the “Tax Reform 2.0” proposal suggests several changes, the House has not presented any bills to date and there is very little detail associated with the proposal. We are in the very early stages of the legislative process.
We will continue to monitor the “Tax Reform 2.0” proposals and developments closely. Please contact your Mazars USA LLP professional for additional information.