Tax Reform, take 2
Republicans on the House Ways and Means committee have released what they call a "Tax Reform 2.0" framework. It's a very broad outline of a series of bills the GOP hopes to pass (at least through the House) before the November elections.
What are the main points? The Tax Foundation has this analysis of what we know so far:
Make permanent the income tax rate and deduction changes scheduled to expire in 2025: The Tax Foundation’s Taxes and Growth model estimates that this would boost long-run GDP (2.2 percent) and wages (0.9 percent) and create 1.5 million additional jobs, while reducing annual federal revenues by $112 billion dynamically.
Streamline retirement savings accounts: Currently, the tax treatment of retirement savings is riddled with restrictions, limitations, and rules that differ across more than a dozen types of retirement accounts. Though the framework does not specify how lawmakers would reform the current structure of retirement savings, the creation of a universal savings account would be a significant improvement over today’s long-term savings options, especially for Americans who may not have access to retirement savings through their employer.
Improve the tax treatment of start-up businesses: While it’s unclear what provisions the House may consider, lawmakers could make the Section 179 deduction more generous or create a standard deduction for start-up business costs, among other options. Tax Foundation economist Kyle Pomerleau has testified before Congress on ways to remove the tax code’s barriers to entrepreneurship.
The individual tax cuts included in this year's legislation were not permanent, and expire in 10 years. The corporate tax cuts were made permanent -- a political calculation Republicans made to insulate those cuts from Democratic tax hikers.
We will have to wait and see what the specifics of any new legislation might be. But as we have long argued, tax cuts -- good, and necessary as they are -- must also come with federal spending cuts. If spending is left untouched, that will leave us with an ever-growing mountain of debt. And at $20 trillion and counting already, more debt is exactly what our economy, and our grandchildren, do not need.