House OKs Tax Reform 2.0 bills aimed at bolstering retirement savings, incentivizing new businesses
The House on Thursday passed two pieces of Republicans’ “Tax Reform 2.0” package that aim to bolster retirement savings plans and incentivize investments from new businesses.
House leaders are also planning to vote Friday on a third bill to make permanent the individual rate cuts in the GOP’s $1.5 trillion tax law, as Republicans look to paint a contrast with Democrats on taxes and the economy before members head back home to hit the campaign trail.
“You will see that there are two different visions one vision that still wants to go back to higher taxation, rules and regulations, government control,” said Rep. Pete Sessions, Texas Republican. “And we are as a Republican party and as the free enterprise party going to stand up and say that we will be there on behalf of all workers.”
One of the bills which passed Thursday on a 240-177 vote tries to incentivize people to save more by allowing small businesses to band together to create more affordable 401(k) retirement plans.
It also eliminates the current rules that bar people older than 70 years old from making contributions to certain retirement plans, and exempts smaller retirement plans from mandatory payouts.
The bill also creates a new universal savings account to which families can contribute up to $2,500 per year and access whenever they want, and it allows families to access retirement accounts without incurring a penalty to pay for costs associated with a new child.
The second bill, which passed 260-156, allows new businesses to write off more of their start-up costs up to $20,000 to try to spur innovation.
The bills that passed Thursday did attract some support from Democrats, but no congressional Democrats voted for the broader $1.5 trillion tax law last year.
Some Democrats cast the exercise this week as another giveaway to the rich, and said that providing the public new incentives to save money doesn’t necessarily help people who are already underwater and struggling to pay their bills.
“This new tax cut 2.0 package, just like the one before it, is being rushed through the House with no hearings and no input from the American people,” said Rep. John Yarmuth, the top Democrat on the House Budget Committee.
The centerpiece of the GOP’s second round of tax cuts is a measure that would make permanent the individual tax rate cuts in the new law, as well as an expanded standard deduction and a more generous child tax credit.
The corporate tax rate was permanently lowered from 35 percent to 21 percent under the new law, but the individual rate cuts were written to expire after 2025 in order to comply with budget rules.
A vote on that bill is expected on Friday in the House.
The bills aren’t expected to pass in the more evenly-divided Senate since they would need 60 votes to overcome a potential filibuster though lawmakers have been working on separate bipartisan legislation aimed at bolstering savings that contain some of the elements of one of the bills that passed the House Thursday.