A tax cuts “2.0” draft will likely be unveiled to House Republicans in July, the House’s top tax writer has said. A draft of the tax reform “phase two” legislative outline is expected to be released generally in August.
Tax Cuts Phase Two Timeline
“I think the Ways and Means Committee timetable will be to begin circulating a draft to House Republicans when we return after the fourth of July break,” House Ways and Means Committee Chairman Kevin Brady, R-Tex. said in a televised June 26 interview. “I expect to see the legislative outline released in early August, with votes in the fall depending on when leadership wants to schedule them.”
Individual Tax Cuts
The next round of tax reform will focus on making permanent the individual tax cuts enacted temporarily through 2025 under the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97). Additionally, Republican tax writers are considering proposals that would streamline the retirement savings process, a Ways and Means spokesperson previously told Wolters Kluwer. Brady said in the June 26 interview that he intends to use the month of July to hear from Republican colleagues on what they want to see in the “2.0” measure.
Democratic Support Needed
Further, Brady alluded in the June 26 interview that Republicans will not use the reconciliation process for Senate approval of a phase two bill. Using the reconciliation process allows for approval of legislation with only a simple GOP majority, as used with the TCJA. Moreover, not using that legislative path forward will make for an uphill battle in the Senate, requiring Democratic support. Democrats have remained largely opposed to the TCJA and the notion of subsequent, extending tax cuts.
“I think the Senate is vitally interested in what can get 60 votes that they can pass, because we unfortunately won’t have the reconciliation instructions in place because of the budget,” Brady said. Additionally, Brady predicted that more than one tax bill will be part of Republican phase two legislative efforts. “I don’t see it as one bill. I see it as a package of two, three or four approaches, with permanency being one of them,” he said.
In related news, the nonpartisan Congressional Budget Office (CBO) has estimated a sharp increase in federal debt by 2048. In the 2018 Long-Term Budget Outlook released by the CBO on June 26, the federal budget deficit, relative to the size of the economy, is predicted to grow substantially over the next 30 years. “Moreover, if lawmakers changed current laws to maintain certain policies now in place—preventing a significant increase in individual income taxes in 2026, for example—the result would be even larger increases in debt,” the CBO report notes.
House Ways and Means Committee ranking member Richard Neal, D-Mass., criticized the TCJA in a June 26 statement issued after the CBO report’s release. “Now, in the CBO’s new report, we see the long-term consequences of the GOP’s fiscally irresponsible tax law: racking up historic debt and laying the groundwork for economic crisis,” Neal said.
However, Brady placed the blame on excess mandatory and discretionary government spending. “Raising taxes on hardworking Americans—as Democrats want to do—will not solve our out-of-control debt,” Brady said in a June 26 statement.
By Jessica Jeane, Wolters Kluwer News Staff
The 2018 Long-Term Budget Outlook can be found here