House
Republicans proposed legislation on Monday that would make permanent several expiring tax cuts enacted as part of the
2017 tax overhaul
.
Rep.
Vern Buchanan
(R-FL) was joined by 72 of his colleagues in introducing the legislation.
Without Congress acting, nearly two dozen tax provisions that were part of the Tax Cuts and Jobs Act are set to sunset after 2025, affecting people and small businesses. Republicans have made extending portions of the tax law a top priority, although doing so will likely not happen in the near term as Democrats control both the Senate and the White House.
Among the provisions that will sunset are lower individual income tax rates and the ability for pass-through businesses to take a 20% deduction. Pass-through businesses, which are not subject to the corporate income tax, are the most common type of business and include sole proprietorships, partnerships, and S corporations — most small businesses.
Additionally, the $10,000 cap on deductions for state and local taxes paid is among the swath of policies set to expire. The cap was introduced as a pay-for by Republicans as the deductions largely benefit wealthy people in high-tax states. Several Democratic lawmakers have made raising or repealing the ceiling a top priority.
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The 2017 tax law also doubled the estate, or death, tax exemption. That allowed people to keep more of their inheritance before being hit by federal taxes. Extending the increased threshold would cost about $100 billion through 2032.
Extending the tax cuts would be costly, although proponents contend the trade-off is that the more favorable tax regime spurs economic expansion and, in turn, generates more revenue. The Congressional Budget Office estimated last year that extending the lower individual income tax rates would cost $1.5 trillion through 2022.
The historic tax law also doubled the child tax credit, increasing it to $2,000 for qualifying families. The CBO estimates extending the boosted child tax credit would cost more than $500 billion. Meanwhile, extending the SALT cap and associated changes would offset some of those costs by saving the United States $765 billion.
While the proposal in its entirety has little chance of becoming law with President Joe Biden in the White House, extensions of the provisions could be bargaining chips the GOP can use to negotiate with Democrats down the line.
“In 2017, Republicans delivered the most comprehensive overhaul of the U.S. tax code in more than three decades and achieved historic economic growth,” said Buchanan, who is vice chairman of the Ways and Means Committee. “With Americans continuing to suffer under the weight of record-high inflation and an uncertain economic future, we need to provide some much-needed relief and certainty to hardworking families and Main Street businesses and ensure these tax cuts do not expire.”
Buchanan’s legislation has garnered support from Americans for Tax Reform, the America First Policy Institute, the National Federation of Independent Business, the National Association of Manufacturers, the National Taxpayers Union, the American Farm Bureau Federation, and others.
Extending the expiring portions of the 2017 tax cuts was a top priority for Republicans on the tax-writing Ways and Means Committee heading into the new Congress. Republicans cite the tax changes as being the driving force behind the ultra-low unemployment notched right before the coronavirus pandemic took hold.
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“The results of TCJA were nothing short of stunning, but not surprising,” said Buchanan. “As someone who spent 30 years building businesses, I know from experience that making our tax code more competitive means greater prosperity for small businesses and families.”
A 2018
analysis
by the Tax Foundation found that if the expiring tax provisions are extended, they would increase the country’s long-run GDP by more than 2% and long-run wages by about 1% and would add 1.5 million full-time equivalent jobs.
