The House Ways and Means Committee passed late Thursday Republicans’ Tax Reform 2.0 package of three bills that lock in recent cuts and include retirement planning provisions that are part of the bipartisan Retirement Enhancement and Savings Act (RESA).
Meanwhile, lawmakers also agreed Thursday to a budget bill that will prevent an Oct. 1 government shutdown.
Committee passage of the tax measure — which includes The Protecting Family and Small Business Tax Cuts Act, H.R. 6760; The Family Savings Act of 2018, H.R. 6757; and The American Innovation Act of 2018, H.R. 6756 — is “only the first step in the legislative process,” said Ways and Means Chairman Kevin Brady, R-Texas, after the vote. “We will continue to listen to members of the House and work to improve Tax Reform 2.0 at every opportunity as we advance these common-sense measures to the House floor.”
The full House is expected to approve the measure later this month. However, industry officials see Senate passage as unlikely.
“We still think there’s no chance of passage in the Senate, which probably won’t even consider the bill,” said Greg Valliere, chief global strategist for Horizon Investments, in his Capitol Notes briefing on Friday.
Why are Republicans still pushing for it? “They expect Democrats to take the House this fall, and they want the record to show — as a recession inevitably looms at some point in the next decade — that they have a cure, while Democrats want a de facto tax hike,” Valliere says.
During the markup of the tax package on Thursday, Rep. Bill Pascrell, D-N.J., introduced an amendment to fully restore the state and local tax deduction and finance the change by raising the corporate tax rate. However, the amendment did not make it into the package.
Kyle Pomerleau, the Tax Foundation’s director of quantitative analysis, said Thursday in a note that new analysis from the group shows that “such a swap would harm the economy and would be regressive, raising taxes on the bottom 90% of taxpayers.”
John Buhl, a spokesman for the Tax Foundation, told ThinkAdvisor in a Friday email message that any attempts to include such an amendment again once the bill hits the House floor would likely fail.
“The SALT cap is a big pay-for, and Republicans won’t want to hike the corporate income tax. This [amendment] was mainly a thought exercise, since we know some GOP and most Democrats want to reinstall the full deduction, and Democrats have floated raising the corporate income tax rate by a few percentage points.”
The Insured Retirement Institute wants to see additional provisions included in the bill.
“We appreciate Chairman Kevin Brady’s leadership in advancing this important legislation through the committee. However, we should not miss this opportunity to do more to significantly boost retirement security,” said Cathy Weatherford, IRI’s president and CEO, in a statement.
IRI vowed to continue to pursue additional provisions to boost participation in workplace retirement plans and provide greater access to products that can provide guaranteed lifetime retirement income.
“IRI supports lifetime income disclosures on benefit statements, so workers can gauge what their monthly retirement income might be and wants to enhance retirement plan auto-enrollment to boost employee participation.”
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