New GOP Bill Seeks to Make 2017 Tax Cuts Permanent

Rep. Vern Buchanan, R-Fla., has introduced the TCJA Permanency Act, H.R. 8913, legislation to make permanent tax cuts for individuals and small businesses originally enacted as part of the Tax Cuts and Jobs Act (TCJA) of 2017, including expanding the use of 529 plans.

Without congressional action, 23 different provisions of the sweeping tax overhaul are set to expire after 2025, Buchanan said.

“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 ensure these tax cuts do not expire,” Buchanan said in a statement.

Among the tax provisions the bill would make permanent:

• The revised tax brackets, which reduced tax rates for most Americans.
• The 20% deduction for qualified business income.
• The higher standard deduction. The Tax Cuts and Jobs Act increased the standard deduction from $6,500 to $12,000 for individual filers, from $13,000 to $24,000 for joint returns, and from $9,550 to $18,000 for heads of household in 2018. As before, the amounts are indexed annually for inflation.
• The doubled child tax credit.

Buchanan said his legislation also includes a number of important updates to a previous iteration of this bill, including several technical fixes and expanded eligible uses of 529 savings plans.

It was not immediately clear whether the bill would permanently extend all 23 of the expiring tax provisions. For example, an expansion of the estate and gift tax exemptions is also set to expire in 2025. A full copy of the bill was not available.

Rep. Kevin Brady, R-Texas, ranking minority member on the House Ways and Means Committee who’s a co-sponsor of Buchanan’s bill, said in a statement that “making the historic Tax Cuts and Jobs Act permanent will lock in low taxes for families and small businesses struggling with record inflation.”

Garrett Watson, senior policy analyst at the Tax Foundation, told ThinkAdvisor Thursday in an email that the foundation has estimated “the impact of the major provisions in Buchanan bill for making permanent the TCJA individual provisions (outside of some minor items).”

Making the TCJA individual tax provisions permanent “would increase the size of the economy in the long-run by about 2.2%, raise wages by 0.9% and create 1.5 million full-time equivalent jobs, but it would also come at the tradeoff of about $638 billion in federal government revenue loss from 2019 to 2028,” Watson said.

From 2023 to 2032, Watson said, “it would cost closer to about $1.9 trillion over ten years. We also found that distributionally, it would increase after-tax incomes for households across all income groups, ranging from a 1.2% increase in after-tax incomes for the bottom 20% of taxpayers and a 1.5% increase in after-tax income for the top 20%.”