Tax Reform 2.0
The House Republicans recently introduced legislation that, bundled together, is being referred to as Tax Reform 2.0. Expanding on the Tax Cuts and Jobs Act (TCJA), it’s composed of three main bills intended to address some of most criticized portions of the TCJA. H.R. 6760, Protecting Family and Small Business Tax Cuts Act of 2018 Currently, the TCJA tax cuts for individuals and small businesses expire in 2025, but this bill would make them permanent. The bill would also extend the lower 7.5 percent deduction floor for medical expenses through 2020; currently, this provision expires after 2018. Additionally, the bill attempts to clarify the increased child tax credit by making it explicit that a taxpayer identification number is needed to claim any non-child dependent. The estimated cost of these tax law changes is approximately $631 billion over 10 years. H.R. 6757, Family Savings Act of 2018 This bill aims to help families start saving earlier and save more by expanding options. For example, one of the new savings vehicles the bill is set to create is a universal savings account allowing up to $2,500 in after-tax contributions per year, with tax-free withdrawals that can be made at any time for any reason. 529 plans also would be modified, expanding the definition of qualifying expenses and allowing up to $10,000 in distributions to be used for repayment of qualified education loans. The estimated cost of these tax law changes is approximately $21 billion over 10 years. H.R. 6756, American Innovation Act of 2018 H.R. 6756 aims to help new businesses by expanding the current start-up and organizational costs deductions. Currently, start-up and organizational costs each qualify for a $5,000 deduction; this bill would allow a combined deduction of up to $20,000 for both. Under the law as written currently, net operating loss carry-forwards, net operating losses, general business credit carry-forwards, and general business credits are eliminated or limited if there is an ownership change. H.R. 6756 would allow new businesses that have a change in ownership to claim these tax breaks the same as if no ownership change occurred. The estimated cost of these tax law changes is approximately $5.4 billion over 10 years. Conclusion While the House Republicans believe they are being responsive to their constituents with these bills, the total cost for all three over the next 10 years exceeds $657 billion. With a federal deficit growing increasingly fast, it’s not clear how the Senate will react to the three bills that have already passed in the House.
More Blog Posts
My first day of work as an administrative assistant at CJBS in August 2020 was unlike any other first day I’ve had — not because of the people or the office, but because I started in the middle of a worldwide pandemic. The CJBS office had recently reopened after being closed during the beginning of […]
In the past the beginning of March has always meant certain things to me – we have endured the worst weather of another Chicago winter and spring is close; the groundhog has seen his “tax” shadow so there is only six more weeks of tax season; golf season will soon be here; and a funny John Belushi bit about March coming in like a lion (worth the YouTube search).
When I’m not creating innovative tax and financial strategies for clients, you can usually find me on the golf course. Golf checks a lot of boxes for me. I originally started to play as I saw others developing relationships and business on the golf course. Having never played, I immediately went for some lessons. The first time I hit a four iron long and straight, I was hooked.
In January 2018, I began working at CJBS as an intern at the start of tax season. I was very grateful for the opportunity as I hadn’t had much experience with other organizations by then. It turns out CJBS was the best fit for me. Even during the interview, I knew CJBS was different. My interviewer put me at ease and was both encouraging and supportive, going so far as to offer me advice on my career path during our conversation.
One of the best professional decisions I have ever made was to attend the career fair at Loyola University in September 2018. It was then that I first met members from CJBS. After witnessing my husband’s experience with one of the Big 4 accounting firms, I knew that I would prefer to work at a medium‐sized public accounting firm. What was a great fit for him, was probably not ideal for me.
Last fall, after applying for a summer internship, I had my first conversation with members of the CJBS team via a virtual interview. Right away I knew that CJBS would be a perfect fit. Both Ryan and Susan were welcoming on the call and we connected over their description that accounting is like puzzle solving. […]