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house Bill H.R. 22

Should the GOP Tax Cuts for Individuals, Families, and Small Businesses be Permanent?

Argument in favor

This bill will promote economic growth, job creation, and give Americans more take home pay by making the GOP’s tax cuts for individuals, families, and small businesses permanent.

Argument opposed

This bill will increase the deficit by hundreds of billions of dollars by cutting tax cuts that will mostly benefit the wealthiest among us, rather than working class Americans who need it.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Ways and Means
    IntroducedJanuary 3rd, 2019

What is House Bill H.R. 22?

This bill — the Protecting Family and Small Business Tax Cuts Act — would make permanent the tax cuts for individuals, families, and small businesses that were enacted by the Tax Cuts and Jobs Act of 2017. It’d make permanent the reduced personal income tax rates, doubled standard deduction & child tax credit, preserve other personal deductions and credits, and the 20 percent deduction for pass-thru businesses that are set to expire at the end of 2025 under current law. A breakdown of its provisions can be found below.

Personal Tax Rates

The current seven personal income tax brackets that were enacted by the Tax Cuts and Jobs Act would be made permanent:

  • The 10% bracket applicable up to $9,525 for individuals; and $19,050 for joint filers.

  • The 12% bracket applicable between $9,525 - $38,700 for individuals; and between $19,050 - $77,400 for joint filers.

  • The  22% bracket applicable between $38,700 - $82,500 for individuals; and between $77,400 - $165,000 for joint filers.

  • The 24% bracket applicable between $82,500 - $157,500 for individuals; and between $165,000 - $315,000 for joint filers.

  • The 32% bracket applicable between $157,500 - $200,000 for individuals; and between $315,000 - $400,000 for joint filers.

  • The 35% bracket applicable between $200,000 - $500,000 for individuals; and between $400,000 - $600,000 for joint filers.

  • The 39.6% bracket applicable over $500,000 for individuals; and over $600,000 for joint filers.

Personal Tax Credits and Deductions

Several tax credits and deductions would be permanently modified:

  • The standard deduction would remain at $12,000 for individuals and $24,000 for married couples filing jointly — roughly double what they were prior to the Tax Cuts and Jobs Act’s enactment.

  • The Child Tax Credit, also doubled by the Tax Cuts and Jobs Act, would remain at $2,000 and would still be fully refundable up to $1,400 while phasing out for families earning over $400,000. Parents would still be required to provide a child’s valid Social Security Number to receive the credit.

  • The state and local tax (SALT) deduction would remain capped at $10,000 and taxpayers could choose from sales, income, and property taxes to count toward the deduction.

  • The mortgage interest deduction would remain unchanged for all homeowners with existing mortgages at the time of the Tax Cuts and Jobs Act’s enactment, while for new mortgages (and those since its enactment) the deduction would be available up to $750,000.

  • The deduction for medical expenses would still be available for medical expenses exceeding 7.5 percent of adjusted gross income in 2018 and 2019, which would rise to 10 percent beginning in 2020.

Other Personal Tax Provisions

  • The exclusion threshold for the estate tax (aka the death tax) would stay increased to $11 million for individuals and $22 million for married couples.

  • The gift tax tax rate would remain lowered from 40 percent to 30 percent, with the basic exclusion of $10 million and the annual exclusion of $14,000 remaining at their current levels, indexed for inflation.

  • The Alternative Minimum Tax (AMT), which taxpayers must pay if their AMT tax liability exceeds their regular income tax liability, would remain in effect with increased exemptions and phased-out thresholds.

  • Individuals would still be able to rollover funds in a 529 savings plan to ABLE accounts, which are tax-advantaged for individuals with disabilities and their families.

  • The personal exemption would be permanently repealed.

Small Business Tax Provisions

Pass-thru businesses would permanently have a 20 percent deduction for non-wage income under certain circumstances, reducing their effective marginal tax rate to no more than 29.6 percent.

Impact

American taxpayers, particularly those with families; small businesses; and the federal government.

Cost of House Bill H.R. 22

The CBO estimates that enacting this bill would reduce tax revenue by $632 billion over the 2019-2028 period, which would be focused in the years after the Tax Cuts and Jobs Act’s provisions scheduled sunset at the end of 2025.

More Information

In-Depth: Rep. Kevin Brady (R-TX) reintroduced this bill from the 115th Congress to make the Republicans' tax cuts for individuals, families, and small businesses permanent. When this bill was introduced in the 115th Congress, then-House Ways and Means Committee Chairman Kevin Brady (R-TX) offered the following statement about Rep. Rodney Davis’s (R-IL) bill:

“The Protecting Family and Small Business Tax Cuts Act locks in the tax relief from the Tax Cuts and Jobs Act - which included a nearly doubled standard deduction, a doubled Child Tax Credit, lower rates across the board, and a historic 20-percent pass through deduction for Main Street businesses. This will create over 1.5 million new jobs, continue to raise wages, and boost long-run GDP.”

In the previous Congress, House Democrats opposed this bill along with the rest of the GOP's Tax Reform 2.0, with House Democratic Whip Steny Hoyer (D-MD) writing:

"Today, Ways and Means Republicans passed out of committee on a party line basis a second round of their dangerous tax scam, which would further bankrupt our children and grandchildren in order to provide even more tax breaks to the wealthiest in our country.  Their latest tax legislation would add $3 trillion to the deficit over a decade, even as Republican economic policies - including their first round of tax cuts - led the Congressional Budget Office to project trillion dollar deficits far into the future.  Meanwhile, their promised massive economic growth and wage gains for middle class workers have not materialized, with wages still stagnating while businesses use their tax breaks to benefit shareholders through stock buy-backs."

There are no cosponsors of this bill in the current Congress. In the 115th Congress, this bill passed the House by a 220-191 vote with the support of 40 cosponsors, all of whom were Republicans.


Of Note: The Tax Foundation estimated that making the lower personal income tax rates under the Tax Cuts and Jobs Act permanent would increase long-run GDP by 2.2 percent, create 1.5 million new full-time equivalent jobs, and increase wages by 0.9%. Further, it projected that those changes would decrease revenue by $166 billion annually on a static basis and $113 billion annually on a dynamic basis (in which economic growth is accounted for).

The Tax Policy Center estimated that this bill would increase after-tax income for all taxpayers by an average of 1.6% with higher-income earners benefiting more because they pay a larger share of the tax burden.


Media:

Summary by Eric Revell

(Photo Credit: iStock.com / gerenme)

AKA

To amend the Internal Revenue Code of 1986 to make permanent the increase in the standard deduction, the increase in and modifications of the child tax credit, and the repeal of the deduction for personal exemptions contained in Public Law 115-97.

Official Title

To amend the Internal Revenue Code of 1986 to make permanent the increase in the standard deduction, the increase in and modifications of the child tax credit, and the repeal of the deduction for personal exemptions contained in Public Law 115-97.

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