The “Tax Reform 2.0” framework released today by the House Ways & Means Committee provides great reason for excitement. Most importantly, the plan would make permanent the tax relief provided to individuals and small businesses under last year’s Tax Cuts and Jobs Act (TCJA). Doing so would lock in the across-the-board tax rates, the expanded Child Tax Credit, and the doubled standard deduction, among other important changes. These provisions have provided substantial relief for everyday, hard-working American taxpayers and should be made permanent as soon as possible.
In terms of driving economic growth, the framework also discusses allowing new businesses to write off more of their start-up costs. Full and immediate expensing of capital investment is one of the best ways to stimulate growth and job creation. While the TCJA took some significant steps in that direction, Tax Reform 2.0 presents an opportunity to continue to improve the tax code’s cost recovery provisions.
The framework also contemplates changes to tax savings vehicles. One particularly noteworthy proposal is the expansion of 529 education savings accounts. This could provide a critical benefit to families. As NTU Foundation’s Andrew Wilford noted in a recent paper:
“Expansion of 529 plan eligibility would make it easier to enroll in private schools for grade and high school. This would provide parents with more choice in determining where their children receive their education. While Congress did expand 529 eligibility to include K-12 expenses in TCJA, an effort to include homeschool and vocational expenses as well was left on the cutting room floor and should be revisited in future reform discussions.”
Taxpayers should be thrilled that Chairman Kevin Brady (R-TX) and the House Ways & Means Committee are working toward enacting another round of tax reform and building upon the success of TCJA. While details are scant at this point, Tax Reform 2.0 could help create more jobs, spur more economic growth, and help make the tax code fairer and simpler. In short, it could be the next huge win for taxpayers.