House Republicans Introduce "Tax Reform 2.0"

On Sept. 10, Republicans in the House of Representatives introduced a package of three tax bills to make additional changes to the U.S. revenue code following the 2017 Tax Cuts and Jobs Act that was passed last December. Provisions in this package of tax bills would reduce the individual tax rates set by the Tax Cuts and Jobs Act and make them permanent (they currently expire in 2025). The bill would also make changes to rules relating to retirement savings and increase the ability of start-up organizations to deduct expenses.

The three bills included in the package are:

• H.R. 6760, the Protecting Family and Small Business Tax Cuts Act of 2018, sponsored by Rep. Rodney Davis (R-IL), and cosponsored by Rep. Mark Meadows (R-NC), Rep. Mark Walker (R-NC), House Ways and Means Committee Chairman Kevin Brady (R-TX), and all other Ways and Means Committee Republicans.
• H.R. 6757, the Family Savings Act of 2018, sponsored by Rep. Mike Kelly (R-PA), and cosponsored by Rep. Paul Mitchell (R-MI), House Ways and Means Committee Chairman Kevin Brady (R-TX), and all other Ways and Means Committee Republicans.
• H.R. 6756, the American Innovation Act of 2018, sponsored by Tax Policy Subcommittee Chairman Vern Buchanan (R-FL), and cosponsored by House Ways and Means Committee Chairman Kevin Brady (R-TX) and all other Ways and Means Committee Republicans.

The IRS recently issued guidance on a provision in the 2017 Tax Cuts and Jobs Act, which clarified that 3PLs incorporated as pass-through entities under the tax code would be eligible for the full 20% deduction of qualified business income. That deduction was phased out in the original legislation for specified service industries, including for “brokerage services.” The IRS clarified that the phase-out for brokerage services is limited to services in which a person arranges transactions between a buyer and seller of securities (i.e. not real estate, insurance, or transportation). This was a major victory for small businesses in the 3PL industry, and improved the positive impact of the 2017 Tax Cuts and Jobs Act on those businesses and partnerships.

Passage of major tax legislation is a difficult and time consuming process. Senate passage of the Tax Cuts and Jobs Act was possible by majority vote only through procedural maneuvers that slowed the passage of legislation, guaranteed the ability of the minority party to offer amendments, and limited the long-term impacts of the legislation on the national debt. While the House of Representatives may act on this bill in the weeks prior to the 2018 midterm Congressional elections, the Senate will likely be occupied with pending spending bills and the nomination of Brett Kavanaugh to the U.S. Supreme Court.

TIA staff works hard to monitor and advocate for legislation that makes it easier for 3PLs to run their businesses. For more information on Tax Reform 2.0, or other critically important issues, please contact TIA Government Affairs staff at advocacy@tianet.org or 703-299-5700.