By Jessica Jeane, J.D.
Medical devices tax part of tax cut package.
The House on December 17 approved a $428 billion bipartisan tax cuts package addressing tax extenders, retirement savings, 2017 GOP tax law fixes, and more. The tax provisions made "the cut" for hitching a ride with a year-end government spending bill just days before federal funding was set to expire.
The Senate is expected to approve the FY 2020 appropriations measure, HR 1865, which serves as the legislative vehicle for the tax provisions. President Trump has indicated he will sign the measure once it reaches his desk, thus averting a government shutdown just before Congress adjourns until the New Year.
Most notably, the tax package generally includes:
- Retroactive and current renewal of over two dozen temporary tax breaks known as tax extenders, which have expired or are soon-to-be expired, spanning from 2017 to 2019. Generally, the renewed tax breaks are extended through 2020, and the biodiesel and short-line railroad maintenance tax credits are extended until 2022;
- The Setting Every Community Up for Retirement Enhancement Secure bill (HR 1994) (SECURE Act), which makes sweeping changes to retirement savings and employer retirement contributions provisions;
- Certain fixes to the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97); and
- Repeal of certain tax-related provisions of the Affordable Care Act (ACA), including the 2.3 percent excise tax on medical devices and the "Cadillac" excise tax on high-dollar employer-sponsored health insurance plans.
Hill Reaction. Capitol Hill was buzzing with talk of tax policy as the costly measure cleared the House by a 297-to-120 vote on December 17. Namely, the much-anticipated renewal of tax extenders, many of which expired two years ago, was a significant talking point among lawmakers.
"The agreement addresses expired and expiring tax provisions that are critical for middle-class families and our economy," Senate Finance Committee (SFC) ranking member Ron Wyden (D-Ore.) said in a December 17 statement. However, House Ways and Means Committee ranking member Kevin Brady (R-Tex.) chief architect of the TCJA, expressed disappointment regarding tax extenders.
"Regrettably, business as usual prevailed in our efforts to reform these supposedly temporary, annual tax policy changes," Brady said in a statement. "This annual temporary tax circus needs to end," he added.
Overall, Republicans and Democrats largely agree that temporary tax policy is not ideal for providing taxpayer certainty. However, moving beyond the annual or biannual eleventh hour renewal of temporary tax breaks has proved difficult.
Lots of Winners. "There were numerous fits and starts, but this result is a reminder that Congressional muscle memory on extenders is very strong, so ultimately the members did what they always do – extend them," John Gimigliano, principal-in-charge of the federal legislative and regulatory services group in the Washington National Tax practice of KPMG LLP told Wolters Kluwer on December 17. "Some might be surprised to see the ACA taxes rolled back, but it has always felt like those items were on borrowed time; it was really just a question of when and how they were repealed, not whether. So in the end, with more than $400 billion in tax cuts, there were lots of winners and the usual loser – the budget."
The Joint Committee on Taxation’s (JCT) cost estimate of the revenue provisions in HR 1865 can be located here.
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