28 THE QUEENS COURIER • AUGUST 16, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
More Tax Cuts
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Co-Author of the
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“Breaking the Tax Code”
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Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
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BY JOHN SAVIGNANO, CPA
Last year’s tax law was a key legislative
win for President Trump and
congressional Republicans. So, with
the midterm elections coming up…
GOP lawmakers want even more
tax cuts. They view taxes as a valuable
campaign message to help entice
voters to come out to the polls in
November.
Details are sparse in the tax outline
release by Kevin Brady, the House’s
chief tax writer. It’s really more of a
talking points framework that GOP
candidates can use during the summer
break. Items will be added as
members lobby for their views.
Let’s look at the ideas:
• Making permanent the individual
tax provision in the new tax
law. Most expire after 2025, including
tax rate and bracket changes, the
increased standard deduction and
the 20% write-offs for owners of
pass-throughs.
• Letting new businesses immediately
write off more of their startup
costs.
• Allowing early distributions from
401(k)s and IRAs for folks having
a baby or adopting a child, without
having to pay the 10% fine for preage
59 ½ withdrawals.
• Expanding 529 college savings
plans to cover student loan payoffs,
homeschooling expenses and the
cost of apprenticeship fees to learn
a trade.
• Creating a new tax-advantaged
savings account. There are no specifics,
but we think annual nondeductible
payins of up to $5,500 or
so would be permitted, earnings
wouldn’t be taxed, and tax-free withdrawals
could be taken at any time.
• Also included is a package of
rehashed retirement plan and IRA
proposals that the Senate Finance
Committee approved back in
2016. Among its many provisions:
Allowing individuals to make traditional
IRA contributions past the age
of 70 ½ and making it easier for small
companies to band together to pool
retirement plans.
There’s a push for House
Republicans to act on tax cuts sometime
in September. That may happen,
although not before deficit hawks
voice their concerns on the high cost
of a new wave of tax cuts that would
blow up the already large deficit. The
effort is likely to die in the Senate.
Democrats’ opposition will derail it.
It wouldn’t surprise us, however, if
the retirement plan proposals pop
up again.
A set of proposals to expand health
savings accounts is going nowhere.
There’s not much support from
Democrats, who believe HSAs favor
the wealthy. Additionally, many senators
from both sides of the aisle
are leery of the cost. But a Housepassed
bill to repeal the 2.3% medical
device tax fares better. This unpopular
excise tax is now under a temporary
moratorium that ends after
2019.
Here is an idea that is generating
rare bipartisan support on Capitol
Hill:
The need to modernize IRS and
make it decidedly more taxpayer
friendly. A bill to do just this
passed the House unanimously in
April. Meanwhile, the Senate is considering
its own, more narrow proposal.
While it’s not necessarily a
slam dunk, we believe that Congress
will eventually enact legislation providing
for IRS reforms.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second
Floor, in Long Island City. If you have
any questions or require additional
information, please call John at 718-
707-0955.
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