House Committee Takes Up Three Critical Tax Relief Bills

Three bills will be marked up in the House Ways and Means Committee tomorrow. The bills –  H.R. 3936, the Tax Cuts for Working Families Act, H.R. 3937, the Small Business Jobs Act, and H.R. 3938, the Build it in America Act – will promote a more efficient tax code, relief for small businesses, and more American innovation.

In 2017, the Tax Cuts and Jobs Act (TCJA) raised the standard tax deduction from $6,500 to $12,000 for single filers and from $13,000 to $24,000 for married couples filing jointly. Plainly and simply, American families got to keep more of their hard-earned paychecks by exempting a greater amount of their income from taxes. This also added a much-needed level of simplicity to the tax code.

Thankfully, H.R. 3936 doubles down on this successful approach to simplify taxes. The legislation would add a bonus “guaranteed deduction” of an extra $4,000 for couples, $3,000 for heads of household, and $2,000 for all other filers. This once again makes the tax filing process easier for millions of Americans and decreases the burden they bear when it comes time to pay the Internal Revenue Service (IRS).

The second installment of this three-bill package, H.R. 3937, builds on this simplicity by repealing the Biden administration’s misguided 1099-K reporting rule. This rule required companies like Venmo, CashApp, and PayPal to report any transactions by a user that amount to over $600. The previous standard was well above this, sitting at $20,000 to require a 1099-K.

The new rule meant anyone would have to justify transactions – be it split checks or babysitting money – that eclipse $600 for a year. This would drown millions of citizens in unnecessary paperwork. Its repeal would return to the previous regime that was simpler and ensured only those who truly needed to would have to submit tax forms for electronic transactions on these apps.

Lastly, H.R. 3938 provides a boost to the economic engine by extending expiring and already-expired provisions of the TCJA through 2025. This bill restores expensing for research and development costs, which decreases the risk of investing in the American economy and will incentivize innovators. It also has a host of other provisions relating to expenses that will give American businesses a break when it comes to investing in themselves.

The Tax Cuts and Jobs Act created a period of economic optimism and prosperity in the short time it was law before the onset of the coronavirus pandemic. There is little reason to believe that such an approach will not be successful moving forward. Thankfully, this package of bills set to begin their legislative journey this week will restore that vision to the American tax code – for the reasons outlined above amongst a host of others. If they are passed into law, the American taxpayers will get some much-needed relief.