WASHINGTON—A nearly 300-page tax bill has been introduced in the new Congress that would affect Americans' retirement savings, numerous business tax breaks and even redesign the Internal Revenue Service–but it does not include any changes to a new tax on compensation for some credit union executives.
House Ways and Means Committee Chairman Rep. Kevin Brady (R-TX) has introduced a package that includes the Retirement, Savings, and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018.
Given that Congress is in its lame duck session, experts stated that it’s difficult to forecast the likelihood the package will pass.While Brady was re-elected to Congress, the Democratic majority in the next Congress means he will be replaced as chairman in January by Rep. Richard Neal (D-MA).
"The policy proposals in this package have support of Republicans and Democrats in both chambers,” said Brady in a statement. “I look forward to swift action in the House to send these measures to the Senate."
Included in the 297-page bill, which many Democrats said they didn’t even know about until it was introduced, are tax breaks for fuel cell cars, energy efficient homes, race horses, mine safety equipment, auto race tracks and many other items, as well as retirement savings plans such as 401(k)s and individual retirement accounts (IRAs), according to a review by Reuters.
It also includes language around mortgage debt and mortgage insurance that is likely to be welcomed by credit unions.
What’s Not Included
What the legislation doesn’t include is any changes to an excise tax contained in the Tax Cuts and Jobs Act of 2017 (TCJA). The new law requires tax-exempt entities to pay a 21% excise tax on the five highest-paid employees’ compensation that individually exceed $1 million annually, effective Jan. 1, 2018.
The provision was designed to create parity between not-for-profit entities and for-profit entities, which can only deduct the first $1 million of each individual employee’s compensation.
“This is the opening bid in the last poker game of the 115th Congress, from a tax standpoint,” said John McKechnie, senior partner at Total Spectrum in Washington, who previously held positions at NCUA and CUNA. “There are a couple small but important items in here for credit unions regarding mortgage insurance premiums and mortgage debt forgiveness. This bill is worthwhile, but its chances of becoming law are entirely dependent on how much Democrats will want to work with Republicans in the waning days of the year, given the change in House control.”
The full tax package can be found here.