▶ 0:00:01the committee will come to order as of today we have only 142 legislative days before taxes will go up for every single American if Congress fails to act one year from now the paychecks of every working American will look a lot different as on average their taxes will go up 22% % during the first
▶ 0:00:31Trump presidency the tax cuts were the rocket fuel that propelled America out of the stagnation of the Obama years by every conceivable measure American workers and the economy were better off Americans earned bigger paychecks unemployment for every group was at historic lows and poverty dropped to its lowest level in American history buying a home was an achievable part of the American dream
▶ 0:01:01not just a dream never to become reality low-income taxpayers were helped more than those at the top American earners under $100,000 received a 16% tax cut while the amount of taxes paid by the top 1% in fact increased small businesses small business optimism hit record highs American corporations stopped shipping their headquarters jobs
▶ 0:01:31and tax revenues overseas the economy soared creating 5 million new jobs in the two years after the 2017 tax cuts the economy grew a full percentage Point faster than the Congressional budget office projected in over 10 years that equals 3 trillion in new Revenue even though we lower taxes tax revenue went up in fact we have already seen 1.6
▶ 0:02:02trillion in higher revenues than what CBO projected Americans are demanding we restore prosperity and build upon the success of President Trump's economic policies that gave the American people the best economy in my lifetime however that effort is at risk if we do not make the 2017 tax cuts permanent if Congress fails to act the average family of four
▶ 0:02:32will end up paying the equivalent of nine weeks of groceries and higher taxes after four years of sticker shock at the grocery store that's the last thing families need 40 million parents will have their child tax credit slashed in half 2 million family farmers will see the death tax exemption slashed in half 91% of all taxpayers will see their guaranteed deduction
▶ 0:03:03slashed in half 26 million small businesses will be hit with a 43.4% top tax rate more than 20 points higher than what businesses pay in communist China today as we speak businesses are making decisions about where they are going to invest higher and grow this year and in the years to come and they're making those decisions based on the taxes they expect to pay
▶ 0:03:33and uncertainty is an unnecessary weight on our job creators and our family farmers who will have to start calling accountants and estate planners to figure out how they might navigate higher taxes if we want to continue president Trump's Legacy of a strong economy Congress must act swiftly to make the tax cuts permanent Americans don't have the luxury of waiting many have been waiting for years for
▶ 0:04:03Relief before us is the opportunity to permanently remove the uncertainty and anxi and and and anxiety that dampened business expansion job creation and economic growth making the 2017 tax cuts permanent is key to unlocking a second economic boom in a second Trump presidency we would see 284 billion ion in new GDP growth from a boom in
▶ 0:04:34manufacturing 150 billion in new small business GDP growth from small businesses expanding hiring new employees and investing in their Community 50 billion dollar in Opportunity Zone Investments to revitalize the poorest neighborhoods in this country over 1 million new small business jobs each year just for making the small business dedu permanent and just this morning before this hearing
▶ 0:05:04the National Association of Manufacturers released a new study revealing that 6 million jobs would be saved including 1.1 million manufacturing jobs by extending the Trump tax cuts we must not leave families and small businesses waiting for Congress to do the right thing and provide tax relief at the 11th hour we must make the Trump tax cuts permanent as soon as
▶ 0:05:34possible I'm glad we were joined by our Witnesses Americans whose lives were improved by the 2017 tax cuts and look forward to hearing their stories I'm pleased to recognize the ranking member Mr nil for his thank you chairman uh I came to the committee because I believe in the tax code as an engine for change let's be clear I've been a pro growth Pro Prosperity but Pro fair share shot member of this committee which is exactly what the American people are asking us to
▶ 0:06:04do right now recently the financial times and The Economist magazine said that the American economy was the Envy of the world I was struck by the hearing title quote the need to extend Trump's tax cuts for Working Families when we know that most of these Cuts went to people at the very top indeed the top 2% the American people are living under this tax plan and they need relief from it the American people need lower costs our Republican
▶ 0:06:34colleagues are looking to come to the aid of the strongest and wealthiest Among Us once again last week treasury released a new report confirming that if this exercise was actually about lowering costs for Working Families Republicans wouldn't be running their 2017 Playbook back to the tune of $ 1.8 trillion of borrowed money I don't understand the logic of suggesting that we're going to attack the national debt and simultaneously add $4 trillion to it
▶ 0:07:05by a tax cut proposal a reminder that we had the opportunity here to address the national debt and tax relief for middle class Americans and people at the lower end of the scale but that was not what was entertained so we're talking now about adding 4.6 trillion to the deficit as part of their mandate we can lower this cost by making up the difference by extending premium tax credits in the Democrat expanded child tax credit initiative we could put more money directly
▶ 0:07:35into the pockets of those who need it it's been proven time and again that parents who received our monthly payments spent the money on Necessities child poverty was cut in half and a recent study found parents actually cut back on cigarette use likely because of this decreased stress from the security of having more relief our colleagues are charging ahead on this policy because it graduates from a con cep of a plan to empty Action cutting taxes for corporations and
▶ 0:08:05billionaires on the backs of people that really need help we're all looking forward to seeing how the proposals will play out as to how the initiatives will be embraced to cut many important social programs while we cut taxes on the Republican side for the wealthiest Among Us they're guising this agenda behind what they are calling a clear mandate I asked this morning what mandate the smallest popular vote margin in a quarter Century the fourth narrowest by
▶ 0:08:35percentage since 1960 losing seats in the House of Representatives the only mandated agenda we should be focused on is one that the American people deserve and the one they want working together to make their lives more affordable the American people deserve better than these tax cuts being extended without any questions being asked they deserve a worker centered agenda that delivers relief and gives them as I noted earlier a fair shot they need peace of mind and caring for themselves
▶ 0:09:05and indeed their loved ones and Democrats are going to continue to fight for that not a cash grab that will be discussed as we proceed this morning with that I yeld back my time thank you ranking member Neil um I will now introduce our Witnesses that's with us today the first one Michelle Gallagher is a partner at atomy valuation and Gallagher flintoff and Klein we have Margaret marpel is a mother from Lynchberg Virginia and We Have Allison couch is the owner
▶ 0:09:36of ignite accounting and business advisors and we have Courtney silver is president of caty Incorporated and Brendan Duke is senior director for economic policy at the center for American progress thank you for joining us today your written statements will be made part of the hearing record and you each will have five minutes to deliver your remarks start Miss Gallagher you may begin when ready chairman Smith
▶ 0:10:06ranking member Neil and the distinguished members of this committee thank you for the opportunity to provide testimony today on the importance of permanently extending provisions of the tax cuts and jobs act tcja my name is Michelle Gallagher I am a CPA from the great state of Michigan with 35 years of experience working with businesses of all sizes working families and multigenerational family Enterprises I have seen firsthand how the provisions
▶ 0:10:36of the tcja have provided critical support to the businesses farmers and working families that form the backbone of our economy to start I want to strongly encourage Congress to make addressing the permanency of tcja your top priority taxpayers and their advisers are Desperately Seeking certainty and predictability so they can plan for the future without Clarity businesses and farmers are likely to delay or forego investment
▶ 0:11:07which could stall economic growth and depress job creation Congress cannot risk waiting until later this year to address these important tax Provisions when it is simply too late for taxpayers to react the 199a deduction has been critical for businesses organized as sole Proprietors Partnerships llc's and S corporations which represent nearly 99% of my business clients and the vast majority of businesses in Michigan and Nationwide
▶ 0:11:37they also employ most of the country's workers 199a helped many small business clients stay competitive with large corporations on wages and hiring when inflation was skyrocketing and during postco economic rebound many of my clients increase their investments in equipment to make use of the 199a deduction as well as the last full years of bonus depreciation if the 199a deduction expires the taxes on pass through businesses will go up sharply
▶ 0:12:08while C corporations and publicly traded companies will continue to enjoy their lower 21% tcja permanent corporate rate this simply is just not fair to the Main Street businesses and farmers of our country 199a should be permanently extended period full bonus depreciation under the TC ja has also been a game changer for my business clients immediate deductions have freed up capital for investments in state-of-the-art equipment resulting in increased
▶ 0:12:38efficiency production and job creation lower marginal tax rates for nearly all taxpayers have bolstered the financial health and of businesses and farmers and provided relief for Working Families when marginal rates are higher families must tighten their belts and businesses face greater Financial strain at the expense of growth opportunities when marginal rates are lower Working Families have more take-home pay and they can invest more in their families and communities if the
▶ 0:13:09marginal rates are not permanently extended nearly every American worker will go home with a smaller paycheck starting in just 11 short months the doubling of the standard deduction has simplified tax filing for millions of Americans and provided substantial tax savings for middleclass families in addition to these tax savings the Simplicity has saved taxpayers valuable time and enabled them to focus on running their businesses farms and households instead of navigating complex
▶ 0:13:39tax filings the expanded child tax credit under tcja has been a Lifeline for working families and has even had a direct impact on my own family my brother who works as a public school teacher relies on this child tax credit to help provide for his wife and seven children between the ages of four and 19 his modest salary is stretched thin and the child tax credit has been essential to covering their family expenses for families like this the expanded child
▶ 0:14:09tax credit is not just helpful it is indispensable and must be retained the estate tax presents a constant source of worry and financial burden for many family businesses and Farmers that I work with many business owners and family Farmers may appear Wealthy on paper but almost always lack the cash or liquidity to pay estate taxes I have seen this lead to family businesses closing or being gobbled up by multinational corporations because they realize they cannot afford to pay
▶ 0:14:39the death tax additionally compliance costs related to the estate tax amount to over 18 billion annually according to the tax Foundation a figure that actually exceeds the annual estate tax revenue collected that's right more money is spent annually complying with the tax than the government collects in the tax itself the estate tax is if the estate tax is not addressed this year the current exemption will be cut in half doubling or tripling the amount
▶ 0:15:09of unexpected families forced to pay this death tax Congress should pull the plug on the death tax for good no grieving family has to deal with this unfair double tax small businesses and farms are the heartbeat of their communities creating jobs and fostering Local Economic growth as someone who has worked closely with businesses farmers and Working Families for 35 years I have seen the tangible benefits of the tcja firsthand I urge
▶ 0:15:39Congress to permanently and swiftly extend these Provisions to provide certainty to America's small businesses farmers and families thank you for the opportunity to share my perspective I look forward to our discussion here today thank you miss marpel you are now recognized chairman Smith ranking member Neil and members of the Ways and Means Committee thank you for your invitation to testify today on the importance of the child tax credit my name is Margaret
▶ 0:16:10marpel and I'm the mother of three children all boys ages 9 2 and one before I first became a mother in 2016 I did not know about the child tax credit I also did not know how challenging it would be to provide for my children this challenge increased when I became a single mother in 2017 After experiencing a betrayal and divorce for 4 years the child tax credit served to lighten the load of providing for my son with one income and child care expenses
▶ 0:16:41it was especially helpful to me in 2018 after C Congress passed the tax cuts and jobs act doubling the child tax credit to $2,000 I remarried in 2020 and for two years received the child tax credit as a two income household my husband and I had two more children and at the end of 2022 I decided to stop working to give my very young and active Sons my full time and attention at home last year with only
▶ 0:17:11my husband's income supporting our family of five we witnessed the child tax credit making all the difference my husband and I both have college degrees we have no school debt or credit card debt yet the majority of our money goes to covering the essential yet astronomical costs of Medical Care grow groceries and gas it takes us over a year just to pay the hospital bill for simply giving birth to a child with an income of 75,000 and without the child tax credit last year we would have owed the
▶ 0:17:41government over $2,000 what a discouragement it would have been to have yet another financial burden placed on our shoulders after filing our taxes however because of the child tax credit we received back over $3,500 at times the money we have received from the child tax credit has been the only money in our savings account we are not looking for a handout my husband and I understand that it's our job to provide for our children what we want is an opportunity to
▶ 0:18:11thrive we want to be able to save our hard-earned money for our children's future so when they leave home they are not burdens on society but burden lifters this is what I know about being a hardworking mother today in America whether single or married I am raising children in a culture of giving up at every turn there is a temptation to give up on your marriage on your children on yourself just look at divorce rates suicide rates and abortion
▶ 0:18:41rates people are giving up on children before they even come out of the womb but all human life from conception to Natural death is valuable as a mother I am unwilling to give up on my children children indeed are the future of our country and like millions of other young people I am ready for America to be a place again where families can truly Thrive the child tax credit promotes the flourishing of families and when American families are strong America is strong the child tax credit
▶ 0:19:11is a simple yet significant way the tax code can communicate the value of hardworking parents trying to provide for their children under the current weight of high inflation and an unmanageable cost of living the financial benefit of the child tax credit lightens the load of the financial burden parents carry but also serves to affirm and enforce the value parents hold we don't want to be rescued we want to be valued parents need to hear from their government leaders don't give up your dedication
▶ 0:19:42and sacrifice remains valuable to this country without the child tax credit how else would the government show it supports the important social role of parents making the the child tax credit expansion within the tax cuts and jobs act permanent would ass assure parents like me that our value to this country will not be forgotten as parents persevere and as the government prioritizes financially what's truly important I believe America's current culture of giving up will turn into
▶ 0:20:12a culture of life and strength finally I want to thank this committee for leading the way and passing the bipartisan tax relief for American families and workers act last year that bill if it had been signed into law would have helped the child tax credit reach work and growing families like mine and updating the child tax credit for inflation would have served to lighten the heavy load parents are are already carrying as we work to provide for our families in this economy I hope you will consider
▶ 0:20:42parents like me when negotiating and crafting the upcoming tax package and look for ways to further extend the 2017 child tax credit expansion Congress has an opportunity this year to help American families flourish by making the T CJ's child tax credit permanent and consider further improvements as was done in the bipartisan tax package last year thank you for your opportunity thank you for the opportunity to testify on this important issue thank you Miss
▶ 0:21:13couch it's great to have you back with our committee um I believe the last time we saw you was at a field Hearing in Peach Tree City Georgia so we're we're glad to have you back um you're now recognized thank you good morning chairman Smith ranking member Neil and members of the house Ways and Means Committee my name is Allison couch and I'm the president of ignite accounting and business advisors thank you for inviting me to your hearing today to provide real world testimony on critical issues before you
▶ 0:21:43as many of you may remember this is my second time that I have testified before this committee on the important issues being addressed today in April of 2023 I came before the Ways and Means Committee at a hearing in my home state of Georgia to discuss the challenges faced ing the small businesses that my team and I work with as well as what your committee can do to support the problems that they face during that hearing I underscored the need for Congress to renew provisions of the tax cuts and jobs Act
▶ 0:22:142017 that small businesses have become dependent on particularly the 20% small business deduction section 199a and work to reduce regulatory burdens on small businesses so that their limited resources are not consumed with meeting this honorous requirements today my testimony will be much the same as we get closer to critical parts of tcja expiring at the end of this year the clients that my team and I support
▶ 0:22:44still lack the certainty of whether or not many of the provisions that their businesses depend upon will be extended these include the 20% small business deduction and reduced rates for individual income tax brackets moreover they are still faced with steep regulatory requirements imposed by taxing authorities that deplete much of their time and efforts for those new to the committee I sit before you today with the perspective of true American small owner
▶ 0:23:14my own small business ignite accounting and business advisors is an accounting firm based in Columbia County Georgia my small But Mighty team Services over 200 clients by providing bookkeeping financial statement preparation sales tax payroll tax property tax and income tax services as I said in my previous testimony my business is a small business that nurtures other small businesses and a critical aspect of our work is providing Financial advice to
▶ 0:23:45our clients which can often include providing a listening ear and encouraging words and that perspective is a crucial part of any testimony presented before you in my April 2023 testimony I underscored the need for Congress to act to preserve the 20% small business deduction in that testimony I stated that the tax burden on small businesses was already incredibly heavy and allowing this deduction to lapse when it has been in place for so many years will not feel like a sunset
▶ 0:24:15but a tax increase today with this section of the tax code set to expire in less than one year this remains true and I urge Congress to act swiftly to renew it the small businesses that I work with have become dependent on having access to these funds and they need the certainty provided by making the 20% small business deduction permanent my typical client generates 3 million or less in annual revenue emploees an average staff of 10 people and depends on the
▶ 0:24:45small business deduction I have practiced public accounting for 21 years and can tell you without a doubt that the 20% small business deduction has been the single most beneficial tax deduction for small owners moreover this deduction is more far-reaching vertically and horizontally to small business owners when compared to other deductions for example depreciation deductions require significant cash flow reduction or taking on debt but section 199a
▶ 0:25:16does not this is true of small businesses Nationwide a recent ey study on the macroeconomic impact of section 199a for small businesses found that 25.9 million small businesses Nationwide utilize this deduction and that it directly supports job creation in the small business sector as part of my testimony today I would like to submit that report to the record another area of apprehension for small business clients is that if
▶ 0:25:46Congress does not act the reduced tax rates for individual income tax brackets established under tcja will increase as members of this committee are aware the 20% small business deduction is a ailable to businesses that operate as pass through entities like s corporations and Partnerships this means that their business profits and the deduction flows from their business return onto their 1040 and Nets there to be taxed at the owner's individual tax rates in fact 33 million small businesses in the United States
▶ 0:26:16are organized as passrs as I stated in my testimony in April 2023 business income is different from business owner income I would like to stress that point yet again increas inre business income allows small business owners to reinvest in their businesses and employees if Congress does not address the changes in the personal income tax brackets set to expire at the end of this year small businesses structured as passrs will be faced with a tax increase finally in my April 2023 testimony I highlighted
▶ 0:26:46the issue of regulatory burdens imposed on small businesses by the IRS particularly the thresholds on 1099 NEC and 1099 K forms the threshold of 1099 NEC of $600 has not been adjusted in decades I would ask you to consider a one-time adjustment of this threshold to account for the impact of inflation over the years with no adjustment where no adjustment has been made and then an annual adjustment thereafter on the other hand while the threshold for 299k has been adjusting
▶ 0:27:17it's moving in the wrong direction for the years 2023 and prior payment apps and marketplaces have been required to send out forms to tax tax payers who receive over $20,000 and have over 200 transactions for 2024 the threshold moves down to$ 5,000 and for 2025 2500 the intention is to further reduce it to $600 for the calendar year 2026 and thereafter for the years's 2024
▶ 0:27:47and after 1099 K requirements are based solely on dollar thresholds with no consideration for the numbers of transactions as the committee reviews the proposals to reduce burdens on small businesses say I urge your members to consider reversing the course on lowering the 1099 K threshold amounts and instead work to increase them thank you for the opportunity to testify today and I look forward to answering any questions thank you Miss silver you're recognized good morning chairman Smith ranking member Neil and members of the committee
▶ 0:28:17thank you for inviting me to speak on why Congress must preserve the tax cuts and jobs act and how its policies ensure that manufacturing REM Remains the driving force of the American economy my name is Courtney silver and I'm president owner of katchi a third generation precision machine shop located in Concord North Carolina since 1947 Ki has been a reliable part of the manufacturing supply chain because we invest in Equipment Technology
▶ 0:28:48and most importantly people I'm honored to be with you today as this hearing marks the beginning of a historic year for the committee critical Pro growth Provisions from tax reform have already expired and more harmful changes are on the way at the end of this year this means that every member of this committee has the opportunity to take real action that supports Manufacturing in America and the stakes couldn't be higher a new study released today
▶ 0:29:18by the National Association of Manufacturers shows that nearly 6 million American jobs are at risk unless Congress presents reserves PR manufacturing tax policies America will also lose more than $500 billion in worker pay and more than $1 trillion in GDP manufacturing will bear the brunt of this economic Devastation with more than 1 million manufacturing jobs at stake this e
▶ 0:29:49economic damage makes sense because the tax cuts and jobs Act was revolutionary for manufacturers after it was signed into law caty experienced the best year in our 7 decade history over 2018 and 2019 we were able to invest more than $1 million in Capital Equipment and create new jobs within catchi we upgraded our security our hfac systems and invested in new technology on our shop floor and most
▶ 0:30:19importantly we provided raises and bonuses to all our employees because without them our growth would not have been possible business boomed throughout our supply chain and demand for our parts soared our typically organized shop floor was covered in pallets of materials to keep up with our customers orders unfortunately beginning in 2022 critical progrowth Provisions began to expire such as immediate R&D expensing
▶ 0:30:50enhanced interest deductibility and full expensing for Capital Equipment purchases and more harmful tax increases are on the way further threatening manufacturers like catchy the loss of the pass through deduction increased individual rates taxes and changes to the estate tax will hurt my ability to grow and create jobs in Concord in addition it is important to preserve the 21% corporate tax rate
▶ 0:31:20and new international tax policies many of which impact cat's customers and suppliers manufacturers know the only way to succeed is to relentlessly focus on the future by pouring resources back into your team and Equipment the tax cuts and jobs act allowed me and so many others to do so with 6 million jobs on the line the time to act is now these policies are vital for our economy
▶ 0:31:51but I also want to share how they are changing lives and opening doors to new opportunities tax reform enabled me to create opportunity KNX an internship program that brings students into to Shadow our team on the factory floor while earning School Credit two of our recent graduates had little Direction on what to pursue After High School thanks to our program they fell in love with manufacturing they are now full-time apprentices and are able to
▶ 0:32:21provide for their families while also contributing to their community and working on a team they admire put simply we are inspiring the next generation of manufacturers in America Congress has the opportunity to help support this important work by enacting permanent and consistent progrowth tax policy thank you and I look forward to your questions thank you Mr Duke you're now recognized thank you chair
▶ 0:32:51Smith ranking member Neil and members of the committee my name is Brandon Duke and I'm senior director for economic policy at the center for American progress I'm honored to testify today about the 2017 tax law and the implications of expiring Provisions this year let's start by remembering how we got here Congressional Republicans and Donald Trump deeply wanted to cut corporate taxes in 2017 they also knew that just cutting taxes for corporations without providing tax cets for families would have been a political disaster and because they wanted to pass their tax bill on a Partyline vote they
▶ 0:33:21could not increase deficits beyond the 10-year budget window this gave birth to the bill that passed they made a big permanent 40% cut to the corporate tax rate then they did a series of tax cuts for individuals heavily tilted to the wealthy that expire at the end of this year and here we are today at the beginning of the debate about what to do about them what have we learned first the corporate rate cut the center piece of the original bill was a massive windfall for investors spurring a$1 trillion do surge in stock BuyBacks yet it failed to meaningfully increase
▶ 0:33:51investment and none of that windfall trickled down to ordinary workers and the recovery and housing investment after the Great Recession screeched to a halt after the bill passed CBO in fact projected that quote residential investment is reduced throughout the entire period by crowding out end quote and now CBO says that extending the inspiring individual prisions will shrink the economy in the long run given that the tax cuts didn't trickle down we should then focus on their direct distributional impact who got what any way you look at it extending these expiring Provisions will increase income
▶ 0:34:21inequality cutting taxes for rich people while giving pennies to everyone else the average tax cut for the top 1% of house households is more than 60 times larger than that of the middle 20% of households and even these numbers are too Rosy we are talking about a bill that will add $ trillion dollars of deficits over 10 years these tax cuts numbers include money we are borrowing that we will have to pay back one day in the form of tax increases or spending cuts One financing mechanism Trump has floated is a giant across theboard tax on all imported goods a range of analyses from
▶ 0:34:51Progressive to conservative think tanks estimate that this would cost a typical family thousands of dollars by making a trip to the grocery or Pharmacy more expensive alternatively they can pursue cuts to vital programs Tesla CEO Elon Musk a co-head of the new Department of governmental efficiency has proposed $2 trillion in annual spending cuts taken literally this would cut every program in the budget on average by roughly 13d including Medicare Social Security food safety inspection cancer and soak research and nutrition for newborns finally the Trump Administration in Congress could find the easiest way to offset
▶ 0:35:22the tax CS is to just not offset them that's what we did last time but there's no free lunch here the tax will likely be paid for eventually in the form of spending cuts or tax creases down the line and in the meantime continued or even higher deficits could mean continued or even higher interest rates that makes housing student loans and credit card debt less affordable for working people we shouldn't ask middle-class families trying to buy their first home to shoulder the burden of financing tax cuts for millionaires this is an especially poor choice when the economy is strong and unemployment is low like it is today
▶ 0:35:52higher deficits can be a useful tool for getting depressed economy to Full Employment but today they just mean higher interest rates the very real danger of cuts programs that working in Middle Class families rely on and higher interest rates highlights why Congress must offset any tax cuts they extend in a revenue neutral Manner and simply changing accounting conventions to pretend extending TXS have no cost does not remove the burden that extending these taxs will place on Federal and eventually on fam's finances the good news is that Congress can cut the cost of extending the taxs by simply refusing to extend them for the top 2%
▶ 0:36:22of households making over $400,000 the treasury Department released analysis last week showing that that that would cut the cost of extending the expiring individual Provisions from $4.2 trillion to 1.8 trillion in other words we are talking about a $2.4 trillion tax cut exclusively for the top 2% of households it's worth noting that $2.4 trillion is also the total amount of cuts to Medicaid and the Affordable Care Act in budget share jod arrington's proposed list of offsets that came out last week these Healthcare Cuts aren't necessary they're entirely about making
▶ 0:36:52room for a tax cut exclusively for the top 2% of households not exciting tax cuts for the top 2% also makes the cost of offsetting remaining taask Cuts easier and makes room for Congress to take real steps to bring down the cost of living by extending the enhanced Affordable Care Act tax credits while improving the earned income and child tax credits the American Rescue plan expansion of the CCC represents the gold standard but I'd like to commend Jer Smith for his work last year on a bipar been compromise on the CTC it would have made a real difference for workingclass kids whose parents do hard work as home health aids construction workers
▶ 0:37:22and waiters preventing tax increases on working in middle- class families next year is not a reason to cut taxes for the wealthy cutting taxes for the wealthy is a choice Congress may make this year but it is a choice given that working in middle- class families will end up paying the price letting the tasket for the wealthy expire is clearly the correct Choice thank you thank you for your testimony um uh we'll start with Miss Gallagher um I'll ask the first question Miss Gallagher one of the major reasons to extend the
▶ 0:37:522017 Trump tax cuts as soon as possible is to give America workers families farmers and small businesses certainty in the long run um small businesses are facing a 43.4% tax rate if the 199a small business deduction as I refer to it expires this looming threat impacts decisions they are making today about whether to invest grow hire the same is true for the 2 million family Farmers
▶ 0:38:22facing a potential increase in their in their death tax if if Congress does doesn't act soon family-owned farms and Main Street businesses will have to start calling estate planners and accountants um to figure out how they navigate the potential increases in taxes so can you speak to how this uncertainty drives decision-making today among America's families Farmers small businesses yes thank you
▶ 0:38:52chairman uh my phone has been ringing off the hook last August um with the pending election of families and business owners and the uncertainty of where this tax change may go uh we have been running meetings and scenarios with our clients for months now trying to plan for the future many successful businesses
▶ 0:39:23do their forecasting out not just one year which is just the Year we're in now but the the most successful ones plan out three years five years 10 years out especially when they're looking at investing whether it's investing into more employees or more equipment that takes capital and it takes time to accumulate that Capital to be able to afford it and so it is imperative as an adviser to
▶ 0:39:53these folks to be able to help them navigate these these tax tax policies I've been around 35 tax seasons and I have experienced last minute tax changes by our government and it is extremely frustrating not only on the taxpayers but frankly and selfishly the advisers as well so I I can't encourage you enough to do this swiftly and quickly to help our businesses and our and our Farmers make some decisions
▶ 0:40:24thank you Miss Miss Marple um we have talked about how Working Families have watched prices rise by over 20% over the the past several years or how wages have fallen 3% since President Biden um took office the last thing families need is to see Washington slashing their child tax credit in half 40 million families would be would be impacted and as a mother can you share what it would mean for families if
▶ 0:40:54Congress fell to act and allowed the cc to be cut in half and how would shrinking the CTC to just $1,000 impact a couples thinking um about starting a family or growing their family thank you chairman Smith and thank you to this committee for holding this important hearing my family and Working Families like mine know the financial benefit of the child tax credit um lightens the load of the financial
▶ 0:41:24burden parents carry but also serves to affirm and enforce the value parents hold slashing the child tax credit in half or by any amount for that matter would only increase the challenges parents face to raise their children in this economy and it would communicate that the government does not value parents Congress has an historic opportunity this year to help American families flourish by making the tcja's
▶ 0:41:54child tax credit permanent and and by considering further improvements as was done in the bipartisan tax package this committee passed last year the 2017 Trump tax cuts revived American manufacturing we we saw 20% growth and investment here at home thanks to policies like 100% immediate expensing that incentivized American manufacturers to buy new equipment and expand their operations stronger manufacturing at home
▶ 0:42:25not only contributes to to our Economic Security but our national security as well helping secure Supply chains and make us less dependent on hostile Nations like China unfortunately incentives for American manufacturing have already started to go away as what was testified Miss silver um Miss silver as a small business uh manufacturer how has that affected your business planning and what would it mean for you if Congress were to restore
▶ 0:42:56the 100% % immediate expensing thank you for the question chairman Smith um yeah full expensing has impacted me greatly um I I I have a area on my shop floor that um is empty and you know I've I've hit the pause button I've put that Capital equipment purchase on hold um because of these expired tax Provisions it
▶ 0:43:26changes the return on investment calculation for me the business decision feels more risky irresponsible and um it it impacts the creation of jobs it impacts my competitiveness um I'm at risk of falling behind my International competitors um my International competitors are investing in similar advancements that increase their productivity increase their throughput and um so yeah this this affects
▶ 0:43:56my my ability to be competitive and um my my customers are large manufacturers across this country and they really need three things for me and it's high quality precision machine parts delivered on time at a competitive price for me to be able to do that I have to make investments in our people I have to make investments in our process in Technology thank you looking Beyond current
▶ 0:44:27policy um how would businesses like yours respond to new incentives for Dom domestic manufacturing such as a quicker cost recovery for Investments made in new facilities and and other policies that further lower the tax burden on those who produce here in the US as president Trump suggested it would make us more competitive um we would we would grow we would Thrive um we'd be able to innovate more take
▶ 0:44:59um it it would really drive us and it would drive the whole manufacturing supply chain um it it's it's tough to um face uncertain tax code that's that's changing we're a pass through organization and so I pay taxes at the individual rate so I feel like when those rates are being debated um and and changed it feels like you're debating the future of my company and and a lot of times that pass
▶ 0:45:29through income is not liquid it's tied up in receivables inventory work in process and so any policy that Congress can enact that's permanent that's consistent predictable will help us greatly to be able to continue to support the whole manufacturing supply chain in our country thank you Miss silver Mr Duke um I was just curious in regards to um uh the income tax rates and the
▶ 0:46:00tax Provisions that affect people making less than $400,000 a year is that something that you would support making permanent for the people under $400,000 per year if we could find a way to offset the cost by raising taxes on wealthy people deficit Finance tax cuts aren't a good idea right now thank you uh I recognize the ranking member for questions thank you Mr chairman I want to thank our panelists as well it's always an opportunity for uh instruction and and to hear sometimes competing perspectives
▶ 0:46:30so uh M Gallagher are you aware of the fact that in tcja that the Republican Party borrowed $2.3 trillion for the tax cut thank you for your question Congressman Neil I am not in tune with the extent of any numbers or statistics um to that level for for today's um I am well aware there are um plenty
▶ 0:47:01of tradeoffs in all negotiations in all tax policies that that we encounter and so um I I'm I'm not familiar with the exact numbers I'm sorry so let me follow up with that and and ask the following question are you aware of the fact that their intention here is to ignore what is known as the Baseline here so that means they're going to ignore the $2.3 trillion that they borrowed and erase it now just
▶ 0:47:32professionally would you advise your client to ignore their credit card debt or their Mortgage Debt or their property debt and take on more debt if they couldn't sustain it and then complain about the debt they already have well again I would say that um first of all I am I'm not aware about the intention of the Baseline argument um for us here today um there are many factors that go into decisions when I help my clients make decisions
▶ 0:48:02about taking on debt um in particular with my clients not necessarily speaking of the federal government uh sometimes debt is okay and it needs to be incurred and so um I would just comment that um it's it's not always a negative yeah fair enough but would you tell your client to ignore the debt that they have no thank you um M marpel appreciate your comment that were really well done so were you able I hope to have taken advantage of the child credit
▶ 0:48:32expansion that the pandemic relief packages offered thank you Congressman um I'm here today to talk about the current 2017 expansion which has made a huge difference for my family since 2018 and is going to expire in December if Congress does not act I would refer you to the tax experts on this panel who can speak to you about the other policies fair enough but I assume that because of electronic deposit you were able to receive the enhanced
▶ 0:49:03child credit during pandemic um I was able to receive that yet thank you thank you so uh Miss silver were you able to take advantage of any of the pandemic relief packages for investment in equipment or some new opportunities within your business I have a huge Precision manufacturing constituency so I hear the arguments making yes I was you were okay did that add to the national debt I'm sure
▶ 0:49:33it did thank you um Mr Duke so the proposal here today based on the statistical data that that we've heard is that last year or as the proposal goes forward here a taxpayer who made a million do last year they're going to receive a tax cut of $78,750 $717 this is not according to the Democratic National Committee this is according to the Joint Committee on taxation
▶ 0:50:03which we all have the highest regard so a taxpayer who made under $50,000 is going to get $273 do you want to expand on that sure so we know that the tax package is Progressive we know that the tax cuts for high-income households are just much higher than they are for low-income households it's true as a percentage of income too we know that extending them is going to increase income inequality and I think the treasury analysis put out last week just
▶ 0:50:33really you know throws it out there that we have a $4.2 trillion tax cut but you can really break it into two pieces there's a $2.4 trillion tax cut for households making over 400k and um a tax cut for low and middle- income families in upper middle class families of 1.8 trillion sure so I'm delighted that you were able to take advantage of the initiatives that we put out very pleased and that's why the American economy as The Economist pointed out and the financial times pointed out as the Envy of the world we rebounded so much more quickly than the rest of
▶ 0:51:03the world however it did add to the debt we acknowledge that the plan here today that the Republicans are talking about is to ignore what they borrowed and proceed with more borrowing and then complain about the size of the national debt I yield back my time Mr Buchanan is recognized yeah thank you Mr chairman I I want to get one thing off the table a little bit as chairman of the Florida chamber I can tell you we had
▶ 0:51:33130,000 businesses this is a while back there 90 95% were passed through entities and they're dealing with these these potential tax rates that's what scares a lot of people in our area most of the companies our 25 employees or less I ched our local chamers same thing couple thousand businesses 25 employees or less just like you've got Miss over that's the PE that's where we need to be focusing on the idea that you could have a tax rate of 43%
▶ 0:52:04and then many states add another 10% it's over 50% tax rates throughout the country that's why so many frankly I'll just be caned are moving to Florida I hear it all the time moving to Texas because they don't mind paying a little bit more but they're not going to pay 50% plus rates so I want to say that uh the DC the T tcja was rocket fuel for American economy businesses grew rapidly America paid families paid less taxes and government revenues increased due the economic
▶ 0:52:35growth allowing the legislation to uh expire would raise the taxes on over 200 million uh folks from that standpoint the point I want to make the big point I want to make is I introduced hr1 137 tcja permanency act uh that would make the law permanent and Miss silver you you you touched on a little bit on expensing or depreciation but a lot of people don't realize to me it's kind of a timing thing we had bonus depreciation
▶ 0:53:05where you got 50% plus 10 but it makes such a huge difference having that ability to deduct that even though it's a timing type issue is that your thought it absolutely um it's as a small business we well there are small businesses that have long-term contracts and in my business we typically don't so there is a lot of uncertainty as you look forward in your business and think about your strategy
▶ 0:53:35so yeah absolutely being able to to deduct that full investment how many employees do you have 20 yeah and that's my point most of America when they don't it's not the gigantic corporations yeah they're out there in a big way you know in terms of few numbers but a lot of employees or the billionaires and I'm not defending any of that but I am defending defending people like yourself startups and people that are entrepreneurial have it all on the line every day need to make a payroll and that's why this is where I look at it
▶ 0:54:06from these tax advantages Mrs Gallagher what's your thought in terms of you mentioned I don't know if you touched on much 199a I can just tell you in our area it's huge it's a big issue I was looking at it I've got 82,000 businesses in my district alone uh 82020 that are might be subject not all of them but some of them to 43% bracket but what's your thought on the 199 my thought on 199a is it needs to be extended period
▶ 0:54:36um it has been a Lifeline for our pass through businesses which I just testified are 99% of my business clients they're sole Proprietors they are Partnerships s corporations all pass through entities that can benefit from the 199 a uction so I would say if if the other important thing about 199a is it gives our small businesses and passrs parity
▶ 0:55:07to the C corporations and the publicly traded companies their tcja lower rate of 21% was made permanent whereas the 199a was not and I just think it is unfair to our Main Street businesses and our farmers s to have this expire and to your earlier Point pay upwards of potentially 50% in taxes when SE corporations are going to be
▶ 0:55:37at 21 in fact we will see a number of our pass through entities contacting their lawyers and accountants to become sea corporations that's what business owners do that's I got cut on top short on time but that's the one of the biggest issues is where's the fairness I start out see Corporation 40 years ago now we're in pass through entities my kids run uh but you know we're looking to go back to C Corps if that becomes the reality we don't want to but that's that's where we're being driven to
▶ 0:56:07potentially exactly so but again I just want to thank all our panelists today for your input thank you back thank you Mr dogget thank you Mr chairman and thanks to our Witnesses I'm for a dramatic increase in corporate taxes we have to increase taxes on the wealthy for getting our guys tax cut we've got to cut spending which they're going to resist where does the tax revenue come from corporations and the wealthy and when they start squealing we have a conversation
▶ 0:56:38we're all Partners in this everybody's going to take a little pain those are not my words they're not a message from the progressive caucus but rather the recent comments of Steve Bannon sometime Trump advisor and about as Maga as you can get he reiter ated them this very morning uh this committee has got to decide uh will it maintain its traditional allegiance to the plutocrats or help Working Families some of whom
▶ 0:57:08are represented here on today's panel it's encouraging that for the first time we see at least some elements of the Republican party that recognize tax reality that you just can't cut revenue and add without adding to the national debt and you cannot just pour some magical dust on it calling it changing a a line and ignore what you've done uh spiraling Republican spiraling
▶ 0:57:38national debt has been something that some members of this committee had previously said was a national security crisis well it's a crisis just as much if you do it through more tax breaks more L gas for the billionaire class for the multinational corporations that are paying a tax rate today that is a fraction of that paid by Main Street businesses uh and by most Americans and there's further trouble for Working Families in the plans
▶ 0:58:08that Republicans are advancing only last week president-elect Trump told Americans that on food we can expect quote some pretty drastic price reductions I think all of us would wish him well on that and eagerly await his fulfilling his promise oft repeated to lower drastically the price of food most economists however are concerned that his policies will have exactly the opposite effect indeed the minutes
▶ 0:58:38of the last Federal Reserve meeting suggest that we may already be paying higher interest rates because of their concern that Trump WIll Stoke inflation this is especially true regarding his declaration that quote the most beautiful word in the dictionary is and it's my favorite word well in Texas a trump grocery tariff tax which he can impose as soon as next Monday will likely increase grocery prices of
▶ 0:59:08most every vegetable and most fruits that we by overall Republican eagerness for a trade war that no one will win beginning with the imposition of multiable trump tariff taxes a regressive form of Taxation and the resulting retaliation by other countries and Republican Reliance on tariff taxes to offset their tax breaks for the super wealthy will continue to shift the tax burden to some of the very type of businesses that are represented
▶ 0:59:39on this panel indeed one recent study found that if the uh tax breaks were combined with the Tariff increase that the impact would be that 80% of Americans would be in worse condition and let's not forget that the last time uh retaliation occurred from Trump tax tariffs uh that farmers had to be paid billions of dollars in welfare because of their lost foreign markets now the impact
▶ 1:00:09of the 2017 Trump tax scam was to add about $2 trillion to our deficit and now it's proposed that we add another four or five trillion the effect on Americans is that 7.8% was the tax rate paid by the top multinationals in one year uh last year uh the Pharma industry uh didn't as a group pay any tax whatsoever uh but meanwhile a working mother with two children
▶ 1:00:39uh who has paid the average rate uh was paying a tax rate of 20% that's not fair and I'm glad that Mr Bannon recognized it I hope more of our Republicans will recognize that these large profitable corporations need to pay their fair share uh and so to the wealthiest few in our country The Biggest Loser of their plan overall will be our our debt but the impact that that has on the soleny of Social Security and Medicare and other Investments is also
▶ 1:01:10very critical so as we move forward we need to consider all of these impacts and look for a tax code that is more fair for working Americans and less gift to those at the top and I yield back Mr Smith thank you Mr chairman certainly thank you to our entire panel here today I think this this hearing is very timely it's important I think it it's always healthy to uh look back uh see where we've been where we need to go moving forward
▶ 1:01:40I'm proud to say that the 200 2017 tcja tax cuts and jobs Act was a reflection and a result of several years of thoughtful exchange and really diving deep into what we uh could do at the time to grow our economy create more opportunity create more fairness in the tax code I might add and it it was interesting I think one thing that is left out of the discussion today especially as we heard some testimony
▶ 1:02:11earlier is that even Barack Obama when he was president realized that we needed to be more competitive on the corporate side and propos a reduction in the rate now a different rate than we ended up at but Barack Obama hardly even a moderate president suggested we needed to be more competitive he saw the inversions that
▶ 1:02:41were taking place over and over and over again that I don't think a score has ever truly reflected the damaging aspects of an uncompetitive corporate tax rate now we can uh you know talk about this all all we want and and characterize this in different ways but fact of the matter is we were in a bad spot as a country before tcja and yes had
▶ 1:03:11we only done corporate that would not have been a good look and as we hear here today again the impacts of what we did for families was very positive without going so so far as President Biden did with pushing more money so much money out there calling it tax relief but it was just pushing money out there that triggered inflation so I think it it is incredibly important and I I believe we
▶ 1:03:41owe the American people a discussion an exchange in sharing ideas and reflecting reality that we would shape policy moving forward in a in a productive fashion and when I say productive I I mean uh with this process but miss silver very accurately I believe and described and we sought out in 2017 on productivity for
▶ 1:04:11manufacturers such as Miss silver now I I think it was important that we were agnostic on size uh of a company so that everyone could benefit but but we knew that with increased productivity if a business would see advantages in the tax code to adding new equipment as Miss silver articulated that the end result would be good for the company on a micro
▶ 1:04:42basis but great for the economy as a whole as more us companies became more productive and profitable now call me unreasonable but I think profitability is a good thing profitability around this town is demonized so often I think it's sad and the we owe the American people a better discussion than than what we've uh been seeing uh way way too often here but uh I I just think it's important to note
▶ 1:05:13that the thoughtfulness that went into 2017 I I think think there's a a greater understanding these days that what we did in 2017 was the right thing to do especially giv even the uh the factors to to consider at the time and now looking Looking Backward I'm proud to say we did the right thing now we want to prepare for the future what do we need to do to be more competitive moving forward let let's look at that but let's not ignore the successes that we had
▶ 1:05:43now very briefly sorry I've uh taken up so much time here but miss Gallagher I want to give you more time to elaborate perhaps on you know the the value of permanence whether it's a state tax whether it's 199a the value of permanence and and what that would look like perhaps to an individual business or or even Beyond thank you congressman and good to see you I came to your uh tax team meeting this summer and talk to you and your
▶ 1:06:13folks on this um so permanency certainty and predictability is key for our small businesses and Farmers how can you plan without it I think sometimes I was thinking of a analogy I could give you but I know you all are very busy people so imagine if you will getting your calendar or your schedule the morning of your day
▶ 1:06:44not having any idea where you were going who you were seeing what you were supposed to say what you were supposed to do until that morning that's how how I see this permanency and the need to do this swiftly for our taxpayers they are in the dark and I think certainty and predictability so they can plan is is key it could stunt economic growth and job creation
▶ 1:07:15without it okay thank you thank you I he back thank you Mr Thompson thank you Mr chairman thank you for having the hearing and thank you to all the witnesses uh before I comment I just want to make make uh one point about Mr Neil's comments regarding the fires in California uh I think it's really important to remember that we are the Congress of the United States of America not red blue or otherwise if there's a natural disaster or or a horrific situation such as the
▶ 1:07:45people in Southern California are experiencing as members of the Congress of the United States of America we need to be Allin to provide help irrespective of where the those people uh happen to reside so Mr Neil thank you for bringing that up you know we're going to hear a lot today uh we already have and I'm sure we will for the rest of the year on how the Trump tax cuts delivered for Working Families let's be clear the ones who benefited the most from these tax cuts were the rich the very rich
▶ 1:08:15Working Families receive pennies compared to the billionaires and that's not the only misleading claim my colleagues on the other side have made about the 2017 tax bill they claimed to be champions of fiscal responsibility while it was their tax bill that added 1.5 trillion to our national debt every Economist even the Republican ones say tax cuts don't pay for themselves extending the tcja
▶ 1:08:46would add almost $5 trillion to our debt over the next 10 years and if you add all of president-elect trump list of tax cut promises uh that number jumps up to about $16 trillion the Trump tax cuts did not deliver for the middle class a taxpayer earning a million dollars or more received a tax cut almost 300 times greater than a taxpayer
▶ 1:09:17$50,000 a year the fact is it was a Democrats uh legislation that delivered results uh for economic results for the middle class for example the chips and science Bill the inflation reduction act all contributed to increased domestic manufacturing it wasn't the tax cuts since the IRA was signed in the law companies have announced over $130 billion worth of investment
▶ 1:09:47in clean energy and electric vehicle manufacturing my friends on the other side of the aisle should go back home and see for themselves because 85% of the IRA investments in new projects have gone to Republican congressional districts and the uh 20 the 2007 tax bill raised cost of uh for millions of our constituent 217 tax bill for our constituents by capping the state and local
▶ 1:10:18tax deduction about an $8,000 a year tax increase to people uh in my District um Mr Duke Republicans claim that the tcga is responsible for increased domestic manufacturing uh let's take uh EV manufacturing for for example what have been the benefits of the EV credit and what would happen if the Republicans uh U repeal that so this isn't just an economic
▶ 1:10:48issue this is a GE strategic issue this strong industrial policy that you know the inflation reduction acts EV credits are an example of are positioning us automakers to catch up and lead in global manufacturing Excellence uh firms have invested more than $81 billion in domestic EV and Battery manufacturing since it passed um and it's helping close the gap investment Gap with China making the US EV industry the most invested in EV industry on a per country basis these are the vehicles of the future we can't let China you know dominate that uh that market
▶ 1:11:19thank you uh very much um Miss silver uh you were the past chair of the National Association of manufacturers you uh refer to that in your testimony do you agree with Mr Duke on the importance of the EV tax credit and the section 45 uh X of our manufacturing sector I I can't answer that question but I certainly can follow up with you I don't I don't know about the EV tax credit to speak to it and the advanced manufacturing production
▶ 1:11:49credit I I can follow up with you after this for sure okay thank you uh Miss Gallagher you you talked a lot about uh farmers and you talked about certainty predictability uh would you agree uh that if we really want certainty and partic and uh predictability and we really cared about our Farmers we take this tariff discussion off the table now thank you for that question um I have I've not looked at how any tariffs would impact
▶ 1:12:19our farming community so I'm not um well we have experience what they did last time uh and you heard from Mr Dogg at how we had to bail out Farmers because of those tariffs I know that my farming clients have benefited greatly from the tcja provisions specifically on the 199a full bonus and lower marginal rates and uh the increased estate exemption has been a major benefits for my farming clients thank you Yi back
▶ 1:12:50Mr Kelly uh thank you chairman thank you all for being here and taking a day out of your lives to and talk to people who've never really been in the private sector uh I'm an automobile dealer second generation my son's now running the store my mother and father started in 1953 with absolutely nothing a onecar showroom and about six service bays and worked their taals off S days a week to make it profitable I love people who have to payroll there had been several times and we were doing tcj to begin with and chairman Brady
▶ 1:13:20was talking about it one day I said actually chairman there's two times in my life I pay absolutely no tax and he looked at me and said Mike how'd you get away with that I said we lost money that year isn't it bizarre that we talk about where would the revenue come from well we take a certain percentage out of people's profits with the exception you can lose money and still be held responsible for real estate taxes wage taxes every other single tax that every single American pays every single day and we come here today and
▶ 1:13:50talk about the benefits of tcja was was it really true yes it was to because we actually garnered more Revenue with tcj than we' hadd ever seen before and I can remember being there the day that boat was taken it was the wealthy the wealthy the wealthy they never get taxed their fair share and all of a sudden we did tcja and all these wonderful wonderful people who left America because America was being too tough for them came home they hired people they made Investments certainty is absolutely the most
▶ 1:14:20important part of any business I wish in the business I was in that there would certainty as to who it is is going to be able to buy a car or truck from us tomorrow A friend of mine by the name of uh Leonard pintel who was the mayor of our town he said Mike you know what I would love to see I would love to see that it was required that you have to actually survive in the private sector before you can go into public office and be paid on commission only and
▶ 1:14:51lost your job at least once all these Wonder ful talks that we have going back and forth about who benefits who loses who's paying it I'll tell you who pays it companies that are profitable why did these companies that left America come back because of tcja why did they leave to begin with it's not because they didn't love America they just got to the point they knew America didn't love them anymore we would tax them out of existence and complaint for it's like
▶ 1:15:21the Little Hen right lay hen lay and no golden eggs quit coming and we what happened the H couldn't lay them anymore if we go through all these different things and what we're going to do and what we're not going to do and how difficult it is I got to tell you please please give me a break give me a break Miss silver I've read your testimony first of all you've been through an incredible life the loss of your husband I can't imagine what that was like to go through Miss marel raising children miss gallager working with people Miss couch working with people
▶ 1:15:51look um do you know that in this entity and government you know that during the height of covid we didn't miss one payday I wish I could have said that about the dealership we lost a lot of paydays we lost a lot of paydays but when you come down to tcja and what were the benefits of it and what where did we hurt people and who did we go after and all the rest of this back and forth listen all of you was life better under tcja when
▶ 1:16:21we made that change and we did that tax change in 2017 did America start to Blossom again did the people seem to come back to America did we start paying more taxes because we had people making money and businesses being profitable I mean silver I know a lot of people that do what you do this is a tough tough business but all of you if you just please weigh in I get so tired of people talking about tax revenue who've never had a worry about making a profit in order to
▶ 1:16:51pay taxes if you can all and I know you've all given your testimony today and you took a day out of your life to come here but miss miss I really was reading about what you because I have so many people back home that do what you do and how tough it is it's no bit of roses you compete against a lot of people so if you please share more because I got your testimony was incredible and all of you thank you so much Miss marel congratulations uh sounds me like you're raising a family well thank you for your comments Congressman
▶ 1:17:21um I I could throw some color on this as far as um um how complex this is so to to take raw material and to transform it into a useful object that we all benefit from is extremely tough um there's a whole lot that has to go into that we have to make in like I said earlier have to make investments in our people um processes in Machining technology and um you're right there's
▶ 1:17:52definitely years where you don't make a um but just if you take this piece of paper okay and you slice this TW let's say you slice this 20 times in width if you take one one of those strands of 20 that is the tolerance that we are holding on Dimensions that on parts that we manufacture um that's too tense you
▶ 1:18:22can't see that with the human eye this is not me buying equipment pressing a button and a widget comes out this is this is uh a ton of small businesses like you said in your District um and so we need progrowth tax policies um that are permanent that are consistent that are predictable to help us be able to grow because our manufacturing supply chain in our country needs us they need us to grow
▶ 1:18:52they need us here yeah well you know what I appreciate your testimony I think you know the rest of the world keeps hoping that America will raise its tax rates again because then they will see this group of people who were staying in America come back over and start their business with them uh if we make it impossible to be profitable here people will leave they did it before they'll do it again we've looked at the greatest tax revenues we've ever had uh I don't this is not a trump issue with me it's not a red issue or a blue issue as my friend Mr Thompson these are red white and blue issues if it's not
▶ 1:19:22for America I don't care about any else in the world if America is strong the world is strong and the America is safe thank you all so much for being here chairman thanks for having this and uh let's go tcja part two and watch America rise again thank you Mr lson thank you Mr chairman I thought you were going to say let's go Notre Dame you missed your opportunity there but uh I left that out yes go Irish right but uh thank you Mr chairman for uh this uh hearing and uh I want to associate
▶ 1:19:53myself with the remarks of Mr Neil and my colleagues that the the witnesses have been outstanding and uh when you listen to your testimony uh I think you can see that there's a desire here on both sides of the aisle help and but that help all comes down to fairness at the end of the day and the quandry that Mr Neil
▶ 1:20:23presented I think is one that this committee needs to sort through and have the on and the other thing that he talked about is that you just can't ignore the obvious in what's in front of you and from my perspective as a ranking member and the Social Security committee we can't ignore the obvious
▶ 1:20:54you think any of the witnesses do you know the last time that we extended Social Security benefits in the United States anyone want to venture a guest it's not a fair question to you it's it was 1971 Richard Nixon was President of the United States could any of your businesses or households survive if the last time the responsibility which is that of
▶ 1:21:24the United States Congress and this committee to adjust Social Security including the unfair policies of taxing your Social Security when you retire uh I think the American people rightly need no longer we cannot ignore these issues 70 million Americans
▶ 1:21:56rely on Social Security and with 10,000 Baby Boomers a day becoming eligible for Security that's 3.65 Americans becoming eligible every year and we have an extended benefits in over 50 years that's an outrage and when you look look at its impact on
▶ 1:22:26people more than 5 million Americans getting below poverty level checks for about 35 million Americans in total the only benefit they have is their social security that they paid into this is an earned benefit and the responsibility is that of the United congresses I'm looking forward to working with Mr eses and I believe
▶ 1:22:56my colleagues on the other side of the aisle care as deeply about this issue as we do but we can't ignore it everybody cares about the national debt everybody knows that we're going to have to raise the debt ceiling and we know that we have work in front of us and yet when we talk about the fairness where you see disagreement is when you see all the money going
▶ 1:23:26in One Direction and not even using capitalism's greatest tool for Equity Social Security make sure that that's the great including tax breaks for people on Social Security including what parents get and what children get what surviving spouses
▶ 1:23:57get this is why these are important programs in a democracy and why this committee as the chairman started out today talking about our importance and significance no greater number than 70 Americans that need a program addressed that hasn't been touched by Congress to enhance it
▶ 1:24:28in over now going on 54 years I yield back gentl Mr Scher is recognized for five minutes thank you Mr um and for all of our members here um what we're doing actually is serious um your country borrows about 70,000 every second um the cost of
▶ 1:24:58the the the expected additional revenues from taxing everyone more with the expirations at the end of the year would be about $15,700 a second the scale of these terrifying but as you'll notice when you hear the left and then the right going back and forth we seem to cherry-pick comments over and over over that mathematically don't actually walk through the complexity
▶ 1:25:29um the fact of matter is today's tax system is the most Progressive ever Rich pay a higher percentage of federal income taxes now did they get benefits of course but the fact of the matter is how many did we completely from paying federal income tax and they still have their payroll taxes um also and Mr chairman um for submission to the record I would like to actually put in a series of documents that show the best estimates are almost 70% of the
▶ 1:25:59corporate income tax benefits actually go to the worker and vice versa if you raise corporate taxes about 70% is the mean come out of the workers wage growth um and we you look I'm sure you were all with baited breath on the report from CBO last night I hope that was a UC with that objection so all right good cuz I got a big stack for you um
▶ 1:26:30how many of you saw the CBO report that came out yesterday basically saying in eight years or so the United States has more deaths than births this is more than just what we're going to extend in the expiring tax policies the fact of the matter is the world we're dealing with today is different than those of us who worked on tcja in 2017 um couple other things I I sort of want to walk through um
▶ 1:27:00we have the reports and it's been supplemented a couple times um CBO but it's all very very recent that shows we maximize GDP growth and wage growth if we offset most of these tax extensions because you don't bleed out the capital stack that's required so you actually have lendable borrowable money for your businesses well that makes the world difficult um but a couple other things I do want to walk through
▶ 1:27:30here on both CBO and tax Foundation charts and this will also be submitted for the record basically showing that if we had done expense the expensing you know the series of research and development expensing Capital expensing it actually has much less costs and actually equal to or greater than economic velocity in than we did in the industrial policy of what was done
▶ 1:28:01with the IRA and the chips act because it has a better distribution those dollars actually ultimately go where it maximizes investment velocity and I'm s sorry but this is maybe the most important Committee in world can we get our basic economics and our math right because this is a big deal you have a country Mr
▶ 1:28:31chairman that is now facing a movement around the world where government debt is up almost a full point since where we were in December if we go to a five handle on us sovereign debt over the next 10 years that's almost 9 trillion additional borrowing to just pay for how does this committee produce policy that says we're not going to raise taxes on working people we need our
▶ 1:29:01small businesses to be to hitting a new productivity curve because that's how we survive but at the same time how do we thread the needle and communicate to the world debt markets that were serious please don't keep raising our interest rates because at this moment if where the interest rates are going just that incre increase of going to a five handle is double is actually double the cost of extending all these tax
▶ 1:29:31Provisions understand if we don't get this right the debt and bond markets are going to run this country not us with that I yield back gentleman yields Mr Davis you will recognize for five minutes thank you Mr chairman and let me thank all of our Witnesses you know the 2021 child tax credit expansion almost have child poverty in just one year it pains me that
▶ 1:30:02the Republican expiration of the 2021 child tax credit doubled the child poverty rate in just one year yet here we are again with Republicans advocating an average 7 $8,000 tax cut for millionaires while demanding that Working Families and seniors
▶ 1:30:33pay thousands more in tariffs and lost Medicaid Medicare food student aid housing and Social Security benefits the tcja does nothing to help parents afford child care in 2020 1 the democrat's Family Care Credit Improvement took the benefit from $600
▶ 1:31:03for one child to 4,000 and from about ,200 for two or more children to 8,000 $88,000 is a lot better than 1,200 the tcga does nothing to improve the Earned Income Tax Credit credit to stop tax and lowincome workers into poverty in 2021 the Democrats nearly tripled the
▶ 1:31:33earned income tax credit and made critical expansions for younger workers older workers Foster Youth and homeless youth the tcga fails to help workers the tcga does nothing to increase housing insecurity in fact Mr Duke mentioned that housing investment is lower today than
▶ 1:32:04below Mr Duke as an economic expert can you speak about how tax policies that support lowincome individuals parents and workers strengthen families and boost our economy for example if we help Parents Without tax liability get up to $88,000 credit for their child care
▶ 1:32:34like we did in 2021 or if we restored the 2021 Earned Income Tax Credit expansion or if we created a new Renters Tax Credit how would these benefits help not only these families but the economy as well absolutely so we've got4
▶ 1:33:05trillion dollars on the table so that's like a lot to work with right and you know as I mentioned in my testimony housing investment basically cratered after the law passed and you know I suspect a lot of the reason why CBO found that growth went down after you extend the tax cuts is because housing investment gets hammered it's a very interest rate sensitive sector so I think a key thing is paying for whatever we're going to do to keep the deficit in check which is going to um you know keep housing investment going on top
▶ 1:33:35of that though we do have room to make investments in families that directly benefit them you mentioned a lot of them I think the child tax credit was just an enormous success in 2021 you know increasing the size making sure workingclass families get you know the same tax credit that middle- class families do um and again you know I think you this committee overseas the largest affordable housing program that we have the low-income housing tax credit that's an example of way of I think a better priority than you know a lot of what's you know in that $4 trillion especially that $2 and.
▶ 1:34:05half trillion doar for households making over $400,000 so I think the Investments you're talking about the child tax credit the Earned Income Tax Credit um you know making more support available to low-income renters make a lot of sense while making sure that we have robust housing investment going by offsetting whatever extension happens by raising taxes on the wealthy incorporations thank you very much I thank you and Mr chairman I you back gentleman yields Mr lahood is recognized for five minutes well thank you Mr
▶ 1:34:35chairman I want to thank all of our Witnesses for your valuable testimony here today on this important subject that we're talking about there was some reference earlier about the election and maybe the the in insignificant uh insignificance uh regarding the results of the election or somehow this was not a a mandate on what happened in the election and this is our first full hearing really since the election and I guess I look at the election results a little differently if we were sitting here six
▶ 1:35:05months ago and I would tell you that Donald Trump would win all seven swing states that he'd win the popular vote would win record amounts of African-American males and a record amount of Afric of uh Latino males um I don't think anybody would have believed us but that was the results of what happened and the other thing that never changed in the election if you look over the last year was 72% of the country thought we were headed in the wrong direction based on the economy and immigration it never changed we're headed in the wrong direction and you you
▶ 1:35:35drill down on that on the economics and we've alluded to it here today uh the insecurities and the anxiety the American people had lower middle class people felt it devastating inflation cost of living increases lower wages uh lack of economic optimism and anxiety and anxiety on living the American dream and that was reflected in the election results and so when we think about those results that's the reality that's the Mandate we have to fulfill
▶ 1:36:06those campaign promises that we made on fixing the economy what better way to do that than continue the tax cuts and jobs act 2017 go back to the tax cuts and jobs act and and again we've talked about some of the results from that here today I would argue my nine years I've been in Congress it's the most important and most impactful vote that I've taken in voting for the 20 2017 tax cuts and jobs act and what it did for the American economy created the best economy in
▶ 1:36:36my lifetime um you look at what it did to the economy higher wages record employment record number of investment in small and medium-sized businesses it it created a booming economy but even going a little further uh we moved 6 and A5 million people out of POS poverty people don't talk about that enough it was the largest migration of people leaving poverty leaving uh welfare programs to go into our economy under the tax cuts and jobs act that's the reality of what happened
▶ 1:37:06so why wouldn't we want to continue that particularly with the election results we just had I would also mention on the international side uh particularly what we did on guilty and beat and the International International tax Provisions um we repatriated $3.5 trillion dollar back to the United States no one talks about inversions anymore pre-tcja companies were inverting uh all around the globe going to other places no one inverts anymore because of the changes we made bringing that $ three and a.
▶ 1:37:35half trillion dollars back to this country those are the tangible Real Results that we had from tcja now I'll admit Co got in the way of that growth path I think we all admit that but what better way now to continue that growth and get back on track with those Real Results then making these tax cuts permanent and that's why we're really here today so um a couple things um as we begin I I just want to mention two goals that we ought we should be accomplishing one we need to ensure that the tax cuts are are preserved
▶ 1:38:06and if we let them expire at the end of this year the average taxpayer in my district would see a 22% tax hike in 2026 uh and I know that percentage is similar to a lot of other districts this is simply unacceptable and we need to work together to ensure that we're protecting the full gamut of tax payers whether they are individuals Working Families small businesses Family Farms and so on the second goal and I hope we can accomplish that I hope we can accomplish in addition is extending the the Trump tax cuts um and it's
▶ 1:38:36uh it's for us to consider the tax proposals that address some of the new challenges that are we are seeing in the country today there are common sense reforms already out there uh that address affordable housing child care and taxation of Americans living overseas and I hope we can look um to better support Working Families and ensure our tax code is more progrowth and evenhanded um Miss gallager I do have a question for you um my district that I represent in Central and Northwest Illinois uh
▶ 1:39:06large number of Family Farms family-owned small manufacturing companies I wonder if you could talk you alluded to it in your statement you made uh about what can be done for farms and and small businesses if we were to let the estate tax exemption uh be cut in half at the end of this year due to the expiring tax cuts can you uh talk about what that would mean to businesses yes and thank you for that great question it it will impact at least twice maybe three times as
▶ 1:39:37many of what I say unexpecting families um I think most are oblivious to potentially this estate tax exemption being cut in half many small businesses yes they do have advisors and and we do our best to advise our clients on these things uh but the middle class businesses uh are the ones who will be unexpecting of this and will not have in my opinion the time or money to
▶ 1:40:07hire the accountants and and and estate planners to develop the estate plan that can protect those assets I would also comment that farmers in particular are are most at a disadvantage um manufacturers and and companies are as well because they have very illiquid assets farmers in particular their values of their land continue to increase it's very valuable but you can't just pull cash out of it unless you sell some of it
▶ 1:40:38or there's no cash there to pay that estate tax so it can be devastating to a family when they don't have the cash to pay that estate tax and they need to plan thank you Miss Sanchez you will recognize for five minutes thank you Mr chairman before we begin I want to just take a minute to discuss the fires that are still raging in Los Angeles um I did travel home this weekend and while my district so far is safe many of our friends and Neighbors in Los Angeles including those in missu District
▶ 1:41:08are suffering and they've lost everything in these horrific wildfires and I have to say it was apocalyptic and just heartbreaking to see firsthand the devastation we've also seen sadly a lot of disinformation and lies that are being spread and attempts to score cheap political points and I just want to remind folks that these are real people who are hurting families who have lost everything and they deserve better from our nation's leaders in the weeks and months ahead I hope that we can focus on ways to help these families
▶ 1:41:38recover just as we have done for victims of other natural disasters across this country um but that's not what we're here to discuss today we're here today because Republicans are attempting to renew Trump's signature tax scam that reward rewarded our nation's wealthiest at the expense of Working Families Republicans say this hearing is about making the Trump tax cuts permanent for Working Families but let's not forget what they really did in 2017 they permanently cut taxes
▶ 1:42:08for large corporations which allows them to continue paying less in taxes than ever before forever Republicans claimed that those tax cuts would trickle down to everyone else but slashing the corporate income tax rate only further line the pockets of millionaires Executives and shareholders Republicans love to claim that they're helping Working Families but the fact of the matter is under their policies Working Families only get the crumbs we need to chart a
▶ 1:42:39new and fairer path in tax policy we should expand and make fully refundable the child tax credit like Democrats did in 2021 which cut child poverty in this country nearly in half we should expand the Earned Income Tax Credit to reach the millions of low-income workers who work full-time but don't make enough to make ends meat and we should increase the child and family caregiver tax credits to help our families manage their exhausting and expensive
▶ 1:43:09Balancing Act of working and caring for their loved ones my Democratic colleagues and I recognize that Investments that directly benefit American families yield much stronger returns than continually cutting tax taxes for the wealthiest in country Mr Duke can you explain what happens when our neediest families experience a drop in income from the death of a parent or a natural disaster such as we've seen in Los Angeles to their eligibility for a child tax credit that is not
▶ 1:43:39fully refundable yeah so I think a good um you know a good tax credit that really supports families reduces income volatility but we can see with the earnings requirement the child tax credit kind of increases that earnings volatility for those low-wage workers because if they lose their job if they have to take time off to you know care for you know a a new child um if you know a loved one dies they have to leave the workforce and not only do they lose those wages but they also lose the child tax credit that's getting hit
▶ 1:44:09twice from that so I think you know that's why full refundability is so powerful and we know look this is America most Americans are connected to the labor market right you know and you know the ones who aren't you know they're retired because they're a grandparent they have a disability or you know they're not in the labor market that year but they were in the labor market the year before and they're going to get a job after it's really hard to get by in America without a job so that's why full refundability makes the most sense now miss marel said that you know they rely on that child tax credit to get by
▶ 1:44:40and that it should be for hardworking families like hers um isn't it true that under the Republican policy you can still receive part of that credit if you make over $400,000 a year for joint filers yes that's right and isn't it true that there is an earned income requirement under this Republican plan so that the poorest who don't even earn enough don't even get the full credit yes that's right does that sound like we are helping the PE that this tax policy that they're trying to push is going to help the neediest
▶ 1:45:10hardest working families in this country no it does not thank you um Mr Duke as you know nearly 80% of the tax cuts for individuals in the tcja went towards White households who represent about 67% of American um taxpayers and the wealth of billionaires has nearly doubled since the enactment of the tcja can you tell us how extending the tcja is going to actually widen that racial inequality yeah absolutely so America is a country
▶ 1:45:40where wealth is distributed very unequally and there's a racial pattern to it the 10% wealthiest white households hold 2third of the entire country's wealth and so when we cut taxes in the way that tcja did that you know drives that disparity and even more again we're going to have to pay for it somehow we're going to do it through taxes on imported goods we're going to do it through cuts to programs like healthcare um now or in the future so again you know I think low middle- inome families are going to pay that price and that is going to drive those disparities thank you very much I appreciate
▶ 1:46:11all of our Witnesses testimony today and I yield back Mr Arrington you are recognized for five minutes thank you Mr chairman um I can't imagine in any world that anyone from any political party would call what happened and transpired as a result of progrowth policies a tax scam you would have to believe you would have to have the fundamental belief that it's a scam because that's not the American
▶ 1:46:41people's money that we're playing with here in Washington that that's actually rightfully the government's money I think because there's no way to describe the lowest poverty rates in recorded history as a scam there's no way to describe the results of the Trump tax cuts and the broader Trump economic agenda deregulation America First Trade and the results of the highest capital investment ever
▶ 1:47:11highest R&D investment ever lowest unemployment rates for minorities and women ever no repatriation of of our jobs and businesses overseas but repatriated Capital repatriated businesses repatriated jobs from overseas back to the great us OFA now if that's a scam as they say I'll I got some ocean front property in West Texas to sell you everyone
▶ 1:47:42benefited and those on the lower income Spectrum benefited the most actually the top 1% paid more so it got more more Progressive in that sense but all boats rose on the tide of prosperity as a result of good low competitive tax rates for our country and for our families I guess my colleagues want to go back to when we had higher
▶ 1:48:13tax rates than communist China what's pro-american about that how are we going to unleash economic growth job creation and prosperity with that kind of tax rate and we reduced it to 21% we're not even in the top quarter of the most competitive tax rates so I guess my colleagues want to go back to being the highest business tax rate in the Free World
▶ 1:48:43it makes no sense the American people had the clearest contrast between my colleagues policies and the associ effects on our families and our economy relative to the democ to the Republicans policies and Associated effects on families in the economy we've never had a clear contrast between the two because we had total control when we passed tcja they've had total
▶ 1:49:13control for the last not the last four years but the two previous years and what's there's 's no comparison think about the last four years we've had the worst most regressive tax in 40 years called inflation on Working Families we had $8 trillion in spending we had higher taxes a barrage
▶ 1:49:43of regulations on our small businesses our our our job creation engine we we we the the production of of of domestic energy the lifeblood of our economy repeatedly with a whole of government assault why wouldn't we experienced the inflationary Firestorm and the cost of living crisis that is decimating families today why wouldn't
▶ 1:50:14we with those failed economic policies and The Reckless spending combined we were paying people not to work we were expanding welfare without even the reasonable Common Sense expectation that if you're able to work and you receive Social Services on behalf of the American people that you ought to be looking for a job or working at least 20 hours a week the American people were clear about
▶ 1:50:44what was on the ballot here and they didn't want any more of the last four years we could not have suffered anym we need to lock in low tax rates for our families and relief for heaven's sakes what did they lose in their income over the last five years and now we what would happen let me ask a question in 15 seconds Miss Gallagher what would happen to an to the to a working family if you put a $5,000 tax hike on them
▶ 1:51:15right now on the heels of the last four years of having inflation burn a hole in their budget in their pocket book what would that do to them you've interacted personally with them so you can tell this story I want to hear it and that and I I you I I you know I'm out of time so can can she answer that question Mr chairman quickly please I'll be brief they will tighten their belts meaning they will have less money to put back
▶ 1:51:45into their households and into their communities which will then stifle more economic growth so it it becomes problematic especially when the credit card debt is the highest it's ever been especially when consumer debts a highest that's ever been especially when we just added three trillion in Consumer Debt especially when their APR went up by 50% they're out of money they don't have any more credit cards there're the PE I yield back Mr chairman Su you recognized
▶ 1:52:15for five minutes thank you Mr chairman as we review the tax credit and jobs act and its effects I I think we should be guided by a simple principle the American people deserve a Congress that puts the American people's interests first all of the American people's interests first not just some I can I can't think of a better place for this committee to do this than then through an expanded and fully refundable child tax credit we've had economists academics
▶ 1:52:45parents Guardians and yes even today uh Miss Miss Mrs G Miss Gallagher as well as m marle talked about the advantages of the child tax credit the child tax credit has helped millions of children Across America including over 11,000 children in my Alabama district it's not just expanding CTC that is important it must also be fully refundable And Timely received to make the SE to make the child tax credit
▶ 1:53:16fully refundable would allow many more families to take advantage of this crucial resource we know that because we know that because in 2021 the Democrats and the American Rescue Plan gave more money per child and made it fully refundable capturing millions of families who make very low wages who may not file taxes or who make no wages at all I think that it matters how we structure the child tax credit and
▶ 1:53:46I think that the plan that the way that we did it under the American Rescue plan was the best way we gave more money to to children and it even uh and we gave more opportunities for their families to have better resources likewise the CTC would have a more immediate impact if if the child tax credit is paid in advance in monthly installments with the option of even disp dis um depositing it directly into their checking accounts
▶ 1:54:16people do not pay for rent or utilities on an annual basis they pay for it monthly then why I'm not sure why we would do the same for CTC uh I think it's really important that we are accountable not just to some of the American families but to All American families I can't tell you how many times I was stopped in the grocery store by many of my constituents uh during the American Rescue plan 2021 year and was told by countless parents how that that increase in money from child
▶ 1:54:46tax credit and being given it monthly was such a huge advantage to them they were able to uh get instruments for their children and better uh food for their children and I think that we as an American people if we're going to spend 4 trillion dollar get $4 trillion dollar into debt we can't do that on the backs of of of our Working Families and our children we should be trying to figure out ways that we can be fairly Distributing uh those resources now another area that the the that that the that
▶ 1:55:17the tax cut and jobs act has negatively impact is in limiting the ability of mun Municipal governments and public entities to improve their communities especially those underserved communities our tax code incentivized these investments in providing tax credits and tax incentives to investors to invest in these communities as a former Bond lawyer I believe we need to use all of the tools in our toolkit to make sure that we're revitalizing communities tcja repealed the advanced refunding or the tax
▶ 1:55:47exempt bonds uh that were Advanced refund so that many of these communities uh these public entities and these governments couldn't take advantage of lower interest rates so the borrowing costs went up I think that there are many ways that we can actually effectively help more Americans and better use the $4 trillion dollars that we're investing uh in expanding the tcja I also think that it's critically important that we look at uh expanding the earn income tax credit Mr Duke you talked a little bit about about
▶ 1:56:17that and I'd like for you to elaborate on ways that we can literally we talk about a rising tide lifting all boats but the fact of the matter is we have an opportunity if we're gonna open the tax code up again to actually benefit more Americans can you talk a little bit about that yeah so low-wage workers without children are the only group that the federal tax code taxes deeper into taxes into poverty or taxes deeper into poverty that's just a policy error that we need to fix so in 2021 with the American
▶ 1:56:47Rescue plan we tripled it for these low-wage workers making like 145,000 a year these people are not making much money but really you know just again prevents the federal tax code from taxing them into poverty and deeper into poverty these are workers you know they're working as cashiers as construction workers it's doing the hardest work in this country and you know really I think we should have a federal tax code that values that work instead of insult it well thank you and Mr chairman I just want to say that if we're going to uh actually look at our tax code again I really would hope that the Republicans
▶ 1:57:17will work with us on structuring this child tax credit the earn income taxx credit uh the uh low-income housing tax credit as well as New Market tax tax credits and advanc refundings so that we can truly broadly affect all Americans thank you and I you'll back the balance of my time Mr Estus you will recognize for five minutes thank you Mr chairman and uh thank you to all of our Witnesses for being here this morning for our first hearing of the 119th Congress we have so much important work to do for the American people and
▶ 1:57:47and I'm glad we're starting with this critical issue of progrowth tax reform before I get too deep into my mark into my remarks I wanted to uh briefly discuss an oped that I wrote for the telegraph uh I'm deeply concerned that the oecd is working very hard to finalize pillar two guidance before the change of administrations next week my house Ways and Means colleagues and I have long warned that the pillar two agreement which mandates a global minimum tax implements a u utpr provision and unfairly treats us tax credits
▶ 1:58:18is detrimental to our country's tax sovereignty to American ingenuity the federal Treasury and our national economy our allies will be best served by partnering with the incoming Administration not the one halfway out the door Mr chairman I ask unanimous consent to submit this offed for the record without objection for the past four years the kenens I represent Americans across the country have suffered under historic inflation thanks to the damaging policies of the outgoing Administration canons need economic relief and the Trump
▶ 1:58:48tax cuts are Surefire away to deliver it it's pretty simple without the Trump tax cuts taxes on nearly every American will go up the average taxpayer in Kansas will pay over $2,200 more in taxes if the trunk tax cuts are allowed to expire but by extending the 2017 tax cuts we will avoid this tax hike and allow Americans to keep more of their hard-earned money by making the Trump tax cuts permanence will do more than just provide sorely needed relief to individuals and families
▶ 1:59:18these tax cuts also help the businesses and in and innovator who create and sustain countless jobs in communities across our country leading to job creation and economic growth we can't go backwards uh from the growth that we've gotten out of 2017 to lose all of these benefits key to this success was the immediate R&D expensing provision after the Trump tax cuts R&D investment grew by 18% amounting to over $2 trillion in new facilities and
▶ 1:59:49activities extending immediate expensing of for our R&D would generate over $70 billion in new investment and support over 21 million jobs we also have the advantage of knowing how beneficial immediate R&D expensing is as we've had three years to see the damage and hardship that happens without it uh since immediate R&D expensing expired in 2022 we've seen investment in R&D drop from over a 6 and a half% increase each year to less than 0.5%
▶ 2:00:19per year that means we have less economic growth fewer jobs for American workers and less tax revenue in recent jobs reports we've seen some job growth but not manufacturing jobs we're competing globally for jobs and Investments and without immediate R&D expensing we risk again losing good Invaders good innovators innovators jobs and dollars to other countries like China that are instead choosing to in incentivize R&D Investments we can't afford to fall behind on the international stage this way
▶ 2:00:49I also want to highlight that as mentioned earlier that in January the House of Representatives so is possible to find consensus on this Common Sense progrowth policies by passing the tax relief for American families and workers act not only this legislation passed but it passed with huge bipartisan support 357 to 40 given the American people's desire for change in our economic trajectory I'm hopeful that this committee and this Congress can once again come together to deliver meaningful tax reform that will boost the economy and allow
▶ 2:01:19Americans to keep more money in their pocket M silver uh some people wrongly conceive uh of the business Provisions in Trump tax cuts as handouts or special treatments for business can you share how business Provisions like immediate R&D expensing allowed you to reinvest in your business to support your employees and customers sure thank you for the question question Congressman um you know manufacturing is a is a total team sport so this expired R&D tax provision has affected my
▶ 2:01:50customers and it's affected my suppliers um so no matter what your size or or structure of your business we are affected by this and I can give you an example I I run my entire business on a software uh on a Erp system it's called and the company that has built that software um is in Texas and they were dramatically affected their tax liability went up um by a lot after this R&D
▶ 2:02:20tax revision expired and so that's less uh they have less ability to reinvest their profits to create new jobs to innovate the so the product that I use every day to run my business so there's a ripple effect um definitely to me Y and that's just one example that's right and we're hearing it over and over with different because of the cash flow cost uh and not being able to ride off that expenses on your taxes that you're not getting the benefits and therefore your customers aren't getting
▶ 2:02:50the benefits so than thank you and unfortunately I'm out of time I've got more questions but I'll yield back Mr chairman Mr to Benny you recognize for five minutes thank you Mr chairman I want to thank all of our Witnesses for uh being with us today um I also appreciate that so many of our Witnesses have highlighted the benefits of expanding the child tax credit uh when Democrats expanded the child tax credit in 2021 child poverty was cut nearly in half with the credit reaching over 65 million kids
▶ 2:03:21um the Republicans version of the child tax credit leaves out one in three children especially the ones who need it the most and when Republicans let the expanded child tax credit expire child poverty more than doubled this data and there's lots of data uh underscores the importance of expanding the child tax credit beyond what was done in the tcja Republicans are focusing on all the so-called good things from the tcja when in reality we
▶ 2:03:51have spent the last s years trying to fix the many mistakes that they made for example Republicans made changes to the R&D credit to help pay for their $3 trillion bill making it more difficult and expensive for businesses to invest in R&D we have a chance to meaningfully help families and small businesses by reforming our tax code but Republicans instead are moving full steam ahead with plans to spend trillions upon trillions on more Trump
▶ 2:04:21tax cuts for the wealthy and well-connected leaving Working Families to foot the bill even worse Republicans say they want to partially pay for these tax giveaways by cutting Medicaid and Medicare which provide basic health care to low income families people with disabilities and seniors gutting critical Investments to combat climate change and imposing across theboard tariffs on Imports which economists estimate would raise prices on the average American
▶ 2:04:52household by thousands of dollars per year this means higher costs at the grocery store gas pump and Pharmacy Counter and these negative impacts will get even worse when our trading partners retaliate by cutting off access to their markets or blocking essential Goods like critical minerals from coming into the United States um Mr Duke can you discuss the regressive nature of tariffs and what the likely impacts are um or that that
▶ 2:05:22what impacts would be of Trump's first or tariff First Trade proposals um let me turn that one over to you yeah absolutely tariffs are most regressive form of tax so for example treasury assumes the bottom 90% of Americans only pay about 20% about of the total individual income taxes that are paid they pay about 30% of corporate taxes but the bottom 90% pay more than half of taxes on imported goods these numbers actually understate the regressivity of tariff because they don't
▶ 2:05:52actually account for the fact that low-income people spend their entire income in a given year just trying to you know make ends meat while millionaires can save their entire income so our income tax code does a good if and perfect job of creating progressivity by taxing High income people at different rates than low-income people tariffs can't do that tariffs still have a play role to play as a targeted trade tool protecting strategic Industries based on National Security industrial strategy and resilience but the more Industries you apply that to the less effectively uh we accomplish those aims and when we're using as a Reven tool 20%
▶ 2:06:23across the board we're essentially talking about a national sales tax it's the most regressive way to raise revenue thank you for that I also wanted to uh talk a little bit about the IRS uh Republicans claim to be concerned about the nation's deficit yet they continue to advocate for and enact policies that increase it um for example Republicans continue to Target the IRS and have rescinded $20 billion of the 80 billion from the inflation reduction act to help make sure that um folks are paying their taxes
▶ 2:06:53um especially the wealthiest are paying their taxes uh Mr Duke can you speak to how cutting IRS funding impacts the deficit yeah sure so the bulk of that IRS funding was dedicated to hiring more staff for stepped up enforcing of existing tax law and frankly modernizing a 20th century you know technology that was at the IRS and the Biden Administration focused those enforcement efforts on auditing the wealthy incorporations the funding was extremely is extremely effective and pays for itself multiple times CBO estimates that a $1 cut uh to
▶ 2:07:24Irish funding will raise the deficit by $2.50 one last thing I'll note Irish funding is a critical part of our law enforcement apparatus tax enforcement is how we caught Al Capone I don't understand why we would let terrorists and money launderers and Fentanyl dealers Off The Hook by cutting Irish funding thank you for that um and thanks uh again to all our Witnesses for being here Mr chairman I yield back Mr smucker you are recognized for five minutes thank you Mr chairman I'm glad we're holding this hearing I think as we uh engage
▶ 2:07:54on uh implementing tax policy over the next uh uh few months and year it's very important to understand uh the impacts of the tcja and the impact that had on the economy and on the American people uh and we're hearing again some tired arguments today about the tcja that are just simply false we've heard that the tcja made uh the tax code more Progressive that's false we heard that tcja benefited the rich
▶ 2:08:24at the expense of Middle inome America that is false uh and I'll I have um Mr chairman uh a chart from the IRS uh that I would like to submit into the record that objection and I'd like to explore a little of this here today uh this is essentially a chart comparing it's directly from the IRS 2017 tax returns filed compared to 2018
▶ 2:08:55uh tax returns filed and there's some striking results here uh the tax cuts and jobs act 2018 of course the first year the tax cuts and jobs act went to effects reduced average effective income tax rates for filers in every one of the irs's income tax brackets everyone with the largest benefits going to the lowest and middle inome household so for instance uh in the 40 to
▶ 2:09:27$50,000 uh income range there were about 12 million Returns the average tax paid by them was reduced by 18% in the 10 to $15,000 range the average tax rate paid was reduced by 71% as opposed to the top 1% they also saw a reduction but much much less uh they saw reduction of less than 5% so the benefits
▶ 2:09:57most certainly acced to the lowest income earners and everyone or every class at least maybe not everyone within that class but every class saw uh a reduction in their taxes paid over their taxes in 2017 we also saw of course uh the poverty uh level reach the lowest ever in the history of the country so the poor were lifted out of poverty one of the interesting things of this chart
▶ 2:10:27as well is that uh we saw upward Mobility as the result of the tax cuts and jobs act so for instance the um number of um individuals in the 1 to $225,000 earnings uh bracket uh was decreased by more than 2 million filers per year so that many people moved up in their earnings uh and the highest increase in earnings over a million
▶ 2:10:58filers uh was in the 100 to $200,000 range they essentially moved up from the lower earnings and were earning more and and uh paying less taxes so you know the American people didn't believe Democrats last session when they said this you they when they when they looked at how they felt after four years of the Biden Administration compared to four years of the Trump Administration they understood that the tax cuts jobs act benefited them they saw
▶ 2:11:28the impact on their pocketbooks they understood that their aage their real wages had gone up about $6,000 uh dollars annually compared to reduction of real wages after inflation with the Biden Administration and they they told us they understood that uh in in the election so you to the Democrats on the committee they didn't believe you last time and they're not going to believe you now so what i' what I'd suggest is that we find ways to work together because I do agree
▶ 2:11:59that uh there there's there's a number of things I heard from the Democrat side of the aisle here today that I agree with and one is I'm concerned about the debt and we ought to be sure that when we're doing the extension of these tax cuts uh that we are implementing policies that grow the economy you can't you can't change our fiscal trajectory that we're on which isn't going to end well without strong economic growth policies and I think we could agree uh on a lot of that and then otherwise we should have
▶ 2:12:29corresponding uh uh Cuts in spending to offset the cost of uh any uh tax increases or or tax extensions that are not covered with additional Revenue through economic growth I think there's a lot of areas for us to uh work together we should do that we should do what's right uh for the American people but these tired arguments about what happened with the tax cuts and jobs act as I said they didn't believe you then and they're not going to believe you today as well thank you Mr
▶ 2:13:00chairman Miss Chu you were recognized for five minutes the Republican tax bill provided a gigantic tax cut for corporations from 35 to 21% leading to billions of dollars of profits for them there were no conditions for this money this bill gave a top tax rate cut for millionaires from and billionaires from 39% to
▶ 2:13:31375% giving them millions and millions of dollars of profit there were no conditions for this money and yet I have just returned from my district in Southern California which has been completely devastated by the eaten fire leaving it an apocalypse in Altadena and Northern Pasadena the fire has destroyed over 7,000 structures left 20,000 people homeless burn
▶ 2:14:01schools and businesses and Community institutions to the ground First Responders have found 16 people who lost their lives and expect that number to rise thousands of people have lost their homes and a lifetime worth of belongings and memories and yet scores of Republicans LED by president-elect Trump and speaker Johnson are already already threatening to place conditions for a Disaster Assistance
▶ 2:14:31to these victims I invite any Republican in Congress who's entertaining these demands to visit my district see the devastation for yourself and look the victims in the eye when you tell them they don't deserve help from their country because you disagree with certain policy IES passed by their state this is the United States of America we help our citizens when they fall victims to a natural
▶ 2:15:01disaster regardless of their political party or opinions and we do it without strings attached just like we did in December for victims of hurricanes Milton and Helen I bring this up because I have not heard of single Republicans suggest that the trillions of tax cuts for the wealthy they're proposing to make permanent should be conditioned or come with strings
▶ 2:15:33attached one thing is for sure we should not impose conditions for helping people at the absolute lowest time of their lives and now I'll turn to another subject Mr Duke I've noticed that you'd written some pieces about pass through entities for the center for American progress even before the Trump tax law passed as a longtime member of the small business committee I'd like to ask you
▶ 2:16:04about the 19 199 Capa deduction I believe one of the major myths of the Republican tax bill is that it helps small businesses through this 199 I pass through actually there is no size restrictions for the size of the business taking this deduction and in fact the largest businesses can take advantage of the deduction
▶ 2:16:34so Mr Duke are all pass through deductions small businesses and can you talk about the kinds of taxpayers who benefit from this deduction and whether it's an effective way to support the smallest businesses in this country yeah so no not all of the businesses that receive the deduction are small businesses it goes to big companies generating millions of dollars of profits they have pass through status and they can you know collect the benefit
▶ 2:17:04and according to JCT more than half of the benefits of this deduction go to millionaires people making over a million dollars each year rich people are both more likely to have pass through income and the structure of the deduction makes it mechanically larger the benefit uh larger for high earners so you know again you know the deduction you know doesn't do anything for a business without profits like a startup um and its value goes up the higher a family's income is so by design it can go to wealthy Real Estate Investors without any employees I think there's a lot we can do to help startup
▶ 2:17:35businesses including expanding the size of deduction for startup expenses you know to $30,000 or $50,000 and a key thing for small businesses and startups is they borrow money so interest rates matter to them which means that you know making sure that whatever we extend we pay for to keep those interest rates low low and in fact uh the pass through deduction uh provides uh for the wealthiest 10% of taxpayers a 3,000 times larger benefit for taxpayers than those
▶ 2:18:05at the lowest 20% he of income thank you I back thank you um Mr Hearn thank you Mr chairman for having this very important meeting um uh Mr Duke I'd like to ask you a question that the witnesses say next to you that take risk every single day they employ people that sign both sides of the paycheck that many times don't get paid are you in business do you hire employ you create jobs and so you don't think that 199a is important at all to anybody uh I'm not
▶ 2:18:35I think that how we pay for things matter so if we can find a good offset for it maybe that's something we can discuss but how we pay for things matters you know I think you and I can agree that the deficit is not on a good trajectory well it's not been on a good trajectory for about 50 years so we could take talk about that for a long time like my colleague to my left who's also a business person we're concerned about it uh we're concerned about frivolous money I mean there there's a belief that we should just tax everybody 100% then we get to decide where the money goes back I don't think you agree with that and I think at the end of the day
▶ 2:19:05we have to respect the idea of when people take risk and try to put create jobs and put Americans to work they're doing that for the independence the Liberties the freedoms that those individuals workers can to enjoy and so they don't have to depend on the federal government before coming here and and still here I've been 40 years in business from starting as a single person in business to creating jobs 1200 jobs at my highest before I started selling my restaurants but in the manufacturing World in technology world I've
▶ 2:19:35seen this as a small business entrepreneur for my entire life grew up in poverty if not for the opportunities the United States of America for the opportunity to take risk and create jobs and help people go to work and experience that same opportunity I wouldn't be here today that's what these folks are doing that's what they're talking about and I I would like for you to share with us where only the rich are benefiting from the tax cuts because everything that I read both liberal left of center right of Center hard right there no one says that when you look at it right now the top 1% pay 26%
▶ 2:20:05tax rate the bottom 50% or 5% pay a 3.3% rate so I hear it's not dollars for dollars and that's how you guys try to make this thing sound so evil but the reality is there's being more PID at the top today than there was prior to 2017 before I got here I wasn't here in 2017 but as these folks have said and want to say to you but they can't ask you questions certainty is important and we're getting ready to see the largest tax increase in American history starting in January of 26 if we don't do something
▶ 2:20:36and we've got to figure out if it all needs to go through or if the entire package or what may needs to be fixed modified adjusted added to so that we have the greatest country in the world for creating jobs it's talked about the 21% corporate rate and I'm speaking to directly to you because the information you're sharing to the committee is what they're asking you the questions on to validate the things that they're saying the 21% rate in the United States of America when you add the average State rate across the United States is at 25% our greatest adversary in the world economically
▶ 2:21:07nobody else is even close as China at 25% do you think it's smart business practice for the global economy for us to be one of the higher tax nations in the world I don't think it's a good idea to borrow money from China I ask you a I didn't ask I didn't ask you about that China has a whole different way I said is it you think it's smart business practices to be the highest tax nation in the world when it comes to Global competitiveness you it matters how these things are paid for you think China worries
▶ 2:21:37about that I mean they they lend money to us they don't have that problem they're lending less today because they understand the importance of what we're doing do you remember in 2017 again I wasn't in Congress but I was in OB server from the outside wasn't even running for congress when the 21% corporate rate was lowered the other nations around the world lowered their rate so they could remain competitive with the United States of America because they were afraid what was happening was going to impact them and it did the 4,000 inversions before 2017
▶ 2:22:07we've had zero since then no one argues that no one is talking about the impact of the tax rate it did change the hearts and minds of America it did and it created corporations here they didn't leave anymore they didn't go buy companies from somewhere else and relocate their headquarters the 199a it puts a parity between small business passs and C corporations of which 95% of businesses in America are pus are there some larger than others absolutely are we going to
▶ 2:22:37be pentative to those people who have fought and grown their businesses from one person as I did to 1,200 employees are we evil because we created jobs okay so why why are we sitting here saying yes some what's the percentage of people of businesses in America that you think you're so disgusted with that are 199a pass through deductions as compared to somebody that's got one person I'm not disgusted by anybody receiving 199 CA I would love to cut taxes for businesses but it's a question of how we pay
▶ 2:23:07for it are we doing it through taxes on imported goods are we cutting Medicaid those things matter too Mr chairman I I run out of time I Y my time back thank you Mr Bole I'd like to thank the uh chair and the ranking member as well as all of my colleagues it is indeed a pleasure to resume my service on the Ways and Means Committee I'd also like to thank uh all of the witnesses for being so generous with your time and and taking now three plus hours out of your lives in order to testify
▶ 2:23:38uh you are a proof of the wisdom of the old saying no good deed goes unpunished so I'm sorry you've had to listen to us for the last three hours and and probably still have some uh some time to go uh I do want to um return to the history of 8 years ago because it's often said that uh history doesn't repeat itself but it does Rhyme eight years ago the very top priority of then president Trump and unified Republican Congress was the soall tax cuts and job act
▶ 2:24:09which according to the nonpartisan Congressional budget office showed 83% of the benefit went to the richest 1% no wonder that in the entire entire history of Gallup polling the only poll to register majority voter disapproval as opposed to approval was the tcja and it wasn't just one poll poll after poll showed only about 40% of the American people supported the Trump tax cuts
▶ 2:24:39while a majority somewhere in the mid 50% range opposed them the wisdom of the American people was proven to be right that added two trillion dollar to our national debt so now that it's 8 years later and they're set to expire the question is how much more debt would this policy add the CBO again released a a report in May and they've testified uh before the budget committee another committee on which I serve
▶ 2:25:09as ranking member they showed in their report the full extension of the tcja would add 4.6 trillion dollars to the national debt so for the last four years I keep hearing from a number of my friends on the other side of the aisle How concerned they are about deficit How concerned they are about debt uh I do tend to notice that whenever there's about to be a republican in the white house we tend to hear a lot less concern
▶ 2:25:40about deficit and debt and the top priority is always tax cuts for the richest 1% of Americans now Mr Duke let me uh with a great first name let me turn to you Brendan and ask you um do tax cuts pay for no and um the $4.6 trillion figure that the nonpartisan professional at the CBO found which is also similar to
▶ 2:26:11analysis done by the Wharton School and by other uh nonpartisan groups as well does that sound approximately the uh the right number yep and you are familiar with some of the other reports and Analysis that has been done by other groups they're all approximately in that $4 a.
▶ 2:26:29half trillion dollar range correct y That's right so it is fair to say that if we fully extend the tcja we will be adding at least $4 trillion more to the national debt that's right now let me turn uh to tariffs tariff is another word for tax is it not that's right so if president Trump follows through on his promise to do wholesale tariffs on imported goods
▶ 2:27:00that would be in reality like a national sales tax on anything that we get abroad correct that's right it's funny it seems to me that one of the big drivers of this past election was dealing with the global increase in inflation a problem that uh ret Havoc all around the world from the baltics and Germany through the UK to Canada the US Asia started in 2021 once economies began to
▶ 2:27:31get back into full swing after the covid pandemic and that we had to restart um uh Supply Chains would tariffs make Goods less expensive for the American people absolutely not in fact tariffs would make Goods more expensive for the American people that's right thank you with that I Y back thank you Miss Miller is recognized thank you Mr chairman and thank you all for being here today
▶ 2:28:02I don't think there's a more appropriate way to kick off the 119th Congress and the Republican leadership than to discuss the great success of the 2017 Trump tax cuts and I'm so thrilled that we have a strong leader who understands business and the economy and the mandates Etc so he's back in the white house and I think that's a wonderful thing American voters have given Congress and our president
▶ 2:28:32a mandate to make permanent the great work that was accomplished in 2017 and it's up to the members of this committee specifically to ensure that these policies are made permanent for our workingclass families and small businesses to thrive I'm a West Virginia and we know small business because 98.9% of our businesses in my home state are considered small businesses the 199a small business deduction created
▶ 2:29:02in the tax cuts was transformational for the hardworking small business owners in my district the small business deduction allows pass through entities to receive tax rates comparable to larger corporations allowing those small businesses to stay competitive and to reinvest in their employees and their Community last year we had Michael irvan who's the founder of and CEO of the coal River coffee company in Charleston
▶ 2:29:33West Virginia and he came and testified before this committee about how his business has been able to utilize the benefits from this deduction and I've stayed in touch with him since then and all the work that the co River coffee company's been able to do for his workers and the community in the district thanks to the 199a the business has been able to provide raises promotions purchase new equipment label making Dei you know
▶ 2:30:03train their new coffee roasters and they were also recognized with the 2024 small communities big solution award for revitalizing communities across West Virginia this type of growth helps small businesses level the playing field with the big corporations and it's happening all over my state workers and businesses alike are much better off because of the 99a and I look forward to extending this policy as part of our efforts
▶ 2:30:33this next year not only does Congress have the opportunity to make permanent the 2017 tax cuts this year but we also have the opportunity to provide additional relief for workingclass Americans that were harmed by President Biden's disastrous economic polic policies one such policy was the 1099 K reporting threshold in the misnamed American Rescue plan act the 1099 K reporting threshold was changed from the time
▶ 2:31:04tested standard of $20,000 and over 200 transactions to $600 over a single transaction as a result Americans using eBay or Etsy to sell or resell products or venmo to collect an are now considered small businesses and will be sent a 1099 K form this upcoming tax year since this disastrous policy was signed into law the Biden administration's IRS twice
▶ 2:31:34delayed implementation and last year illegally changed the thresholds without Congressional Authority all because they knew how catastrophic the policy would be for the average Americans and the gig workers my bill the saving gig economy transpa TR taxpayers act to restore the 1099 K threshold to the pre arpa levels was co-sponsored by all Republican members on this committee and favorably passed out of this committee last Congress
▶ 2:32:04so I look forward again to introducing that legislation to fix this problem that the Biden Administration created to provide relief for the working class Americans Miss couch you helped small businesses and individuals understand these honorous 99k reporting requirements can you speak to how difficult it's been for taxpayers to understand that the new thresholds admits the uncertainty from the Biden Administration thank you for your question yes these thresholds are
▶ 2:32:35uh requirements that are very burdensome for small business owners who already have a lot of compliance requirements that they must do on a regular basis um there's will be a good bit of confusion in our industry professional opinion that folks won't be able to understand the difference between uh personal and family payments through venmo for example versus a payment to an actual small business owner and there's the potential for
▶ 2:33:05people to receive 1099s that should not be receiving them so that's another concern as well uh we would really like to see these thresholds move in the opposite direction of where they're headed now and we appreciate your work and and Bill uh that you've done to help small business owners on this matter thank you I yield back Dr Murphy thank you Mr chairman and thank you for um putting together this meeting the greatest existential
▶ 2:33:35threat to the United States is our debt we're in a uh I'm not an economist by trade but um reading and researching uh this is what's going on right now having sound tax policy that allows us to bring in Revenue you grow our country is critical is everything perfect with the tcja I don't in my opinion no are there a lot of good things yes it grew our economy it grew people out of poverty it helped in every single possible you know
▶ 2:34:05I I hear the phrase so often that they are quote not paying their pair fair share Mr Duke what percent do the top 10% pay in taxes what could you repeat the question of the top 10% what percent of taxes do they pay 76% okay okay just to give you the the answer real quick um the top 1% pay 45% the top the lowest 50% of income earners what percentage of taxes do they
▶ 2:34:35pay 2.3% you should know these numbers I know you know these numbers you know the uh the Biden Administration through the pillar two I'm glad one of my partners or colleagues brought that up is trying to give our taxpayer dollars away to other countries you know Ireland to try to grow their economy guess what they did they cut the corporate tax rate and guess what happened companies went to Ireland because they paid a lower tax rate and guess what companies and businesses do they employ people
▶ 2:35:06imagine that what a novel concept and we what what does some folks want they just want more money for the government so the government can employ people it's good to have people who have run businesses a lot of the folks on this side of the Das have I did it in a medical practice and we didn't get a chance to raise our prices we had to make sure that we knew where money was coming from and how money was spent so you know I I I just get irritated I have to be very Frank and say that folks who talk about business policy who've
▶ 2:35:36never run a business know what the hell they're talking about these are folks who are sitting here who stay up at 2:00 in the morning on Saturday night trying to figure out how they're going to meet payroll you know I I Mr Silver I'm giving my most most sincere condolences to you on the loss of your husband um I went out and toured a sweet potato farm that went through uh you know Generations upon generations and now we have the estate tax that is
▶ 2:36:06come due that would drop that would plummet um how does that work with your family what things would you have to face if that were to occur in 2014 it it could have definitely drastically affected us the expiration of of the estate taxes um you know my husband was the sole shareholder and owner of caty so upon his passing um it went to me and I don't I don't know if I would have continued on with his legacy if I
▶ 2:36:36would have had this large looming tax bill ahead of me um and I'm in a very Capital intensive business which I kind of described earlier so a lot of time we don't have the liquidity in the business to pay such a tax like an estate tax upon someone's passing um and I really view it as double taxation I've I've already paid taxes on my assets I've already paid taxes on my business on my income yeah so
▶ 2:37:07I absolutely and this is the hard part about America I think there's just an absolute theological difference on how we run our economy how do you give people a life that's worth living a steam reason to get up in the morning you get them a job you give them something to create you give them something to accomplish and we should be creating policies that allow us to grow rather than create create dependence if you look about reform if we talk about any of the type entitlement programs
▶ 2:37:37about reform it's not about giving money back so people don't will stay at home it's about giving them a productive life going in growing a job maybe even having a job a business of their own someday to employ people make decisions make payroll and God forbid they actually had some extra money left over that they would actually reinvest in their business to grow their people and guess what you would employ more people and educate more people we get into
▶ 2:38:08this Maelstrom of codependency upon the government check rather than one that you do through your own efforts and energy this is what our tax policy should be burden for I'm happy to work with Democrats this is tcja is not perfect I'm just going to say that I wasn't here at the time it's not perfect but it gives us a a policy that allows American Business and Innovation to grow employ people give them a meaningful life and at the same time I'm going to go
▶ 2:38:38back to my original statement help us cut our deficit thank you Mr chairman I'll you back thank you Mr berer Mr chairman thank you thank all of you for for hanging in there with us um I've fascinated I want to build on things my my good friend Dr Murphy just mentioned you know I I've too a business owner on this side 46 years running the family business and I so I very much appreciated the bonus depreciation the interest deductibility I think 199a was essential when we cut the corporate tax rate to
▶ 2:39:0821% otherwise every subs or LLC or partnership would be fleeing become a C Corp um and I think that we have seen significant small business growth because of that however um this notion that the corporations were over taxed yeah we dropped the rate to 21% which is the large the lowest has been in a 100 years when I started my family business it was 78% and we were still profitable now it's 21% but the effective rate according to the Pete Peterson Institute the foundation
▶ 2:39:38which is a very Republican thing said was the effective rate was 9% in 2018 the last year for which they have statistics 9% so and if you look at corporate taxations as a share GDP is 1.6% that's I think the lowest in the oecd things like Canada 5% so our corporations are contributing relatively little to the tax dollars overall but the fundamental point I want to make is back to Dr Murphy's notion of fair share I would argue that we don't look at what
▶ 2:40:09percent of the tax revenues come from the 1,000 billionaires it's going to be a lot they're they're billionaires but rather how much they have versus how much the rest of us have our income inequality and our wealth inequality is the worst that's been in at least 100 years 19113 1915 we saw this in the last election when so many people couldn't find out you couldn't figure out how to make ends meet and that they fled to a different president hoping that he could somehow solve that problem
▶ 2:40:39the problem isn't that we um and by the way it's not about entitlements I totally agree with my Republican friends it's about work that pays we have so many Americans working full-time one job two jobs three jobs that can't pay the rent they can't make a car payment they can't pay for child care um I had the honor of serving in Switzerland for four years and when I left in 2013 the minimum wage in Switzerland was $488,000 a year um way way higher than it is here and that was a long time ago as
▶ 2:41:09a consequence there's virtually no poverty there's also virtually no entitlement payments there was none of this takers and and and makers um it developed so what we have now is is a significantly undertaxed very wealthy class the 10% and up and not a a lower class that's that's over taxed but rather a lower class that's not given the job opportunities that they need to to make things work and if we as a combined Democrats and Republicans together can can
▶ 2:41:39address the fact that people with $20 million $50 million a billion dollars they don't live a better life incrementally than that someone has 21 million versus $20 million this whole notion that it's all about money rather than about family and community and making America strong again and we screwed up our tax policy so bad um because those taxes not to be used for transfer payments but for making our economy stronger and our companies stronger
▶ 2:42:09let me get to a simple question Brendan um one of the things that my Republican friends are talking about is getting rid of the the EV tax credits that came in the inflation reduction act that suggest it will put 133,000 highquality manufacturing jobs at risk it'll hand this critical future industry Domin over to China what will Ford and GM and all those International name plate manufacturers making cars in the United States think about this policy yeah so
▶ 2:42:40EES are clearly the industry of the future I mean you know this better than me as a former car dealer um and so uh what we didn't see is we didn't see this taking off when we imposed tariffs under Trump just tariffs alone isn't going to do it you need that investment to couple with it right you need to you know make that big push in that industry of the future and again I'm very worried that this industry of the future is going to be dominated by a geostrategic rival the way we won World War II was we had all these civilian industries that could be
▶ 2:43:10dual purpose for you know for military stuff right that's how we won World War II letting China build you know these industries of the future is not the way we're going to do it so again Ford and GM are going to cut back on those investments in the industries of the future that they're going to make if we pull back on these Investments thank you very much I just want to end with the thought think about this room filled 90% with people filled with economic anxiety about their lives and the other 10% with more money than they know what to do with I think there's
▶ 2:43:40something fundamentally wrong with the fairness of an economy and a society like this democracy and we should address it with that a you back thank you Mr kustoff thank you Mr chairman and thank you to the witnesses for appearing today Mr chairman when you opened this committee uh hearing today you talked about the 2017 tax cuts and jobs act and its passage and how it was really rocket fuel
▶ 2:44:10for our economy uh that we still benefit today and I think we all take that to heart and then something that the witnesses have testified to about is certainty what we need to do what Congress needs to do to give individuals and especially small business owners some certainty about the path forward and so I do think it's instructive uh from
▶ 2:44:40the witness's standpoint to talk about the real practical implications of the tax cuts and jobs act and if I can miss couch with with you in your testimony and in your written testimony you talked about the importance from your standpoint about your work with small business owners and how important section 199a has been since 2017 to small business owners I can with you
▶ 2:45:11can can you talk about from your standpoint working with those business owners what it has meant uh not in terms of of being able to um maybe hire more employees but also to to provide for their wages and and benefits if you will yes thank you for your question so 199a has provided tax relief to free up cash flow that's been reinvested in small business by the owners
▶ 2:45:42and as I mentioned in my testimony that small business uh owner income is is different from business income the owners take profits and invest them back into their businesses and that's done by way of raises and and hiring additional employees they also use that money to invest in software purchases and and things of that nature but they also uh they give money to
▶ 2:46:12the tball teams they sponsor youth trips they really invest it back into their communities as as well and that's something that we can't ignore and that I'm afraid would be some of the first things to be cut if uh if that deduction expired you worked with these small businesses before the passage of the tax cuts and jobs act you worked with these small businesses prior to the covid pandemic your opinion if Congress had not enacted the 2017
▶ 2:46:43tax cuts and jobs act and implemented section 199a What would the co pandemic had done to your small business owners that you work with so I worked very very closely with my small business owners during covid I often tell the story that uh I would from sun up to sun down would be on my porch and and there was no time to even I'd be out there in my pajamas because there there would be no time to even properly get dressed you were on the phone with folks trying to
▶ 2:47:13come up with new revenue streams trying to to calm their fears and anxiety and there were a lot a lot of Tears shed because small business owners truly feel that their small business is like a child to them that they've brought along the way and uh Co was a very scary time for a lot of small business owners and I am certain that without tcga that we would have seen a lot more small businesses close up shop during covid had that not been in place thank
▶ 2:47:43you very much Miss couch M Gallagher if I could with you the doubling of the standard deduction has meant according the statistics that we've seen that Nationwide some 88 to 89 90% of tax filers take the standard deduction and don't have to itemize can you talk about your work with uh with uh people you help before the tax cuts and jobs act and and after in terms of the doubling of the standard deduction
▶ 2:48:13and the benefit that it gave yes and thank you for that question the doubling of the standard deduction has not only provided tax savings to middle class families it also has decrease the amount of time and energy and effort that taxpayers uh business owners and uh Working Families alike have had to spend navigating complex tax filings so there it has freed up their time
▶ 2:48:44considerably um I've even noticed in particular even my high income tax payers um have used the standard deduction now for ever since it came into play and the middle class families themselves many of them were under that doubling amount for years they may not have had a large morgage or their income taxes may not have been you know they might have been just barely getting over the hump and so by doubling that it made a big impact on
▶ 2:49:14the middle class families that I work with thank you Miss Gallagher now yeld back Mr chairman thank you Mr Fitzpatrick thank you Mr chairman uh Mr Duke just very briefly um because I want to get to the child tax uh credit but you had meant you had answered a question to my colleague Mr Bole that tax cuts don't pay for themselves ever do you you wish to qualify that at all the tax Foundation which lots of you know people on your side of the aisle um you know site they posted last November tax and quoting tax cuts
▶ 2:49:44typically don't pay for themselves typically I mean could we find some educ Cas but not with a $4.6 trillion you know Mr Duke are you saying that no tax cuts ever generate any kind of Economic Development any kind of Revenue generation that pay for themselves they can you so for example uh you know with the first tax and jobs act CBO found CBO and JCT found that they increased the economy and that cut the cost by about like 20% or so you're saying you gave a blanket statement that
▶ 2:50:14tax cuts don't pay for themselves that seems ridiculously oversimplified if you could name a tax cut that you think paid for itself I mean that would you know that would help me you know figure out what that your answer's question was are there are none they don't exist is that your position I mean I can't think of any um going to the child tax credit uh currently the CTC benefits approximately 40 million families each year obviously the uh the tax cuts and jobs act doubled it from $1 to $2,000 um attach a social security number requirement for the first time
▶ 2:50:45very important um and uh to rorate under current law law uh the CTC is 2K uh per child and if it were to expire it would drop back to $1,000 moreover the refundability was a key element uh the refundability was increased from 1,00 to 14400 moreover uh it was indexed uh to keep track with inflation uh if we do not extend the child tax credit uh all Americans will see their tax refund go down and specifically um for our district in uh in Pennsylvania
▶ 2:51:15uh families would see their household income um household child uh tax credit I should say cut in half uh Miss marpel um as a stayhome mom with three children can you speak to the benefits of the child tax credit for you and your family and the importance of keeping that protected yes um I think that thank you for your question I think that um as a state home mom and raising kids at home there's a lot of pressure at every angle and a big one is financial it it influences
▶ 2:51:45your marriage it influences all your decisions espe especially grocery shopping and trying to meet your need trying to meet needs for your growing family and um the child tax credit is a powerful form of communication and where the government communicates to people like me working behind the scenes that my job raising kids is important to the stability and the prosperity of our
▶ 2:52:16country uh Miss Gallagher and your experience working with thousands of multi-generational businesses um what have you seen as the major pieces uh of the tax cuts and jobs act that have benefited your clients um and if they were to expire how would they uh how would they harm these very people thank you for that question the multi-generational families have benefited across the board on any of the 199a full bonus depreciation
▶ 2:52:46lower income tax lower marginal R brackets but I would say most importantly when you bring in the multi-generational piece to this is the estate tax and the increased exemption I work at length with businesses and farming clients to develop estate plans that work for them and work for their families um and also try to help benefit that the most dollars get to their heirs as possible
▶ 2:53:17and so the estate tax has probably been the most impactful for those types of businesses thank you Miss calgar are you back Mr CH Miss Moore happy New Year everyone I'm so glad to be back with my ways and means family want to join uh the chairman and the ranking member and welcoming all of our new members and welcoming our returning members so grateful to have this extremely great panel
▶ 2:53:47I hope you have had a break so that you could sort of move around a little bit and thank and excuse my departure uh with conflicting obligations you know this hearing I walked back in and I felt like I had never left people making the same comments that taxes are going to go up for every single American unless we extend these these tax cuts um I I didn't miss a be um and I guess I was thinking the other day would have
▶ 2:54:17been my dad's 119th birthday what the first time I heard this I heard it from him is you know is the is the squeeze worth worth the juice and I wonder that particularly when I was listening to your testimony miss gallinger when you were saying that you know this is a that the 199 a were just a great thing and it's it's harder for the wealthy
▶ 2:54:48to uh qualify and I guess that that's my biggest issue with the one 199a cuz all of us want to help small businesses there's not a single person who's been elected to anything dog catcher School Board nothing else that won't tell you that they don't want to help small businesses you know but what is a small business I mean is a small business and I guess I'm going to I'm going to go to um our the gentleman on the end um for some answers to some of these questions is a
▶ 2:55:18small business some of the ones that we have seen that have received the $199 uh uh the 199a where they where they hundred million businesses not so small um businesses that are sold proprietorships have only one employee we've talked about small businesses as being these entities that have less than 25 employees but if they make a hundred million
▶ 2:55:48dollar where where is the break even point so I have in my hand and I'm going to ask the chairman please to let me put this in the record it is a um it's a memorandum uh from uh Thomas AB bartold our chief Economist here uh data on 199a deductions and he says that those taxpayers with adjusted gross incomes of less than $174,000 account for approximately 23% of all all this money
▶ 2:56:19that we spend on it whereas people with gross incomes justed gross incomes above 66 $44,000 placing them in the top percentile account for over 50% of all of the section um of the section 199a deduction so um I guess I'm going to ask um you sir um how how does the distribution ution of
▶ 2:56:49the 199a uh comport with the notion of tax Equity uh and tax fairness yeah absolutely so the data you were citing was on you know who gets the deductions and actually in some ways that understates the regressivity because you know a $1,000 deduction for somebody in the 0% tax bracket does nothing for them a $1,000 deduction for somebody in the 40% tax bracket gets them a lot more right and so what we know is that taxpayers making over a million dollar got half
▶ 2:57:19of the benefits from 1999 cap and so that's the distribution of it and you know hopefully it trickles down but we have a study from a Carnegie melon Economist that shows that cutting the top rate on pastores only help the business owner and their highest paid employees exactly I sure don't have enough time I want to thank all the women who uh really testified also miss silver you talked a lot about being able to buy new equipment but that wasn't the 199a that was like the bonus depreciation stuff that helped you with
▶ 2:57:49that is am I correct well those other B just yes or no it wasn't the 1998 it helped you get equipment yes 19 I have a thousand examples I could tell you of what okay I I got 30 seconds so I just want to talk to these uh especially the moms with the child tax credit I mean this is this is my passion I have three daughters three granddaughters three great granddaughters you know ages six 61 years old this is
▶ 2:58:19so important and sometimes you're happily ever after isn't you know and I'm so glad you found love again and you found a good husband but what I am saying to you is that there are 19 million children whose parents can't get any or very little of this deduction the poorest most vulnerable kids that need to eat and they need to be well off only because their parents don't earn enough money and I think when you start talking about work work conditions I mean this is
▶ 2:58:49this is not Charles Dickens people we're not asking kids to go to work there should why do we have a work requirement in order to make the child tax credit totally refundable um I think that families like yours are great but I think poor families and poor children deserve this benefit as well Mr chairman thank you for your Indulgence thank you uh Witnesses I wish I had more time I got so many questions I'll come and mess
▶ 2:59:19with you guys afterwards if you're still there thank you Mr Mr subie thank you Mr chairman president Trump's tax cuts undeniably sparked significant economic growth the tcja dramatically increased the net worth of Americans especially lowincome and middle inome families in 2018 and 2019 lowincome families increased their net worth by 37% and the net worth of middle-income families skyrocketed by 40% with many of the tcja provisions expiring ing after this year it's imperative that Congress
▶ 2:59:50act this year to ensure that we continue progrowth policies that help American families in my district the consequences of inaction would be devastating my constituents on average would experience a 24% tax increase if the tcja is allowed to expire meanwhile over 55,000 small businesses in my district alone would be hit with a 43.4% tax rate the expiration of tcj would result in small businesses closing jobs lost and American families suffering just so the government can take more of their hard-earned money
▶ 3:00:21the good news is that Congress can avoid such economic catastrophes by extending and making permanent tcga Provisions like the individual rate cuts and the 199a qualified business income deduction which helps small businesses compete and provide jobs for millions of Americans moreover Congress must end the immoral death tax once and for all it is fundament fundamentally unjust that the federal government claims a right to the property of taxpayers just because they die this a moral provision of our tax code has hurt family Farmers for far too long
▶ 3:00:51unless we act millions of family-owned Farms will be subject to even more taxes this time Congress needs to finish the job and deliver a final death blow to the death tax Miss couch I'd like to ask you start with you um as an owner of a small business that also Services hundreds of other small businesses can you please tell us how 199a has a real world impact for your employees and customers yes thank you for your question so 199a has really been
▶ 3:01:21uh wonderful tax relief for True small business owners my typical client earns uh gross revenue under $3 million a year employees 10 or less employees so we're talking about uh coffee shops we're talking about ice cream shops restaurants professional service business owners the real heartbeat of the American economy and I have seen when I 9A have the greatest impact on that segment
▶ 3:01:51of business owners more so than any other form of tax relief in my 21 years in practice so it provides uh the it frees up cash flow to to reinvest in employees to reinvest in equipment and software and as mentioned earlier I think that it really provides a little bit of cash flow to give back to the community to sponsor tball teams to be there for pto's
▶ 3:02:22and things like that which really is very impactful when uh you're such a strong advocate for for your community as a small business owner and if 199a were allowed to expire how would your businesses and clients be forced to respond if 199a expires it will feel like a tax increase on small business owners instead of a sunset of uh of a tax deduction and so what you will see as a result of that is the inability to provide raises
▶ 3:02:52the inability to invest in new equipment inability to really uh R&D and and and different things of that nature that is so crucial when you own a small business and quite frankly I think that it will cost some small business owners their businesses I think it is that impactful and Miss Gallagher in your testimony you note that IRS statistics do not reflect the difficulties faced by Family businesses being forced into fire sale situations by the death tax you mentioned
▶ 3:03:23that this often results in family round businesses being acquired by larger corporations how does this affect local communities and are employees of these family impacted yes they're definitely impacted and I I have seen firsthand businesses having to succumb to multinational corporations or private Equity because they simply cannot afford toay pay the death tax it has impacted the communities that I've seen by
▶ 3:03:54the lowering of jobs and just general economic growth within the community some of those companies have purchased our businesses and taken the the work elsewhere out of the community alog together um I I to have seen an impact on the community on numbers dollars being contributed back to the the community in terms of um High School football sponsorships and any
▶ 3:04:24type of community event you can think of has has decreased um considerably if I could just add one quick thing on the 199a to your testimony um I I think it's important to note that 199a has impacted the small businesses in middle class more than any any of the businesses in this country we talk about the large businesses or the wealthy or the high income and I can
▶ 3:04:54firsthand tell you it does not impact them as greatly because frankly many of them don't even qualify for it if you think about it some of the highest income businesses doctors lawyers CPAs Engineers service businesses don't even qualify for this and there are significant guard rails and limitations in place to make sure that if a high- income individual is going to qualify they are absolutely required
▶ 3:05:24to invest in their employees and infrastructure and equipment to even qualify so I would just like to make sure it's on the record that 199a is the most impactful for the small businesses and the Working Families who run them thank you all for being here today my time's expired thank you Miss Tenny thank you uh so much Mr chairman and thank you for holding this meeting and uh congratulations and welcome to all our new members on both sides of the aisle and uh this has been you know incredibly
▶ 3:05:55uh helpful to me to listen to today I am one of those small business owners that knows what it's like to struggle to make payroll there are times when we couldn't make payroll and I went out and got a 30% loan on a credit card several of them thinking someday we're going to go under uh thankfully that didn't happen and that's I just know that kind of stress you know I sat there and comb through my uh you know accounts receivable list and said gez uh hey you owe 10,000 can you give five how about three how about 500 just to make payroll and every single person that
▶ 3:06:25works in our family business which we still have uh is an important part of our entire family and every one of them has a family and we provide healthc care and a 401k and uh we provide them with a livelihood and uh and a challenging good job as many as we can and it's very important to us and that's why the tax cuts and jobs Act was was so important to my business small family-owned business started in the 1940s by my grandmother handed down through generations to us and listening to you all
▶ 3:06:55today has been amazing and so when I hear that this is about the wealthy I Come From New York we are currently the highest tax state in the entire United States with the highest burden of of compliance and requirements for running a business it's a hard place to be and I ran a newspaper in a dying economy in a dying industry in and we sold it thankfully in 2004 but what I really want to talk about and I think I don't know even where to start you're all so good and you've all given great testimony I wanted to just say something quickly um to
▶ 3:07:26Allison from nfib I just want to thank you because nfib has been an invaluable resource for our business we joined in the 80s and you've always been so helpful in understanding and articulating what we've been through as businesses and we I just so appreciate uh what you've talked about and when you talked about 199a I'm looking at your testimony and this really stuck uh stuck out for me and you talked about the macroeconomic impact of 25.9 million small businesses use the 199a deduction that is
▶ 3:07:56critically important in Upstate New York and everyone thinks of New York as New York City Upstate New York 95% of the people where I live go to work in a small business that's dependent on 199a and we need that to continue that's so critically important and you indicated that these pass through entities 33 million are pass through entities throughout this country this is such important information coming from you is that I hope that my colleagues on the other side of the aisle realize how critical this is and uh you're all talking about wonderful things one of the great things um
▶ 3:08:26Michelle uh Gallagher uh wonderful the one of the most important things you said in this committee meeting as a small business owner that we nearly got all of the cash taken the little bit that we had because of the death tax taken out of our business very small business a lot of former Farmers work for us but you said the IRS spends more money on compliance with the Dex death tax than it actually brings in how important is that the IRS with compliance enforcement
▶ 3:08:57litigation spends more money going after small businesses Family Farms that have invested in expensive equipment and all this than it actually collects that is the best case for getting rid of it especially because we have one in New York state as well it's not just Federal we have all these things on the state level so thank you for doing that I really it's just important and uh I one of the things I just want to to to get back at and also ask a couple of questions of all of you is as we go through this process
▶ 3:09:27of trying to figure out a way to protect our family businesses and the jobs um what would you provide today and I'm I guess I'm going to go to Courtney I've asked I've mentioned All of You So Courtney silver um what would you talked a little bit about you know making things predictable in the business and that's what every business owner is looking for predictability transparency neutrality Simplicity in the tax you know knowing what you're going to expect so you can budget for it what would you um highlight in and talk in in dealing with this estate tax what would
▶ 3:09:57you say uh would happen if your death you I know you talked about this early but I want to hear it from you again what would happen if the death tax expired in your business and what would be the consequences of that sure well it we may not continue in business um and it would obviously depend upon the year what was going on what was you know that the financial statements the financial condition of the company looking forward but um thinking about having this huge tax
▶ 3:10:27bill um in a situation uh where a company's passing to another owner we wouldn't we're Capital intensive we don't we aren't sitting on piles of cash um we use our cash flow to reinvest exactly that is so important because so many of the I represent the largest agricultural District in the entire Northeast we have farmers who have spent millions of dollars on equipment on labor all these things if if we were to implement another uh death taxs I would end uh basically nutrition
▶ 3:10:58in Upstate New York that just that supplies not only for our region our state uh you know we ship some of this stuff overseas our food nutrition this is so important I really I I know I'm out of time but I just want to say again thank you so much to all of you for what you do and for supporting our small business Community there is nothing more important than making sure that we extend these tax cuts to help them middle class and uh it was the best thing that's happened Upstate New York uh in 30 years and uh we're so grateful and hope that you'll continue to Advocate thanks so much I yield back thank
▶ 3:11:28you Mr Evans you are now recognized thank you would you yield yes thank you so much Mr Evans and I won't take much of your time I just wanted to without with unanimous consent to be able to put something in the record we have had the national Federation of Independent Business uh witness here but the small business majority sort of agrees with the notion of of in line with what the joint committee on taxation has said that there's that this
▶ 3:11:59199a uh provision goes largely to uh higher earning individuals and so while it might be one of the most important Provisions uh for the reauthorization is actually one of the most expensive and really accounts for um uh individual taxes uh increasing I just want to point one thing out too I was around in politics in 1986 uh the tax reform at that time
▶ 3:12:29and that is when small a lot of businesses organized themselves as passrs because they received a benefit even as far back as then there's no equity issue uh involved with uh this uh overblown one 199a benefit thank you and I'll will yield back to Mr Evans Mr Duke I'd like to talk a little bit about the Earned Income Tax Credit I believe that the Earned Income
▶ 3:12:59Tax Credit is the most important tool we have in tax space to reduce poverty it has been active introducing legislation to expand and to improve although this credit normally is a bipartisan supporter Republic did not use the opportunity to in the last 2017 meanwhile Democrats have passed legislation in 2020 to expand the last credit to more individual
▶ 3:13:30and help lifted more people out of poverty so could you speak to that issue please yeah so you know as you know the Earned Income Tax Credit is just hugely important for American families it's our second largest anti-poverty program after Social Security and you know Paul Ryan was actually a huge supporter of expanding it it for um childless workers but they failed to do that in 2017 and again that is the group that the tax code taxes into poverty or
▶ 3:14:00deeper into poverty at the same time one of the pay fors for the tax legislation was changing the inflation index which sounds very nerdy but gets important um for you know how we uh you know for how we calculate their income tax credit Mr Duke The Joint Committee on tax ation says that under the last Republican tax bill of $6 billion Less on improved income tax credit was paid out prior to the bill can you please describe why
▶ 3:14:30yeah so they use the budget reconciliation process which means that you can't increase deficits um outside of 10 years um because you know when you do a Partyline vote you have to use reconciliation right and what that means is they needed a pay for for their permanent corporate tax fed there were two payforce there was um cutting Healthcare by eliminating the individual mandate in the Affordable Care Act and then there was changing the inflation index by which we adjust all of our tax parameters in the tax code for inflation including the Earned Income Tax
▶ 3:15:00Credit now you know for some Provisions maybe that's fine because you know the individual tax you know rates you know gives them still a tax cut but for really low-wage workers who don't pay you know normal income taxes they didn't get that benefit but they see a slower growth and frankly a real cut in their Earned Income Tax Credit so in that sense you know the reduction in the Earned Income Tax Credit helped pay for the permanent uh corporate tax cut one last real quick U piggyback
▶ 3:15:31a little bit under the Republicans current plan for the tax bill extensions would this problem get worse um you know I haven't heard you know what the plan is to do on you know the Earned Income Tax Credit again I think they're kind of leaving it behind but again I haven't heard any you know any taask cuts for you know those super low wage workers who are making 14,000 $15,000 who aren't paying federal income taxes again that's why the American Rescue
▶ 3:16:01plan expansion was so important it tripled the size of the earned income tax cedit for those folks so that we stop taxing um low agage workers without kids into poverty or deeper into poverty thank you Mr Duke thank you Mr chairman thank you uh Miss VY you are now recognized Mr Duke I'm perplexed by a lot of your testimony today you've had a lot of criticism over the small business deduction so I'm just curious what do you consider a small
▶ 3:16:32business I don't have a particular definition of it you don't have a definition I I don't think I've said the word small business deduction so so 109 the 199 a sure but that's passrs they can be really big there's no you know on their do you think the way that it's being held right now h small businesses the 33 million small businesses that we have the 99.9% of all businesses in the US that are small businesses that are able to take advantage of this do you think that the 199a actually helps them sure it gives them a tax cut increases deficits
▶ 3:17:02increases interest rates though so you're concerned about the deficit you're concerned about the debt for sure and as a Democrat I was really surprised as a Democrat witness that that some of the the ideas that you held that we should be concerned about the Deb the debt and we should be concerned about how much of that's owned by China I'm curious as a volunteer on the Biden Harris transition team and as the uh person who was part of the Biden administration's build back better an American Rescue plan as the uh White House National Economic Council right you are the senior policy adviser to the White
▶ 3:17:32House on those two bills were you concerned at all about the trillions of dollars of debt that they added the trillions of dollars of debt that that China May potentially own and the benefit that China directly got as a result of those bills I'm assuming you are advocating against that because if you don't want additional debt God forbid we have trillions of dollars that are going out the door for green New Deal programs that are benefiting China am I correct the macroeconomic context matters a lot inflation is high unemployment so the inflation that by adding to
▶ 3:18:02the debt the 20% inflation that we got over the last four years I'm assuming that you are advocating against all of those tax increases every country in the world experienced that those same 20% that we got an inflation I'm assuming you you those Justin Trudeau is facing that problem I do not want to compare the US to Justin Trudeau there's a reason why that man has quit his job okay but inflation was a global supply chain phenomena that affected every country supply chain you were
▶ 3:18:32also if I am correct you were the point person on the supply chain data during the infant formula crisis of 2022 yes okay so we all saw how that went I I want make sure that it's that that we are appreciating the opportunity right now to be able to kind of correct some of the views that we're seeing the misinformed views of the tax cuts and jobs act you were saying that you know that the the rich experience getting richer the poor experienc getting poorer however in
▶ 3:19:032024 about one out of 180 American taxpayers will make a million dollars or more it's about 5% So based on the government's forecast the government's own forecast on this those earning a million dollars or more in 2024 will pay an average of about $776,000 in federal income taxes which 475 times as much as the average American taxpayer who's making between 50,000 and 100,000 the top 1% will pay an average of 31.5%
▶ 3:19:34this year compared with 10 to 12% of the middle class and about 0% at the bottom and the rates near the bottom can be negative because of the refundable tax credits so according to the Federal Reserve low and middle income tax uh Americans received the largest increase in wealth during 2018 and 2019 low-income families saw their net worth increased by 37% while middle income families net worth increased by 40%
▶ 3:20:05in the two years after tcja more than 6.6 million people were lifted out of poverty dropping the poverty rate to 10.5% the lowest level in US history and yet we're somehow arguing that that's that's the tcja did nothing for the lower class it blows my mind that we can even say that Miss silver I want to thank you very much for your testimony you talked about how much you were able to reinvest in your businesses after tcja was implemented and that is great to hear can you talk a little bit about what the cost would be if your business and and if Congress did not
▶ 3:20:35renew the president's tax cuts president Trump's tax cuts it's it's going to result in less investment in our equipment less investment in our people less investment overall uh it it would be very difficult to stay competitive grow so all the people that you pay would possibly lose their jobs or get paid less potentially I yeah or you would actually your your job in your Investments would shrink absolutely it's
▶ 3:21:05a real life example right there Mr chairman I asked to submit a letter from the wine and spirit wholesalers of America expressing support for the extension of the small business credit into record without objection we hear the partisan pundit claimed that the tax tax cuts were just too big for corporations but this is just not true as part of my work on the Main Street tax team we were able to get out of DC and we talked to real business owners we heard about the successes from policies such as the small business deduction in section 199a which created over 66 billion in
▶ 3:21:35tax savings for Main Street businesses one of the businesses that I met with in north Texas was Republican National and distributing company where I held a round table with over 25 small businesses including roofing companies Community Banks local banks and Realtors these are the businesses across the US who are benefiting from this and this is why Congress must act thank you very much and I yield thank you uh and then the birthday boy of the committee Mr finstra thank you Mr chairman and I want to thank each one of our Witnesses uh You'
▶ 3:22:05all have great testimonies I'm very impressed and I think we all understand how important the tax cutsom jobs act in 2017 was to our families uh to our businesses uh to to each of us uh I I think about my district I live in a very rural part of Northwest Iowa and every day we're fighting to survive that Main Street that Main Street made up of all these small little Bakery hardware store drug store you name it
▶ 3:22:35and this 199a is is so critical for their existence um if we did not have 199a if it sunsets obviously they'd have a 43% tax increase what would that do to Rural America it'd be devastating and to our families you know it's been noted many times here that it'd be a 26% increase to each one of our families where do we get those dollars where do we get those extra tax dollars and I look back so what what what did it do from 2017 till
▶ 3:23:05now and we went through covid um this all made a difference I mean if we didn't have these tax cuts and jobs act how catastrophic would it have been to our economy I mean we would have probably been in a deep recession even depression well we don't ever know but we do know this is that we survived and that's what we have to look at there's one thing that that really bothers me yet and that is a double tax I want to talk about the death tax uh I introduced the death tax repeal
▶ 3:23:36act and we'll reintroduce it in next Congress I had over 170 uh members sponsor this because everyone thought it was so important but think about this the government when somebody dies when when somebody dies the government puts their arm in the grave the IRS puts their arm in the grave pulls the person back out and says you owe 41% tax on everything that you accumulated in your life think about that 41% pulling them out of the ground say you owe
▶ 3:24:0741% that person is ready to pay tax on most of that already and yet to pass it on we got to pay 41% tax that's why I I I am so passionate about getting rid of the death tax and I hope we can do it this coming year especially in reconciliation on the other side of the death tax when since we have currently uh we don't have we do have the death tax we have estate tax it costs approximately $18 billion doll for small businesses
▶ 3:24:37to comply to try to figure out insurance to try to figure out trust to figure out how to manage not to pay that 41% 18 billion you know we we can save a lot of money by just getting rid of it so Mr Gallagher I want to talk to you about this obviously your family has has to have jumped through a lot of Hoops to to try to salvage your business to the Next Generation can you talk about that uh how it affects you and what compliance looks like
▶ 3:25:08yes and thank you for that for that question I'm very passionate about it as well uh primarily because I've seen the impacts of of what happens when either people have not planned for it or just simply don't have the money to pay the tax so the Hoops are are real the Hoops that these businesses and Farmers jump through is starting out with identifying their personal goals for their family
▶ 3:25:38first of all so every every single one has a different story and a different need and a different goal so this is not a cookie cutter plan that everybody can can just put into place it it takes a lot of customization and a lot of planning and a lot of planning early yes it it the the Hoops include setting up multiple entities like a number of different trust Vehicles can be used um limited Partnerships uh llc's they setting up
▶ 3:26:08entities to to help create uh the best benefit so The Heirs can get the most amount of money uh when death does OCC Ur um it acquire you have to have many appraisals done your business has to be appraised your real estate has to be appraise your farm has to be appraised the costs are astronomical for for what they have to go through all the stuff you have to go through just to comply with the death tax just to try to figure it out and we can we can get rid of it and we don't have all that problems I want
▶ 3:26:38to talk about one more thing pay paid family medical leave uh tax credit uh to me this is so important uh Miss uh C you talked about this uh in in Atlantic can you briefly talk about how important this is to small businesses as an incentive and not a mandate yes thank you for your question so the uh paid Medical Leave Act is very important to be able to retain um you know you want to retain quality employees and right now it's very difficult especially in my industry as
▶ 3:27:08an accountant uh to to find and retain employees however it's so important for small business owners to not be mandated to uh pay various things like uh Paid Family Medical Leave Act and it's much more beneficial if it comes in the form of a credit absolutely and I want to thank you for that incentivize makes all the difference in the world and we can do family medical leave and I'm again passionate about that also thank you very much I yeld back thank you Mr Schneider uh thank you m Mr chairman I want to thank you for having this
▶ 3:27:38hearing and I thank all of our Witnesses uh for sharing your perspectives today um Miss silver I just want to command you actually went and looked at your website and saw what you do as a company and your investment in people especially young people and bringing people into manufacturing is is so important uh also impressed third generation family business before I came to Congress I was a consultant I worked with family businesses principally and getting from the first generation to the second generation is hard less than a quarter of all businesses make it to that point but less than 10%
▶ 3:28:09make it to the third generation and 1% to the fourth generation uh so it is it is really difficult and there's a lot of reasons for that obviously um Miss Gallagher I might turn to you because you advise a lot of these businesses I'm guessing a lot of them are family businesses The Firm I work for as a Consultants now part of Plant Moran where I know you started your career um but uh what do you tell your clients as they approach a point where they're starting to take on too much debt what is the cost to a a family business of having too much of a
▶ 3:28:43burden there are a lot of different aspects of a family's finances so debt in a silo cannot be addressed well I I I disagree because when you have too much debt as you start accumulate debt you have to service that debt and you have to start paying the interest on the debt and start paying the principal on the debt and as a business as you're trying to grow if you take on debt to maybe acquire some equipment or going Branch off into a a new business
▶ 3:29:13line that's going to pay back pay itself back but if you're taking on debt to to basically spend extravagantly that debt service is going to become a huge burden um Miss Gall are you aware of what The Debt Service of the United States what the burden is at this point no I am I'm not it's larger than our defense budget we're paying more in interest and service of our debt than any other line in our discretionary budget
▶ 3:29:44and so as we S stand here and we find ourselves again in this conversation about giving large Cuts in taxes to people who are doing really really well I'm not talking about small businesses I'm not talking about uh folks who are struggling to make 's meet but to take away from programs like Medicaid and investments in education to give a tax cut to people who don't really need
▶ 3:30:14it and add to the debt of the country so we're losing know Miss silver you know from your experience as you're looking at making ends meat the the money that came in we talked about early the money that came in during the crisis the the pandemic allowing companies to invest I think you said you invested in HVAC which gave better air quality probably to your employees you invested probably in training as you brought in new new equipment all of those things are investments that if you're spending all your money servicing the debt
▶ 3:30:45you can't do so as we look at this just simply extending the tax cuts across the board Mr Duke you talked about it the top 2% of income earners folks who are making a whole lot of money and God bless them I their success helps grow our American economy but giving them another tax cut will cost us another two and a half trillion dollars in debt
▶ 3:31:15in the first decade and that's money that we have to pay back that we have to service that makes it virtually impossible to invest in our communities invest in building resilience so we don't see crises like we just saw in California or earlier late late last year a month ago in North Carolina debt has a cost and it doesn't need to be siloed it needs to be discussed and and assessed and we need to have the open conversation my colleagues on their
▶ 3:31:45side we have a lot of agreement I know I'm running out of time and I I did have questions but I got carried away but there are things that we agree on I think we all agree on both sides of this aisle that we want to help small businesses succeed M silver I want your business to pass to the fourth gener do you have a fourth generation coming in the business okay I want the business to pass to fourth generation less than 1% make it that far it's really hard and I want to help Working Families make ends meet and not just make ends meet I want to help Working Families get
▶ 3:32:15ahead and I I think everyone on this committee on both sides of the a agree on that I think we agree that we want to make the American dream more real for more Americans we want every American to have that chance to succeed so there's a lot of debate and and a lot of discussion about how one side is doing this or that or taking this position and in demonizing let's get away from that and start talking about how we can put Working Families Americans American economy
▶ 3:32:45front and center and find common ground and as my friend Randy fster was talking about let's find ways that companies can pass and Farms can pass generation to generation and we can build on the American dream for every American and I went too long without asking a question I'll yield back miss m Tas well thank you Mr chairman and thank you all for being here today I think we're as members are very excited about this opportunity to build on the success of tax cutting jobs act uh the tcja it created millions of jobs it lifted middle class
▶ 3:33:16wages it brought unemployment down uh to record lows for African-Americans for Hispanics did great things for women entrepreneurs and we're really looking forward uh to seeing not not only extended and made permanent but also uh adding some additional Provisions to make it stronger one of the things that um we saw for for for those that I represent that was beneficial was the doubling of the standard tax credit the doubling of the child tax credit the lowering of the personal income tax and the elimination of the Alternative
▶ 3:33:46Minimum Tax and so I wanted to talk to Miss Gallagher because uh you and I agree that the Alternative Minimum Tax um cannot come back and the the issue for my constituents middle class families in Staten Island Southern Brooklyn a lot of them didn't benefit from the salt deduction because of the Alternative Minimum Tax uh and so we have to make sure that that does not come back but we are as salt uh State members looking to try to provide an increase to that salt reduction
▶ 3:34:16and we recognize that the reason why we need salt relief is because our Mayors and our Governors treat taxpayers like ATM machines they continue to hammer them over the head year after year property tax levy goes up they don't want to cut the personal income tax rates at the local and state level like we saw president Trump do at the federal level so we recognize that it really is a problem created by our local and state governments but nonetheless we met with President Trump we had a successful meeting does want to help
▶ 3:34:46as does the chairman has been willing to help provide relief from the federal level to help those middle- class families so I guess my question for you first and foremost is the Alternative Minimum Tax should not come back right and if so what would what kind of impact would that be on middle class families thank you for that very good question and usually when we start talking about the Alternative Minimum Tax or AMT as I'll refer to it people just run out of the room frankly it is one of the the most complex and
▶ 3:35:17complicated tax computations in the Internal Revenue code I I mean I remember trying to learn it as a young tax professional and threw my hands up many many times so I was thrilled to see the AMT exemptions increase considerably so that so many of my clients were no longer subject to it and it targeted the middle class really that's who got hammered by it right it it definitely targeted and hammered middle class no doubt about it and you said that in your testimony
▶ 3:35:47that if it does return it would affect 7.2 million taxpayers starting in 2026 and that would be predominantly the middle class yes and the salt deduction can you explain how uh constituents may have not benefited from Salt because of the AMT yes so the deduction is uh because of its limitation the salt deduction is actually part of the computation of the AMT it's an addback so when you're calculating your alternative minimum tax
▶ 3:36:18taxable income you have to add back all of your salt taxes and so my warning and my written testimony was that if if there's an argument um to have salt then we have to keep AMT out as well because everybody who may not be limited in salt will now be paying AMT and they're no further ahead than they were okay I agree with you 100% now with the salt if we were able to increase that deduction
▶ 3:36:48um do you have any estimates of what could cover a majority of middle class families let's say people with incomes 400,000 or 500,000 or less I have not done that math no problem just just curious I know it was uh around 23,000 was the average deduction for middle class families under with an income level of 2,500,000 that was in 2016 so today it would probably be more like 30,000 um if you want to hit that income level or below should we index it like the standard deduction so it goes up year after year to keep Pace
▶ 3:37:18somewhat with inflation well I think indexing is always fair I mean inflation and dollars go up tremendously so do you think we should cap income eligibility so it is targeted to the middle class and not completely lift the cap I think there's some concern from Members ac across both sides of the aisle about giving relief for ultra wealthy you think it should be targeted the salt deduction increas and then cap it so only certain incomes qualify well
▶ 3:37:48certainly I'd want to look at the pros and cons of all of all of those things but certainly there is a middle ground to to get the middle class the relief that they need great if we wanted to also limit it for properties would it make sense to um limit it limit the the real estate portion or the property tax portion to just your primary residence would that be something that could be a possible solution to kind of limit it it certainly could not I mean many um a lot
▶ 3:38:18of folks don't have more than one property not just the middle class so thank thank you all this salt got me thirsty Mr chairman and I've run out of time so thank you very much and I yield back all right um votes have been called we're going going to try to run up as close as we can to the time that we can make it to the floor to vote and then we'll return back promptly whenever we do have to recess for the three votes that's been called but Mr Carrie is next uh thank you Mr chairman it's honored to serve on this committee again this this this
▶ 3:38:48session and I also want to welcome our new members to the committee both on both sides of the aisle so welcome um this body uh delivered Landmark legislation in 2017 that provided as we've heard from all of you Witnesses most of you Witnesses provided significant tax relief for Americans by putting money back into their pockets and for working families and boosting our economy and we must make these effective tax cuts permanent I think we've heard that from many of you today
▶ 3:39:19and build upon the success of the tax cuts and jobs act to benefit Working Families and our businesses this would ensure that Americans don't see an increase in their taxes and on average sa o Highlands about 23% a 23% tax hike you know ask Congress this committee and the house overwhelmingly passed the tax relief for American families and workers act which included many many many of the policies to help Working Families we need to continue
▶ 3:39:49to support these policies and help our Working Families grow as a member of the work working families tax team I have heard firsthand from members of my community over the last eight month about how tcja policies have helped them and the importance of extending these tax cuts credit for caring this is a a piece of legislation that I am proud to lead with my fellow Ways and Means member uh representative Linda Sanchez and it's called
▶ 3:40:20the credit for caring act which will provide eligible working caregivers a tax credit to help offset the cost of care that they offer it would allow them to continue to work while caring for a loved one through illness disability and aging in place I'm looking forward to continuing that work on tax policies that will help these Working Families succeed Mrs marpel I want to thank you so much uh for taking the time to to come out here and I was
▶ 3:40:50I was Touched By Your Story number one um you're sounds like you have a lot of things going on um there's no doubt about that but I just uh you know is you once a single mother and now you're remarried and and you have two two children and very similar to my mother and so I I appreciate what you're doing in my home state of Ohio a family making a medium income in my district is about $75,000 and they would see a tax increase of $1,540
▶ 3:41:21if these taxes are set when they set to expire and 89,50 families in my district would see their ta child tax credit benefit cut in half I me just say that number again 89,50 would see that child tax credit benefit cut in half so let me ask you Mrs Marvel can you give me any idea how a tax increase like that would impact family yes thank you for your question
▶ 3:41:51congressman and thank you for the opportunity to talk about families today I think that um as I talked about in my testimony that we are raising kids in a culture of giving up and as we do our taxes and we find out that the powerful Communicator of the government that we're doing a good job as parents when we find find out that that has been cut in half that would be for me it would mean
▶ 3:42:21that I would have received either back less money or I would have owed money for my taxes which would have added to the financial burden but it also would kind of take the wind out of our sales in doing the work that we're doing um to to um build the country and to fight against this culture of giving up the the tax credit um remaining permanent and expanding would
▶ 3:42:51just encourage families like mine to not give up I want to thank you for that testimony I was going to have some other questions but I'm running short on time but I just want to say is I represent the largest city in the state of Ohio which is Columbus a recent study by the National Association manufacturers found that Ohio could lose upwards of two thou 208,000 jobs and $8.9 billion in wages and over $37 billion in Gross D or
▶ 3:43:21GDP if we don't extend tcja so I just want to point those numbers out again 208,000 Jobs $8.9 billion in wages and $37 billion in GDP and with that Mr chairman I yield back thank you Mr Panetta thank you Mr chairman thank you ladies and gentlemen for not just being here but for your businesses for your families for the your communities of the work that you do we appreciate that and let me also just start off by saying as someone whose district has experienced many
▶ 3:43:51natural disasters I Echo the sentiments of my colleagues that making disaster relief contingent on anything is pretty despicable and actually politically stupid as well I understand the rhetoric but doing that to vulnerable and defenseless Americans is absolutely unamerican now I appreciate your American stories uh especially the fact that government has actually helped you I think you've all provided some pretty nice stories uh and we appreciate that and I want you to know that we here
▶ 3:44:22even though we on this side of the aisle We are rooting for you we support you and we want you to continue to succeed but in order to continue to help you to help our nation we got to think about we got to talk about how we pay for things and if we don't we just can't do a simple extension of the tax cuts and jobs acts the Prov their expiring provisions because if we don't it's going to be hugely expensive according to the CBO as we've heard today it could reach a $4.6 trillion
▶ 3:44:52price tag and with the national debt already at 36 trillion a deficit at 2 trillion for fiscal year 24 it is incumbent upon us to not only do something about our debt we must do something to pay for any type of extension when it comes to the tcj expiring Provisions I believe the American people don't want an unpaid don't want to have an unpaid tax bill in a bill that will further disintegrate our country's finances and destroy our nation's credibility a partisan deficit
▶ 3:45:22inflating tax bill is not the solution and I hope that we instead focus on advancing bipartisan legislation that addresses the real challenges that Americans face by figuring out how we pay for those Solutions now when it comes to paying for itself there have been plenty of estimates that have found that the tcja has failed to do that and the reason being is that while certain cuts can spur some growth they don't spur growth at a rate high enough to offset the cost in Revenue now Mr
▶ 3:45:53Duke as you shake your head how much would the economy have to grow to fully offset an extension of the tcja talking about I mean so we have like a average tax rate of 20% or so so you need five times the amount of growth coming from that in order to just make it all back so we're talking 7 8% or something is that realistic yeah is that realistic and are the policies of the TC tcj likely to bring about that growth yeah absolutely not
▶ 3:46:23CBO showed that it would strength the economy in the long run the tax Foundation which is a right leaning organization found that um you know economic growth only cuts the cost by 14% so it's still just there you still have a big tax cut you need to pay for now it's also been Flo that we can eliminate credits from the IRA as a pay for as you've heard Mr Duke correct yes what would the elimination of energy tax credits in the ira do to the ability to expand our economy yeah so you know first households would
▶ 3:46:53face higher costs they would pay more for electricity they will pay more for you know electric vehicles it also again you know puts us at you know kind of under China's thumb that these are the industries of the future and they're trying to build them strategically they're porting in trillions of dollars to build these industries and you know we need that foothold in the future if we want to you know basically go toe-to-toe with them now the president elect has proposed across theboard tariffs of 10 to 20% as well as a tariff of 60% applied to imports from China some have
▶ 3:47:23suggested that these tariffs could be used as a pay for for the extension of the tcja now miss silver you operate a machining business that according to customs reports Imports primarily Machinery gums resins and aluminum from the United correct no you don't import those all of those things you said no from the United Kingdom where do you import them from my raw material um
▶ 3:47:53it's mainly us you don't have any Imports to your business I'm sure there are we've had some bearing assemblies where we're sourcing bearings and they're probably not all made here got it but our majority of our raw material is made here got it but if you if you did have Imports they'd obviously subject to these tariffs which would then lead to price increases for your business correct correct right and is that how you would want would you want to pay for the TCA with those price
▶ 3:48:25increases I we are as you're saying we're a participant in the global supply chain and you know I would I would want Congress to tailor any policies you know so that we can continue to participate that in that and be competitive and that would would that include price increases on Imports for you in your business is that what you want well no I don't want any price inrees anything the votes are taking down I think we'll call on one more
▶ 3:48:55um and then we will recess and then come back um directly following votes but Mr Moore thank you Mr chairman for holding this important hearing to the witnesses thank you for being here um it's been a slugfest and uh there isn't a better more important conversation to be having right now and I appreciate my colleagues on the on the Democrat side that like we need to have a focus on deficit we need to continue to to have that it's been absent uh since in my time of Congress enough to be able to see policy driving forward to do that the truth is
▶ 3:49:25is we need a strong economy a strong economy will produce revenues we've seen a consistent 17 average percent um as a as a as a portion of GDP uh post pre pre-tax cut post tax cut that's just data so we are still seeing strong revenues even with tax um tax cuts that we did in 2017 that's where the focus needs to be now there's a looming deficit that grows continually and our interest that we're paying on our debt is what is growing the
▶ 3:49:56the the high the largest budget line item that we've had and over the last four years that's been increasing about $200 billion dollar a year that's where the issues come in that's where the deficit comes but our only saving grace our only Fighting Chance is to maintain a strong GDP and and and continue with revenues increasing look it's important to to to highlight again we we we've catched on it a lot my district the average taxpayer would face a 20% tax hike if tcja expires uh certain part of this bill it's very
▶ 3:50:26um important to me and my team and and my district is to being is for me to be laser focused on building the pro- family and progrowth reforms from tcja to help American families communities and small businesses Thrive Miss marpel I appreciate your testimony your story is awesome uh very very important and and and I think that a lot of people could relate to um about the child tax credit and how these reforms in that 2017 Bill provided tax relief to your family this illustrates the great work that was accomplished in 2017 and how
▶ 3:50:56we can build on this um this year it's the reason I wanted to be on this committee is because I knew this was looming and a and um this was an opportunity to reestablish that yesterday I introduced The Family First Act legislation to streamline and simplify Provisions in the tax code and to support Working Families with an updated and enhanced child tax credit this will provide tax relief for parents with young children and create new tax credit for pregnant mothers miss marble um how would either a baby bonus uh or increasing the CTC amount for children
▶ 3:51:26under five provide a tax relief for working families and and would this have benefited your family yes thank you for the question um when your family's growing and your kids are young a lot of changes are taking place um you're changing jobs Child Care looks different um you need a bigger house you need a bigger car there's a lot of pressure um put on the family and life gets really busy adding a baby bonus or something like that like
▶ 3:51:56you were referring to in bill um would definitely help compensate for all of those big changes that a growing family is facing you're highlighting flexibility uh because you're going through a lot of change as my kids get a little bit older they would be mostly outside this this this this range we're still supporting those families but um and recognize it's still still expensive it's kids are expensive regardless of their age but particularly in that first 5 years the change that happens to the parents and their situation is it's important to
▶ 3:52:26make sure that we um we we address that uh so thank you for that this is something we're we're really excited about I think it takes a look at um tax Provisions that have been around for a while and when things get stale and have been around like it it's time to shake it up a little bit this child tax credit is a huge increase and my Democrat college should be very supportive of this it's a huge increase but it also offsets it by taking a look at Antiquated tax policy that probably needs to be changed or eliminated and we're doing that and we're creating a more progrowth
▶ 3:52:57Pro family approach and and I look forward to continuing to drive this forward um we also introduced the small business growth act which would support small business growth by helping small businesses obtain equipment necessary to buy their operations we've talked a lot about this I'll just quickly ask Miss Gallagher and and Miss silver anything to add on how important it is to be able to up that instead of a million dollars it's going to increase to the X number of dollars like it's it's going to help small businesses be able to buy their equipment and get that right off it anything to add to that I can certainly agree
▶ 3:53:27with it 100% that that is an incentive to investment and I would look to our actual business owner here and how how she would respond and you're talking about Section 179 yes yeah absolutely increasing it's an increasing of the threshold yes that would help us tremendously with planning and drive investment which makes us more competitive and gets us gets our customers what they need and a point that I make when I'm back home is I say okay if
▶ 3:53:57you have that ability to invest more equipment guess what that other company that's selling you that equipment they're now paying more taxes they're because they're excited about their business growth so they're they're pay we are still contributing to tax revenues it's not a decrease in taxes it's actually spurring significant economic growth and that can't be discounted thank you so much yield back all right we will recess until after votes and then we'll we'll begin right
▶ 4:14:12e e
▶ 4:15:11the meeting will come back to order Mr yakum thank you Mr chairman I ask unanimous consent to enter into the record two documents from the blueprint for life Coalition as well as a letter from the Americans United for life without objection I want to start by saying what an honor and privilege it is to be here at my first Ways and Means Committee hearing a seat on Ways and Means matters a great deal to the people of Indiana with two great hooers having served before me our dear late friend
▶ 4:15:41Jackie wski and Senator Todd young before her I hope to follow in their footsteps with hard work compassion and hooer common sense I look forward to working with my colleagues on both sides of the aisle toward progrowth tax Regulatory and trade policy so that manufacturers innovators and job creators can expand hire and invest so that agricultural producers can compete and win in markets new and old and so that families have the
▶ 4:16:11best shot at achieving the American dream I'm glad that we're kicking off the 119th Congress by highlighting the importance of making president Trump's tax cuts permanent the Trump tax cuts have been transformational for families and small businesses in my district if they expire the average taxpayer in my district will see a 27% tax hike that's $1,252 for the average family of four in my district that cannot be written
▶ 4:16:41off as mere crumbs it's real money for the average hardworking ho your family that's trying to live within its means Miss marpel I'm a father of three so I greatly appreciate your time here to testify today I know it's no small task I thought you were so spoton with your testimony when you called the child tax credit a simple significant way for the tax code to communicate the value of hardworking parents raising their children
▶ 4:17:12at a time of inflation that's why I'm concerned that over 87,000 families in my district would see their child tax credit cut in half if president Trump's tax cuts were allowed to expire miss marel my colleagues on the other side of the aisle like to talk about their enlarged child tax credit as they temporarily created during the pandemic but you mentioned that you and your husband have worked so hard to support your family and that you're not looking for a handout
▶ 4:17:42can you talk more about the value and importance of work as a requirement for receiving the child credit thank you for your question um yes I think there's a a big between receiving an encouragement from the government and um something that produces encouragement and something that produces entitlement and the truth is the desire
▶ 4:18:13of me and a lot of other parents is to work hard to provide for our family there's a fulfillment there um and so being in being um uplifted and having that burden of supporting our family lightened um it goes a long way right thank you yes and and one more quick question if the Trump tax cuts were to expire Not only would the credit be cut from $2,000 to1 ,000
▶ 4:18:43but a requirement for children to have a Social Security number would expire as well now that we're uh you know after four years of the Biden Harris administration's failed open border policy that saw nearly 9 million illegal immigrants come across the southern border do you think it's fair that your hardworking tax dollars that you worked hard for could potentially go to people who are not here in this country legally no right thank you uh Mr Duke you seem to imply that that families making over $400,000
▶ 4:19:14a year shouldn't be able to claim the child tax credit at all fair enough I want to highlight in August 2024 article from Politico which reads quote upper income homeowners are scooping up billions of dollars in tax credits for making their residen more energy efficient while the poor are getting almost nothing under the same B Administration effort should the federal government be subsidizing people making $400,000 who want to who want to put solar panels on their
▶ 4:19:46uh you know I'm not an energy expert but I think that you know those credits are you know about creating you know a supply chain and Industry that really you know puts us forth in the 21st century you're not an energy expert but you are a tax experts so do you think that those tax credits should go to families who are making more than wealthy families making more than $400,000 per year I think it was designed well so what about the EV tax credit which is capped at $300,000 a year do you think that that c should be removed and we should pay for wealthy families electric vehicles look
▶ 4:20:16I think that Congress you know and we're going to see this when we talk about extending the 2017 tax law obviously has a lot of different you know what do you recommend I would actually have to know more about EVs and you know Ro to know like exactly what the right level would be great thank you for your non-answers Mr chairman i y back Mr Gomez um thank you Mr chairman um before I get started I just want to say to angelinos I represent Los Angeles I'm committed to securing whatever resources
▶ 4:20:47uh necessary to fight these fires but also help people rebuild their lives I know it's going to be a long road ahead um also I did go back because of the fires this weekend and I visited I was in my district and in my household we do what other households do we divide the the chores and my one of my chores is to go grocery shopping so I went to the store and I picked up some of the basics Cheerios egg soup nothing unusual Nothing Fancy no sparkling
▶ 4:21:17water or or prime rib it was the basics and as I was uh leaving the store I was looking at receipt and as I looked at the receipt I was like $65 not too not too bad but then I remembered I went to the store earlier that day and spent $20 for milk bread oranges and strawberries I have a toddler and they eat a lot of strawberries and a few days before that I spent $150 for groceries that included
▶ 4:21:47diapers um so in one week I spent $235 that's a lot of money um unfortunately my family isn't alone trying to pinch pennies and trying to watch what they're spending so as we start this debate I will keep in mind all those families that look at their receipts and how much they're spending families that are feeling the pain of higher prices families with children families that um that work multiple jobs mom and
▶ 4:22:17dads that go to a morning job and an evening job and a weekend job just to make ends meet just to pay their rent and um I want to be clear last November families didn't vote to keep Treading Water they voted for a government that will lower prices and help them get ahead but what but what the Republicans are offering is more of the same high prices and tax cuts for billionaires and the ultra wealthy while working people fall further and further
▶ 4:22:48behind so how do I know that let's just look at what they did in 2017 in 2017 Republicans had a choice and they chose to give permanent tax cuts to corporations and gave temporary tax cuts to families and individuals and if that wasn't true then we would even be having this hearing today the benefits of the last great tax bill as the Republicans claim went to the top income earners the top .1%
▶ 4:23:19got a $250,000 tax cut while working people got around 500 to 600 per year um Mr Duke will extending the Republican tax plan or the tcja do do anything to lower costs no no so to my Republican uh colleagues let's write a truly bip Carson bill that actually makes America affordable let's work to lower the cost of housing by
▶ 4:23:49cutting red tape incentivising building across the country let's lower the cost of Child Care by investing in the workforce and the small business entrepreneurers that provide that care let's lower the cost of groceries by preventing monopolies from squeezing out the little guy I know Republicans often say that we don't have the money for these sorts of Investments but Mr Duke let me ask you this if we made Elon Musk Mark Zuckerberg the ultra wealthy and the big corporations
▶ 4:24:20and all their billionaires pay their fair share in taxes do you think we could afford these things that I just mentioned absolutely the Biden budget contained a minimum tax on billionaires as well as reforms to how we tax capital gains for the highest income Americans it raised trillions of dollars so i' like to also point out that people talk about the establishment in DC um you know they said it's one day it's the blue establishment the other day it's the the red establishment see I don't think there's a blue establishment or red establishment DC
▶ 4:24:51I think it's the the new green billionaire establishment and it is our job to push back against those individuals that want to pass a tax structure that benefits themselves at the expense of the working class Mr um chairman I have a question you yeah that's kind of unusual but go ahead Mr Gomez well this is an unusual time let's say we actually get together in a room and negotiate a
▶ 4:25:21bipartisan uh tax plan that benefits the working people invests in what we want if Elon mus tweets to you to throw that out will you reject U Elon Elon musk's request or will you guys capitulate like you did in December Mr Gomez the only person that the Republicans are beholden to are the people that him to Washington and Elon Musk is not a constituent okay well see we I call me skeptical but what I saw in no in
▶ 4:25:51December was uh it was uh dastardly so if you guys are wanting to negotiate a real bipartison tax plan let's do it and let's get something that helps lower costs for the American people with that I yield back Mr Miller thank you Mr chairman uh I'm glad Mr Gomez used his 5 minutes for a Twitter clip uh thank you but thank you Mr chairman and thank you to our Witnesses for their time and testimony today I'm honored to be joining the way and Means Committee with a shared
▶ 4:26:21goal that's to drive forward an economic agenda that ensures the United States Remains the global economic leader today we are here to discuss the need to make the Trump tax cuts for Working Families permanent ensuring prosperity for families and businesses Across the Nation the tax cuts and jobs act championed by President Trump was a transformative bill that provided much needed relief to businesses and spurred investment across the country as we have heard here today it reduced the corporate tax rate introduced full expensing for equipment
▶ 4:26:52purchases and created a business environment that encouraged growth Innovation and greater Global competition these Provisions gave companies the certainty to reinvest in their operations hire workers and strengthen their local communities I proudly represent Ohio's cons seventh congressional district a region with the strong manufacturing and agricultural backbone these policies drove significant job creation and economic revitalization to the area small businesses and Farmers
▶ 4:27:22all benefited from the ability to reinvest their Capital Savings expand their operations and provide good paying jobs for Ohioans but it wasn't just businesses that saw the benefits of this historic legislation for individual taxpayers the ACT expanded the standard deduction simplifying tax filing and putting more money back into the pockets of Working Families this simplification was transformative especially in workingclass communities where most taxpayers claim the standard deduction
▶ 4:27:53by eliminating the need for a complex and timec consuming itemization process the expanded standard deduction has made tax season far more efficient and far less stressful for millions millions of Americans in my district alone 93% 93% of taxpayers and families claim the standard deduction when filing their taxes and underscoring its vital role in simplifying their financial interactions with the government maintaining the current standard deduction levels
▶ 4:28:23allows families to focus on their priorities whether saving for the future or supporting their children or investing in their homes while enjoying greater Financial Security Miss Gallagher we know that the increased standard deduction significantly boosts disposable income for families to directly benefiting individual taxpayers however it's clear to me that the advantages for households and businesses are deeply deeply interconnected as stronger household finances Drive broader
▶ 4:28:53economic growth and support local businesses can you please comment on how the standard deduction affects disposable income for families and have you observed any indirect impacts on small businesses or local economies with high Reliance on this deduction thank you for that question my midwesterner uh absolutely the standard deduction has been a life Cher for individuals and frankly
▶ 4:29:24my fellow tax preparers as you were talking about tax season being made so much easier for me my staff it has been a tremendous help from from that perspective the taxpayers however on that side have received significant taxes savings many of them were far under that level when even when they itemized and so the standard deduction gave them increased deduction I.E less taxes to pay and more money
▶ 4:29:54in their pocket to contribute to their communities and to their own households so I I absolutely saw a direct impact on individuals and small businesses in my communities thank you for that answer and I have as well uh and as I will just restate 93% of our constituents in the 7th District of Ohio use standard deduction uh Miss silver in your opening testimony you highlighted how small and medium-sized manufacturers are leveraging the current tcja
▶ 4:30:24and tax benefits to reinvest in their local communities and expand their Workforce however with many of these Provisions set to expire at the end of this year we we Face the potential loss of nearly a quarter of a million jobs just in my home state of Ohio as Congressman Carrie earlier mentioned that to my right could you elaborate on the specific negative impacts that businesses like yours and others across the country would encounter if these critical tax benefits are allowed to expire well I I can answer that by saying
▶ 4:30:55that so I'll expand upon what I've been able to do because of tcja so when you think about that it's like I'm not going to be able to do this stuff when all this when these tax policies expire so um one example is I was able to use the 199a pass through deduction to reinvest in my company I we bought our first collaborative robot it's a it um is integrated with one of our L it's two spindles it allows us to run this machine unattended at night so
▶ 4:31:25it increases my throughput my productivity and so much so I was able to go to my customer in the fluid motion control industry come down on his price and then still have a healthy profit myself so it was a win-win for the manufacturing supply chain that I was able to use that deduction to reinvest in my company so if it expires these are the things I can't do I also can give you another example if you like it's up to the chairman okay all right yes ma'am
▶ 4:31:55um we created a high school internship program uh it's a job shat it's I it is a job shattering program our local high school is um 100% of the students are disadvantaged and it allows the students to come in and job shadow on the factory floor these are students that have never been exposed to manufacturing before and it I've I've bought equipment so they can train on this um it and it's it's really it's
▶ 4:32:25it's impacted our community it's impacted our culture um and now I have two full you know two full-time apprentices learning the Machining trade thank you for sharing that Miss silver amount of time but thank you for sharing that with the American people I truly appreciate your testimony and all the witnesses here today thank you Mr chairman I yield back thank you Mr Bean thank you very much Mr chairman a good afternoon to you good afternoon ways and means our Witnesses what an honor to have you here I know it's hard work uh to
▶ 4:32:55uh testify for uh going on what our fifth hour now uh first of all it's just an honor this is my very first time speaking in committee it is indeed an honor and privileged to serve on this committee I uh fought to serve on this committee for the same reason that I fought to serve in Congress our country's in trouble I believe debt is one of our greatest challenges we've got to fix it and we continue to dig we continue to uh to go in the wrong direction so uh Mr chairman you and
▶ 4:33:25ranking member Neil I look forward to working with each of you as we uh build a strong America that can once again be that shining City on a Hill to serves as a beacon for countries around the uh the world M marpel you have testified what a game changer the tax credit is you you've said that it's made a tremendous difference for the marel household is that correct yes okay it
▶ 4:33:55as you you've testified so are you a billionaire no wait a minute you must run a Fortune 500 company is is that correct it's more like a small business okay so wait a minute I'm confused Mr chairman all I hear is this Trump tr's tax cuts have only benefited billionaires Fortune 500 companies and I looked at your income Miss marull and it's part of your testimony it's $775,000 is that correct about right that year
▶ 4:34:26that year that year but uh it's true then that uh you're not a billionaire I I don't understand how the Trump tax credits could help somebody like you making that that amount of money but yet it did was it a game changer for you miss marpel um we work for we work for the wealthy and they pay our they pay our paychecks but getting that tax credit that really made a big deal for you I mean your testimony you said it is and by the way we're all very proud of
▶ 4:34:56you who's very proud of you are your folks for raising those three boys I too rais three boys and before you know it they're taller than you they're out the door and it's the most important thing that we do on this planet is to launch successful kids you're doing the right thing and we're proud of you so much uh Miss couch you also have testified that uh by the way ignite I've watched you grow 200 clients you're rocking it too uh you've testified that uh your clients have done so well
▶ 4:35:26is that correct my clients are doing well thanks to very good now wait a minute so that means they're all billionaires is that correct they are not billionair I don't they're fortune five you just do a Fortune 500 exclusively is that right Miss couch no far from it okay so uh it's amazing because all we hear it helps the rich the top 10% 1% or whatnot but yet uh I we both know it I can see and look your eyes you're the the movers and shakers that's who you do the people that
▶ 4:35:56employ put this country to work that's your clients and I know you're proud of your folks are proud of you for uh Rock and ignite Miss silver we're all proud of you of what you have done right now uh I'm going to go to a scary place I want to go to a very scary place it's a scary question and that is this if the qualified business income credit were to go away and uh you were faced with a 43% tax rate your company and you uh that rate which is by the way is much higher
▶ 4:36:26than communist China what does it look like is that a grim picture is that a scary question what's going to happen yeah it's it's not good so you might have to lay off Mr Robot that you bought you might have to do some other big drastic decisions you got 20 employees that are depending on you whether or not food goes on their table can they depend on you if they're you're having to pay a 43% uh income tax rate no and so going to be challenging right
▶ 4:36:57and we've been talking about like what we do with these tax policies how we reinvest but a contrasting example that I could give you yeah is that you know there's economic downturns there's normal business fluctuations going to have to make hard decisions what you're saying is that right hard decisions hard decisions yes that is hard it's hard it's scary to even listen to it I want to take you back to 2017 let's remind everybody because we've got the receipts of what happened in 2017 Adele's hello was playing on the radio Dunkirk
▶ 4:37:27was the top movie and Trump had just passed tax cuts let me tell you what happened net worth among lowincome families Rose 37% white uh while middle income families net worth increased by 40% % even the bottom 20% of earners incomes Rose uh massive we saw massive we saw the economy getting on fire and that's what we're going to have to do if we're going to solve our economic woes yes we have to have uh we have to have economic growth
▶ 4:37:57we have to make Cuts I'm making Cuts we're going to make Cuts but we also have growth in our economy and good gravy I've only got through page one it's going to be really tough to ask all these questions so uh with that Mr chairman looking forward to working with you thank you again I yield back back thank you Mr Horford thank you Mr chairman and to the ranking member uh for this important hearing and all to our Witnesses for being here for what has been a long day for all of you look my colleagues have
▶ 4:38:27noted and it is fact that the top 1% of households received the most benefits from the TCG uh ja let me put that in perspective though data from the center on budget and policy priorities found that those making over $800,000 on average save $61,000 congress's own nonpartisan joint committee on taxation says that millionaires saved over $78,000 each year now for
▶ 4:38:57someone living in tonopa Nevada which is in the rural part of my district in the center of Nevada that's double their median salary the constituents in my district have called on me to help help them cut household uh expenses uh to put more money back in the pockets uh of hardworking people like them and that's why I introduced the tipped income protection and support act uh no tax on tips tips
▶ 4:39:28is a gift not a guarantee and I hope that the chairman will agree and work with me on my bill uh the tips act would exempt income tax of tipped wages for many workingclass fames Ames but let me be clear I'll work with anyone on this committee that wants to help Working Families keep more money in their pockets however working class families can't afford a tax scheme that benefits the top well 1%
▶ 4:39:58and doesn't help them Mr Duke when drafting the tips act I put income caps to ensure that only workingclass families can receive the bills benefits should we consider income caps on tcj programs that predominantly benefit the wealthy like 199a that's right um treasure yeah that's right yes yeah okay look I I'm glad that we have so many small businesses here today and that's intentional because there was a choice
▶ 4:40:28made when they passed this bill in 2017 they made the tax breaks for the big corporations and the wealthy permanent and they made the tax reductions for you temporary and now they're here to say that unless we pass the entire bill it's going to hurt you well my question is why didn't why didn't they prioritize you to begin with why didn't we make the small business tax reductions permanent
▶ 4:40:59and the corporate tax reductions temporary that was the choice they made now what's also important is that the bottom 90% of workers wages were unaffected by changes in the corporate tax rate I'm glad as I said that we have business owners like Miss silver here uh in this discussion because we need to focus more on small business efforts and I commend you for everything that you're doing including your jobs
▶ 4:41:30program you are the ones who have accounted for 62% of net new job creation since 1995 you small businesses uh small businesses account for 98% of the firms in the state of Nevada Mr Duke the topic of this hearing is the need to make permanent the Trump tax cuts for Working Families given the information that I just shared can you explain how reducing the corporate tax rate help
▶ 4:42:00small businesses and Working Families no I cannot because cutting the corporate tax rate um you know I mean for one thing it increases our debt which increases interest rates which you know makes it much harder for startups and you know small businesses to survive and at the same time you know obviously they have to compete with um you know with these big corporations especially one thing I'll say is especially you know multinational corporations pay half the rate corporate rate on their overseas profits that's something that's not
▶ 4:42:30available to American small businesses so here we are now this is a tax scheme that if we renewed it with no changes would cost the American people $4.6 trillion what can we do with $4.6 trillion we could lower cost we could expand the child tax credit which is not an entitlement Working Families like Mrs marpel deserve to get benefits from our tax code not just big
▶ 4:43:00corporations we could build more affordable housing we could put more money into low income and affordable housing for All Families including veterans that's why I've introduced such islation to take on corporate landlords that are gouging renters and making housing more afford uh less affordable yet the tcja isn't helping the housing market it's ex extending the bill doesn't help build up the supply of housing nor is it helping lower housing costs for buyers and
▶ 4:43:31renders like my bill would do the home act so work with us let's come up with a more reasonable approach let's use the tax code to help small businesses to drive the uh economy to help uh families who are struggling that should be our priority not billionaires and big corporations I yield back thank you Mr Moran thank you Mr chairman uh for the panel let me give you a little Foundation about my district the first district of Texas 17 counties
▶ 4:44:01uh rural Northeast Texas and let me provide this Foundation of of what the impact was of the tcja back in 2017 and what would happen if it expired and then I want to ask some questions expiration of the tcja in my district alone uh for our businesses there would put 12,000 plus family-owned farms in Texas 01 uh in Jeopardy because of having their estate tax exemption slashed in half next year 37,000
▶ 4:44:32plus small businesses in Texas 1 would be hit with a 43% tax rate increase if the if the 199a small small business deduction expires and the failure to renew certain Pro manufacturing initiatives in the tcja puts nearly 14,000 jobs in my district at risk these statistics underscore a larger theme that across several Industries whether it's agriculture small businesses or large manufacturers the tcja promotes the growth of business
▶ 4:45:02in America now more than ever it's important to ensure that Congress continues to put Americans first by providing the tax incentives for American Business to grow themselves restoring the immediate R&D expensing provision in the tcja is a prime example of putting Texan and American businesses first as you're aware uh up until 2022 the tax code allowed manufacturers to immediately deduct 100% of R&D expenses in the year that they were incurred at present the US is
▶ 4:45:33just one of two countries without this essential Innovation incentive meanwhile China offers things like a super deduction for research spending and it's not the only nation providing more than that attractive R&D incentive over 15 other countries now offer deduction surpassing 100% of eligible R&D costs making the US a less attractive and competitive environment for research and development Miss silver I want to come to you first since you were the National Association of Manufacturers small manufacturers
▶ 4:46:03chair tell me in your expert opinion what impacts of any results from the us having weaker R&D incentives than other countries especially countries like our China well um R&D is is what our country's built on um I manufacture Parts I machine parts that are built from companies equipment mainly equipment manufacturers who are using R&D tax policies
▶ 4:46:34R&D money R&D support to come up and innovate with new product lines so this is this is what our country's built on is research and development and Innovation and it's critical to have that immediate 100% expensing in the year that those uh expenses were taken so that those businesses will be incentivized to innovate and grow is that right absolutely Miss Gallagher you talked a little bit about the 199a uh provision in your experience what do most
▶ 4:47:05small businesses do with the money that they save from reduced tax rates using section 199a reinvest it back into their businesses by way of either employees hiring more employees or buying more equipment or increasing their infrastructure for future growth yeah in your written testimony you talked about how these companies that you you work with they'll reinvest to pay for health insurance a lot of times for their employees or to buy new facilities or upgrade their equipment and their computers things that they need to grow
▶ 4:47:35to innovate or to expand production all of which creates new jobs correct yes and that's what we want is the economy to grow and we want more opportunities for American Working Families isn't that the point of 199a absolutely and if we take that away then what happens if those businesses no longer pay uh that lower rate that 21% rate but are paying now a 43% rate this more than 99% of the businesses in America would pay what happens
▶ 4:48:05now uh for their ability to provide health insurance or upgrade their equipment or expand their production or to create new jobs economic downturn is what happens that's exactly what happens I want to end today by agreeing with Mr Gomez when he argued that we should consider the impact on Working Families when we consider the tax policy this year I absolutely agree in my district uh we have a median yearly income of $61,000 a family receiving this yearly income would see $1,042
▶ 4:48:35tax increase should the Trump tax cuts expire at the end of the year and we do nothing for family for this $1,142 is worth about 6 weeks of groceries in this in my region it's also uh enough money to cover about 27 full tanks of gas Even in our big old trucks and based on the that's based on the average pricing those are important things groceries and gas are important things to uh to every American and every east Texan that I represent the tax cuts and jobs act
▶ 4:49:06cannot expire we must continue those Provisions to allow families to thrive and businesses to grow with that Mr chairman I yield back thank you Miss plaset thank you so much Mr chairman and it's so good to be back here on the committee to be a part of these discussions which affect so many Americans um the notion of taxes and trade this is in fact the most important committee and the work that we're doing are going to affect every American
▶ 4:49:36as we've said uh I'm grateful to be a part of the debate on the ways and means in which we fund American government and particularly fund businesses fund how the mechanisms of our economy grow here in the 119th Congress I'm eager to serve of one of three Democrats on the budget committee as well which will no doubt be a place of fierce debate as we work in the next two years and I look forward to advancing shared priorities with my Republican colleagues
▶ 4:50:07I Mr chairman share one of the I'm one of the few members of Congress who actually worked on the and was a member of the other party at one point I worked in the Bush Administration um for a number of years after September 11th and so I see myself in some ways as a bridge in the actual policy ideas that I put forward and we come together here in both of these parties to
▶ 4:50:38try and make permanent and work on a way that supports the American dream but I have to say that I see the uh work on the 117th with President Trump's crowning achievement being the tax bill as an unequitable piece of legislation for all Americans achievement gave .1% an average of$ 25200 th000 of tax
▶ 4:51:08cuts while the poorest fifth of American an only $70 it seems that the largest cups were filled with no overflow going to those most in need by percentage 56% of the tax cut enriched shareholders 44% lined the pockets of Executives and zero went to 90% of the workers in those businesses you know in the early days of our nation uh
▶ 4:51:38Native of my Island s Croy where I live and my family is from our Founding Father Alexander Hamilton famously wrote a national debt if it is not excessive to us will be a national blessing it's that phrase if it is not NE excessive has always been important but never more important than today the need for tax reform is critical for so many different people I've been listening to my colleagues being myself and Mr swazi and
▶ 4:52:08others just coming back to the committee we're now at the end so we get to listen to a lot of the discussion and I thought some of the things that we discussed were very very interesting we talk about the child tax credit and how important it was I have five children I understand the importance of the tax credit I was not always a member of Congress uh I was not always an attorney I struggled for many years I worked a full-time job went to law school at night had small children I
▶ 4:52:38understand the need for that but the children who need the most are not helped by insisting on the earning requirements for the refundable tax credit we are leaving out children who need those resources the most uh there's also when we talk about manufacturing manufacturing capacity actually contracted in the Years following the passage of tcja I'm great I'm so grateful that we do have individuals who did receive that manufacturing benefit
▶ 4:53:09but so many did not according to the Federal Reserve manufacturing capacity contracted a half% each year on average from 2018 to 2021 and then expanded a half% in 2022 and 1.2% in 2023 and Manufacturing capacity is expected to grow by 1.3% in 2024 Let's Get the facts correct research first published in 2022
▶ 4:53:39by authors affiliated with the The Joint Committee on Taxation and Federal Reserve found that the benefits of tcja's corporate tax reductions did not trickle down to workers in fact the authors concluded that the earnings do not change for the workers in the bottom 90% of those corporations there is work that we can do there are ways that we can come together I think that supporting our businesses is important not just our small businesses but I I listen to
▶ 4:54:09my colleagues say there will be Cuts we need to make sure that those cuts do not affect the people who need those resources the most i y back thank you Mr swazi okay thank you Mr chairman and thank you so much for sticking around really appreciate that Mr ranking member thank you Mr Kelly and the Witnesses five hours you've spent here we're very grateful to all of you for spending so much time uh thank you so much and we know it's been very cold in here it's a little warmer now it's
▶ 4:54:39been cold here all day but thank you so much for being here so uh first I want to note something that was noted earlier today by one of my colleagues Mr dogget who said Steve Bannon who's very much affiliated with the Republicans these days is out there saying we should increase taxes on the wealthy we should increase taxes on corporations so we can pay for tax cuts for the middle class so I just want to point out that that's happening with some of your big supporters Jason okay so the uh
▶ 4:55:09I'm here to talk about one thing I've learned since I've been in Congress uh I guess we all know this but I've really learned it since being in Congress and talking to my colleagues is how different it is for different people in different parts of the country in different states in different neighborhoods uh people's incomes are different in different parts of the country but so is their cost of living and so is their uh property taxes and their income taxes that's a very big difference Mr Moran when I was walking was saying that the average income in his in his
▶ 4:55:39uh district is $61,000 I think he said I have one of the higher incomes in the country but our property taxes are way higher as well and our income taxes are much higher I'm in from New York State and the 2017 tax law delivered a lot of benefits to some people in America but it hurt the people in my district and it hurt people in different parts of the country very very badly uh so I'm concerned about especially the state and local tax
▶ 4:56:09deduction the state and local tax deduction was put in place by the federal government over a hundred years ago uh when they first developed the progressive income tax in America the federal tax and when they were debating it the governors and the mayor said we don't want a federal income tax because we want to be able to do we want to be able to tax at the local level at the state and local level to pay for our police and our fire and our local Services they said no don't worry we're going to give you a state and local tax deduction
▶ 4:56:39because we recognize it wouldn't be fair for you to pay federal income taxes on the state and local taxes you've already paid it's just not fair it's not fair that states like mine and other states throughout the country have relied on this tax deduction for a 100 years up until 2017 and then it was capped at $110,000 that's why when we passed three times uh when I was previously in Congress a restoration of the state and local tax deduction it was supported by the
▶ 4:57:10uh uh us Conference of Mayors the national league of cities the US Association of counties the firefighters the teachers the police throughout the country all support restoring the state and local tax deduction because it's not fair to pay taxes on the taxes you've already paid because it's not fair that governments have relied on that deduction for such a long period of time and then it was summarily taken away from them uh relatively quickly and it's not fair that people did get tax cuts in some parts of the country in some places at some income levels but in other places like M
▶ 4:57:40they didn't get those benefits so uh I want to ask each of the here if you recognize that uh the state and local tax deduction is important to a lot of taxpayers in the country Miss Miss Gallagher you're are you an accountant I think yes I am a CPA yeah I was a CPA too I was trained as a CPA just work for Arthur Anderson a company ah very good so do you think the state and local tax deduction was beneficial to a lot of people in the country at one time um yes indeed it when it was fully deductible it was was a full
▶ 4:58:10tax deduction and impacted uh all taxpayers um probably higher income taxpayers more just because they pay more tax they well that's a very interesting point because a higher income that's like a question we talk what's what's the middle class okay so in my district if you're a police officer and you're married to a school teacher you're making $200,000 a year now in some places in the country Mrs marel when I said that her eyebrows went up right and she's like wow $200,000 that teacher and a cop how's that
▶ 4:58:40possible but in other places if you're making $200,000 a year you've got a you're in a gated community you've got a indoor pool and you belong to the country club but where I am you're just getting by and because your taxes are higher your cost of living is higher your your property taxes are higher so it it's different that's why it's so much better if we work in a bipartisan fashion to try and find common ground to try and find a way to address the different people throughout our country and not just make it like it was the first time they asked president Trump they
▶ 4:59:10said hey isn't this going to hurt the people in New York where you're from he said oh they didn't vote for me anyway that's not the way we should be doing our business we should be trying to work together so I'm not going to ask you Mrs marpel because you already answered with your eyebrows but miss couch do you know about the state and local tax deduction you think that helped a lot of families in America yes I'm sure I'm sure that it did uh I think for Georgia you know being very different place it's very different so um where are you from Miss
▶ 4:59:41Silver North Carolina y different there too A lot of people are leaving my district to go to Florida South Carolina North Carolina and my some of my Republican colleagues boast about that but when I asked Steve minuchin who was the former Secretary of the Treasury I said when those people leave New York who gets left behind to pay the remaining taxes he said the people that are still living there that's making taxes go up for people he says well you could cut their services but do we want to cut their police and their fire and their teachers
▶ 5:00:11are Mr Mr chairman thank you so much for allowing me to go a little bit over I apologize thank you I'd like to thank um all of our Witnesses for appearing before us today it's been a long day and you've done a phenomenal job we appreciate that ple please be advised that members have two weeks to submit written questions to be answered later in writing those questions and your answers will be made part of the formal hearing record and with that the committee stands a journ thank you for