[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]


                    THE NEED TO MAKE PERMANENT THE TRUMP 
                         TAX CUTS FOR WORKING FAMILIES
=======================================================================

                                HEARING

                               BEFORE THE
                               
                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED NINETEENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 14, 2025

                               __________

                          Serial No. 119-FC01

                               __________

         Printed for the use of the Committee on Ways and Means
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
59-656 PDF                  WASHINGTON : 2025                  
          
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                      COMMITTEE ON WAYS AND MEANS

                    JASON SMITH, Missouri, Chairman
                    
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               DANNY DAVIS, Illinois
JODEY ARRINGTON, Texas               LINDA SANCHEZ, California
RON ESTES, Kansas                    TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania          SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma                 JUDY CHU, California
CAROL MILLER, West Virginia          GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina          DON BEYER, Virginia
DAVID KUSTOFF, Tennessee             DWIGHT EVANS, Pennsylvania
BRIAN FITZPATRICK, Pennsylvania      BRAD SCHNEIDER, Illinois
GREG STEUBE, Florida                 JIMMY PANETTA, California
CLAUDIA TENNEY, New York             JIMMY GOMEZ, California
MICHELLE FISCHBACH, Minnesota        STEVEN HORSFORD, Nevada
BLAKE MOORE, Utah                    STACEY PLASKET, Virginia
BETH VAN DUYNE, Texas                TOM SUOZZI, New York
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
RUDY YAKYM, Indiana
MAX MILLER, Ohio
AARON BEAN, Florida
NATHANIEL MORAN, Texas

                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel
                 
                         C  O  N  T  E  N  T  S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. Jason Smith, Missouri, Chairman.............................     1
Hon. Richard Neal, Massachussetts, Ranking Member................     2
Advisory of January 14, 2025 announcing the hearing..............     V

                               WITNESSES

Michelle Gallagher, Partner, Adamy Valuation and Gallagher, 
  Flinton and Klien..............................................     4
Margaret Marple, Mother, Lynchburg, Virginia.....................    13
Alison Couch, Owner, Ignite Accounting and Business Advisors.....    17
Courtney Silver, President, Ketchie Incorporated.................    24
Brendan Duke, Senior Director for Economic Policy, Center for 
  American Progress..............................................    34

                    MEMBER QUESTIONS FOR THE RECORD

Member Questions for the Record and Responses from Alison Couch, 
  Owner, Ignite Accounting and Business Advisors.................   258
Member Questions for the Record and Responses from Courtney 
  Silver, President, Ketchie Incorporated........................   260

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................   263

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   THE NEED TO MAKE PERMANENT THE TRUMP TAX CUTS FOR WORKING FAMILIES

                              ----------                              


                       TUESDAY, JANUARY 14, 2025

                          House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:29 a.m., in Room 
1100, Longworth House Office Building, Hon. Jason Smith 
[chairman of the committee] presiding.
    Chairman SMITH. The 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 
percent.
    During the first Trump 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, 
not 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 percent tax cut, while the amount of 
taxes paid by the top one percent, in fact, increased.
    Small business optimism hit record highs. American 
corporations stopped shifting their headquarters, jobs, and tax 
revenues overseas. The economy soared, creating five 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 trillion 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 will 
end up paying the equivalent of nine weeks of groceries in 
higher taxes. After four years of sticker shock at the grocery 
store, that is the last thing families need. Forty million 
parents will have their Child Tax Credit slashed in half. Two 
million family farmers will see the Death Tax exemption slashed 
in half. Ninety-one percent of all taxpayers will see their 
guaranteed deduction slashed in half. Twenty-six million small 
businesses will be hit with a 43.4 percent 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 are making those decisions based on 
the taxes they expect to pay. And 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 relief.
    Before us is the opportunity to permanently remove the 
uncertainty 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 in new GDP growth from a boom in 
manufacturing; $150 billion in new small business GDP growth 
from small businesses expanding, hiring new employees and 
investing in their community; $50 billion in opportunity zone 
investments to revitalize the poorest neighborhoods in this 
country; over one million new small business jobs each year 
just for making the small business deduction permanent. And 
just this morning, before this hearing, the National 
Association of Manufacturers released a new study revealing 
that six 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 
possible.
    I am glad we are joined by our witnesses--Americans whose 
lives were improved by the 2017 tax cuts--and look forward to 
hearing their stories.
    I am pleased to recognize the ranking member, Mr. Neal, for 
his opening statement.
    Mr. NEAL. Thank you, Chairman. I came to the committee 
because I believe in the Tax Code as an engine for change. 
Let's be clear, I have been a pro-growth, pro-prosperity, but 
pro-fair shot member of this committee, which is exactly what 
the American people are asking us to do 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 percent. The American people are living 
under this tax plan, and they need relief from it. The American 
people need lower costs. Our Republican colleagues 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 are going to attack 
the national debt and simultaneously, add $4 trillion to it by 
a tax cut proposal.
    A reminder that we have 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 are 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 Democratic-expanded Child Tax Credit initiative. We can put 
more money directly into the pockets of those who need it, 
which has 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 the 
decreased stress from the security of having more relief.
    Our colleagues are charging ahead on this policy because it 
graduates from a concept of a plan to empty action. Cutting 
taxes for corporations and billionaires on the backs of people 
that really need help.
    We are 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 are guiding this agenda 
behind what they are calling a clear mandate. I ask this 
morning, What mandate?
    The smallest popular vote margin of a quarter century, the 
fourth narrowest by percentage 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 in 
caring for themselves and 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 yield back my time.
    Chairman SMITH. Thank you, Ranking Member Neal.
    I will now introduce our witnesses that are with us today. 
The first one, Michelle Gallagher is a partner at Adamy 
Valuation and Gallagher, Flintoff and Klein. We have Margaret 
Marple is a mother from Lynchburg, Virginia. And we have Alison 
Couch, is the owner of Ignite Accounting and Business Advisors. 
And we have Courtney Silver as president of Ketchie 
Incorporated. And Brendan Duke, a senior 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 
5 minutes to deliver your remarks.
    We will start. Ms. Gallagher, you may begin when you are 
ready.

 STATEMENT OF MICHELLE GALLAGHER, PARTNER, ADAMY VALUATION AND 
                 GALLAGHER, FLINTOFF AND KLEIN

    Ms. GALLAGHER. Chairman Smith, Ranking Member Neal, 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 of 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 advisors 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 which 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, LLCs, and S-
corporations, which represent nearly 99 percent of my business 
clients and the vast majority of businesses in Michigan and 
nationwide. They 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 post-COVID economic rebound, many of 
my clients increased 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, while C-corporations and 
publicly-traded companies will continue to enjoy their lower 21 
percent 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 TCJA 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 efficiency, production, and job 
creation.
    Lower marginal tax rates for nearly all taxpayers have 
bolstered the financial health 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 marginal 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 middle-class 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 tax 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 
schoolteacher, 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 extended Child Tax 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 the debt 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 is right. More money is spent 
annually complying with the tax than the government collects in 
the tax itself.
    If the estate tax is not addressed this year, the current 
exemption will be cut in half, doubling or tripling the amount 
of 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 Congress 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.
    [The statement of Ms. Gallagher follows:]
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    Chairman SMITH. Thank you. Ms. Marple, you are now 
recognized.

             STATEMENT OF MARGARET MARPLE, MOTHER, 
                      LYNCHBURG, VIRGINIA

    Ms. MARPLE. Chairman Smith, Ranking Member Neal, 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 Marple, and I am the mother of three 
children, all boys, ages 9, 2, and 1. 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 childcare 
expenses. It was especially helpful to me in 2018 after 
Congress passed the Tax Cuts and Jobs Act, doubling the Child 
Tax Credit to $2,000.
    I remarried in 2020, and for 2 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 my 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. Yet the majority of our 
money goes to covering the essential yet astronomical cost of 
medical care, 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 government 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 
is our job to provide for our children. What we want is an 
opportunity to thrive. 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 the temptation 
to give up on your marriage, on your children, on yourself. 
Just look at divorce rates, suicide rates, and abortion rates. 
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 is 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 and 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 Child Tax Credit expansion within the Tax Cuts and Jobs Act 
permanent would assure parents like me that our value to this 
country will not be forgotten.
    As parents persevere and as the government prioritizes 
financially what is truly important, I believe America's 
current culture of giving up will turn into a 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 working and 
growing families like mine. And updating the Child Tax Credit 
for inflation would have served to lighten the heavy load 
parents are already carrying as we work to provide for our 
families in this economy.
    I hope you will consider parents 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 TCJA's Child Tax Credit 
permanent, and consider further improvements as was done in the 
bipartisan tax package last year.
    Thank you for the opportunity to testify on this important 
issue.
    [The statement of Ms. Marple follows:]
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    Chairman SMITH. Thank you. Ms. Couch, it is great to have 
you back with our committee. I believe the last time we saw you 
was at a field hearing in Peachtree City, Georgia. So we are 
glad to have you back. You are now recognized.

    STATEMENT OF ALISON COUCH, OWNER, IGNITE ACCOUNTING AND 
                       BUSINESS ADVISORS

    Ms. COUCH. Thank you. Good morning, Chairman Smith, Ranking 
Member Neal, and members of the House Ways and Means Committee. 
My name is Alison Couch, and I am 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.
    As 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 facing the small businesses that my team and I 
work with, as well as what your committee can do to support 
problems that they face.
    During that hearing, I underscored the need for Congress to 
renew provisions of the Tax Cuts ad Jobs Act of 2017 that small 
businesses have become dependent on, particularly, the 20 
percent small business deduction Section 199A, and work to 
reduce regulatory burdens on small businesses so that their 
limited resources are not consumed with meeting these onerous 
requirements. Today, my testimony will be much the same.
    As we get closer to critical parts of the TCJA expiring at 
the end of this year, the clients that my team and I support 
still lack the certainty of whether or not many of the 
provisions that their businesses depend upon will be extended. 
These include the 20 percent small-business deduction and 
reduced rates for individual income tax bracket. 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 
a perspective of true American small business owner. My 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 our 
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 percent 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, but 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 percent small business deduction 
permanent.
    My typical client generates $3 million or less in annual 
revenue, employs an average staff of 10 people, and depends on 
the small business deduction.
    I have practiced public accounting for 21 years and can 
tell you without a doubt that the 20 percent small business 
deduction has been the single most beneficial tax deduction for 
small business 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 does 
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 
utilized 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 hearing record.
    Another area of apprehension for small business clients is 
that if Congress does not act, the reduced tax rates for 
individual income tax brackets dollars established under TCJA 
will increase.
    As members of this committee are aware, the 20 percent 
small business deduction is available 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 as the owner's individual tax rate. In 
fact, 33 million small businesses in the United States are 
organized as pass-throughs.
    As I stated in my testimony in April 2023, business income 
is different from business owners' income. I would like to 
stress that point yet again. Increase business income allows 
small business owners to reinvest in their businesses and 
employees. If Congress does not address the changes and the 
personal income tax bracket set to expire at the end of this 
year, small businesses structured as pass-throughs will be 
faced with a tax increase.
    Finally, in my April 2023 testimony, I highlighted the 
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 
where no adjustment has been made, and then an annual 
adjustment thereafter.
    On the other hand, while the threshold for 1099-K has been 
adjusting, it is moving in the wrong direction.
    For the years 2023 and prior, payment apps in marketplaces 
have been required to send out forms to taxpayers who receive 
over $20,000 and have over 200 transactions.
    For 2024, the threshold moves down to $5,000. And for 2025, 
$2,500. The intention is to further reduce it to $600 for the 
calendar year 2026 and thereafter.
    For the years 2024 and after, 1099-K requirements 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, I urge your members to consider reversing the 
course on lowering the 1099-K amount and instead work to 
increase them.
    Thank you for the opportunity to testify today, and I look 
forward to answering any questions.
    [The statement of Ms. Couch follows:]
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    Chairman SMITH. Thank you. Ms. Silver, you are now 
recognized.

           STATEMENT OF COURTNEY SILVER, PRESIDENT, 
                      KETCHIE INCORPORATED

    Ms. SILVER. Good morning, Chairman Smith, Ranking Member 
Neal, and members of the committee. Thank you for inviting me 
to speak on my Congress Must Preserve the Tax Cuts and Jobs Act 
and how its policies ensure that manufacturing remains the 
driving force of the American economy.
    My name is Courtney Silver, and I am President and owner of 
Ketchie, a third-generation precision machine shop located in 
Concord, North Carolina.
    Since 1947, Ketchie has been a reliable part of the 
manufacturing supply chain. Because we invest in equipment, 
technology, and most importantly, people. I am 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 by the National Association of 
Manufacturers shows that nearly 6 million American jobs are at 
risk, unless Congress preserves pro-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 economic damage makes sense 
because the Tax Cuts and Jobs Act was revolutionary for 
manufacturers.
    After it was signed into law, Ketchie experienced the best 
year in our seven-decade history. Over 2018 and 2019, we were 
able to invest more than $1 million in capital equipment and 
create new jobs within Ketchie. We upgraded our security, our 
HVAC systems, and invested in new technology on our shop floor. 
And, most importantly, we provided raises and bonuses to all 
our employees, because without them, our growth would not have 
been possible.
    Ms. SILVER. 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 pro-growth 
provisions began to expire, such as immediate R&D expensing, 
enhanced interest deductibility, and full expensing for capital 
equipment purchases. And more harmful tax increases are on the 
way further threatening manufacturers like Ketchie. The loss of 
the passthrough 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 percent 
corporate tax rate and new international tax policies, many of 
which impact Ketchie'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, but I also want 
to share how they are changing lives and opening doors to new 
opportunities. Tax reform enabled me to create Opportunity 
Knocks, an internship program that brings students in 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 provide 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 pro-growth tax 
policy.
    Thank you. And I look forward to your questions.
    [The statement of Ms. Silver follows:]
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    Chairman SMITH. Thank you.
    Mr. Duke, you are now recognized.

STATEMENT OF BRENDAN DUKE, SENIOR DIRECTOR FOR ECONOMIC POLICY, 
                  CENTER FOR AMERICAN PROGRESS

    Mr. DUKE. Thank you, Chair Smith, Ranking Member Neal, and 
members of the committee. My name is Brendan Duke, and I am 
senior director for economic policy at the Center For American 
Progress. I am honored to testify today about the 2017 tax law 
and the implications of the 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 cuts for families would have 
been a political disaster. And because they wanted to pass 
their tax bill on a party line vote, they could not increase 
taxes beyond the 10-year budget window.
    This gave birth to the bill that passed. They made a big, 
permanent 40 percent 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 centerpiece of the original bill, was a 
massive windfall for investors spurring a $1 trillion surge in 
stock buybacks, yet it failed to meaningfully increase 
investment, and none of that windfall trickled down to ordinary 
workers, and the recovery in 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 expiring 
individual provisions will strengthen 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 imminent equality, cutting taxes for rich people while 
giving pennies to everyone else. The average tax cut for the 
top 1 percent of households is more than 60 times larger than 
that of the middle 20 percent of households. And even these 
numbers are too rosy. We are talking about a bill that will add 
$4 trillion to 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-the-board tax on all imported goods. A range of 
analyses, from progressive to conservative think tanks, assumes 
this would cost a typical family thousands of dollars by making 
a trip to the grocery store or pharmacy more expensive.
    Alternatively, they can pursue cuts to vital programs. 
Tesla CEO, Elon Musk, a cohead 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 one-third, including Medicare, 
Social Security, food safety inspection, cancer and stroke 
research, and nutrition for newborns.
    Finally, the Trump administration and Congress could find 
the easiest way to offset tax cuts is to just not offset them. 
That is what we did last time. But there is no free lunch here. 
The tax cuts will likely be paid for eventually in the form of 
spending cuts or tax increases down the line, and in the 
meantime continued or even higher deficits could be 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. Higher 
interest rates can be a useful tool for getting a depressed 
economy to full employment, but today they just mean higher 
interest rates. The very real danger of cuts to programs that 
working and middle class families rely on and higher interest 
rates is why Congress must offset any tax cuts they extend in a 
revenue neutral manner. And simply changing accounting 
conventions to prevent extending tax cuts that have no cost 
does not remove the burden that extending these taxes will 
place on Federal and eventually on families' finances.
    The good news is that Congress can cut the costs of 
extending the tax cuts by simply refusing to extend them for 
the top 2 percent of households making over $400,000. The 
Treasury Department released analysis last week showing 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 hit exclusively for 
the top 2 percent of households.
    It is worth noting that $2.4 trillion is also the total 
amount of cuts to Medicaid and the Affordable Care Act in 
Budget chair Jody Arrington's proposed list of offsets that 
came out last week. These healthcare cuts are necessary. They 
are entirely about making room for a tax cut exclusively for 
the top 2 percent of households. Not extending tax cuts for the 
top 2 percent also makes the cost of offsetting remaining tax 
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 approving the Earned 
Income and Child Tax Credits.
    The American Rescue Plan expansion of the CTC represents 
the gold standard, but I would like to commend Chair Smith for 
his work last year on a bipartisan compromise on CTC. It would 
have made a real difference for working class kids whose 
parents do hard work as home health aids, construction workers, 
and waiters. Preventing tax increases on working and middle 
class families next year is not a reason to cut taxes for the 
wealthy. Cuttings taxes for the wealthy is a choice Congress 
may make this year, but it is a choice. Given that working and 
middle class families will end up paying the price, letting the 
tax cuts for the wealthy expire is clearly the correct choice.
    Thank you.
    [The statement of Mr. Duke follows:]
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    Chairman SMITH. Thank you for your testimony.
    We will start with Ms. Gallagher. I will ask the first 
question.
    Ms. Gallagher, one of the major reasons to extend the 2017 
Trump tax cuts as soon as possible is to give America workers, 
families, farmers, and small businesses certainty in the long 
run.
    Small businesses are facing a 43.4 percent 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 two 
million family farmers facing a potential increase in their 
death tax.
    If Congress doesn't act soon, family-owned farms and main 
street businesses will have to start calling estate planners 
and accountants to figure out how they navigate the potential 
increases in taxes.
    So can you speak to how this uncertainty drives 
decisionmaking today among America's families, farmers, small 
businesses?
    Ms. GALLAGHER. Yes. Thank you, Chairman.
    My phone has been ringing off the hook since last August 
with the pending election of families and business owners and 
the uncertainty of where this tax change may go. We have been 
running meetings and scenarios with our clients for months now 
trying to plan for the future.
    Many successful businesses do their forecasting out not 
just 1 year, which is just the year we are in now, but the most 
successful ones plan out three years, five years, 10 years out. 
Especially when they are looking at investing, whether it is 
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 advisor to these folks to be 
able to help them navigate these tax policies. I have 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 advisors 
as well.
    So I can't encourage you enough to do this swiftly and 
quickly to help our businesses and our farmers make some 
decisions.
    Chairman SMITH. Thank you.
    Ms. Marple, we have talked about how working families have 
watched prices rise by over 20 percent over the past several 
years or how wages have fallen three percent since President 
Biden took office. The last thing families need is to see 
Washington slashing their Child Tax Credit in half. 40 million 
families would be impacted.
    And as a mother, can you share what it would mean for 
families if Congress failed to act and allowed the CTC to be 
cut in half? And how would shrinking the CTC to just $1,000 
impact a couple's thinking about starting a family or growing 
their family?
    Ms. MARPLE. 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 lightens the load of the 
financial burden 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 a historic opportunity this year to help 
American families flourish by making the TCJA's Child Tax 
Credit permanent and by considering further improvements as was 
done in the bipartisan tax package this committee passed last 
year.
    Chairman SMITH. The 2017 Trump tax cuts revived American 
manufacturing. We saw 20 percent growth in investment here at 
home thanks to policies like 100 percent immediate expensing 
that incentivized American manufacturers to buy new equipment 
and expand their operations. Stronger manufacturing at home not 
only contributes 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, Ms. Silver.
    Ms. Silver, as a small business manufacturer, how has that 
affected your business planning? And what would it mean for you 
if Congress were to restore the 100 percent immediate 
expensing?
    Ms. SILVER. Thank you for the question, Chairman Smith.
    Yeah, full expensing has impacted me greatly. I have an 
area on my shop floor that is empty. And, you know, I have hit 
the pause button. I have put that capital equipment purchase on 
hold because of these expired tax provisions. It changes the 
return on investment calculation for me. The business decision 
feels more risky, irresponsible. And it impacts the creation of 
jobs.
    It impacts my competitiveness. I am at risk of falling 
behind my international competitors. My international 
competitors are investing in similar advancements that increase 
their productivity, increase their throughput. And so, yeah, 
this affects my ability to be competitive.
    And my customers are large manufacturers across this 
country, and they really need three things from me, and it is 
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 and equipment technology.
    Chairman SMITH. Thank you.
    Looking beyond current policy, how would businesses like 
yours respond to new incentives for domestic manufacturing, 
such as a quicker cost recovery for investments made in new 
facilities and other policies that further lower the tax burden 
on those who produce here in the U.S. as President Trump 
suggested?
    Ms. SILVER. It would make us more competitive. We would 
grow. We would thrive. We would be able to innovate more, take 
risks. It would really drive us, and it would drive the whole 
manufacturing supply chain.
    It is tough to face an uncertain Tax Code that is changing. 
We are a passthrough organization, and so I pay taxes at the 
individual rate. So I feel like when those rates are being 
debated and changed, it feels like you are debating the future 
of my company. And a lot of times that passthrough income is 
not liquid. It is tied up in receivables, inventory, work in 
process.
    And so any policy that Congress can enact that is 
permanent, that is consistent, predictable will help us greatly 
to be able to continue to support the whole manufacturing 
supply chain in our country.
    Chairman SMITH. Thank you, Ms. Silver.
    Mr. Duke, I was just curious, in regards to the income tax 
rates and the tax 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?
    Mr. DUKE. If we could find a way to offset the cost by 
raising taxes on the wealthy people. Deficit financed tax cuts 
aren't a good idea right now.
    Chairman SMITH. Thank you.
    I recognize the ranking member for questions.
    Mr. NEAL. Thank you, Mr. Chairman. I want to thank our 
panelists as well. It is always an opportunity for instruction 
and to hear sometimes competing perspectives.
    So, Ms. Gallagher, are you aware of the fact that in TCJA 
that the Republican Party borrowed $2.3 trillion for the tax 
cut?
    Ms. GALLAGER. Thank you for your question, Congressman 
Neal.
    I am not in tune with the extent of any numbers or 
statistics to that level for today's testimony. I am well aware 
there are plenty of tradeoffs in all negotiations and all tax 
policies that we encounter. And so I am not familiar with the 
exact numbers. I am sorry.
    Mr. NEAL. So let me follow-up with that 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 are going to ignore the $2.3 trillion that 
they borrowed and erase it.
    Now, just professionally, 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?
    Ms. GALLAGHER. Well, again, I would say that, first of all, 
I am not aware about the intention of the baseline argument for 
us here today. There are many factors that go into decisions 
when I help my clients make decisions about taking on debt. In 
particular, with my clients, not necessarily speaking of the 
Federal Government, sometimes debt is okay and it needs to be 
incurred. And so I would just comment that it is not always a 
negative.
    Mr. NEAL. Fair enough. But would you tell your client to 
ignore the debt that they have?
    Ms. GALLAGHER. No.
    Mr. NEAL. Thank you.
    Ms. Marple, I appreciate your comments. They were really 
well done.
    So, were you able, I hope, to have taken advantage of the 
child credit expansion that the pandemic relief packages 
offered?
    Ms. MARPLE. Thank you, Congressman.
    I am 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.
    Mr. NEAL. No, fair enough. But I assume because of 
electronic deposit you were able to receive the enhanced child 
credit during the pandemic?
    Ms. MARPLE. I was able to receive that, yes.
    Mr. NEAL. Thank you, thank you.
    So, Ms. 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? And I have a huge 
precision manufacturing constituency, so I hear the arguments 
you are making.
    Ms. SILVER. Yes, I was.
    Mr. NEAL. You were.
    Okay. Did that add to the national debt?
    Ms. SILVER. I am sure it did.
    Mr. NEAL. Thank you.
    Mr. Duke, so the proposal here today, based on the 
statistical data that we have heard, is that last year, or as 
the proposal goes forward here, a taxpayer who made a million 
dollars last year, they are going to receive a tax cut of 
$78,717. This is not according to the Democratic National 
Committee. This is according to the Joint Committee on Taxation 
which we all have the highest regard for.
    So, a taxpayer who made under $50,000 is going to get $273. 
Do you want to expand on that?
    Mr. DUKE. 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 is true as a percentage of income too. We know 
that extending them is going to increase income and equality. 
And I think the Treasury analysis put out last week just 
really, you know, throws it out there, that we have a $4.2 
trillion tax level, but you can really break it into two 
pieces. There is a $2.4 trillion tax cut for households making 
over $400K and a tax cut for low- and middle-income families 
and upper middle class families of $1.8 trillion.
    Mr. NEAL. Sure. So, I am delighted that you were able to 
take advantage of the initiatives that we put out, very 
pleased. That is why the American economy as the economists 
pointed out and the financial times pointed out is the envy of 
the world. We rebounded so much more quickly than the rest of 
the 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.
    Chairman SMITH. Mr. Buchanan is recognized.
    Mr. BUCHANAN. Thank you, Mr. Chairman.
    I want to get one thing off the table a little bit. As 
chairman of the Florida Chamber, I can tell you we had 130,000 
businesses. This is a while back there.
    90, 95 percent were passthrough entities, and they are 
dealing with these potential tax rates. That is what scares a 
lot of people in our area. Most of the companies are 25 
employees or less. I chair our local chamber, same thing, 
couple thousand businesses, 25 employees or less. Just like you 
have got, Ms. Silver. That is where we need to be focusing on.
    The idea that you could have a tax rate of 43 percent and 
then many states add another 10 percent, it is over 50 percent 
tax rates throughout the country. That is why so many, frankly, 
I will just be candid, are moving to Florida--I hear it all the 
time--or moving to Texas because they don't mind paying a 
little bit more, but they are not going to pay 50 percent plus 
rates. So I want to say that.
    The TCJA was rocket fuel for the American economy. 
Businesses grew rapidly. America families paid less taxes, and 
government revenues increased through the economic growth. 
Allowing the legislation to expire would raise the taxes on 
over 200 million folks from that standpoint.
    The point I want to make, the big point I want to make is I 
introduced H.R. 137, TCJA Permanency Act that would make the 
law permanent.
    And, Ms. Silver, you touched a little bit on expensing or 
depreciation, but a lot of people don't realize--to me it is 
kind of a timing thing. We had bonus depreciation. We got 50 
percent plus 10. But it makes such a huge difference having 
that ability to deduct that even though it is a timing type 
issue.
    Is that your thought on it?
    Ms. SILVER. Absolutely. It is--as a small business--well, 
there are small businesses that have long-term contracts, but 
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.
    So, yeah, absolutely being able to deduct that full 
investment----
    Mr. BUCHANAN. How many employees do you have?
    Ms. SILVER. Twenty.
    Mr. BUCHANAN. Yeah. And that is my point. Most of America, 
it is not the gigantic corporations. Yeah, they are out there 
in a big way, you know, in terms of a few numbers with a lot of 
employees or the billionaires, and I am not defending any of 
that, but I am defending people like yourself. Startups and 
people that are entrepreneurial, have it all on the line every 
day, need to make a payroll, this is where I look at it from 
these tax advantages.
    Ms. Gallagher, what are your thoughts, I don't know if you 
touched much on 199A. I can just tell you in our area it is 
huge. It is a big issue, so I was looking at it. I have got 
82,000 businesses in my district alone, 82,020, that might be 
subject--not all of them, but some of them to the 43 percent 
bracket. But what is your thought on the 199A?
    Ms. GALLAGHER. My thought on 199A is it needs to be 
extended, period. It has been a lifeline for our passthrough 
businesses which I just testified are 99 percent of my business 
clients. They are sole proprietors. They are partnerships, S 
corporations, all passthrough entities that can benefit from 
the 199A deduction.
    So I would say if--the other important thing about 199A is 
it gives our small businesses and passthroughs parity to the C 
corporations and the publicly-traded companies. Their TCJA 
lower rate of 21 percent was made permanent, where as the 199A 
was not. And I just think it is unfair to our main street 
businesses and our farmers to have this expire and, to your 
earlier point, pay upwards of potentially 50 percent in taxes 
when C corporations are going to be at 21 percent. In fact, we 
will see a number of our passthrough entities contacting their 
lawyers and accountants to become C corporations. That is what 
business owners do.
    Mr. BUCHANAN. I am short on time, but that is one of the 
biggest issues is where is the fairness. I started out a C 
corporation 40 years ago. Now, we are passthrough entities my 
kids run. But, you know, we are not going to go back to C corps 
if that becomes the reality. We don't want to, but that is 
where we are being driven to potentially.
    Ms. GALLAGHER. Exactly.
    Mr. BUCHANAN. But, again, I just want to thank all of our 
panelists for input. Thank you.
    I yield back.
    Chairman SMITH. Thank you.
    Mr. Doggett.
    Mr. DOGGETT. Thank you, Mr. Chairman, and thanks to our 
witnesses.
    I am for a dramatic increase in corporate taxes. We have to 
increase taxes on the wealthy. For getting our guys' taxes cut, 
we have got to cut spending, which they are going to resist. 
Where does the tax revenue come from? Corporations and the 
wealthy. And when they start squealing, we have a conversation. 
We are all partners in this. Everybody is going to take a 
little pain.
    Those are not my words. They are 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 reiterated them this very morning.
    This committee has got to decide will it maintain its 
tradition allegiance to the plutocrats or help working 
families. Some of them are represented here on today's panel. 
It is 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 without adding to the national 
debt, and you cannot just pour some magical dust on it and 
calling it the changing of a line and ignore what you have 
done.
    Spiraling Republican--spiraling national debt has been 
something that some members of this committee have previously 
said was a national security crisis. Well, it is a crisis just 
as much if you do it through more tax breaks, more largesse 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 and by most Americans.
    And there is further trouble for working families in the 
plans that 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 slower drastically the price of food.
    Most economists, however, are concerned that his policies 
will have exactly the opposite effect. Indeed the minutes of 
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 tariff, and it is 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 on most 
every vegetable and most fruits that we buy.
    Overall Republican eagerness for a trade war that no one 
will win, beginning with the imposition of multiple 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 on this panel.
    Indeed, one recent study found that if the tax breaks were 
combined with the tariff increase that the impact would be that 
80 percent of Americans would be in worse condition. And let's 
not forget that the last time retaliation occurred from Trump 
tax tariffs that farmers had to be paid billions of dollars in 
welfare because of their lost foreign markets.
    Now, the impact of the 2017 Trump tax scam was to add about 
$2 trillion to our deficit, and now it is proposed that we add 
another $4 or $5 trillion. The effect on Americans is that 7.8 
percent was the tax rate paid by the top multinationals in one 
year. Last year the Pharma industry didn't as a group pay any 
tax whatsoever, but, meanwhile, a working mother with two 
children who is paid the average rate was paying a tax rate of 
20 percent. That is not fair. And I am 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 and so do the wealthiest few in our country.
    The biggest loser of their plan overall will be our debt, 
but the impact that that has on the solvency of Social Security 
and Medicare and other investments is also very 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.
    Chairman SMITH. Mr. Smith.
    Mr. SMITH of Nebraska. Thank you, Mr. Chairman. Certainly 
thank you to our entire panel here today. I think this hearing 
is very timely. It is important. I think it is always healthy 
to look back and see where we have been and where we need to go 
moving forward.
    I am proud to say that the 2017 TCJA, Tax Cuts and Jobs 
Act, was a reflection and result of several years of thoughtful 
exchange and really diving deep into what we could do at the 
time to grow our economy, create more opportunity, create more 
fairness in the Tax Code I might add.
    And it was interesting, I think one thing that is left out 
of the discussion today, especially as we heard some testimony 
earlier, is that even Barack Obama when he was President 
realized that we needed to be more competitive on the corporate 
side and proposed 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 were 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, you know, talk about this all we want and to 
characterize this in different ways, but the fact of the matter 
is we were in a bad spot as a country before TCJA. And, yes, 
had we 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 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 is incredibly important, and I believe we owe 
the American people a discussion, an exchange in sharing ideas 
and reflecting on reality that we would shape policy moving 
forward in a productive fashion. And when I say productive, I 
mean with this process, but Ms. Silver very accurately, I 
believe, and appropriately described--we sought out in 2017 on 
productivity for manufacturers such as Ms. Silver. Now, I think 
it was important that we were agnostic on size of a company so 
that everyone could benefit, but we knew that with increased 
productivity if a business would see advantages in the Tax Code 
to adding new equipment, as Ms. Silver articulated, that the 
end result would be good for the company on a micro basis, 
great for the company as a whole as more U.S. companies became 
more productive and more profitable.
    Now, call me unreasonable, but I think profitability is a 
good thing. Profitability around this town is demonized so 
often. I think it is sad. And we owe the American people a 
better discussion than what we have been seeing way, way too 
often here.
    But I just think it is important to note that the 
thoughtfulness that went into 2017--I think there is a greater 
understanding these days that what we did in 2017 was the right 
thing to do, especially given the factors to consider at the 
time. And now looking backward, I am 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's look at that, 
but let's not ignore the successes that we had.
    Now, very briefly--sorry I have taken up so much time here. 
But, Ms. Gallagher, I want to give you more time to elaborate 
perhaps on, you know, the value of permanence, whether it is a 
state tax, whether it is 199A, the value of permanence and what 
that would look like perhaps to an individual business or even 
beyond.
    Ms. GALLAGHER. Thank you, Congressman. And good to see you. 
I came to your tax team meeting this summer----
    Mr. SMITH of Nebraska. Yes, thank you.
    Ms. GALLAGHER [continuing]. And talked to you and your 
folks on this.
    So permanency, certainty, and predictability is key for our 
small businesses and farmers. How can you plan without it? I 
was thinking of an analogy I could give you, but I know you all 
are very busy people. So imagine, if you will, getting your 
schedule the morning of your day, not having any idea where you 
are going, who you are seeing, what you were supposed to say, 
what you were supposed to do until that morning. That is 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 key. It could stunt economic 
growth and job creation without it.
    Mr. SMITH of Nebraska. Okay. Thank you.
    Thank you. I yield back.
    Chairman SMITH. Thank you.
    Mr. Thompson.
    Mr. THOMPSON. Thank you, Mr. Chairman. Thank you for having 
the hearing and thank you to all of the witnesses.
    Before I comment, I just want to make one point about Mr. 
Neal's comments regarding the fires in California. I think it 
is really important to remember that we are the Congress of the 
United States of America, not red, blue, or otherwise. If there 
is a natural disaster or a horrific situation such as the 
people in southern California are experiencing, as Members of 
the Congress of the United States of America, we need to be all 
in to provide help irrespective of where those people happen to 
reside.
    So, Mr. Neal, thank you for bringing that up.
    You know, we are going to hear a lot today--we already 
have, and I am 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 benefitted the most from these tax cuts 
were the rich, the very rich. Working families received pennies 
compared to the billionaires.
    And that is not the only misleading claim my colleagues on 
the other side have made about the 2017 tax bill. They claim to 
be champions of fiscal responsibility. Well, 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 would add almost $5 trillion to our debt 
over the next 10 years. And if you add all of President-elect 
Trump's list of tax cut promises, 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 making $50,000 a year. 
The fact is it was a Democrat legislation that delivered 
results for--economic results for the middle class.
    For example, the CHIPS and Science Act, the Inflation 
Reduction Act all contributed to increased domestic 
manufacturing. It wasn't the tax cuts. Since the IRA was signed 
into law, companies have announced over $130 billion worth of 
investment in 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 percent of the IRA 
investments in new projects have gone to Republican 
congressional districts.
    And the 2007 tax bill raised costs for millions of our 
constituents--2017 tax bill for our constituents by capping the 
State and local tax deduction, about an $8,000 a year tax 
increase to people in my district.
    Mr. Duke, Republicans claim that the TCJA is responsible 
for increased domestic manufacturing. Let's take EV 
manufacturing, for example. What have been the benefits of the 
EV credit? And what would happen if the Republicans repeal 
that?
    Mr. DUKE. So this isn't just an economic issue. This is a 
geostrategic issue. The strong industrial policy that, you 
know, the Inflation Reduction Act EV credits are an example of 
are positioning U.S. automakers to catch up and lead in global 
manufacturing excellence. Firms have invested more than $81 
billion in domestic EV and battery manufacturing since it 
passed, and it is helping close the investment gap with China, 
making the U.S. 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 market.
    Mr. THOMPSON. Thank you very much.
    Ms. Silver, you were the past chair of the National 
Association of Manufacturers. You refer to that in your 
testimony. Do you agree with Mr. Duke on the importance of the 
EV tax credit and the section 45X of our manufacturing sector?
    Ms. SILVER. I can't answer that question, but I certainly 
can follow up with you. I don't know about the EV tax credit to 
speak to it.
    Mr. THOMPSON. And the advanced manufacturing productions 
credit?
    Ms. SILVER. I can follow up with you after this for sure.
    Mr. THOMPSON. Okay. Thank you.
    Ms. Gallagher, you talked a lot about farmers, and you 
talked about certainty and predictability. Would you agree that 
if we really want certainty and predictability and we really 
cared about our farmers, we would take this tariff discussion 
off the table now?
    Ms. GALLAGHER. Thank you for that question.
    I have not looked at how any tariffs would impact our 
farming community, so I am not----
    Mr. THOMPSON. Well, we have experience what they did last 
time, and you heard from Mr. Doggett how we had to bail out 
farmers because of those tariffs.
    Ms. GALLAGHER. I know that my farming clients have 
benefitted greatly from the TCJA provisions, specifically on 
the 199A full bonus and lower marginal rates, and the increased 
estate exemption has been a major benefit for my farming 
clients.
    Mr. THOMPSON. Thank you.
    Yield back.
    Chairman SMITH. Mr. Kelly.
    Mr. KELLY. Thank you, Chairman. Thank you all for being 
here and taking a day out of your lives to come and talk to 
people who have never really been in the private sector.
    I am an automobile dealer, second generation. My son is now 
running the store my mother and father started in 1953 with 
absolutely nothing, a one-car showroom and about six service 
bays and worked their tails off 7 days a week to make it 
profitable.
    I love people who have to make payroll. There have been 
several times when we were doing TCJA to begin with and 
Chairman Brady was talking about it one day, I said, 
``Actually, Chairman, there is two times in my life I have paid 
absolutely no tax.'' And he looked at me and said, ``Mike, how 
did 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 talk about the benefits of TCJA. Was 
it really true? Well, yes, it was because we actually garnered 
more revenue with TCJA than we had ever seen before. And I can 
remember being there the day that vote was taken. It was the 
wealthy, the wealthy, the wealthy, they never get taxed their 
fair share.
    And all the sudden we did TCJA, and all of these wonderful, 
wonderful people who left America because America was being too 
tough with them came home. They hired people. They made 
investments. Certainty is absolutely the most important part of 
any business.
    I wish in the business I was in that there was certainty as 
to who it is that is going to be able to buy a car or truck 
from us tomorrow.
    A friend of mine by the name of Leonard Pintell, who is 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. It would be paid on commission only, and you 
lost your job at least once.
    All of these wonderful talks that we have going back and 
forth about who benefits, who loses, who is paying it, I will 
tell you who pays it. Companies that are profitable. Why do 
these companies that left America come back? Because of TCJA. 
Why did they leave to begin with? It is 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 complain for them just like the little hen. Right? Hey, 
hen, lay. And no golden eggs. They quit coming. And we said, 
What happened? The hen couldn't lay them anymore.
    We go through all of these different things and what we are 
going to do and what we are not going to do and how difficult 
it is. I have got to tell you, please, please, give me a break. 
Give me a break.
    Ms. Silver, I read your testimony. First of all, you have 
been through an incredible life. The loss of your husband, I 
can't imagine what that was like to go through. Ms. Marple 
raising children, Ms. Gallagher working with people, Ms. Couch 
working with people. Look, do you know that in this entity, in 
government, do you know that during the height of COVID-19 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 where do 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 we made that change, when 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, Ms. Silver, I know a lot of people that do what you 
do. This is a tough, tough business. But all of you, if you 
would just please weigh in. I get so tired of people talking 
about tax revenue who never had a worry about making a profit 
in order to pay taxes. If you can all--and I know you all have 
given your testimony today, and you took a day out of your life 
to come here.
    But, Ms. Silver, I really was reading what you were saying 
because I have so many people back home that do what you do and 
how tough it is. It is no bed of roses. You compete against a 
lot of people. So please share more because I thought your 
testimony was incredible.
    And all of you, thank you so much.
    Ms. Marple, congratulations. It sounds to me like you are 
raising a wonderful family.
    Ms. SILVER. Well, thank you for your comments, Congressman.
    I can throw some color on this as far as how complex this 
is.
    Mr. KELLY. Please do.
    Ms. SILVER. So to take raw material and to transform it 
into a useful object that we all benefit from is extremely 
tough. There is a whole lot that has to go into that. We have 
to make--like I said earlier, have to make investments in our 
people, processes, and machining technology. And you are right, 
there are definitely years where you don't make a profit. But 
if you take this piece of paper, okay, and you slice this--
let's say you slice this 20 times in width. If you take one of 
those strands of 20, that is the tolerance that we are holding 
on dimensions on parts that we manufacture. That is two-tenths. 
You can't see that with the human eye. This is not me buying 
equipment, pressing a button, and a widget comes out. This is a 
ton of small businesses, like you said, in your district.
    And so we need pro-growth tax policies 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. They need us here.
    Mr. KELLY. Yeah. Well, you know what, I appreciate your 
testimony. I think 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. But if we make it 
impossible to be profitable here, people will leave. They did 
it before. They will do it again. We have looked at the 
greatest tax revenues we have ever had.
    This is not a Trump issue with me. It is not a red issue or 
a blue issue, as my friend Mr. Thompson said. These are red, 
white, and blue issues. If it is not for America, I don't care 
about anybody else in the world. If America is strong, the 
world is strong, then America is safe.
    Thank you all so much for being here.
    Chairman, thanks for having this. And let's go TCJA part II 
and watch America rise again.
    Chairman SMITH. Thank you.
    Mr. Larson.
    Mr. LARSON. Thank you, Mr. Chairman.
    I thought you were going to say let's go, Notre Dame. You 
missed your opportunity there, but----
    Chairman SMITH. I left that out, yes. Go Irish.
    Mr. LARSON. Yeah, right.
    But thank you, Mr. Chairman, for this hearing. And I want 
to associate myself with the remarks of Mr. Neal and my 
colleagues. The witnesses have been outstanding. And when you 
listen to your testimony, I think you can see that there is a 
desire here on both sides of the aisle to help, but that help 
all comes down to fairness at the end of the day.
    And the quandary that Mr. Neal presented I think is one 
that this committee needs to sort through and have the 
conversation on. And the other thing that he talked about is 
that you just can't ignore the obvious and what is in front of 
you. And from my perspective as a ranking member on the Social 
Security Committee, we can't ignore the obvious. Do you know 
the last time that we extended Social Security benefits in the 
United States? Anyone want to venture a guess?
    It is not a fair question to you. 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 the United States Congress and 
this committee, to adjust Social Security, including the unfair 
policies of taxing your Social Security when you retire? I 
think the American people rightly no longer--we cannot ignore 
these issues. 70 million Americans rely on Social Security. And 
with 10,000 baby boomers a day becoming eligible for Social 
Security, that is an additional 3.65 Americans becoming 
eligible every year. And we haven't extended benefits in over 
50 years? That is an outrage.
    And when you look at its impact on people, 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 States 
Congress.
    I am looking forward to working with Mr. Estes, and I 
believe my 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 are 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 the 
disagreement is when you see all the money going in one 
direction and not even using capitalism's greatest tool for 
equity, Social Security, make sure that that is the great 
leveler, including tax breaks for people on Social Security, 
including what parents get and what children get, what 
surviving spouses get.
    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 million Americans that need a program addressed that hasn't 
been touched by Congress to enhance it in over--now going on 54 
years.
    I yield back.
    Mr. KUSTOFF [presiding]. The gentleman yields.
    Mr. Schweikert is recognized for 5 minutes.
    Mr. SCHWEIKERT. Thank you, Mr. Chairman.
    And for all of our members here, what we are doing actually 
is incredibly serious. Your country borrows about $70,000 every 
second. 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 numbers are 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 that 
mathematically don't actually walk through the complexity. The 
fact of the matter is today's tax system is the most 
progressive ever.
    The rich pay a higher percentage of federal income taxes. 
Now, did they get benefits? Of course. The fact of the matter 
is how many did we remove completely from paying federal income 
taxes? And they still have payroll taxes.
    And also, Mr. Chairman, for submission to the record I 
would like to actually put in a series of documents that show 
the best estimates are almost 70 percent of the corporate 
income tax benefits actually go to the worker. And vice versa, 
if you raise corporate taxes, it is about 70 percent is the 
mean come out of the workers' wage growth.
    And I am sure you were waiting all with baited breath on 
the report from CBO last night. I hope that was a UC.
    Mr. KUSTOFF. Without objection, so ordered.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. SCHWEIKERT. All right. Good because I have got a good 
stack for you.
    How many of you saw the CBO report that came out yesterday 
basically saying in 8 years or so the United States has more 
deaths than births? This is more than just what we are going to 
extend in the expiring tax policies. The fact of the matter is 
the world we are dealing with today is different than those of 
us who worked on TCJA 2017.
    A couple of other things I sort of want to walk through. We 
have the reports, and it has been supplemented a couple of 
times, from 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 is required so you actually have lendable, borrowable 
money for your businesses. But that makes the world difficult.
    But a couple of other things I do want to walk through here 
on both CBO and tax foundation charts--and this will also be 
submitted for the record--basically showing that if we had done 
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 than we 
did in the industrial policy, what was done with the IRA and 
the CHIPS Act because it has a better distribution. Those 
dollars actually ultimately go to where it maximizes investment 
velocity.
    And I am sorry, but this is maybe the most important 
committee in the world. Can we get our basic economics and our 
math right? Because this is a big deal. You have a country, Mr. 
Chairman, 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 U.S. sovereign debt 
for the next 10 years, that is almost $9 trillion additional 
borrowing to just pay for that.
    How does this committee produce policy that says we are not 
going to raise taxes on working people? We need our small 
businesses to be hitting a new productivity curve because that 
is how we survive. But at the same time, how do we thread the 
needle and communicate to the world debt markets that we are 
serious, please don't keep raising our interest rates. Because 
at this moment where the interest rates are going just that 
increase of going to a 5 handle is double, is actually double 
the cost of extending all of these tax provisions. Understand 
if we don't get this right, the debt and bond market is going 
to run this country, not us.
    With that, I yield back.
    Mr. KUSTOFF. The gentleman yields.
    Mr. Davis, you are recognized for 5 minutes.
    Mr. DAVIS. Thank you, Mr. Chairman, and let me thank all of 
our witnesses.
    Mr. DAVIS. You know, the 2021 Child Tax Credit expansion 
almost halved child poverty in just 1 year. It pains me that 
the Republican-forced expiration of the 2021 Child Tax Credit 
expansion doubled the child poverty rate in just 1 year.
    Yet, here we are again, with Republicans advocating an 
average $70,000 tax cut for millionaires, while demanding that 
working families and seniors pay thousands more in tariffs, and 
lost Medicaid, Medicare, food, student aid, housing, and Social 
Security benefits.
    The TCJ does nothing to help parents afford childcare. In 
2021, the Democrats' Family Care Credit improvement took the 
benefit from $600 for one child to $4,000, and from about 
$1,200 with two or more children to $8,000. $8,000 is a lot 
better than $1,200.
    The TCJA does nothing to improve the Earned Income Tax 
Credit, to stop taxing low-income workers into poverty.
    In 2021, the Democrats nearly tripled the Earned Income Tax 
Credit and made critical expansions for younger workers, older 
workers, foster youth and homeless youth. The TCJA fails to 
help these workers.
    The TCJA does nothing to increase housing insecurity. In 
fact, Mr. Duke mentioned that housing investment is lower today 
than before.
    Mr. Duke, as an economic expert, can you speak about how 
tax policies that support low-income individuals, parents, and 
workers strengthen families and boost our economy?
    For example, if we help parents without tax liability get 
up to $8,000 credit for their childcare, like 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?
    Mr. DUKE. Absolutely. So we have got $4 trillion on the 
table, so that is 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 is a very interest-rate-sensitive factor.
    So I think a key thing is paying for whatever we are going 
to do to keep the deficit in check, which is going to, you 
know, keep housing investment going.
    On top of 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 working-
class families get, you know, the same tax credit that middle-
class families do. And, again, you know, I think, you know, 
this committee oversees the largest affordable housing program 
that we have--the Low-Income Housing Tax Credit.
    That is an example of, I think, a better priority than, you 
know, a lot of what is, you know, in that $4 trillion, 
especially that $2.5 trillion for households making over 
$400,000.
    So I think the investments you are talking about--the Child 
Tax Credit, the Earned Income Tax Credit, 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 and corporations.
    Mr. DAVIS. Thank you very much. I thank you, and, Mr. 
Chairman, I yield back.
    Mr. KUSTOFF [presiding]. The gentleman yields.
    Mr. LaHood is recognized for 5 minutes.
    Mr. LaHOOD. Well, thank you, Mr. Chairman. I want to thank 
all of our witnesses for your valuable testimony here today on 
this important subject that we are talking about.
    There was some reference earlier about the election and 
maybe the insignificance regarding the results of the election, 
or somehow, this was not 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 6 months ago and I would tell you 
that Donald Trump would win all seven swing states, that he 
would win the popular vote, would win record amounts of 
African-American males, and a record amount of Latino males, I 
don't think anybody would have believed us. But that was the 
result of what happened.
    And the other thing that never changed in the election, if 
you look over the last year was, 72 percent of the country 
thought we were headed in the wrong direction, based on the 
economy and immigration.
    It never changed. We are headed in the wrong direction.
    And you drill down on that, on the economics--and we have 
alluded to it here today--the insecurities and the anxiety that 
the American people had, lower, middle-class people felt it, 
devastating inflation, cost-of-living increases, lower wages, 
lack of economic optimism, and anxiety on living the American 
Dream. And that was reflected on the election results.
    And so, when we think about those results, that is the 
reality, that is the mandate we have to fulfill those campaign 
promises that we made on fixing the economy.
    What better way to do that than continue the Tax Cuts and 
Jobs Act from 2017, go back to the Tax Cuts and Jobs Act. And, 
again, we have talked about some of the results from that here 
today.
    I would argue--my nine years I have been in Congress--it is 
the most important and most impactful vote that I have taken, 
in voting for the 2017 Tax Cuts and Jobs Act and what it did 
for the American economy. It created the best economy in my 
lifetime.
    You look at what it did to the economy: higher wages, 
record employment, record number of investment in small- and 
medium-sized businesses. It created a booming economy.
    But even going a little further, we moved 6.5 million 
people out of poverty. People don't talk about that enough. It 
was the largest migration of people leaving poverty, leaving 
welfare programs to go into our economy, under the Tax Cuts and 
Jobs Act.
    That is the reality of what happened. So why wouldn't we 
want to continue that, particularly with the election results 
we just had?
    I would also mention, on the international side, 
particularly what we did on GILTI and ``B'' in the 
international tax provisions, we repatriated $3.5 trillion back 
to the United States.
    No one talks about inversions anymore. Pre-TCJA companies 
were inverting all around the globe, going to other places. No 
one inverts anymore because of the changes we made, bringing 
that $3.5 trillion back to this country. Those are the tangible 
real results that we had from TCJA.
    Now, I will admit, COVID 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 than making these tax cuts permanent. And that is why 
we are really here today.
    So a couple of things. As we begin, I just want to mention 
two goals that we should be accomplishing: One, we need to 
ensure that the tax cuts are preserved. And if we let them 
expire at the end of this year, the average taxpayer in my 
district would see a 22 percent tax hike in 2026. 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 are protecting the full gamut of taxpayers, 
whether they are individuals, working families, small 
businesses, family farms, and so on.
    The second goal that I hope we can accomplish in addition, 
is extending the Trump tax cuts. And it is for us to consider 
the tax proposals that address some of the news challenges that 
we are seeing in the country today.
    There are commonsense reforms already out there that 
address affordable housing, childcare, and taxation of 
Americans living overseas. And I hope we can look to better 
support working families and ensure our Tax Code is more pro-
growth and even-handed.
    Ms. Gallagher, I do have a question for you. My district 
that I represent in central and northwest Illinois, has a large 
number of family farms, family-owned small manufacturing 
companies.
    I wonder if you could talk--you alluded to it in your 
statement you made--about what can be done for farms and small 
businesses, if we were to let the estate tax exemption be cut 
in half at the end of this year, due to the expiring tax cuts. 
Can you talk about what that would mean to businesses?
    Ms. GALLAGHER. Yes, and thank you for that great question. 
It will impact at least twice, maybe three times as many of 
what I say, unexpecting families. I think most are oblivious to 
potentially this estate tax exemption being cut in half.
    Many small businesses, yes, they do have advisers, and we 
do our best to advise our clients on these things, but the 
middle-class businesses are the ones who will be unexpecting of 
this and will not have, in my opinion, the time or money to 
hire the accountants and estate planners to develop the estate 
plan that can protect those assets.
    I would also comment that farmers in particular are most at 
a disadvantage. Manufacturers and companies are as well, 
because they have very illiquid assets. Farmers, in particular, 
their values of their land continue to increase--it is very 
valuable--but you can't just pull cash out of it unless you 
sell some of it or--there is 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.
    Mr. LaHOOD. Thank you.
    Mr. KUSTOFF. Ms. Sanchez, you are recognized for 5 minutes.
    Ms. SANCHEZ. 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. 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 
Ms. Chu's district, are suffering, and they have lost 
everything in these horrific wildfires. And I have to say it 
was apocalyptic and just heartbreaking to see firsthand the 
devastation.
    We have 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 recover, just as we have done for 
victims of other natural disasters across this country.
    But that is not what we are here to discuss today. We are 
here today because Republicans are attempting to renew Trump's 
signature tax scam that 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 for large 
incorporations, which allows them to continue paying less in 
taxes than ever before, forever.
    Republicans claim that those tax cuts would trickle down to 
everyone else, but slashing the corporate income tax rate only 
further lined the pockets of millionaires, executives, and 
shareholders.
    Republicans love to claim that they are helping working 
families, but the fact of the matter is, under their policies, 
working families only get the crumbs.
    We need to chart a new and fair 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 meet.
    And we should increase the Child and Family Caregiver Tax 
Credits to help our families manage their exhausting and 
expensive balancing 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 taxes for the wealthiest in 
this 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 have seen in Los Angeles, to 
their eligibility for a Child Tax Credit that is not fully 
refundable.
    Mr. DUKE. Yeah. So I think a good, 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 new child, 
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 is getting hit twice from that. So I 
think, you know, that is why full refundability is so powerful.
    And we know, look, this is America, you know, most 
Americans are connected to the labor market, right? And, you 
know, the ones who aren't, you know, they are retired because 
they are a grandparent, they have a disability, or, you know, 
they are not in the labor market that year, but they were in 
the labor market the year before and they are going to get a 
job after.
    It is really hard to get by in America without a job, so 
that is why full refundability makes the most sense.
    Ms. SANCHEZ. Now, Ms. Marple said that, you know, they rely 
on that Child Tax Credit to get by, and that it should be for 
hardworking families like hers.
    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?
    Mr. DUKE. Yes, that is right.
    Ms. SANCHEZ. 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?
    Mr. DUKE. Yes, that is right.
    Ms. SANCHEZ. Does that sound like we are helping--that this 
tax policy that they are trying to push is going to help the 
neediest, hardest-working families in this country?
    Mr. DUKE. No, it does not.
    Ms. SANCHEZ. Thank you.
    Mr. Duke, as you know, nearly 80 percent of the tax cuts 
for individuals in the TCJA went towards White households who 
represent about 67 percent of American 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?
    Mr. DUKE. Yeah, absolutely. So America is a country where 
wealth is distributed very unequally, and there is a racial 
pattern to it. The 10 percent wealthiest White households hold 
two-thirds 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 are 
going to have to pay for it somehow. We are going to do it 
through taxes on imported goods, we are going to do it through 
cuts to programs like healthcare now or in the future.
    So, again, you know, I think low- and middle-income 
families are going to pay that price, and that is going to 
drive those disparities.
    Ms. SANCHEZ. Thank you very much. I appreciate all of our 
witnesses' testimony today, and I yield back.
    Mr. KUSTOFF. Mr. Arrington, you are recognized for 5 
minutes.
    Mr. ARRINGTON. Thank you, Mr. Chairman.
    I can't imagine in any world that anyone from any political 
party would call what happened and transpired as a result of 
pro-growth policies a tax scam.
    You would have to have the fundamental belief that it is a 
scam because that is not the American people's money that we 
are playing with here in Washington, that that is actually 
rightfully the government's money, I think.
    Because there is no way to describe the lowest poverty 
rates in recorded history as a scam. There is 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, highest R&D 
investment, ever; lowest unemployment rates for minorities and 
women, ever; no repatriation of our jobs and businesses 
overseas, but repatriated capital, repatriated businesses, 
repatriated jobs from overseas back to the great U.S. of A.
    Now, if that is a scam, as they say, I got some ocean-front 
property in west Texas to sell you.
    Everyone benefited. And those on the lower-income spectrum 
benefited the most. Actually, the top 1 percent paid more. So 
it got 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 
tax rates than communist China. What is 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 percent. We are 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. It makes no sense.
    The American people had the clearest contrast between my 
colleagues' policies and the associated effects on our families 
and our economy, relative to the Republicans' policies and 
associated effects on families and the economy.
    We have never had a clearer contrast between the two 
because we had total control when we passed TCJA. They have had 
total control for the last--not the last four years, but the 
two previous years. And what is--there is no comparison.
    Think about the last four years. We have had the worst, 
most regressive tax in 40 years, called inflation, on working 
families. We had $8 trillion in deficit spending. We had higher 
taxes, a barrage of regulations on our small businesses, our 
job-creation engine.
    We stomped the production of domestic energy, the lifeblood 
of our economy, repeatedly with a whole-of-government assault.
    Why wouldn't we have experienced the inflationary firestorm 
and the cost-of-living crisis that is decimating families 
today--why wouldn't we--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 commonsense expectation 
that if you are 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 what was on the ballot 
here, and they didn't want any more of the last 4 years. We 
could not have suffered anymore.
    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 5 years?
    And now what would happen--let me ask a question in 15 
seconds, Ms. Gallagher--what would happen to a working family 
if you put a $5,000 tax hike on them right now, on the heels of 
the last four years of having inflation burn a hole in their 
budget, in their pocketbook, what would that do to them? You 
have interacted personally with them.
    Ms. GALLAGHER. Yes.
    Mr. ARRINGTON. You can tell this story. I want to hear it--
and, you know, I am out of time. So can she answer that 
question, Mr. Chairman?
    Mr. KUSTOFF. Quickly.
    Mr. ARRINGTON. Please.
    Ms. GALLAGHER. I will be brief. They will tighten their 
belts, meaning they will have less money to put back into their 
households and into their communities, which will then stifle 
more economic growth. So it becomes problematic.
    Mr. ARRINGTON. Especially when the credit card debt is the 
highest it has ever been, especially when consumer debt is the 
highest it has ever been, especially when we just added $3 
trillion in consumer debt, especially when their APR went up by 
50 percent.
    They are out of money. They don't have any more credit 
cards. I yield back, Mr. Chairman.
    Mr. KUSTOFF. Ms. Sewell, you are recognized for 5 minutes.
    Ms. SEWELL. Thank you, Mr. Chairman.
    As we review the Tax Cuts and Jobs Act and its effects, 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't think of a better place for this committee to do 
this than through an expanded and fully refundable Child Tax 
Credit.
    We have had economists, academics, parents, guardians, and, 
yes, even today, Ms. Gallagher, as well as Ms. Marple, 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 is not just expanding CTC that is important, it must 
also be fully refundable and timely received.
    To make the Child Tax Credit fully refundable would allow 
many more families to take advantage of this crucial resource. 
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 I think that the plan--the way that we did it under 
the American Rescue Plan was the best way. We gave more money 
to children, and we gave more opportunities for their families 
to have better resources.
    Likewise, the CTC would have a more immediate impact if the 
Child Tax Credit is paid in advance, in monthly installments 
with the option of even depositing it directly into their 
checking accounts.
    People do not pay for rent or utilities on an annual basis. 
They pay for it monthly. Then I am not sure why we would do the 
same for the CTC.
    I think it is 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 during the American 
Rescue Plan 2021 year, and was told by countless parents how 
that increase in money from the Child Tax Credit and being 
given it monthly was such a huge advantage to them.
    They were able to get instruments for their children, and 
better food for their children, and I think that we, as an 
American people, if we are going to spend $4 trillion, get $4 
trillion into debt, we can't do that on the backs of our 
working families and our children.
    We should be trying to figure out ways that we can be 
fairly distributing those resources.
    Now, another area that the Tax Cuts and Jobs Act has 
negatively impacted is in limiting the ability of municipality 
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 tool kit to make sure that we are 
revitalizing communities.
    TCJA repealed the advance refunding or the tax-exempt bonds 
that were advanced refund, so that many of these communities, 
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 
that we are investing in expanding the TCJA.
    I also think that it is critically important that we look 
at expanding the Earned Income Tax Credit.
    Mr. Duke, you talked a little bit about that, and I would 
like for you to elaborate on ways that we can literally talk 
about a rising tide lifting all boats, but the fact of the 
matter is, we have an opportunity, if we are going to open the 
Tax Code up again, to actually benefit more Americans. Can you 
talk a little bit about that?
    Mr. DUKE. 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 is just a 
policy error that we need to fix.
    So in 2021, with the American Rescue Plan, we tripled it 
for these low-wage workers, making, like, $14-, $15,000 a year. 
These people are not making much money. But it 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 are working as cashiers, 
as construction workers, 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 insults it.
    Ms. SEWELL. Well, thank you.
    And, Mr. Chairman, I just want to actually say that if we 
are going to actually look at our Tax Code again, I really 
would hope that the Republicans would work with us on 
structuring this Child Tax Credit, the Earned Income Tax 
Credit, the Low-Income Housing Tax Credit, as well as new 
market tax credits and advance refundings, so that we can 
truly, broadly affect all Americans.
    Thank you, and I yield back the balance of my time.
    Mr. KUSTOFF. Mr. Estes, you are recognized for 5 minutes.
    Mr. ESTES. Thank you, Mr. Chairman, and 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 I am glad we are starting with this 
critical issue of pro-growth tax reform.
    Before I get too deep into my remarks, I wanted to briefly 
discuss an op-ed that I wrote for The Telegraph. I am 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 UTPR provision, and unfairly treats U.S. tax 
credits, is detrimental to our country's tax sovereignty, to 
American ingenuity, the Federal Treasury, and our national 
economy.
    Our allies would 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 op-ed 
for the record.
    Mr. KUSTOFF. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. ESTES. For the past 4 years, the Kansans I represent 
and Americans across the country have suffered under historic 
inflation, thanks to the damaging policies of the outgoing 
administration. Kansans need economic relief, and the Trump tax 
cuts are a sure-fire way to deliver it.
    It is 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 Trump 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. Making the Trump tax cuts permanent will do more than 
just provide sorely needed relief to individuals and families.
    These tax cuts also help the businesses and innovators who 
create and sustain countless jobs in communities across our 
country, leading to job creation and economic growth.
    We can't go backwards from the growth that we have gotten 
out of 2017 to lose all of these benefits.
    Key to the success that the immediate R&D expensing 
provision. After the Trump tax cuts, R&D investment grew by 18 
percent, amounting to over $2 trillion in new facilities and 
activities.
    Extending immediate expensing of 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 have had three years to see 
the damage and hardship that happens without it.
    Since immediate R&D expensing expired in 2022, we have seen 
investment in R&D drop from over 6.5 percent increase each year 
to less than 0.5 percent per year. That means we have less 
economic growth, fewer jobs for American workers, and less tax 
revenue.
    In a recent jobs report, we have seen some job growth but 
not manufacturing jobs. We are competing globally for jobs and 
investment, and without immediate R&D expensing, we risk again 
losing good innovators, jobs, and dollars to other countries 
like China that are instead choosing to incentivize R&D 
investments.
    We can't afford to fall behind on the international stage 
this way.
    I also want to highlight that, as mentioned earlier, that 
in January the House of Representatives showed it is possible 
to find consensus on this commonsense pro-growth policy by 
passing the Tax Relief for American Families and Workers Act. 
Not only did this legislation pass, but it passed with huge 
bipartisan support, 357 to 40.
    Given the American people's desire for change in our 
economic trajectory, I am hopeful that this committee and this 
Congress can once again come together to deliver meaningful tax 
reform that will boost the economy and allow Americans to keep 
more money in their pocket.
    Ms. Silver, some people wrongly conceive of the business 
provisions in the 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?
    Ms. SILVER. Sure. Thank you for the question, Congressman. 
You know, manufacturing is a total team sport. So this expired 
R&D tax provision has affected my customers, and it has 
affected my suppliers. So no matter what your size or structure 
of your business, we are affected by this, and I can give you 
an example.
    I run my entire business on a software, on an ERP system, 
it is called, and the company that has built that software is 
in Texas, and they were dramatically affected. Their tax 
liability went up by a lot after this R&D tax provision 
expired, and so that is less--they have less ability to 
reinvest their profits to create new jobs, to innovate the 
product that I use every day to run my business. So there is a 
ripple effect definitely for me.
    Mr. ESTES. Yeah.
    Ms. SILVER. And that is just one example.
    Mr. ESTES. That is right, and we are hearing it over and 
over because of the cash flow costs and not being able to write 
off that expenses on their taxes, that you are not getting the 
benefits, and therefore, your customers aren't getting the 
benefits.
    So, thank you, and unfortunately I am out of time. I have 
got more questions, but I will yield back, Mr. Chairman.
    Mr. KUSTOFF. Ms. DelBene, you are recognized for 5 minutes.
    Ms. DelBENE. Thank you, Mr. Chairman. I want to thank all 
of our witnesses for being with us today.
    I also appreciate that so many of our witnesses have 
highlighted the benefits of expanding the Child Tax Credit. 
When Democrats expanded the Child Tax Credit in 2021, child 
poverty was cut nearly in half, with the credit reaching over 
65 million kids.
    The Republicans' version of the Child Tax Credit leaves out 
1 in 3 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 is lots of data--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 have spent the last 7 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 tax 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 give-aways by cutting Medicaid and Medicare, which 
provide basic healthcare to low-income families, people with 
disabilities and seniors, gutting critical investments to 
combat climate change, and imposing across-the-board tariffs on 
imports which economists estimate would raise prices on the 
average American household 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.
    Mr. Duke, can you discuss the regressive nature of tariffs 
and what the likely impacts are--or that impacts would be of 
Trump's first--our tariff-first trade proposals? Let me turn 
that one over to you.
    Mr. DUKE. Yeah, absolutely. Tariffs are our most regressive 
form of tax. So, for example, Treasury assumes the bottom 90 
percent of Americans only pay about 20 percent of the total 
individual income taxes that are paid. They pay about 30 
percent of corporate taxes.
    But the bottom 90 percent pay more than half of taxes on 
imported goods. These numbers actually understate the 
regressivity of tariffs because they don't actually account for 
the fact that low-income people spend their entire income in a 
given year just trying to, you know, make ends meet, while 
millionaires can save their entire income.
    So our Income Tax Code does a good, if imperfect, 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 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 we accomplish those 
aims.
    And when we are using it as a revenue tool, 20 percent 
across the board, we are essentially talking about a national 
sales tax. It is the most regressive way to raise revenue.
    Ms. DelBENE. Thank you for that. I also wanted to talk a 
little bit about the IRS. Republicans claim to be concerned 
about the Nation's deficit, yet they continue to advocate for 
and enact policies that increase it.
    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 folks are paying 
their taxes, especially the wealthiest are paying their taxes.
    Mr. DUKE, can you speak to how cutting IRS funding impacts 
the deficit?
    Mr. DUKE. Yeah, sure. So the bulk of that IRS funding was 
dedicated to hiring more staff for stepped-up enforcement 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 and corporations. The funding 
was extremely--is extremely effective, and it pays for itself 
multiple times.
    CBO estimates that a $1 cut to IRS funding will raise the 
deficit by $2.50.
    One last thing I will note, IRS funding is a critical force 
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 IRS funding.
    Ms. DelBENE. Thank you for that, and thanks again to our 
witnesses for being here.
    Mr. Chairman, I yield back.
    Mr. KUSTOFF. Mr. Smucker, you are recognized for 5 minutes.
    Mr. SMUCKER. Thank you, Mr. Chairman. I am glad we are 
holding this hearing. I think as we engage on implementing tax 
policy over the next few months and year, it is very important 
to understand the impacts of the TCJA and the impact that had 
on the economy and on the American people.
    And we are hearing again some tired arguments today about 
the TCJA that are just simply false. We have heard that the 
TCJA made the Tax Code more progressive. That is false.
    We have heard that the TCJA benefited the rich at the 
expense of middle-income America. That is false.
    And I have, Mr. Chairman, a chart from the IRS that I would 
like to submit into the record.
    Mr. KUSTOFF. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. SMUCKER. And I would like to explore a little of this 
here today. This is essentially a chart, comparing--it is 
directly from the IRS 2017 tax returns filed, compared to 2018 
tax returns filed, and there is some striking results here.
    The Tax Cuts and Jobs Act--2018, of course, the first year 
the Tax Cuts and Jobs Act went into effect--reduced average 
effective income tax rates for filers in every one of the IRS' 
income tax brackets, everyone, with the largest benefits going 
to the lowest- and middle-income households.
    So, for instance, in the $40- to $50,000 income range, 
there were about 12 million returns. The average tax paid by 
them was reduced by 18 percent.
    In the $10- to $15,000 range, the average tax paid was 
reduced by 71 percent as opposed to the top 1 percent. They 
also saw a reduction but much, much less. They saw a reduction 
of less than five percent.
    So the benefits most certainly accrued to the lowest-income 
earners, and everyone--or every class at least, maybe not 
everyone within that class, but every class saw a reduction in 
their taxes paid over their taxes in 2017.
    We also saw, of course, the poverty 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 as well is that 
we saw upward mobility as the result of the Tax Cuts and Jobs 
Act. So, for instance, the number of individuals in the $1 to 
$25,000 earnings bracket was decreased by more than two million 
filers per year. So that many people moved up in their 
earnings.
    And the highest increase in earnings, over a million 
filers, was in the $100- to $200,000 range. They essentially 
moved up from the lower earnings and were earning more and 
paying less taxes.
    So the American people didn't believe Democrats last 
session when they said this--you know, when they looked at how 
they felt after 4 years of the Biden administration, compared 
to 4 years of the Trump administration, they understood that 
the Tax Cuts and Jobs Act benefited them. They saw the impact 
on their pocketbooks. They understood that their real wages had 
gone up about $6,000 annually, compared to a reduction of real 
wages after inflation with the Biden administration. And they 
told us they understood that in the election.
    So to the Democrats on the committee, they didn't believe 
you last time, and they are not going to believe you now.
    So what I suggest is that we find ways to work together, 
because I do agree that--there are a number of things I heard 
from the Democrat side of the aisle here today that I agree 
with, and one is, I am concerned about the debt.
    And we ought to make sure that when we are doing the 
extension of these tax cuts that we are implementing policies 
that grow the economy.
    You can't change our fiscal trajectory that we are on, 
which isn't going to end well, without strong, economic-growth 
policies, and I think we could agree on a lot of that.
    And then otherwise, we should have corresponding cuts in 
spending to offset the cost of any tax increases--or tax 
extensions that are not covered with additional revenue through 
economic growth.
    But I think there is a lot of areas for us to work 
together. We should do that. We should do what is right 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 are not going to believe you today as well.
    Thank you, Mr. Chairman.
    Mr. KUSTOFF. Ms. Chu, you are recognized for 5 minutes.
    Ms. CHU. The Republican tax bill provided a gigantic tax 
cut for corporations, from 35 to 21 percent, 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 and 
billionaires, from 39 percent to 37-1/2 percent, 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 Eaton 
fire, leaving it an apocalypse. In Altadena and northern 
Pasadena, the fire has destroyed over 7,000 structures, left 
20,000 people homeless, burned schools 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 threatening to place 
conditions for disaster assistance to these victims.
    I invite any Republican in Congress who is 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 policies passed by their State.
    This is the United States of America. We help our citizens 
when they fall victim to a natural disaster, 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 Helene.
    I bring this up because I have not heard a single 
Republican suggest that the trillions of tax cuts for the 
wealthy they are proposing to make permanent, should be 
conditioned or come with strings attached.
    One thing is for sure, we should not impose conditions for 
helping people at the absolute lowest time of their lives.
    And now, I will turn to another subject. Mr. Duke, I have 
noticed that you had written some pieces about pass-through 
entities for the Center for American Progress, even before the 
Trump tax law passed.
    As a long-time member of the Small Business Committee, I 
would like to ask you about the 199A deduction. I believe one 
of the major myths of the Republican tax bill is that it helps 
small businesses through this 199A 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.
    So, 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 is an effective way 
to support the smallest businesses in this country?
    Mr. DUKE. Yeah, so, no, not all of the businesses that 
receive the deduction are small businesses. It goes to big 
companies, generating millions of dollars in profits. They have 
pass-through status, and they can, you know, collect the 
benefit.
    And according to JCT, more than half of the benefits of 
this deduction go to millionaires, people making over $1 
million 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, 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, and as 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 is a lot we can do to help startup 
businesses, including expanding the size of the 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 spend, we pay for, to keep those 
interest rates low.
    Ms. CHU. And in fact, the pass-through deduction provides, 
for the wealthiest 10 percent of taxpayers, a 3,000 times 
larger benefit for taxpayers than those of the lowest 20th 
percentile of income.
    Thank you. I yield back.
    Chairman SMITH [presiding]. Thank you.
    Mr. Hern.
    Mr. HERN. Thank you, Mr. Chairman, for having this very 
important meeting.
    Mr. Duke, I would like to ask you a question that the 
witnesses sitting next to you that take risks every single day, 
they employ people, they sign both sides of the paycheck, that 
many times don't get paid, are you in business? So you don't 
think that 199A is important at all to anybody?
    Mr. DUKE. I am not. I think that how we pay for things 
matter. So if we can find a good offset for it, maybe that is 
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.
    Mr. HERN. Well, it has not been on a good trajectory for 
about 50 years, so we can talk about that for a long time.
    Like my colleague to my left here, who is also a business 
person, we are concerned about it. We are concerned about 
frivolous money. I mean, there is a belief that we should just 
tax everybody 100 percent, and 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, we have to respect the idea that when people take 
risks and try to create jobs and put Americans to work, they 
are doing that for the independence, the liberties, the 
freedoms that those individual workers enjoy, and so they don't 
have to depend on the federal government.
    Before coming here and still here, I have been 40 years in 
business, from starting as a single person in business to 
creating 1,200 jobs at my highest before I started selling my 
restaurants.
    But in the manufacturing world, in the technology world, I 
have seen this as a small business entrepreneur for my entire 
life.
    Grew up in poverty. If not for the opportunities in the 
United States of America, for the opportunity to take risks and 
create jobs and help people go to work and experience that same 
opportunity, I wouldn't be here today. That is what these folks 
are doing. That is what they are talking about.
    And I would like 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--no one says that.
    When you look at it right now, the top 1 percent pay 26 
percent tax rate. The bottom 5 percent pay a 3.3 percent rate. 
So I hear it is not dollars for dollars, and that is how you 
guys try to make this thing sound so evil, but the reality is, 
there is being more paid 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 
are getting ready to see the largest tax increase in American 
history, starting in January of 2026, if we don't do something.
    And we have got to figure out if it all needs to go 
through, or if the entire package or what may need to be fixed 
modified, adjusted, added to, so that we have the greatest 
country in the world for creating jobs.
    Let's talk about the 21 percent corporate rate, and I am 
speaking directly to you because the information you are 
sharing to the committee, or what they are asking you the 
questions on to validate the things that they are saying.
    The 21 percent rate in the United States of America, when 
you add the average State rate across the United States, is at 
25 percent.
    Our greatest adversary in the world economically--nobody 
else is even close--is China at 25 percent. Do you think it is 
smart business practice for the global economy, for us to be 
one of the highest-taxed nations in the world?
    Mr. DUKE. I don't think it is a good idea to borrow money 
from China----
    Mr. HERN. I asked you--I didn't ask you about that. China 
has a whole different way. I said, do you think it is smart 
business practice to be the highest-taxed nation in the world 
when it comes to global competitiveness?
    Mr. DUKE. It matters how these things are paid for.
    Mr. HERN. Do you think China worries about that?
    Mr. DUKE. I mean, they lend money to us. They don't have 
that problem.
    Mr. HERN. They lend it less today because they understand 
the importance of what we are doing.
    Do you remember in 2017--again, I wasn't in Congress, but I 
was an observer from the outside, wasn't even running for 
Congress--when the 21 percent corporate rate was lowered, the 
other nations around the world lowered their rates 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, we have had zero since 
then. No one argues that. No one is talking about the impact of 
the tax rates. 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 pass-
throughs and C corporations, of which, 95 percent of the 
businesses in America are pass-throughs. Are there some larger 
than others? Absolutely.
    Are we going to be punitive 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 aren't we sitting here saying, Yes, some--what 
is the percentage of people, of businesses in America, that you 
think, or you are so disgusted with, that are getting 199A 
pass-through deductions?
    Mr. DUKE. I am not disgusted by anybody receiving 199A. I 
would love to cut taxes for businesses, but it is a question of 
how we pay for it. Are we doing it through taxes on imported 
goods? Are we cutting Medicaid? Those things matter, too.
    Mr. HERN. Mr. Chairman, I ran out of time. I yield my time 
back.
    Chairman SMITH. Thank you.
    Mr. Boyle.
    Mr. BOYLE. I would like to thank the 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 would also like to thank all of the witnesses for being 
so generous with your time and taking now 3-plus hours out of 
your lives in order to testify.
    You are proof of the wisdom of the old saying, ``No good 
deed goes unpunished.'' So, I am sorry you have had to listen 
to us for the last 3 hours and probably still have some time to 
go.
    I do want to return to the history of 8 years ago, because 
it is often said that history doesn't repeat itself, but it 
does rhyme. Eight years ago, the very top priority of then-
President Trump and a unified Republican Congress was the so-
called Tax Cuts and Jobs Act, which, according to the 
nonpartisan Congressional Budget Office, showed 83 percent of 
the benefit went to the richest 1 percent.
    No wonder that in the 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 percent of the American people supported the Trump tax 
cuts, while a majority, somewhere in the mid 50-percent range, 
opposed them.
    The wisdom of the American people was proven to be right. 
That added $2 trillion to our national debt.
    So now that it is 8 years later and they are set to expire, 
the question is, how much more debt would this policy add?
    The CBO again released a report in May, and they have 
testified before the Budget Committee, another committee on 
which I serve as ranking member. They showed in their report 
the full extension of the TCJA would add $4.6 trillion to the 
national debt.
    So, for the last 4 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. I do tend 
to notice that whenever there is about to be a Republican in 
the White House, we tend to hear a lot less concern about 
deficit and debt, and the top priority is always tax cuts for 
the richest 1 percent of Americans.
    Now, Mr. Duke, let me--with a great first name--let me turn 
to you, Brandon, and ask you, do tax cuts pay for themselves?
    Mr. DUKE. No.
    Mr. BOYLE. And the $4.6 trillion figure that the 
nonpartisan professionals at the CBO found, which is also 
similar to analysis done by The Wharton School and by other 
nonpartisan groups as well--does that sound, approximately, the 
right number?
    Mr. DUKE. Yeah.
    Mr. BOYLE. And you are familiar with some of the other 
reports and analysis that has been done by other groups? They 
are all approximately in that $4.5 trillion range, correct?
    Mr. DUKE. Yeah, that is right.
    Mr. BOYLE. 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?
    Mr. DUKE. That is right.
    Mr. BOYLE. Now let me turn to tariffs. ``Tariff'' is 
another word for tax, is it not?
    Mr. DUKE. That is right.
    Mr. BOYLE. So, if President Trump follows through on his 
promise to do wholesale tariffs on imported goods, that would 
be, in reality, like a national sales tax on anything that we 
get abroad, correct?
    Mr. DUKE. That is right.
    Mr. BOYLE. It is 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 wreaked havoc all around 
the world--from the Baltics and Germany, through the U.K., to 
Canada, the U.S., Asia--started in 2021, once economies began 
to get back into full swing after the COVID pandemic and that 
we had to restart supply chains.
    Would tariffs make goods less expensive for the American 
people?
    Mr. DUKE. Absolutely not.
    Mr. BOYLE. In fact, tariffs would make goods more expensive 
for the American people?
    Mr. DUKE. That is right.
    Mr. BOYLE. Thank you. With that, I yield back.
    Chairman SMITH. Thank you.
    Mrs. Miller is recognized.
    Mrs. MILLER of West Virginia. Thank you, Mr. Chairman, and 
thank you all for being here today.
    I don't think there is 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 am so thrilled that we have a strong leader who 
understands business and the economy and the mandates, et 
cetera. So he is back in the White House, and I think that is a 
wonderful thing.
    American voters have given Congress and our President a 
mandate to make permanent the great work that was accomplished 
in 2017, and it is up to the members of this committee 
specifically, to ensure that these policies are made permanent 
for our working-class families and small businesses to thrive.
    I am a West Virginian, and we know small business, because 
98.9 percent of our businesses in my home State are considered 
small businesses.
    The 199A, small business deduction, created in 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 Ervin, who is the founder and CEO 
of the Coal River Coffee Company in Charleston, West 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 have stayed in touch with him since then and all the 
work that the Coal River Coffee Company has been able to do for 
his workers and the community in the district, thanks to the 
199A.
    Mrs. MILLER. The business has been able to provide raises, 
promotions, purchase new equipment, label-making, you know, 
train their new coffee roasters. And they were also recognized 
with the 2024 Small Communities BIG Solutions award for 
revitalizing communities across West Virginia. This type of 
growth helped small businesses level the playing field with the 
bigger corporations. And it is happening all over my state. 
Workers and businesses alike are much better off because of the 
199A. And I look forward to extending this policy as part of 
our efforts this 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 working class 
Americans that were harmed by President Biden's disastrous 
economic 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 tested 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 rent 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 delayed 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 Taxpayer Act to restore the 
1099-K threshold to the pre-upper levels was cosponsored by all 
Republican members on this committee and favorably passed out 
of this committee last Congress. So 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.
    Ms. Couch, you helped small businesses and individuals 
understand these onerous 1099-K reporting requirements. Can you 
speak to how difficult it has been for taxpayers to understand 
that the new thresholds amidst the uncertainty from the Biden 
administration?
    Ms. COUCH. Thank you for your question. Yes, these 
thresholds are 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. There will 
be a good bit of confusion in our economy professional opinion 
that folks won't be able to understand the difference between 
personal and family payments through Venmo, for example, versus 
a payment to an actual small businessowner. And there is the 
potential for people to receive 1099s that should not be 
receiving them. So that is another concern as well.
    We would really like to see these thresholds move in the 
opposite direction of where they are headed now. And we 
appreciate your work and bill that you have done to help small 
business owners on this matter.
    Mrs. MILLER. Thank you. I yield back.
    Chairman SMITH. Dr. Murphy.
    Mr. MURPHY. Thank you, Mr. Chairman, and thank you for 
putting together this meeting. The greatest existential threat 
to the United States is our debt. I am not an economist by 
trade, but reading and researching, this is what is going on 
right now. Having sound tax policy that allows us to bring in 
revenue, grow our country, is critical. Is everything perfect 
with the TCJA? 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 demographic upon.
    You know, I hear the phrase so often that they are, quote, 
``not paying their fair share.''
    Mr. Duke, what percent do the top 10 percent pay in taxes?
    Mr. DUKE. Could you repeat the question?
    Mr. MURPHY. Of the top 10 percent, what percent of taxes do 
they pay? Seventy-six percent just to give you the answer real 
quick.
    Mr. DUKE. Okay.
    Mr. MURPHY. The top 1 percent pay 45 percent. The lowest 50 
percent of income owners, what percentage of taxes do they pay? 
2.3 percent. You should know these numbers. I know you know 
these numbers.
    You know, the Biden administration through the Pillar II--I 
am glad one of my partners or colleagues brought that up--is 
trying to give our taxpayer dollars away to other countries.
    You know, when Ireland tried 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 what companies and businesses do? They employ 
people. Imagine that. What a novel concept. What do some folks 
want? They just want more money for the government so the 
government can employ people.
    It is good to have people who have run businesses. A lot of 
the folks on this side of the dais 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 just get irritated, I have to be very frank 
and say that folks who talk about business policy have never 
run a business know what the hell they are talking about. These 
are folks who are sitting here who stay up at 2 o'clock in the 
morning on Saturday night trying to figure out how they are 
going to meet payroll.
    You know, Ms. Silver, I am giving my most sincere 
condolences to you on the loss of your husband. I went out and 
toured a sweet potato farm that went through, you know, 
generations upon generations. And now we have the estate tax 
that has come due that would drop, that would plummet. How does 
that work with your family? What things would you have to face 
if that were to occur?
    Ms. SILVER. In 2014, it could have definitely drastically 
affected us, the expiration of the estate taxes. You know, my 
husband was the sole shareholder and owner of Ketchie. So upon 
his passing, it went to me. I don't know if I would have 
continued on with his legacy if I would have had this large 
looming tax bill ahead of me. And I am in a very capital-
intensive business which I kind of described earlier. So a lot 
of times we don't have the liquidity and the business to pay 
such a tax, like an estate tax upon someone's passing. And I 
really view it as double taxation. I have already paid taxes on 
my assets. I have already paid taxes on my business, on my 
income.
    Mr. MURPHY. Yeah, so absolutely. And this is the hard part 
about America. I think there is just an absolute theological 
difference on how we run our economy. How do you give people a 
life that is worth living, esteem, a 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 
dependence.
    If you look about reform, if we talk about any of the 
entitlement programs about reform, it is not about giving money 
back so people will stay at home. It is about giving them a 
productive life, going in, growing a job, maybe even having a 
business of their own someday, to employ people, make 
decisions, make payroll, and God forbid they actually have 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 this maelstrom of co-dependency upon the 
government check rather than one that you do through your own 
efforts and energy. This is what our tax policy should be 
burdened for. I am happy to work with Democrats. TCJA is not 
perfect. I am just going to say that. I wasn't here at the 
time. It is not perfect. But it gives us a policy that allows 
American business and innovation to grow, employ people, give 
them a meaningful life. And at the same time I am going to go 
back to my original statement, help us cut our deficit. Thank 
you, Mr. Chairman, I yield back.
    Chairman SMITH. Thank you. Mr. Beyer.
    Mr. BEYER. Mr. Chairman, thank you. I thank all of you for 
hanging in there with us. I firstly want to build on things my 
good friend Dr. Murphy just mentioned.
    Yeah, I am too a businessowner on this side, 46 years 
running the family business. So, I very much appreciated the 
bonus depreciation, the interest deductibility. I think 199A 
was essential when we cut the corporate tax rate to 21 percent. 
Otherwise, every sub S or LLC or partnership would be fleeing 
to become a C-corp. And I think we have seen significant small 
business growth because of that.
    However, this notion that the corporations were overtaxed, 
yeah, we dropped the rate to 21 percent, which is the lowest 
has been in a hundred years.
    When I started my family business, it was 78 percent, and 
we were still profitable. Now, it is 21 percent. But the 
effective rate according to Peterson Institute Foundation, 
which is a very Republican thing, said effective rate was 9 
percent in 2018. The last year for which they have statistics. 
Nine percent.
    And if you look at corporate taxation, the shared GDP, it 
is 1.6 percent. That is I think the lowest in the OECD. Things 
like Canada, 5 percent. So, our corporations are contributing 
relatively little to the tax dollars overall.
    But the fundamental point I want to make is back Dr. 
Murphy's notion of fair share. I would argue that we don't look 
at what percent of the tax revenues come from the 1,000 
billionaires--it is going to be a lot, they are billionaires--
but rather how much they have versus how much the rest of us 
have. Our income and equality, our wealth and equality is the 
worse it has been in at least a hundred years 1913, 1915.
    We saw this in the last election when so many people 
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. The problem isn't that we--and by the way, it is 
not about entitlements. I totally agree with my Republican 
friends. It is 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 their car payment. They can't pay for 
childcare.
    I had the honor of serving on Switzerland for 4 years. When 
I left in 2013, the minimum wage in Switzerland was $48,000 a 
year. Way, way higher than it is here. And that was a long time 
ago. As a consequence, there is virtually no poverty. There is 
also virtually no entitlement payments. There is none of these 
takers and makers developed.
    So what we have now is a significantly undertaxed, very 
wealthy class, the 10 percent and up. And not a lower class 
that is overtaxed, but rather a lower class that is not given 
the job opportunities that they need to make things work.
    And if we as a combined, Democrats and Republicans 
together, can address the fact that people with $20 million, 
$50 million, a billion dollars, they don't live a better life 
incrementally than someone that has 21 million versus $20 
million. This whole notion that it is all about money rather 
than about family and the community and making America strong 
again. And we screwed up our tax policies so bad because those 
taxes not to be used for transfer payments, but for making our 
economy stronger and our companies stronger.
    Let me ask this simple question. Brendan, one of the things 
that my Republican reps are talking about is getting rid of the 
EV tax credits that came in the Inflation Reduction Act. That 
suggests we will put 133,000 high-quality manufacturing jobs at 
risk. It will hand this critical future industry dominance over 
to China.
    What would Ford and GM and all those international 
nameplate manufacturers making cars in the United States think 
about this policy?
    Mr. DUKE. Yeah, so EVs are clearly the industry of the 
future. I mean, you know this better than me as a former car 
dealer. And so 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 make that big push in the industry of 
the future.
    And, again, I am very worried that this industry of the 
future is going to be dominated by a GS strategic rival.
    The way we won World War II was we had all these civilian 
industries that could be dual purpose for, you know, for 
military stuff, right? That is how we won World War II. Letting 
China build, you know, these industries so the future is not 
the way we are 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 are going 
to make if we pull back on these investments.
    Mr. BEYER. Thank you very much. I just want to add with the 
thought, I think about this room filled 90 percent with people 
filled with economic anxiety about their lives, and the other 
10 percent with more money than they know what to do with. I 
think there is something fundamentally wrong with the fairness 
of an economy and a society like this democracy. And we should 
address it. With that, I yield back.
    Chairman SMITH. Thank you. Mr. Kustoff.
    Mr. KUSTOFF. Thank you, Mr. Chairman. And thank you to the 
witnesses for appearing today.
    Mr. Chairman, when you opened this committee hearing today, 
you talked about the 2017 Tax Cuts and Jobs Act and its passage 
and how it was really a kind of rocket fuel for our economy 
that we still benefit from 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 is instructive from the witnesses' 
standpoint to talk about the real practical implications of the 
Tax Cuts and Jobs Act.
    If I can, Ms. Couch, 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.
    Again with you, can you talk about from your standpoint 
working with those business owners what it has meant not only 
in terms of being able to maybe hire more employees, but also 
to provide for their wages and benefits, if you will.
    Ms. COUCH. Yes, thank you for your question. So 199A has 
provided tax relief to free up cash flow that has been 
reinvested in small business by the owners. As I mentioned in 
my testimony that small businessowner income is different from 
business income. The owners take profits and invest them back 
into their businesses. And that is done by way of raises and 
hiring additional employees. They also use that money to invest 
in software purchases and things of that nature. They give 
money to the T-ball team. They sponsor youth trips. They really 
invest it back into their communities as well. And that is 
something that we can't ignore and that I am afraid would be 
some of the first things to be cut if that deduction expired.
    Mr. KUSTOFF. You worked with these small businesses for the 
passage of the Tax Cuts and Jobs Act. You worked with these 
small businesses prior to the COVID pandemic. In your opinion, 
if Congress had not enacted the 2017 Tax Cuts and Jobs Act and 
implemented Section 199A, what would the COVID pandemic have 
done to your small business owners that you work with?
    Ms. COUCH. So I worked very, very closely with my small 
business owners during COVID. I often tell the story that I 
would from sunup to sundown would be on my porch. And there was 
no time to even be out there not in my pajamas because there 
would be no time to even properly get dressed. You were on the 
phone with folks trying to come up with new revenue streams, 
trying to calm their fears and anxiety.
    And there were a lot of tears shed because small business 
owners truly feel that their small business is like a child to 
them that they brought along the way. And COVID was a very 
scary time for a lot of small business owners. And I am certain 
that without TCJA that we would have seen a lot more small 
businesses close up shop during COVID had that not been in 
place.
    Mr. KUSTOFF. Thank you very much, Ms. Couch.
    Ms. Gallagher, if I could with you, the doubling of the 
standard deduction is met with the statistics that we have 
seen. That nationwide, some 88 to 89 to 90 percent of tax 
filers take the standard deduction and don't have to itemize.
    Can you talk about your work with people you helped before 
the Tax Cuts and Jobs Act and after in terms of the doubling of 
standard deduction and the benefit that it gave?
    Ms. GALLAGHER. 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 decreased the 
amount of time and energy and effort that taxpayers, business 
owners and working families alike have had to spend navigating 
complex tax filings. So it has freed up their time 
considerably.
    I have even noticed in particular, even my high-income 
taxpayers 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 mortgage, or you know, they might have 
been just barely getting over the hump. And so by doubling 
that, it made a big impact on the middle-class families that I 
work with.
    Mr. KUSTOFF. Thank you, Ms. Gallagher.
    I yield back, Mr. Chairman.
    Chairman SMITH. Thank you, Mr. Fitzpatrick.
    Mr. FITZPATRICK. Mr. Duke, just very briefly, because I 
want to get to the Child Tax Credit, but you had answered a 
question of my colleague Mr. Boyle that tax cuts don't pay for 
themselves, ever. Do you wish to qualify that at all?
    Mr. DUKE. The tax foundation, which lots of people, you 
know, people on your side of the aisle, you know, cite, they 
posted last November tax--and I am quoting, ``tax cuts 
typically don't pay for themselves.''
    Mr. FITZPATRICK. Typically.
    Mr. DUKE. I mean, could we find some education but not with 
a $4.6 trillion, you know.
    Mr. FITZPATRICK. Mr. Duke, are you saying that no tax cuts 
ever generate any kind of economic development, any kind of 
revenue generation that pays for themselves?
    Mr. DUKE. So, for example, you know, with the first Tax 
Cuts and Jobs Act, CBO and JCT found that they increased the 
economy. And that cut the cost by about like 20 percent.
    Mr. FITZPATRICK. You gave a blanket statement that tax cuts 
don't pay for themselves. That seems ridiculously 
oversimplified.
    Mr. DUKE. Well, if you could name a tax cut that you think 
paid for itself, that would help me, you know, figure out what 
that--
    Mr. FITZPATRICK. Your answer to this question was there are 
none. They don't exist.
    Mr. DUKE. I mean, I can't think of any.
    Mr. FITZPATRICK. Going to the Child Tax Credit, currently 
the CTC benefits approximately 40 million families each year. 
Obviously, the Tax Cuts and Jobs Act doubled it from one to 
$2,000. A tax Social Security number required for the first 
time. Very important. And to render it current law, the CTC's 
2-K per child. And if it were to expire, it would drop after 
$1,000. Moreover, the refundability was a key element. The 
refundability has increased from $1,000 to $1,400. Moreover, it 
was indexed to keep track with inflation.
    If we do not extend the Child Tax Credit, all Americans 
will see their tax refund go down. And, specifically, for our 
district in Pennsylvania, families would see their household 
Child Tax Credit cut in half.
    Ms. Marple, as a stay-at-home 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.
    Ms. MARPLE. Yes, thank you for your question. I think that 
as a stay-at-home mom and raising kids at home, there is a lot 
of pressure at every angle, and a big one is financial. It 
influences your marriage, it influences all your decisions, 
especially grocery shopping, and trying to meet your needs for 
your growing family.
    And the Child Tax Credit is a powerful form of 
communication 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 country.
    Mr. FITZPATRICK. Ms. Gallagher, in your experience working 
with thousands of multigenerational businesses, what have you 
seen as the major pieces of the Tax Cuts and Jobs Act that have 
benefitted your clients, and if they were to expire how they 
harm these very people?
    Ms. GALLAGHER. Thank you for that question. The 
multigenerational families have benefitted across the board. 
Any of the 199A full bonus depreciation, lower income tax, 
lower marginal rights brackets. What I would say most 
importantly when you bring in the multigenerational 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, and also try to help benefit the most dollars get to 
their heirs as possible. And so the estate tax has probably 
been the most impactful for those types of businesses.
    Mr. FITZPATRICK. Thank you, Ms. Gallagher. I yield back, 
Mr. Chairman.
    Chairman SMITH. Ms. Moore.
    Ms. MOORE. Happy New Year, everyone. I am so glad to be 
back with my Ways and Means family. I want to join the chairman 
and the ranking member in welcoming all of our new members and 
welcoming our returning members. I am so grateful to have this 
extremely great panel. I hope you had a break so that you could 
sort of move around a little bit and excuse my departure with 
conflicting obligations.
    You know, in 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 tax cuts. I didn't miss a beat. And, I guess--I 
was thinking the other day, it would have been my dad's 119th 
birthday. The first time I heard this, I heard it from him--is, 
you know--is the squeeze worth the juice?
    And I wondered that, particularly when I was listening to 
your testimony, Ms. Gallagher, when you were saying that, you 
know, that the 199As were just a great thing, and it is harder 
for the wealthy to qualify.
    And I guess that is my biggest issue with the 199A. Because 
all of us want to help small businesses. There is not a single 
person who has elected to anything--dog catchers, school board, 
nothing else that won't tell you 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 am going to go to the gentleman on the end for 
some answers to some of these questions. Is a small business 
some of the ones that we have seen that have received the 
1099--the 199A--were the $100 million businesses, not so, so 
small. Businesses that are sole proprietors have only one 
play--we have talked about small businesses as being these 
entities that have less than 25 employees. But if they make a 
hundred million dollars, where is the break-even point?
    So, I have in my hand--and I am going to ask the chairman, 
please, to let me put this in the record----
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. MOORE. It is a memorandum from Thomas A. Barthold, our 
chief economist here, data on Section 199A deductions.
    And he says that these taxpayers with adjusted gross 
incomes of less than $174,000 account for approximately 23 
percent of all this money that we spend on it.
    Whereas, people with gross incomes, adjusted gross incomes 
above $644,000, placing them in the top percentile, account for 
over 50 percent of all of the section--of the Section 199A 
deduction.
    So, I guess I am going to ask you, sir, how does the 
distribution of the 199A comport with the notion of tax equity 
and tax fairness?
    Mr. DUKE. Yeah, absolutely. So the data you were citing was 
on, you know, who gets the deduction. And actually in some ways 
that understates the progressivity. Because, you know, a $1,000 
deduction for somebody in the zero percent tax bracket does 
nothing for them. A $1,000 deduction for somebody in the 40 
percent tax bracket gets them a lot more. Right?
    And so what we know is that taxpayers making over a million 
dollars got half of the benefits from wanting 199A. And so that 
is the distribution of it. And, you know, hopefully it trickles 
down. But we have a study from a Carnegie Mellon economist that 
shows that cutting the top rate on passthroughs only help the 
businessowner and their highest paid employees.
    Ms. MOORE. Exactly. That is true. I don't have enough time. 
I want to thank all the women who earlier testified.
    Also, Ms. Silver, you talked a lot about being able to buy 
new equipment, but that wasn't the 199A, that was like the 
bonus depreciation and stuff that helped you with that. Am I 
correct?
    Ms. SILVER. Well,----
    Ms. MOORE. Those other business--just yes or no. It wasn't 
the 199A that helped you get equipment.
    Ms. SILVER. Yes, 199--I have a thousand examples I could 
tell you of what it----
    Ms. MOORE. Okay. I got 30 seconds. So I just want to talk 
to these, especially the moms with the Child Tax Credit. I 
mean, this is my passion. I have three daughters, three 
granddaughters, three great granddaughters, you know, ages six 
to one years old. This is so important. And sometimes your 
happily ever after isn't. And I am 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 conditions, I 
mean this is not Charles Dickens, people. We are not asking 
kids to go to work. Why do we have a work requirement in order 
to make the Child Tax Credit totally refundable?
    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, 
witnesses. I wish I had more time. I got so many questions. I 
will come and mess with you guys afterwards if you are still 
there. I yield back.
    Chairman SMITH. Thank you. Mr. Steube.
    Mr. STEUBE. Thank you, Mr. Chairman. President Trump's tax 
cuts undeniably sparked significant economic growth. The TCJA 
dramatically increased the net worth of Americans, especially 
low income and middle-income families.
    In 2018 and 2019, low-income families increased their net 
worth by 37 percent, and the net worth of middle-income 
families skyrocketed by 40 percent.
    With many of the TCJA provisions expiring after this year, 
it is imperative that Congress act this year to ensure that we 
continue pro-growth policies that help American families.
    In my district, the consequences of inaction would be 
devastating, my constituents on average would experience a 24 
percent 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 percent tax rate. The expiration of 
TCJA would result in small businesses closing, jobs lost, and 
American families suffering just so the government can take 
more of their hard-earned money.
    The good news is that Congress can avoid such economic 
catastrophes by extending and making permanent TCJA provisions 
like the individual rate cuts and the 199A qualified business 
income deduction, which helped small businesses compete and 
provide jobs for millions of Americans.
    Moreover, Congress must end the immoral death tax once and 
for all. It is fundamentally unjust. The federal government 
claims a right to the property of taxpayers just because they 
die. This immoral provision of our Tax Code has hurt family 
farmers for far too long. Unless 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.
    Ms. Couch, I would like to ask you, start with you. 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?
    Ms. COUCH. Yes, thank you for your question. So 199A has 
really been wonderful tax relief for true small business 
owners. A typical client earns gross revenue under $3 million a 
year. Employees--ten or less employees. So we are talking about 
coffee shops, we are talking about ice cream shops, 
restaurants, professional service, business owners, the real 
heartbeat of the American economy. And I have seen 199A have 
the greatest impact on that segment of business owners more so 
than any other form of tax relief in my 21 years in practice. 
So it frees up cash flow 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 T-ball teams, to be there for PTOs, and things like 
that, which really is very impactful when you are such a strong 
advocate for your community as a small businessowner.
    Mr. STEUBE. And if 199A were allowed to expire, how would 
your businesses and clients be forced to respond?
    Ms. COUCH. If 199A expires, it will feel like a tax 
increase on small business owners instead of a sunset of a tax 
deduction. And so what you will see as a result of that is the 
inability to provide raises, inability to invest in new 
equipment, the inability to really--RND 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.
    Mr. STEUBE. And Ms. 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 that this often results in family-run 
businesses being acquired by larger corporations.
    How does this affect local communities? And are employees 
of these family businesses impacted.
    Ms. GALLAGHER. Yes, they are definitely impacted. And I 
have seen firsthand businesses having to succumb to 
multinational corporations or private equity because they 
simply cannot afford to pay the death tax. It has impacted the 
communities that I have seen by the lowering of jobs and just 
general economic growth within the community. Some of those 
companies have purchased our businesses and taken the work 
elsewhere out of the community altogether. I too have seen an 
impact on the community on numbers, dollars being contributed 
back to the community in terms of high school football 
sponsorships, and any type of community event you can think of 
has decreased considerably.
    If I could just add one quick thing on the 199A to your 
testimony. I think it is important to note that 199A has 
impacted the small businesses and middle class more than any of 
the businesses in this country. We talk about the large 
businesses or the wealthy or the high income, and I can 
firsthand 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 guardrails and limitations in place to make sure 
that if a high-income individual is going to qualify, they are 
absolutely required to invest in their employees and 
infrastructure and equipment to even qualify.
    So I would just like to make sure it is on the record that 
199A is the most impactful for the small businesses and the 
working families who run them.
    Mr. STEUBE. Thank you all for being here today. My time has 
expired.
    Chairman SMITH. Thank you. Ms. Tenney.
    Ms. TENNEY. Thank you so much, Mr. Chairman, and thank you 
for holding this meeting. And congratulations and welcome to 
all our new members on both sides of the aisle.
    This has been, you know, incredibly helpful to me to listen 
to today. I am one of those small business owners that knows 
what it is like to struggle to make payroll. There are times 
when we couldn't make payroll, and I went ahead and got a 30 
percent loan on a credit card, several of them, thinking 
someday we are going to go under. Thankfully, that didn't 
happen. I just know that kind of stress. You know, I sat there 
and combed through my, you know, accounts receivable list and 
said, Jeez, hey, you worked 10,000, how about three, how about 
500, just to make payroll.
    And every single person that works in our family business, 
which we still have, is an important part of our entire family. 
And every one of them has a family, and we provide healthcare 
and a 401-K. And we provide them with a livelihood and a 
challenging good job, as many as we can. And that is why the 
Tax Cuts and Jobs Act was so important to my business.
    A small, family-owned business started in the 1940s by my 
grandmother handed down through generations to us. And 
listening to you all today 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 compliance and requirements for 
running a business. It is a hard place to be.
    And I ran a newspaper in a dying economy, in a dying 
industry. And we sold it thankfully in 2004. But what I really 
want to talk about--I don't know even where to start. You are 
all so good, and you all have given great testimony.
    I wanted to just say something quickly to Alison from NFIB. 
I just want to thank you because NFIB has been an invaluable 
resource for our business. We joined in the eighties. And you 
have always been so helpful in understanding and articulating 
what we have been through as businesses. And I just so 
appreciate what you have talked about.
    And when you talked about 199A--I am looking at your 
testimony. And this really stuck out for me--that you talked 
about the macroeconomic impact of 25.9 million small businesses 
use the 199A deduction. That is critically important in Upstate 
New York. And everyone thinks of New York as New York City. 
Upstate New York, 95 percent of the people where I live go to 
work in a small business that is dependent on 199A. And we need 
that to continue. That is so critically important. And you 
indicated that these passthrough entities, 33 million are 
passthrough entities throughout this country. This is such 
important information coming from you so that I hope that my 
colleagues on the other side of the aisle realize how critical 
this is.
    And you are all talking about wonderful things. One of the 
great things Michelle Gallagher, one of the most important 
things you said in this committee meeting, as a small 
businessowner 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. A very small business. A lot of former farmers 
work for us.
    But you said the IRS spends more money on compliance with 
the death tax than it actually brings. How important is that? 
The IRS with compliance, enforcement, litigation spends more 
money going after small businesses, family farms that have 
invested in expensive equipment and all of 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 is 
not just federal. We have all these things on the state level. 
So thank you for doing that. It really is just important.
    And one of the things I just wanted to get back at and also 
ask a couple of questions of all of you, is as we go through 
this process of trying to figure out a way to protect our 
family businesses and the jobs, what would you provide to 
them--I guess I am going to go to Courtney. You talked a little 
bit about, you know, making things predictable in the business. 
And that is what every businessowner is looking for--
predictability, transparency, neutrality, simplicity in the 
tax. You know, knowing what you are going to expect so you can 
budget for it.
    What would you highlight in dealing with this estate tax? 
What would you say that would happen if your death--I know you 
talked about this earlier, 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?
    Ms. SILVER. Sure. Well, we may not continue in business. 
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 
thinking about having this huge tax bill in a situation where a 
company is passing to another owner, we are capital-intensive. 
We aren't sitting on piles of cash. We use our cash flow to 
reinvest.
    Ms. TENNEY. 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 we were to 
implement another death tax, that would end basically nutrition 
in upstate New York that supplies not only for our region, our 
state. You know, we ship some of this stuff overseas--our food, 
nutrition. This is so important.
    I am 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 extend these tax cuts to help the middle 
class. And it was the best thing that has happened to upstate 
New York in 30 years. And we are so grateful and hope that you 
will continue to advocate. Thanks so much. I yield back.
    Mr. FEENSTRA [presiding]. Thank you. Mr. Evans, you are now 
recognized.
    Mr. EVANS. I yield to Ms. Moore.
    Ms. MOORE. Thank you so much, Mr. Evans. And I won't take 
much of your time. I just wanted with unanimous consent to be 
able to put something in the record.
    We have had the National Federation of Independent Business 
witness here. But the small business majority sort of agrees 
with the notion of--in line with what the Joint Committee on 
Taxation has said. That this 199A provision goes largely to 
higher earning individuals.
    And so, while it might be one of the most important 
provisions for the reauthorization, it is actually one of the 
most expensive and really accounts for individual taxes 
increasing.
    I just want to point one thing out too. I was around in 
politics in 1986, the tax reform at that time, and that is when 
a lot of businesses organized themselves as passthroughs 
because they received a benefit even as far back as then. There 
is no equity issue involved with this overblown 199A benefit. 
Thank you.
    And I will yield back to Mr. Evans.
    Mr. EVANS. Mr. Duke, I would like to talk a little bit 
about the earned income tax credit. I believe that the earned 
income tax credit is the most important tool we have in tax 
space to reduce poverty. It has been active in introducing 
legislation to expand and to approve.
    Although this credit normally is bipartisan supported, 
Republicans did not use the opportunity in the last 2017. 
Meanwhile, Democrats have passed legislation in 2020 to expand 
the last credit to more individuals to help lift more people 
out of poverty. So could you speak to that issue, please?
    Mr. DUKE. Yeah, so, you know, as you know, the earned 
income tax credit is usually important for American families. 
It is our second largest antipoverty program after Social 
Security. And, you know, Paul Ryan was actually a huge 
supporter of expanding it for childless workers. But they 
failed to do that in 2017. And, again, that is the group that 
the tax code taxes into poverty or deeper into poverty.
    At the same time, one of the pay forwards for the tax 
legislation was changing the inflation--and that sounds very 
nerdy, but gets important for, you know, how we, you know, for 
how we had the income tax credit.
    Mr. EVANS. Mr. Duke, the Joint Committee on Taxation says 
that under the last Republican tax bill a $6 billion less on 
improved income tax credit was paid out prior to the bill.
    Can you please describe why.
    Mr. DUKE. Yeah, so they used the budget reconciliation 
process, which means that you can't increase deficits outside 
of 10 years. Because, you know, when you do a prior length 
vote, you have to use reconciliation, right? And what that 
means is they needed a payfor for their permanent corporate tax 
cut. There were two payfors.
    There was 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 and the Tax Code for inflation, including the earned 
income tax credit.
    Now, you know, for some provisions, maybe that is fine 
because, you know, the individual tax rates, you know, gives 
them still a tax cut. But for really low-wage workers who don't 
pay the 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 
corporate tax cut.
    Mr. EVANS. One last real quick feedback a little bit. Under 
the Republicans' current plan for the tax bill extensions, 
would this problem get worse.
    Mr. DUKE. 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 are kind of leaving it behind. But again, I 
haven't heard any, you know, any tax 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 is why the 
America Rescue Plan was so important. It tripled the size of 
the earned income credit for those folks so that we stopped 
taxing low-wage workers without kids into poverty or deeper 
into poverty.
    Mr. EVANS. Thank you, Mr. Duke. Thank you, Mr. Chairman.
    Mr. FEENSTRA. Thank you. Ms. Van Duyne, you are now 
recognized.
    Ms. VAN DUYNE. Mr. Duke, I am perplexed by a lot of your 
testimony today. You have had a lot of criticism over the small 
business deduction. So I am just curious, what do you consider 
a small business?
    Mr. DUKE. I don't know if there is a clear definition of 
it.
    Ms. VAN DUYNE. You don't have a definition of it.
    Mr. DUKE. I don't think I said the word small business 
deduction.
    Ms. VAN DUYNE. So the 199A?
    Mr. DUKE. Sure, but that is passthroughs. They can be 
really big. There is no, you know, on their side.
    Ms. VAN DUYNE. Do you think the way that it is being held 
right now helped small businesses? The 33 small businesses that 
we have, and 99.9 percent of all businesses in the U.S.----
    Mr. DUKE. Sure.
    Ms. VAN DUYNE [continuing]. That are small businesses that 
are able to take advantage of this, do you think that the 199A 
actually helps them?
    Mr. DUKE. Sure. It gets them a tax cut, increases deficits, 
increases interest rates.
    Ms. VAN DUYNE. So you are concerned about the deficit? You 
are concerned about the deficit.
    Mr. DUKE. Yeah, for sure.
    Ms. VAN DUYNE. I was really surprised as a Democrat witness 
that some of the ideas that you held that we should be 
concerned about the debt, and we should be concerned about how 
much of that is owned by China.
    I am curious as a volunteer in the Biden-Harris transition 
team, and as the person who is part of the Biden 
administration's Build Back Better and American Rescue plan as 
the White House National Economic Council, you are a senior 
policy advisor to the White House 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 China may 
potentially own, and the benefit that China directly got as a 
result of those bills.
    I am 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 benefitting China. Am I correct?
    Mr. DUKE. You are not correct in the context matters a lot. 
Inflation is high----
    Ms. VAN DUYNE. Oh, wait----
    Mr. DUKE. Unemployment----
    Ms. VAN DUYNE. Inflation that by adding to the debt, the 20 
percent inflation that we got over the last 4 years, I am 
assuming that you are advocating against all of this tax 
increases.
    Mr. DUKE. Every country in the world experienced that----
    Ms. VAN DUYNE. The 20 percent that we have got inflation, I 
am assuming you are against those?
    Mr. DUKE. Justin Trudeau is facing that problem.
    Ms. VAN DUYNE. I don't want to compare the U.S. to Justin 
Trudeau. There is a reason why that man has quit his job.
    Mr. DUKE. Okay. But inflation was a global supply chain 
phenomena that affected every country.
    Ms. VAN DUYNE. You are also, if am I correct, you are the 
point person on the supply chain data during the infant formula 
crisis of 2022?
    Mr. DUKE. Yes.
    Ms. VAN DUYNE. Okay. So we all saw how that went. I want to 
make sure that we are appreciating the opportunity right now to 
be able to kind of correct some of the views that we are 
seeing--these misinformed views of the Tax Cuts and Jobs Act.
    You were saying that, you know, the rich experience getting 
richer, the poor experience getting poorer. However, in 2024, 
about one out of 180 American taxpayers will make a million 
American dollars or more. About 5 percent.
    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 $776,800 in Federal income 
taxes, which is 475 times as much as the average taxpayer who 
is making between $50,000 and $100,000. The top 1 percent will 
pay an average of 31.5 percent this year compared with 10 to 12 
percent of the middle class and about zero percent 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 Americans receive the largest increase in wealth during 
2018 and 2019. Low-income families saw their net worth increase 
by 37 percent, while middle-income families net worth increased 
by 40 percent.
    In the two years after TCJA, more than 6.6 million people 
were lifted out of poverty, dropping the poverty rate to 10.5 
percent, the lowest level in U.S. history. And yet we are 
somehow arguing that the TCJA did nothing for the lower class. 
It blows my mind that we can even say that.
    Ms. 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 if Congress did not renew President Trump's 
tax cuts?
    Ms. SILVER. It is going to result in less investment in our 
equipment, less investment in our people, less investment 
overall. It would be very difficult to stay competitive.
    Ms. VAN DUYNE. Okay. So all of the people that you pay 
would possibly lose their jobs or get paid less?
    Ms. SILVER. Potentially, yeah.
    Ms. VAN DUYNE. Or your job and your investments would 
shrink?
    Ms. SILVER. Absolutely.
    Ms. VAN DUYNE. So a real-life example right there.
    Mr. Chairman, I ask to submit a letter from the wine and 
spirit wholesalers of America, expressing support for the 
extension of small business credit into the record.
    Chairman SMITH. Without objection.
    [GRAPHIC] [TIFF OMITTED] T9656A.156
    
    [GRAPHIC] [TIFF OMITTED] T9656A.157
    
    Ms. VAN DUYNE. We hear the party's incumbents claim that 
the 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 D.C., and we talked to real business 
owners. We heard about the successes for policies, such as the 
small business deduction in Section 199A, which created over 
$66 billion in tax savings from Main Street businesses.
    One of the businesses I met with in north Texas was a 
Republican National Distributing Company where I held a 
roundtable with over 25 small businesses, including roofing 
companies, community banks, local banks, and realtors. These 
other businesses across the U.S. who are better framed from 
this. And this is why Congress must act. Thank you very much, 
and I yield.
    Chairman SMITH. Thank you. And then the birthday boy of the 
committee, Mr. Feenstra.
    Mr. FEENSTRA. Thank you, Mr. Chairman. And I want to thank 
each one of our witnesses. You have all had great testimonies. 
I am very impressed. And I think we all understand how 
important the Tax Cuts and Jobs Act of 2017 was to our 
families, to our businesses, and to each of us.
    I think about my district. I live in a very rural part of 
northwest Iowa, and every day we are fighting to survive that 
Main Street. That Main Street made up of all these small little 
bakeries, hardware stores, drugstores, you name it. And this 
199A is so critical for their existence.
    If we did not have 199A, if it sunsets, obviously they 
would have a 40 percent tax increase. What would that do to 
rural America? It would be devastating. And to our families, 
you know, it as been many times here that it would be a 26 
percent increase to each one of our families. Where do we get 
those dollars? Where do we get those extra tax dollars?
    So what did it do from 2017 until now? We went through 
COVID. 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. We don't ever know. But we do 
know this, is that we survived. And that is what we have to 
look at.
    There is one thing that really bothers me yet, and that is 
a double tax. I want to talk about the death tax. I introduced 
the Death Tax Repeal Act. And we will reintroduce it in the 
next Congress. I had over 170 Members sponsor this because 
everyone thought it was so important.
    But think this,--when somebody dies, the government puts 
their arm in the grave--the IRS puts their arm in the grave, 
pulls that person back out and says you owe 41 percent tax on 
everything that you accumulated in your life. Think about it. 
Forty-one percent. Pull them out of the ground and say, you owe 
41 percent. That person has already paid tax on most of that 
already. And yet to pass it on, we got to pay 41 percent tax.
    That is why 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, since we have 
currently--we do have the death tax. We have the estate tax. It 
cost approximately $18 billion for small businesses to comply 
to try to figure out insurance, to try to figure out trust, to 
figure out how to manage not to pay that 41 percent--18 
billion. You know, we would save a lot of money by just getting 
rid of it.
    So Ms. Gallagher, I want to talk to you about this. 
Obviously, your family has to have jumped through a lot of 
hoops to try to salvage your business to the next generation. 
Can you talk about that, how it affects you, and what 
compliance looks like.
    Ms. GALLAGHER. Yes, and thank you for that question. I am 
very passionate about it as well, primarily because I have seen 
the impacts 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 real. The hoops that these businesses and 
farmers jump through is starting out with identifying their 
personal goals for their family, first of all. So 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 
just put into place. It takes a lot of customization and a lot 
of planning, and a lot of planning early.
    Mr. FEENSTRA. Yes.
    Ms. GALLAGHER. Do the hoops include setting up multiple 
entities, like a number of different trust vehicles can be 
used, limited partnerships, LLCs, setting up entities to help 
create the best benefit so the heirs can get the most amount of 
money when death does occur. You have to have many appraisals 
done. Your business has to be appraised. Your real estate has 
to be appraised. Your farm has to be appraised. The costs are--
--
    Mr. FEENSTRA. Right.
    Ms. GALLAGHER [continuing]. Astronomical with what they 
have to go through.
    Mr. FEENSTRA. All this stuff you have to go through just to 
comply with the death tax, just to try to figure it out. And we 
can get rid of it, and we don't have all of those problems.
    I want to talk about one more thing, Paid Family Medical 
Leave Tax Credit. To me this is so important.
    Ms. Couch, you talked about this in Atlanta. Can you 
briefly talk about how important this is to small businesses as 
an incentive and not a mandate?
    Ms. COUCH. Yes. Thank you for your question. So the Paid 
Medical Leave Act is very important to be able to retain 
quality employees. And right now, it is very difficult, 
especially in my industry as an accountant to find and retain 
quality employees.
    However, it is so important for small business owners to 
not be mandated to pay various things like Paid Family Leave 
Act. And it is much more beneficial. It comes in the form of a 
credit.
    Mr. FEENSTRA. Absolutely. And I want to thank you for that. 
Incentivized makes all the difference in the world. And we can 
do Family Medical Leave. And I am, again, passionate about that 
also. Thank you very much. I yield back.
    Chairman SMITH. Thank you. Mr. Schneider.
    Mr. SCHNEIDER. Thank you, Mr. Chairman. And I want to thank 
you for having this hearing. I thank all of our witnesses for 
sharing your perspectives today.
    Ms. Silver, I just want to commend you. I actually went and 
looked at your website and saw what you do as a company and the 
investment in people, especially young people, and bringing 
people into manufacturing is so important. I am 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. Listen, a quarter 
of all businesses make it to that point, but less than 10 
percent make it to the third generation, and 1 percent to the 
fourth generation. So it is really difficult.
    And there is a lot of reasons for that obviously. Ms. 
Gallagher, I might turn to you because you advised a lot these 
businesses. I am guessing a lot of them are family businesses. 
From my work as a consultant is now part of plan moran where I 
know you started your career.
    But what do you tell your clients as they approach a point 
where they are starting to take on too much debt? What is the 
cost of a family business of having too much of a debt burden?
    Ms. GALLAGHER. There are a lot of different aspects of a 
family's finances. So debt in a silo cannot be addressed.
    Mr. SCHNEIDER. Well, I disagree. Because when you have too 
much debt as you start to 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 are trying to grow, if you take on debt to 
maybe acquire some equipment or go branch off into a new 
business line, that is going to pay itself back. But if you are 
taking on debt to basically expend extravagantly, that debt 
service is going to become a huge burden.
    Ms. Gallagher, are you aware of what the debt service of 
the United States, what the burden is at this point?
    Ms. GALLAGHER. No, I am not.
    Mr. SCHNEIDER. It is larger than our defense budget. We are 
paying more in interest and service of our debt than any other 
line in our discretionary budget. And so, as we 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 am 
not talking about small businesses. I am not talking about 
folks who are struggling to make ends 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 it and add to 
the debt of the country. So we are losing.
    Ms. Silver, you know from your experiences, you are looking 
at making ends meet. The money that came in--we talked about it 
earlier. The money that came in during the crisis, the 
pandemic, allowing companies to invest, I think you said you 
invested in HVAC which gave better air quality probably to your 
employees, invested probably in training as you brought in new 
equipment. All of those things are investments that if you are 
spending all of your money servicing the debt you 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 
percent of income earners, folks who are making a whole lot of 
money--and God bless them, their success helps grow our 
American economy. But giving them another tax cut will cost us 
another $2.5 trillion in debt in the first decade, and that is 
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 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 assessed, and we need to 
have the open conversation.
    My colleagues on the other side, we have a lot of 
agreement--I know I am running out of time, and I did have 
questions, but I got carried away. But there are things we 
agree on. I think we all agree on both sides of this aisle that 
we want to help small businesses succeed.
    Ms. Silver, I want your business to pass to the fourth--do 
you have a fourth generation coming into the business?
    Ms. SILVER. Yes.
    Mr. SCHNEIDER. Okay. I want the business to pass to a 
fourth generation. Less than 1 percent make it that far. It is 
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 ahead. And I think everyone on this committee on 
both sides of the aisle 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 is a lot of debate and a lot of discussion about 
how one side is doing this or that or taking this position and 
demonizing. Let's get away from that and start talking about 
how we can put working families, Americans, American economy 
front and center and find common ground.
    And as my friend, Randy Feenstra, 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 will yield 
back.
    Chairman SMITH. Ms. Malliotakis.
    Ms. MALLIOTAKIS. Thank you, Mr. Chairman, and thank you all 
for being here today. I think we as members are very excited 
about this opportunity to build on the success of the Tax Cuts 
and Jobs Act, the TCJA. It created millions of jobs. It lifted 
middle class wages. It brought unemployment down to record lows 
for African-Americans, for Hispanics, did great things for 
women entrepreneurs, and we are really looking forward to 
seeing not only extended and made permanent, but also adding 
some additional provisions to make it stronger.
    One of the things that we saw 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 
minimum tax.
    And so, I wanted to talk to Ms. Gallagher because you and I 
agree that the alternative minimum tax cannot come back. And 
the issue for my constituents, middle-class families in Staten 
Island and southern Brooklyn, a lot of them didn't benefit from 
the SALT deduction because of the alternative minimum tax, and 
so we have to make sure that that does not come back. But we 
are, as SALT state members, looking to try to provide an 
increase to that SALT deduction, and 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. He does want to 
help, as 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, the 
alternative minimum tax should not come back, right? And if so, 
what kind of impact would that be on middle-class families?
    Ms. GALLAGHER. Thank you for that very good question.
    And usually when we start talking about the alternative 
minimum tax, or AMT as I will refer to it, people just run out 
of the room, frankly. It is one of the most complex and 
complicated tax computations in the Internal Revenue Code. 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.
    Ms. MALLIOTAKIS. And it targeted the middle class, really. 
That is who got hammered by it, right?
    Ms. GALLAGHER. It definitely targeted and hammered the 
middle class, no doubt about it.
    Ms. MALLIOTAKIS. And you said in your testimony that if it 
does return, it would affect 7.2 million taxpayers starting in 
2026, and that would be predominantly the middle class?
    Ms. GALLAGHER. Yes.
    Ms. MALLIOTAKIS. And the SALT deduction, can you explain 
how constituents may have not benefited from SALT because of 
the AMT?
    Ms. GALLAGHER. Yes. So because of its limitation, the SALT 
deduction is actually part of the computation of the AMT. It is 
an add-back. So when you are calculating your alternative 
minimum tax taxable income, you have to add back all of your 
SALT taxes. And so, my warning in my written testimony was that 
if there is an argument to have SALT, then we have to keep AMT 
out as well.
    Ms. MALLIOTAKIS. I agree with you.
    Ms. GALLAGHER. Because everybody who may not be limited in 
SALT will now be paying AMT, and they are no further ahead than 
they were.
    Ms. MALLIOTAKIS. Okay. I agree with you 100 percent.
    Now, with the SALT, if we are able to increase that 
deduction, do you have any estimates of what could cover the 
majority of middle-class families, let's say, people with 
incomes of $400,000 or $500,000 or less?
    Ms. GALLAGHER. Actually I have not done that math. Sorry.
    Ms. MALLIOTAKIS. No problem. Just curious. I know it was 
around $23,000 was the average deduction for middle-class 
families with an income level of $200,000 to $500,000. That is 
in 2016. So today, it would probably be more like $30,000, 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 somewhat with inflation?
    Ms. GALLAGHER. Well, I think indexing is always fair. I 
mean, inflation and dollars go up tremendously, so yes.
    Ms. MALLIOTAKIS. Do we think we should cap income 
eligibility so it is targeted to the middle class and not 
completely lift the cap? I think there is some concern from 
members across both sides of the aisle about giving relief for 
ultra wealthy. Do you think it should be targeted, the SALT 
deduction increase, and then cap it so only certain incomes 
could qualify?
    Ms. GALLAGHER. Well, certainly, I would want to look at the 
pros and cons of all of those things, but certainly there is a 
middle ground to get the middle class the relief that they 
need.
    Ms. MALLIOTAKIS. Great. If we wanted to also limit it for 
properties, would it make sense to limit 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?
    Ms. GALLAGHER. It certainly could. Not--I mean, many--a lot 
of folks don't have more than one property, not just the middle 
class, so----
    Ms. MALLIOTAKIS. Thank you.
    All of this salt got me thirsty, Mr. Chairman, and I have 
run out of time. So thank you very much, and I yield back.
    Chairman SMITH. Okay. Votes have been called. We are going 
to try and run up as close as we can to the time that we can 
make it to the floor to vote, and then we will return back 
promptly whenever we do have to recess for the three votes that 
have been called. But Mr. Carey is next.
    Mr. CAREY. Thank you, Mr. Chairman. It is an honor to serve 
on this committee again this session, and I also want to 
welcome our new members to the committee on both sides of the 
aisle, so welcome.
    This body delivered landmark legislation in 2017 that 
provided, as we have 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.
    We must make these effective tax cuts permanent--I think we 
have heard that from many of you today--and 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, save 
Ohioans, about 23 percent, a 23 percent tax hike.
    In the last Congress, this committee and the House 
overwhelmingly passed the Tax Relief for American Families and 
Workers Act, which included many, many of the policies to help 
working families. We need to continue to support these policies 
and help our working families grow.
    As a member of the working families tax team, I have heard 
firsthand from members of my community over the last 8 months 
about how TCJA policies have helped them and the importance of 
extending these tax cuts.
    Credit for Caring, this is a piece of legislation that I am 
proud to lead with my fellow Ways and Means member, 
Representative Linda Sanchez, and it is called the Credit for 
Caring Act which would provide eligible working caregivers a 
tax credit to help offset the costs 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 am 
looking forward to continuing that work on tax policies that 
will help these working families succeed.
    Ms. Marple, I want to thank you so much for taking the time 
to come out here, and I was touched by your story, number one. 
It sounds like you have a lot of things going on. There is no 
doubt about that. But you were once a single mother, and now 
you are remarried and you have two children, and very similar 
to my mother, and so I appreciate what you are doing.
    In my home state of Ohio, a family making a median income 
in my district is about $75,000, and they would see a tax 
increase of about $1,540 if these taxes are set when they are 
set to expire. 89,350 families in my district would see their 
Child Tax Credit benefit cut in half. Let me just say that 
number again: 89,350 would see that Child Tax Credit benefit 
cut in half.
    So let me ask you, Ms. Marple, can you give me any idea how 
a tax increase like that would impact your family?
    Ms. MARPLE. Yes. Thank you for your question, Congressman, 
and thank you for the opportunity to talk about families today.
    I think that, 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 are doing a good job as parents, when we 
find out that that has been cut in half, that would be--for me, 
it would mean that 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 sails in doing the work that we are 
doing to build the country, and to fight against this culture 
of giving up. The tax credit remaining permanent and expanding 
would just encourage families like mine to not give up.
    Mr. CAREY. I want to thank you for that testimony.
    I was going to have some other questions, but I am running 
short on time. But I just want to say I represent the largest 
city in the state of Ohio, which is Columbus. A recent study by 
the National Association of Manufacturers found that Ohio could 
lose upwards of 208,000 jobs, and $18.9 billion in wages, and 
over $37 billion in gross GDP if we don't extend TCJA. So I 
just want to point those numbers out again: 208,000 jobs, $18.9 
billion in wages, and $37 billion in GDP.
    And with that, Mr. Chairman, I yield back.
    Chairman SMITH. Thank you.
    Mr. Panetta.
    Mr. PANETTA. Thank you, Mr. Chairman. Thank you, ladies and 
gentlemen, for not just being here but for your businesses, for 
your families, for your communities, all 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 natural 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 un-
American.
    Now I appreciate your American stories, especially the fact 
that government has actually helped you. I think you all have 
provided some pretty nice stories, and we appreciate that. And 
I want you to know that we here, even though we are 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 have got to think about--we have 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 Act, the expiring 
provisions, because if we don't it is going to be hugely 
expensive. According to the CBO as we have heard today, it 
could reach a $4.6 trillion price tag. And with the national 
debt already at $36 trillion, a deficit at $2 trillion for 
fiscal year 2024, 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 TCJA expiring 
provisions.
    I believe the American people don't want to have an unpaid 
tax bill, and a bill that will further disintegrate our 
country's finances and destroy our Nation's credibility. A 
partisan deficit inflating 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. Duke, as you shake your head, how much would the 
economy have to grow to fully offset an extension of the TCJA?
    Mr. DUKE. Talking about--I mean, so we have, like, an 
average tax rate of 20 percent or so, so you need five times 
the amount of growth coming from that in order to just make it 
all back. So we are talking 7, 8 percent or something----
    Mr. PANETTA. Is that realistic?
    Mr. DUKE [continuing]. Yeah.
    Mr. PANETTA. Is that realistic? And are the policies of 
TCJA likely to bring about that growth?
    Mr. DUKE. Yeah, absolutely not. CBO showed that it would 
shrink the economy in the long run. The Tax Foundation, which 
is right-leaning organization, found that, you know, economic 
growth only cuts the cost by 14 percent. So it is still just 
there. You still have a big tax cut you need to pay for.
    Mr. PANETTA. Now, it has also been floated that we can 
eliminate credits from the IRA as a pay-for as you have heard, 
Mr. Duke, correct?
    Mr. DUKE. Yes.
    Mr. PANETTA. What would the elimination of energy tax 
credits in the IRA do to the ability to expand our economy?
    Mr. DUKE. Yeah. So, you know, first households would pay 
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 are trying to 
build them strategically. They are reporting 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.
    Mr. PANETTA. Now, the President-elect has proposed across-
the-board tariffs of 10 to 20 percent as well as a tariff of 60 
percent applied to imports from China. Some have suggested that 
these tariffs could be used as a pay-for for the extension of 
the TCJA.
    Now, Ms. Silver, you operate a machining business that 
according to Customs reports, imports, primarily machinery, 
gums, resins, and aluminum from the United Kingdom, correct?
    Ms. SILVER. No.
    Mr. PANETTA. You don't import those?
    Ms. SILVER. All of those things you said, no.
    Mr. PANETTA. Where do you import them from?
    Ms. SILVER. My raw material? It is mainly U.S.
    Mr. PANETTA. You don't have any imports to your business?
    Ms. SILVER. I am sure there are. We have had some bearing 
assemblies where we are sourcing bearings, and they are 
probably not all made here.
    Mr. PANETTA. Got it.
    Ms. SILVER. But the majority of our raw material is made 
here.
    Mr. PANETTA. Got it. But if you did have imports, they 
would, obviously, be subject to these tariffs which would lead 
to price increases for your business, correct?
    Ms. SILVER. Correct.
    Mr. PANETTA. Right. And is that how you would want--would 
you want to pay for the TCJA with those price increases?
    Ms. SILVER. We are--as you are saying, we are a participant 
in the global supply chain. And, you know, I would want 
Congress to tailor any policies, you know, so that we can 
continue to participate in that and be competitive.
    Mr. PANETTA. And would that include price increases on 
imports for you in your business? Is that what you want?
    Ms. SILVER. Well, no. I don't want any price increases on 
anything.
    Mr. PANETTA. Thank you.
    I yield back.
    Chairman SMITH. The votes are ticking down. I think we will 
call on one more, and then we will recess and then come back 
directly following votes. But, Mr. Moore.
    Mr. MOORE of Utah. Thank you, Mr. Chairman, for holding 
this important hearing. To the witnesses, thank you for being 
here. It has been a slugfest, and there isn't a better more 
important conversation to be having right now. And I believe my 
colleagues on the Democrat side that we need to have a focus on 
deficit. We need to continue to have that. It has been absent 
since my time in Congress enough to be able to see policy 
driving forward to do that.
    The truth is we need a strong economy. A strong economy 
will produce revenues. We have seen a consistent 17 average 
percent as a portion of GDP pre-tax cut, post-tax cut. That is 
just data. So we are still seeing strong revenues even with tax 
cuts that we did in 2017. That is where the focus needs to be.
    Now, there is a looming deficit that grows continually, and 
our interest that we are paying on our debt is the largest 
budget line item that we have had in our last 4 years. That has 
been increasing about $200 billion a year. That is where the 
issue is coming. That is where the deficit comes. But our only 
saving grace, our only fighting chance is to maintain a strong 
GDP and continue with revenues increasing.
    Look, it is important to highlight again--we have touched 
on it a lot--in my district, the average taxpayer would face a 
20 percent tax hike if TCJA expires. A certain part of this 
bill, it is very important to me and my team and my district is 
for me to be laser-focused on building the pro-family and pro-
growth forms from TCJA to help American families, communities, 
and small businesses thrive.
    Ms. Marple, I appreciate your testimony. Your story is 
awesome, very important, and I think a lot of people could 
relate to 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 we can build on this this year. It is the reason I wanted 
to be on this committee is because I knew this was looming, and 
this is 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 a new tax credit for pregnant mothers.
    Ms. Marple, how would either a baby bonus, or increasing 
the CTC amount for children under 5 provide a tax relief for 
working families? And would this have benefited your family?
    Ms. MARPLE. Yes, thank you for the question.
    When your family is growing and your kids are young, a lot 
of changes are taking place. You are changing jobs. Childcare 
looks different. You need a bigger house. You need a bigger 
car. There is a lot of pressure put on the family, and life 
gets really busy. Adding a baby bonus or something like that, 
like you were referring to in the bill, would definitely help 
compensate for all of those big changes that a growing family 
is facing.
    Mr. MOORE of Utah. You are highlighting flexibility because 
you are going through a lot of change. As my kids get a little 
bit older, they would be mostly outside this range. We are 
still supporting those families and recognizing it is still 
expensive. Kids are expensive, regardless of their age, but 
particularly that first 5 years, the change that happens to the 
parents and their situation, it is important to make sure that 
we address that. So thank you for that.
    This is something we are really excited about. I think it 
takes a look at tax provisions that have been around for a 
while, and when things get stale and have been around, it is 
time to shake it up a little bit. This Child Tax Credit is a 
huge increase, and my Democrat colleagues should be very 
supportive of this. It is 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 are doing that, and 
we are creating a more pro-growth, pro-family approach, and I 
look forward to continuing to drive this forward.
    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 have 
talked a lot about this.
    I will just quickly ask Ms. Gallagher and Ms. Silver, 
anything to add on how important it is to be able to up that? 
Instead of $1 million, it is going to increase to X number of 
dollars. Like, it is going to help small businesses be able to 
buy their equipment and get that right off. Anything to add to 
that?
    Ms. GALLAGHER. I can certainly agree with it 100 percent 
that that is an incentive to investment. And I would look to 
our actual business owner here on how she would respond.
    Ms. SILVER. And you are talking about section 179?
    Mr. MOORE of Utah. 179, yes.
    Ms. SILVER. Yes, absolutely, increasing that----
    Mr. MOORE of Utah. As in increasing that threshold.
    Ms. SILVER. Yes, that would help us tremendously with 
planning and drive investment, which makes us more competitive 
and gets our customers what they need.
    Mr. MOORE of Utah. And a point that I make when I am back 
home is I say, Okay, if you have that ability to invest more, 
guess what? That other company that is selling you that 
equipment, they are now paying more taxes because they are 
excited about their business growth, so they are--they think we 
are still contributing to tax revenues. It is not a decrease in 
taxes. It is actually spurring significant economic growth, and 
that can't be discounted.
    Thank you so much. I yield back.
    Chairman SMITH. All right. We will recess until after 
votes, and then we will begin right after that.
    [Recess.]
    Chairman SMITH. The meeting will come back to order.
    Mr. Yakym.
    Mr. YAKYM. 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.
    Chairman SMITH. Without objection.
   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. YAKYM. I want to start by saying what an honor and 
privilege it is to be here on 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 Hoosiers having served before 
me, our dear late friend, Jackie Walorski, and Senator Todd 
Young before her. I hope to follow in their footsteps with hard 
work, compassion, and Hoosier common sense.
    I look forward to working with my colleagues on both sides 
of the aisle toward pro-growth tax, regulatory and trade policy 
so that manufacturers, innovators, and job creators can expand, 
hire, and invest, so that agriculture producers can compete and 
win in markets new and old, and so that families have the best 
shot at achieving the American dream.
    I am glad that we are 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 
percent tax hike. That is $1,252 for the average family of four 
in my district. That cannot be written off as mere crumbs. It 
is real money for the average hardworking Hoosier family that 
is trying to live within its means.
    Ms. Marple, I am a father of three, so I greatly appreciate 
your time here to testify today. I know it is no small task. I 
thought you were so spot on 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 at a time of high inflation. That is why I am 
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.
    Ms. Marple, 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 are not looking for a handout.
    Can you talk more about the value and importance of work as 
a requirement for receiving the Child Tax Credit?
    Ms. MARPLE. Thank you for your question.
    Yes, I think there is a big difference between receiving an 
encouragement from the government and something that produces 
encouragement, and something that produces entitlement. And the 
truth is the desire of me and a lot of other parents is to work 
hard to provide for our family. There is a fulfillment there. 
And so, being uplifted and having that burden of supporting our 
family lightened, it goes a long way and----
    Mr. YAKYM. All right. Thank you.
    Ms. MARPLE. Yes.
    Mr. YAKYM. And one more quick question. If the Trump tax 
cuts were to expire, not only would the credit be cut from 
$2,000 to $1,000, but a requirement for children to have a 
Social Security number would expire as well.
    Now, after 4 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 is 
fair that your hardworking tax dollars that you worked hard for 
could potentially go to people who are not here in this country 
legally?
    Ms. MARPLE. No.
    Mr. YAKYM. Thank you.
    Mr. Duke, you seemed to imply that families making over 
$400,000 a year shouldn't be able to claim the Child Tax Credit 
at all. Fair enough. I want to highlight an August 2024 article 
from Politico which reads, quote, ``Upper income homeowners are 
scooping up billions of dollars in tax credits for making their 
residences more energy efficient while the poor are getting 
almost nothing under the same Biden administration effort.''
    Should the federal government be subsidizing people making 
over $400,000 who want to put solar panels on their roof?
    Mr. DUKE. You know, I am not an energy expert, but I think 
that, you know, those credits are, you know, about creating, 
you know, a supply chain in an industry that really, you know, 
puts us forth into the 21st century----
    Mr. YAKYM. You are not an energy expert, but you are a tax 
expert.
    Mr. DUKE. Yeah.
    Mr. YAKYM. 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?
    Mr. DUKE. I think it was designed well.
    Mr. YAKYM. So what about the EV tax credit, which is capped 
at $300,000 a year? Do you think that that cap should be 
removed and we should pay for wealthy families' electric 
vehicles?
    Mr. DUKE. Look, I think that Congress, you know--and we are 
going to see this when we talk about extending the 2017 tax 
law--obviously has a lot of different, you know----
    Mr. YAKYM. What do you recommend?
    Mr. DUKE. I would actually have to know more about EVs and, 
you know, wish to know, like, exactly what the right level 
would be for----
    Mr. YAKYM. Thank you for your nonanswer.
    Mr. Chairman, I yield back.
    Chairman SMITH. Mr. Gomez.
    Mr. GOMEZ. Thank you, Mr. Chairman.
    Before I get started, I just want to say to Angelinas--I 
represent Los Angeles--I am committing to securing whatever 
resources necessary to fight these fires, but also help people 
rebuild their lives. I know it is going to be a long road 
ahead.
    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 chores, and one of my 
chores is to go grocery shopping. So I went to the store, and I 
picked up some of the basics, Cheerios, eggs, soup, nothing 
unusual, nothing fancy, no sparkling water or prime rib. It was 
the basics. And as I was leaving the store, I was looking at 
this receipt. And as I looked at the receipt, I was, like, $65, 
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 diapers. So, in one week, I spent $235. 
That is a lot of money. Unfortunately, my family isn't alone 
trying to pinch pennies and trying to watch what they are 
spending.
    So as we start this debate, I will keep in mind all of 
those families that look at their receipts at how much they are 
spending. Families are feeling the pain of higher prices, 
families with children, families that work multiple jobs, mom 
and dads 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 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 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 behind.
    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 
wouldn't 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 percent got a 
$250,000 tax cut while working people got around 500 to 600 per 
year.
    Mr. Duke, will extending the Republican tax plan, or the 
TCJA, do anything to lower costs?
    Mr. DUKE. No.
    Mr. GOMEZ. No. So, to my Republican colleagues, let's write 
a truly bipartisan bill that actually makes America affordable. 
Let's work to lower the costs of housing by cutting red tape, 
incentivizing building across the country. Let's lower the 
costs of childcare by investing in the workforce and the small 
business entrepreneurs 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 and all their billionaires pay their 
fair share in taxes, do you think we could afford these things 
that I just mentioned?
    Mr. DUKE. Absolutely. The Biden budget contained a minimum 
tax on billionaires with reforms to how we tax capital gains 
for the highest income Americans, erased trillions of dollars.
    Mr. GOMEZ. So, I would like to also point out that people 
talk about the establishment in D.C. You know, they say it is 
one day the blue establishment, the other day it is the red 
establishment. See, I don't think there is a blue establishment 
or a red establishment in D.C. I think it is 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. Chairman, I have a question for you.
    Chairman SMITH. Yeah. That is kind of unusual, but go 
ahead, Mr. Gomez.
    Mr. GOMEZ. Well, this is an unusual time. Let's say we 
actually get together in a room and negotiate a bipartisan tax 
plan that benefits the working people, invests in what we want, 
if Elon Musk tweets to you to throw that out, will you reject 
Elon Musk's request or will you guys capitulate like you did in 
December?
    Chairman SMITH. Mr. Gomez, the only person that the 
Republicans are beholden to are the people that send them to 
Washington, and Elon Musk is not a constituent.
    Mr. GOMEZ. Okay. Well, see, we--call me skeptical, but what 
I saw in December was dastardly. So, if you guys are wanting to 
negotiate a real bipartisan tax plan, let's do it and let's get 
something that helps lower costs for the American people.
    With that, I yield back.
    Chairman SMITH. Mr. Miller.
    Mr. MILLER. Thank you, Mr. Chairman.
    I am glad Mr. Gomez used his 5 minutes for a Twitter clip. 
Thank you. But thank you, Mr. Chairman, and thank you to our 
witnesses for their time and testimony today.
    I am honored to be joining the Ways and Means Committee 
with a shared goal. That is 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 purchases, 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 7th Congressional District, a 
region with a strong manufacturing and agricultural backbone. 
These policies drove significant job creation and economic 
revitalization to the area. Small businesses and farmers all 
benefited from the ability to reinvest their capital savings, 
expand their operations, and provide good-paying jobs for 
hardworking 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 working-
class communities where most taxpayers claim the standard 
deduction. By eliminating the need for a complex and time-
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 percent, 93 percent 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 allows families to focus on 
their priorities, whether saving for the future or supporting 
your children or investing in their homes while enjoying 
greater financial security.
    Ms. Gallagher, we know that the increased standard 
deduction significantly boosts disposable income for families 
directly benefiting individual taxpayers. However, it is clear 
to me that the advantages for households and businesses are 
deeply, deeply interconnected as stronger household finances 
drive broader economic 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?
    Ms. GALLAGHER. Thank you for that question, my fellow 
Midwesterner.
    Absolutely, the standard deduction has been a life-changer 
for individuals, and, frankly, my 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 that 
perspective.
    The taxpayers, however, on that side have received 
significant tax savings. Many of them were far under that level 
even when they itemized, and so the standard deduction gave 
them increased deduction; i.e., less taxes to pay and more 
money in their pocket to contribute to their communities and to 
their own households.
    So I absolutely saw a direct impact on individuals and 
small businesses in my communities.
    Mr. MILLER. Thank you for that answer, and I have as well. 
And as I will just restate, 93 percent of our constituents in 
the 7th District of Ohio use standard deduction.
    Ms. Silver, in your opening testimony you highlighted how 
small- and medium-size manufacturers are leveraging the current 
TCJA and 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 face the 
potential loss of nearly a quarter of a million jobs just in my 
home State of Ohio, as Congressman Carey 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?
    Ms. SILVER. Well, I will expand upon what I have been able 
to do because of TCJA. So when you think about that, it is like 
I am not going to be able to do this stuff when all of these 
tax policies expire. So one example is I was able to use the 
199A pass-through deduction to reinvest in my company. We 
bought our first collaborative robot. It is integrated with one 
of our lathes. It is two spindles. It allows us to run this 
machine unattended at night. So it 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 would like.
    Mr. MILLER. It is up to the chairman.
    Ms. SILVER. Okay.
    Chairman SMITH. All right.
    Mr. MILLER. Yes, ma'am.
    Ms. SILVER. We created a high school internship program. It 
is a job shadowing program. Our local high school, 100 percent 
of the students are economically 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 I bought equipment so they can train 
on this, and it has impacted our community. It has impacted our 
culture. And now I have, you know, two full-time apprentices 
learning the machining trade.
    Mr. MILLER. Thank you for sharing that, Ms. Silver. I am 
out 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.
    Chairman SMITH. Thank you.
    Mr. Bean.
    Mr. BEAN. Thank you very much, Mr. Chairman. Good afternoon 
to you. Good afternoon, Ways and Means. Our witnesses, what an 
honor to have you here. I know it is hard work to testify for 
going on, what, our fifth hour now.
    First of all, this is my very first time to speak in the 
committee. It is indeed an honor and privilege to serve on this 
committee. I fought to serve on this committee for the same 
reason that I fought to serve in Congress. Our country is in 
trouble. I believe debt is one of our greatest challenges. We 
have got to fix it, and we continue to dig. We continue to go 
in the wrong direction.
    So, Mr. Chairman, you and Ranking Member Neal, I look 
forward to working with each of you as we build a strong 
America that can once again be that shining city on a hill to 
serve as a beacon for countries around the world.
    Ms. Marple, you have testified what a game changer the tax 
credit is. You have said that it has made a tremendous 
difference for the Marple household. Is that correct?
    Ms. MARPLE. Yes.
    Mr. BEAN. Okay.
    So are you a billionaire?
    Ms. MARPLE. No.
    Mr. BEAN. Wait a minute. You must run a Fortune 500 
company. Is that correct?
    Ms. MARPLE. It is more like a small business.
    Mr. BEAN. Okay. So wait a minute. I am confused, Mr. 
Chairman. All I hear is that Trump's tax cuts have only 
benefited billionaires, Fortune 500 companies. And I looked at 
your income, Ms. Marple, and it's part of your testimony. It is 
$75,000. Is that correct, about right?
    Ms. MARPLE. That year, yes.
    Mr. BEAN. That year. That year, but it is true then that 
you are not a billionaire. I don't understand how the Trump tax 
credits could help somebody like you making that amount of 
money, but yet it did. Was it a game changer for you, Ms. 
Marple?
    Ms. MARPLE. We work for the wealthy, and they pay our 
paychecks.
    Mr. BEAN. But getting that tax credit, that really made a 
big deal for you. I mean, in your testimony you said it is. 
And, by the way, we are all very proud of you. Who is very 
proud of you are those folks for raising those three boys. I 
too raised three boys, and before you know it, they are taller 
than you, they are out the door, and it is the most important 
thing that we do on this planet is to launch successful kids. 
You are doing the right thing, and we are proud of you so much.
    Ms. Couch, you also have testified that--by the way, 
Ignite, I have watched you grow 200 clients. You are rocking 
it, too. You have testified that your clients have done so 
well. Is that correct?
    Ms. COUCH. My clients are doing well, thanks to the tax 
credit.
    Mr. BEAN. Very good. Now, wait a minute. So that means they 
are all billionaires. Is that correct?
    Ms. COUCH. They are not billionaires.
    Mr. BEAN. Wait. I don't--they are a Fortune 500--did you 
just do Fortune 500 exclusively? Is that right, Ms. Couch?
    Ms. COUCH. No, far from it.
    Mr. BEAN. Okay. So it is amazing because all we hear, it 
helps the rich, the top 10 percent, 1 percent, or whatnot, but 
yet we both know--and I can see the look in your eyes. You are 
the movers and shakers. That is who you do, the people that 
employ, put this country to work, that is your clients. And I 
know your folks are proud of you for rocking Ignite.
    Ms. Silver, we are all proud of you of what you have done 
right now. I am going to go to a scary place. I want to go to a 
very scary place. It is a scary question, and that is this: If 
the qualified business income credit were to go away and you 
were faced with a 43 percent tax rate, your company and you, 
that rate, which, by the way, is much higher than Communist 
China, what does that look like? Is that a grim picture? Is 
that a scary question? What is going to happen?
    Ms. SILVER. Yeah, it is not good.
    Mr. BEAN. So you might have to lay off Mr. Robot that you 
bought. You might have to do some other big drastic decisions. 
You have got 20 employees that are depending on you whether or 
not food goes on their table. Can they depend on you if you are 
having to pay a 43 percent income tax rate?
    Ms. SILVER. No. And so we----
    Mr. BEAN. It is going to be challenging?
    Ms. SILVER. Right. And we have been talking about, like, 
what we do with these tax policies, how we reinvest.
    Mr. BEAN. Yes.
    Ms. SILVER. But a contrasting example that I could give 
you----
    Mr. BEAN. Yeah.
    Ms. SILVER [continuing]. Is that, you know, there is 
economic downturns. There's normal business fluctuations and 
so----
    Mr. BEAN. You are going to have to make hard decisions is 
what you are saying. Is that right, hard decisions? Hard 
decisions? Yes, that is hard. It is hard. It is scary to listen 
to it.
    I would take you back to 2017. Let's remind everybody, 
because we have got the receipts of what happened in 2017. 
Adele's ``Hello'' was playing on the radio, ``Dunkirk'' was the 
top movie, and Trump had just passed tax cuts. Let me tell you 
what happened. Net worth among low-income families rose 37 
percent, while middle-income families' net worth increased by 
40 percent. Even the bottom 20 percent of earners' incomes 
rose--we saw the economy getting on fire. And that is what we 
are going to have to do. If we are going to solve our economic 
woes, yes, we have to have economic growth. We have to make 
cuts. I am making cuts. We are going to make cuts. But we also 
have growth in our economy.
    And, good gravy, I have only got through page 1. It is 
going to be really tough to ask all of these questions.
    So with that, Mr. Chairman, looking forward to working with 
you. Thank you again. I yield back.
    Chairman Smith. Thank you.
    Mr. Horsford.
    Mr. HORSFORD. Thank you, Mr. Chairman, and to the ranking 
member for this important hearing and also to our witnesses for 
being here for what has been a long day for all of you.
    Look, my colleagues have noted, and it is fact, that the 
top 1 percent of households received the most benefits from the 
TCJA. 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 saved $61,000. Congress' own 
nonpartisan Joint Committee on Taxation says that millionaires 
saved over $78,000 each year.
    Now, for someone living in Tonopah, Nevada, which is in a 
rural part of my district in the center of Nevada, that is 
double their median salary. The constituents in my district 
have called on me to help them cut household expenses, to put 
more money back in the pockets of hardworking people like them, 
and that is why I introduced the Tipped Income Protection and 
Support Act, no tax on tips. Tips is a gift, not a guarantee, 
and I hope that the chairman will agree and work with me on my 
bill. The TIPS Act would exempt income tax of tipped wages for 
many working-class families.
    But let me be clear. I will 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 1 percent and doesn't help 
them.
    Mr. Duke, when drafting the TIPS Act, I put income caps to 
ensure that only working-class families can receive the bill's 
benefits. Should we consider income caps on TCJA programs that 
predominantly benefit the wealthy, like 199A?
    Mr. DUKE. That's right. Treasury--yes, that is right.
    Mr. HORSFORD. Yes?
    Mr. DUKE. Yes.
    Mr. HORSFORD. Okay. Look, I am glad that we have so many 
small businesses here today, and that is intentional, because 
there was a choice made 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 are here to say that unless we pass the 
entire bill, it is going to hurt you. Well, my question is why 
didn't they prioritize you to begin with? Why didn't we make 
the small business tax reductions permanent and the corporate 
tax reductions temporary? That was the choice they made.
    Now, what is also important is that the bottom 90 percent 
of workers' wages were unaffected by changes in the corporate 
tax rate. I am glad, as I said, that we have business owners 
like Ms. Silver here in this discussion because we need to 
focus more on small business efforts, and I commend you for 
everything that you are doing, including your jobs program. You 
are the ones who have accounted for 62 percent of net new job 
creation since 1995, you, small businesses. Small businesses 
account for 98 percent 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 helps small businesses and working 
families?
    Mr. DUKE. No, I cannot.
    Mr. HORSFORD. Because----
    Mr. DUKE. Cutting the corporate tax rate, you know, 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, you know, these big 
corporations, especially when they all say, you know, 
especially multinational corporations pay half the rate, 
corporate rate on their overseas profits. That is something 
that is not available to American small businesses.
    Mr. HORSFORD. 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 costs. We could expand the Child Tax Credit, which is not 
an entitlement. Working families, like Ms. Marple, deserve to 
get benefits from our Tax Code, not just big corporations. We 
could build more affordable housing. We could put more money 
into low income and affordable housing for all families, 
including veterans.
    That is why I have introduced legislation to take on 
corporate landlords that are gouging renters and making housing 
less affordable, yet the TCJA isn't helping the housing market. 
Extending the bill doesn't help build up the supply of housing, 
nor is it helping lower housing costs for buyers and renters 
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 economy, to help families who are struggling. That 
should be our priority, not billionaires and big corporations.
    I yield back.
    Chairman SMITH. Thank you.
    Mr. Moran.
    Mr. MORAN. Thank you, Mr. Chairman.
    For the panel, let me give you a little foundation about my 
district, the 1st District of Texas, 17 counties, rural 
northeast Texas. And let me provide this foundation 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 for our 
businesses there would put 12,000-plus family-owned farms in 
Texas 01 in jeopardy because of having their estate tax 
exemption slashed in half next year. 37,000-plus small 
businesses in Texas 1 would be hit with a 43 percent tax rate 
increase if the 199A 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 cross 
several industries. Whether it is agriculture, small 
businesses, or large manufacturers, the TCJA promotes the 
growth of business in America.
    Now more than ever it is important to ensure that Congress 
continues to put Americans first by providing the tax 
incentives for American businesses 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 are aware, up until 2022, the Tax Code allowed 
manufacturers to immediately deduct 100 percent of R&D expenses 
in the year that they were incurred. At present, the U.S. is 
just one of two countries without this essential innovation 
incentive.
    Meanwhile, China offers things like a super deduction for 
research spending, and is not the only nation providing more 
than that attractive R&D incentive. Over 15 other countries now 
offer deductions surpassing 100 percent of eligible R&D costs 
making the U.S. a less attractive and competitive environment 
for research and development.
    Ms. Silver, I want to come to you first. Since you were the 
National Association of Manufacturers, Small Manufacturers 
chair, tell me, in your expert opinion, what impacts, if any, 
results from the U.S. having weaker R&D incentives than other 
countries, especially countries like our adversary, China?
    Ms. SILVER. Well, R&D is what our country is built on. I 
manufacture parts. I machine parts that are built from 
companies' equipment, mainly equipment manufacturers who are 
using R&D tax policies, R&D money, R&D support to come up and 
innovate with new product lines. So this is what our country is 
built on is research and development and innovation.
    Mr. MORAN. And it is critical to have that immediate 100 
percent expensing in the year that those expenses were taken so 
that those businesses will be incentivized to innovate and 
grow. Is that right?
    Ms. SILVER. Absolutely.
    Mr. MORAN. Ms. Gallagher, you talked a little bit about the 
199A provision. In your experience, what do most small 
businesses do with the money that they save from reduced tax 
rates using section 199A?
    Ms. GALLAGHER. 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.
    Mr. MORAN. Yeah. In your written testimony, you talked 
about how these companies that you work with, they will 
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 to innovate 
or expand production, all of which creates new jobs, correct?
    Ms. GALLAGHER. Yes.
    Mr. MORAN. And that is what we want is the economy to grow. 
We want more opportunities for American working families. Isn't 
that the point of 199A?
    Ms. GALLAGHER. Absolutely.
    Mr. MORAN. And if we take that away, then what happens if 
those businesses no longer pay that lower rate, that 21 percent 
rate, but are paying now a 43 percent rate that is more than 99 
percent of the businesses in America would pay? What happens 
now for their ability to provide health insurance or upgrade 
their equipment or expand their production or to create new 
jobs?
    Ms. GALLAGHER. Economic downturn is what happens.
    Mr. MORAN. That is exactly what happens.
    I want to end today by agreeing with Mr. Gomez when he 
argued that we should consider the impact of working families 
when we consider the tax policy this year. I absolutely agree. 
In my district we have a median yearly income of $61,000. A 
family receiving this yearly income would a see $1,142 tax 
increase should the Trump tax cuts expire at the end of year 
and we do nothing. For a family of four, this $1,142 is worth 
about 6 weeks' of groceries in my region. It is also enough 
money to cover about 27 full tanks of gas, even in our big old 
trucks. And that is based on the average pricing. Those are 
important things. Groceries and gas are important things to 
every American and every Texan that I represent. The Tax Cuts 
and Jobs Act cannot expire. We must continue those provisions 
to allow families to thrive and businesses to grow.
    With that, Mr. Chairman, I yield back.
    Chairman SMITH. Thank you.
    Ms. Plaskett.
    Ms. PLASKETT. Thank you so much, Mr. Chairman, and it is so 
good to be back here on the committee, to be a part of these 
discussions which affect so many Americans, the notion of taxes 
and trade. This is, in fact, the most important committee, and 
the work that we are doing is going to affect every American as 
we have said.
    I am grateful to be a part of the debate on the ways and 
means of which we fund American government, and particularly 
fund businesses, fund how the mechanisms of our economy grow 
here in the 119th Congress.
    I am eager to serve as 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 2 years.
    And I look forward to advancing shared priorities with my 
Republican colleagues. I, Mr. Chairman, share one of the--I am 
one of the few Members of Congress who actually worked on and 
was a member of the other party at one point. I worked in the 
Bush administration for a number of years after September 11. 
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 try and make permanent and work on a 
way that supports the American dream.
    But I have to say that I see the work on the 117th with 
President Trump's crowning achievement being the tax bill as an 
inequitable piece of legislation for all Americans. The 
achievement gave .01 percent an average of $252,000 of tax 
cuts, while the poorest fifth of Americans only received $70.
    Ms. PLASKETT. It seems that the largest cups were filled, 
with no overflow going to those most in need. By a percentage, 
56 percent of the tax cuts enriched shareholders, 44 percent 
lined the pockets of executives, and zero went to 90 percent of 
the workers in those businesses.
    You know, in the early days of our Nation, a Native of my 
island, St. Croix, 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 is that phrase, ``if it is not excessive'' has always 
been important but never more important than today. The need 
for tax reform is critical for so many different people.
    I have been listening to my colleagues, being myself and 
Mr. Suozzi and others just coming back to the committee. We are 
now at the end, so we get to listen to a lot of the discussion. 
And I thought some of the things that were discussed were very, 
very interesting.
    We talk about the Child Tax Credit and how important it 
was. I have 5 children. I understand the importance of the tax 
credit. I was not always a Member of Congress. 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 understand 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.
    There is also, when we talk about manufacturing, 
manufacturing capacity actually contracted in the years 
following the passage of TCJA. I am so grateful that we do have 
individuals who did receive that manufacturing benefit, but so 
many did not.
    According to the Federal Reserve, manufacturing capacity 
contracted a half percent each year on average from 2018 to 
2021, and then expanded a half percent in 2022 and 1.2 percent 
in 2023. And manufacturing capacity is expected to grow by 1.3 
percent in 2024.
    Let's get the facts correct. Research was published in 2022 
by authors affiliated with 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 did not 
change for the workers in the bottom 90 percent 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 when I listen to my 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 yield back.
    Chairman SMITH. Thank you.
    Mr. Suozzi.
    Mr. SUOZZI. Okay. Thank you, Mr. Chairman, and thank you so 
much for sticking around. I really appreciate that. Mr. Ranking 
Member, thank you, Mr. Kelly.
    And the witnesses, 5 hours you have spent here, we are very 
grateful to all of you for spending so much time. Thank you so 
much, and we know it has been very cold in here. It is a little 
warmer now. It has been cold here all day but thank you so much 
for being here.
    So first I want to note something that was noted earlier 
today by one of my colleagues, Mr. Doggett, who said Steve 
Bannon, who is 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 is happening with some of your big supporters, 
Jason.
    Okay. I am here to talk about the one thing I have learned 
since I have been in Congress, I guess we all know this, but I 
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.
    People's incomes are different in different parts of the 
country, but so is their cost of living and so is their 
property taxes and their income taxes. That is a very big 
difference.
    Mr. Moran, when I was walking in, was saying that the 
average income in his 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 am 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 badly.
    So, I am concerned about especially the State and local tax 
deduction. The State and local tax deduction was put in place 
by the Federal Government over a hundred years ago when they 
first developed the progressive income tax in America, the 
Federal tax.
    And when they were debating it, the governors and the 
mayors 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 are going to give you a 
State and local tax deduction, because we recognize it wouldn't 
be fair for you to pay Federal income taxes on the State and 
local taxes you have already paid. It is just not fair.
    It is not fair that States like mine and other States 
throughout the country have relied on this tax deduction for a 
hundred years, up until 2017, and then it was capped at 
$10,000.
    That is why when we passed three times, when I was 
previously in Congress, a restoration of the State and local 
tax deduction, it was supported by the U.S. Conference of 
Mayors, the National League of Cities, the U.S. Association of 
Counties, the firefighters, the teachers, the police throughout 
the country--all support restoring the State and local tax 
deduction, because it is not fair to pay taxes on the taxes you 
have already paid, because it is 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 relatively quickly.
    And it is not fair that people who did get tax cuts in some 
parts of the country, in some places, in some income levels, 
but in other places like mine they didn't get those benefits.
    So I want to ask each of the witnesses here, if you 
recognize that the State and local tax deduction is important 
to a lot of taxpayers in the country.
    Ms. Gallagher, you are--are you an accountant, I think?
    Ms. GALLAGHER. Yes, I am a CPA.
    Mr. SUOZZI. Yeah, I was a CPA too. I was trained as a CPA. 
I used to work for Arthur Andersen & Company.
    Ms. GALLAGHER. Oh, very good.
    Mr. SUOZZI. So do you think the State and local tax 
deduction was beneficial to a lot of people in the country at 
one time?
    Ms. GALLAGHER. Yes, indeed. When it was fully deductible, 
it was a full tax deduction and impacted all taxpayers, 
probably higher income taxpayers more, just because they pay 
more tax.
    Mr. SUOZZI. Well, that is a very interesting point because 
higher income, that is like a question we talk about. What is 
the middle class, okay?
    So, in my district, if you are a police officer and you are 
married to a schoolteacher, you are making $200,000 a year.
    Now, in some places in the country--Ms. Marple, when I said 
that, her eyebrows went up, right, and she is, like, wow, 
$200,000, a teacher and a cop, how is that possible?
    But in other places if you are making $200,000 a year, you 
have got a--you are in a gated community, you have got an 
indoor pool, and you belong to the country club.
    But where I am, you are just getting by, because your taxes 
are higher, your cost of living is higher, your property taxes 
are higher. So it is different.
    That is why it is 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 when they asked 
President Trump, they said, Hey, isn't this going to hurt the 
people in New York where you are from?
    He said, Ah, they didn't vote for me anyway.
    That is not the way we should be doing our business. We 
should be trying to work together.
    So, I am not going to ask you, Ms. Marple, because you 
already answered with your eyebrows, but, Ms. Couch, do you 
know about the State and local tax deduction? Do you think that 
helped a lot of families in America?
    Ms. COUCH. Yes, I am sure that it did. I think for Georgia, 
you know, being----
    Mr. SUOZZI. A different place.
    Ms. COUCH. It is very different, so.
    Mr. SUOZZI. Where are you from, Ms. Silver?
    Ms. SILVER. North Carolina.
    Mr. SUOZZI. Yeah, different there too. A lot of people are 
leaving my district to go to Florida, South Carolina, North 
Carolina. And some of my Republican colleagues boast about 
that.
    But when I asked Steve Mnuchin, who is 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 is 
making taxes go up for people. He said, Well, you could cut 
their services.
    But do we want to cut their police and their fire and their 
teachers?
    All right, Mr. Chairman, thank you so much for allowing me 
to go a little bit over. I apologize.
    Chairman SMITH. Thank you. I would like to thank all of our 
witnesses for appearing before us today. It has been a long 
day, and you have done a phenomenal job. We appreciate that.
    Please be advised that Members have 2 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 adjourned.
    [Whereupon, at 3:31 p.m., the committee was adjourned.]

      

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