The May 16, 2018, House Ways and Means Committee hearing on economic developments since enactment of the Tax Cuts and Jobs Act (TCJA) continued the partisan debate over who has benefited from the tax bill and included discussion of what other areas should be addressed in follow-on legislation.

In an opening statement, Chairman Kevin Brady (R-TX) cited projected increases in economic growth, investment, employment, and wages since enactment of the TCJA, as well as a boost in small business confidence. Ranking Democrat Richard Neal (D-MA) said Republicans want to offset the cost of the TCJA with Medicare and Social Security cuts, which the Administration has already signaled by proposing cuts to the Children's Health Insurance Program. He also said the Democratic argument that "trickle-down economics simply does not work" has proven true given the number of stock buybacks that benefit the wealthy since enactment of the TCJA.

Witnesses for the hearing, titled "Growing Our Economy and Creating Jobs," were:

 — Douglas Holtz-Eakin, President, American Action Forum
 — Zachary Mottl, Chief Alignment Officer, Atlas Tool Works, Inc.
 — David Farr, Chairman and Chief Executive Officer, Emerson
 — Steven Rattner, Chairman and Chief Executive Officer, Willett Advisors LLC

Holtz-Eakin said it is too early to assess all the effects of the TCJA, just five months into the new tax code, but "there is cause for optimism" that the new law will result in stronger growth, better investment, and an improved labor market.

Mottl said "so far, the needle appears to be moving in a positive direction" in terms of success of the TCJA, with his business benefiting from expensing for capital investments and "seeing increased demand for our products, many of which go into capital projects at large companies."

Farr, who also serves as chairman of the Board of Directors of the National Association of Manufacturers (NAM), said the TCJA is not perfect but, "The 'rocket fuel' of tax reform clearly is continuing to energize manufacturers today with the kind of optimism we have not seen in a very long time."

Rattner criticized the TCJA's impact on the federal deficit and debt, and said while some restructuring of the corporate tax system was advisable, "what emerged from the legislative process was less tax reform than simply a tax cut for business."

The hearing came as Chairman Brady and others are working to assemble a "Phase 2" follow-on tax bill, the contents and timing of which have yet to be announced. Rep. Devin Nunes (R-CA) asked about the potential to expand expensing to commercial real estate. Holtz-Eakin said he would like to see expensing extended to all capital investments. However, Farr said given the TCJA's goal of increasing productivity, it is better to focus expensing on equipment rather than on buildings. He did say he would like to see expensing, which is phased down after 2022 under the TCJA, extended for a longer period of time.

Rep. Kenny Marchant (R-TX) asked witnesses, as members are "on the very edge of beginning a Phase 2," what steps can be taken to avoid slowing down economic momentum and to ensure long-term success of the TCJA. Farr said an immigration policy is necessary in order to bring in new talent to grow the economy, and infrastructure investment is needed as well. The immigration situation is "really hurting this country long-term, economically," he said.

Rep. Ron Kind (D-WI) suggested that while Republicans are celebrating the new tax law, businesses are being harmed by the Administration's trade moves. He said Harley-Davidson announced it is shutting down a US plant and moving a factory to Thailand because of the inability to move forward on the Trans-Pacific Partnership (TPP). Kind also said he is hearing from businesses facing huge increases in steel and aluminum prices related to tariffs, and from those who fear losing market access to Mexico because of the potential for the United States to pull out of NAFTA.

The hearing is the first in a series of Full Committee and Tax Policy Subcommittee hearings on "how tax reform is growing the U.S. economy, creating jobs here at home, and increasing paychecks for hard-working Americans," according to the Committee.

Opening statements of Chairman Brady and Ranking Member Neal are attached, along with witness testimony.

———————————————

———————————————
ATTACHMENTS

Brady Statement

Farr Statement

Holtz-Eakin Statement

Mottl Statement

Neal Statement

Rattner Statement