13 February 2019 Ways & Means subcommittee holds hearing on middle class On February 13, 2019, the House Ways and Means Subcommittee on Select Revenue Measures held a hearing on how middle-class families are faring in the economy, featuring a partisan back-and-forth over whether the Tax Cuts and Jobs Act (TCJA) helped average Americans and whether some provisions for higher-income individuals and corporations should be rolled back. Chairman Mike Thompson (D-CA) expressed concerns about the ability of middle-class Americans to purchase a home, pay student loans and save for college, and afford retirement, and those concerns were echoed throughout the hearing by other Democratic members. Ranking Member Adrian Smith (R-NE) said the job market has benefited from TCJA, and warned Democrats against repealing the law's provisions for corporations, and against raising gas or Social Security taxes.
Zandi said while unemployment is low, "the middle class, burdened by heavy debt, continues to grapple with depressed incomes, low savings and stagnant wealth." Both he and Boushey highlighted a rise in income inequality between the middle and upper class. Collins suggested that lower and middle-class Americans are disproportionately burdened by rising health care costs. Brown described the negative impact on homeownership from the TCJA $10,000 limitation on the state and local tax (SALT) deduction. Eddinger expressed concern over the ability of students to afford community college, and Tirado described her struggles as a single mother with health costs and student loan debt. Only Berkebile painted the TCJA in a positive light, describing how it allowed him to increase salaries and bonuses for his employees and bring on a new hire. Chairman Thompson asked Zandi about reports of smaller tax refunds, and suggested that may have resulted from manipulating withholding rules to increase paychecks following enactment of the law. Zandi agreed with that notion and said refunds are 5%-10% lower, to the surprise of some taxpayers, and may result in some economic struggles, including for retailers. The comments came amid a broader partisan debate over whether smaller reported refunds provide any indications about taxpayers' overall liability. Addditionally, Zandi criticized the TCJA for being deficit-financed, saying while the previous corporate tax rate 35% was too high, a reasonable reduction would have been to 28% and paid-for with tax revenue elsewhere. Under questioning from Rep. Lloyd Doggett (D-TX), he said future tax cuts should be paid for. Rep. John Larson (D-CT) repeated Democratic concerns that they were shut out the development of the TCJA, and focused on the $10,000 SALT cap, suggesting the limitation for residents of his and other states subsidizes the tax law's rate reductions for higher-income individuals and corporations. Full Committee member Rep. Bill Pascrell (D-NJ) this week introduced a bill (H.R. 1142) to repeal the SALT limitation and restore the 39.6% individual income tax rate bracket. Pascrell appeared at the hearing to, like Larson, argue that Republicans financed tax cuts for top earners by robbing states of the SALT deduction. Rep. Suzan DelBene (D-WA) focused on affordable housing, saying many Americans spend more than 50% of their income on rent and are left struggling. Zandi said steps need to be taken regarding affordable housing or middle class families will fall increasingly behind, and it affects the job market because in some areas people can't afford to live where available jobs are. Rep. Jodey Arrington (R-TX) pushed back against the narrative that the TCJA disproportionately benefited the wealthy and said the law provided incentives for businesses to hire and increase compensation for their workers. Opening statements are attached. Witness testimony is here.
Document ID: 2019-0351 | |||||
