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April 12, 2024

Ways & Means holds TCJA hearing

The April 11 House Ways & Means Committee hearing, "Expanding on the Success of the 2017 Tax Relief to Help Hardworking Americans," featured a relitigating of the benefits of the Tax Cuts & Jobs Act (TCJA) between Republicans and Democrats that has been ongoing since its 2017 enactment and juxtaposition of the TCJA with the Inflation Reduction Act (IRA), which Democrats celebrate but Republicans derided as subsidizing businesses under the guise of fighting climate change. There was also discussion of the pending business tax and Child Tax Credit (CTC) bill and OECD-led global tax agreement.

Chairman Jason Smith (R-MO) said the IRA includes tax subsidies that go to companies with over $1 billion in sales and EV tax credits predominately claimed by households earning six figures. "Democrats want to blame the 2017 tax cuts for adding to the debt while ignoring the $10 trillion they and President Biden spent during the first two years of total Democrat control of Congress," he said. Chairman Smith further said the TCJA is a "critical blueprint that Congress can build upon to make lasting improvements to our tax code," and said the Tax Relief for American Families and Workers Act (H.R. 7024) business tax and Child Tax Credit (CTC) bill represents progress by the Committee on "pro-growth and pro-family tax policies."

Ranking Member Richard Neal (D-MA) said little of the benefit of the TCJA went to workers, and instead it enriched executives and shareholders. "Democrats took a different path and now our economy is the strongest in the world … " he said. "Our investments in America's workers and families have powered this record growth: new jobs in clean energy and manufacturing, lower health care and energy costs, and holding wealthy tax evaders accountable."


  • Former Senator Phil Gramm, who was on the Finance Committee and is a regular contributor to the Wall Street Journal opinion section, lauded the benefits of the TCJA corporate tax rate reduction.
  • Dr. Paul Winfree, President and CEO, Economic Policy Innovation Center, said the nation's fiscal situation has deteriorated in recent years, making it more important to extend the TCJA tax cuts.
  • Michael Ervin, Founder, Coal River Coffee Company, advocated for extension of the Section 199A deduction, which he said has provided him funds to reinvest in the business.
  • Austin Ramirez, CEO, Husco International Inc., said pro-growth tax policy allows his company to invest in the business and create jobs, and described the negative effects of R&D 5-year amortization and the bonus depreciation phasedown.
  • Kathryn Anne Edwards, Ph.D., Labor Economist, said the TCJA's "clearest effects were increasing the incomes of the richest Americans and the largest year for stock buybacks in history at the time," and, "It did not significantly grow the economy or wages for the bottom 90% of workers."

During Q&A, Chairman Smith said the TCJA led to the lowest reduction in poverty in history. Referencing the Tax Relief for American Families and Workers Act (H.R. 7024) that passed the House but is stalled in the Senate, he said the CTC expansion needs to include work requirements. Rep. Danny K. Davis (D-IL) said it seems improper for the CTC to be denied to low-income families who don't meet work requirements. Edwards said not being able to afford childcare is a barrier to work. Rep. Ron Estes (R-KS) spoke about the harmful effects of R&D amortization versus expensing.

Rep. Neal asked about the distributional effects of the TCJA. Edwards said the top 1% saw a tax reduction of $61,000, and the benefit was much smaller for those at the lower end of the income scale. She added that wealthier taxpayers who benefit most from tax cuts are the least likely to urgently spend the extra money. Neal opined that Republicans typically complain about spending when there is a Democrat in the White House but focus on tax cuts under GOP presidencies.

Rep. Adrian Smith (R-NE) said there is a demonization of prosperity, but the tax code depends on prosperity to pay the nation's bills. He focused his questioning on proposals to repeal stepped-up basis. Ramirez said the proposal would make it more difficult for multigenerational family businesses. Gramm spoke against proposals to repeal stepped-up basis.

Rep. Lloyd Doggett (D-TX) said the hearing illustrates that the US has two paths before us: continuing tax cuts to increase the debt under GOP leadership or the 'fair share' tax policies promoted by Democrats. He asked whether tax cuts for corporations trickle down to the working class. Edwards said it shouldn't be so difficult to find benefits for workers from a $2 trillion tax cut advertised as being beneficial to average Americans. Rep. Doggett also said a global minimum tax that stops the race to the bottom is the right way to go for the future.

Rep. Mike Kelly (R-PA) also asked about the distribution of TCJA benefits. Gramm said cutting taxes allows job creators to expand their businesses. He said he doesn't understand the displeasure over those who don't pay taxes not benefiting from tax cuts — they are for taxpayers. Kelly further asked about the proposed global minimum tax. Gramm said Treasury's involvement in the global minimum tax process is an abuse of constitutional authority.

Rep. Kevin Hern (R-OK) said the Biden administration has proposed "massive corporate tax hikes" and committed the nation to a global tax agreement that could diminish US competitiveness. He said Congress must approve any such major tax changes and that is made clear in the Constitution. Gramm said no treaty has passed and no law has implemented the global minimum tax, but the Administration is allowing other nations to tax US companies.

Chairman Smith's statement is available here.

Ranking Member Neal's statement is available here.

Testimony from the hearing is available here.

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Contact Information

For additional information concerning this Alert, please contact:

Washington Council Ernst & Young

  • Any member of the group at (202) 293-7474.