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Six Key Hearing Moments – Expanding on the Success of the 2017 Trump Tax Cuts

April 12, 2024

WASHINGTON, D.C. – Ahead of the expiration of key components of the Tax Cuts and Jobs Act in 2025, the Ways and Means Committee is examining pro-growth and pro-family policies to determine how best to build on its success. Under the 2017 Trump tax cuts, real median household income increased by $5,000 and real wages rose by 4.9 percent in the two years after the legislation was signed into law. The economy grew an entire percentage point faster than projected, and the trend of American companies leaving the United States to set up headquarters in other parts of the world came to an end.

If the Trump tax cuts are not extended, working Americans would face a record tax hike and the economy would suffer in the years to come:

  • Starting in 2026, the average family of four making $75,000 will see their taxes increase by $1,500 if Congress does not take action. 
  • Main Street businesses will face a 43.4 percent tax rate.
  • Working parents will suffer from a Child Tax Credit slashed in half.
  • More family-owned small businesses, farms, and ranches will be hit by the death tax and forced to sell land and other assets to pay a big tax bill.

While Congress is debating how to protect working families from higher taxes and help American businesses better compete, grow, and create jobs, President Biden’s latest budget proposes $7 trillion in tax hikes on families, farmers, and small businesses.

Facts Are Facts: Trump Tax Cuts Benefited Working Families

After President Trump signed the 2017 tax relief into law, American workers and families paid less in taxes and had more money in their pocket. In his opening statement, Ways and Means Committee Chairman Jason Smith (MO-08) highlighted the fact that low- and middle-income Americans were major winners from the Republican tax cuts. 

Chairman Smith: “In the first two years after passage of that tax relief, real wages grew nearly 5 percent – the fastest growth in 20 years. Real median household income increased by $5,000, a bigger gain than the prior eight years combined. The officially reported poverty rate dropped to its lowest level in U.S. history, and black and Hispanic unemployment reached historic lows.

“I expect my colleagues will use the same talking points about that bill being all about tax breaks for the wealthy. But the truth is the Congressional Budget Office found that the 2017 tax law increased the share of taxes paid by the top one percent of households while reducing the burden paid by lower income earners. As a result of the Tax Cuts and Jobs Act, Americans earning under $100,000 received an average tax cut of 16 percent. Facts are clearly facts.

Democrats’ Death Tax Spells Death for Family Businesses

The Tax Cuts and Jobs Act doubled the exemption for the death tax, allowing more family-owned businesses, farms, and ranches to pass on from one generation to the next. As Rep. Adrian Smith (NE-03) noted, Democrats routinely target family-owned businesses and farms for higher taxes. In his budgets, President Biden has proposed applying the death tax to more families and small businesses as well as repealing stepped-up basis. A Wisconsin family-owned small business owner shared that Democrats’ proposed tax increases would force the closure of family businesses that are the economic foundation for many communities.

Rep. Smith: “Mr. Ramirez, I certainly appreciate your personal story of your father leading the way to buy a business that he was working in, employing local workers. I certainly appreciated that you called out the importance of the increased death tax exemption for helping keep family businesses local and family-run. I think it is a good priority. The same is true, I would add for farmers, ranchers and family-owned manufacturers. In my own district, I hear from them all the time, especially as it relates to this. Now, a recurring tax proposal from the Biden Administration is the repeal of the stepped-up basis. It would be just as detrimental to family businesses, especially taxing supposed gains on the value of your family business, which you’ve never actually realized. Could you discuss what the repeal of the stepped-up basis would look like as you think about the future of your business?”

Austin Ramirez, Wisconsin small business owner: “I think family businesses are an indispensable part of the U.S. economic system. We take long investment horizons; we invest in our communities; we have consistency of leadership. You want policy that encourages multi-generational family businesses, and both stepped-up basis and the death tax do the opposite, and make it more difficult for families to maintain businesses and have these entities passed from one generation to the next.”

“Greatest Abuse of the Constitution”: Biden Surrendering Tax Authority to Foreign Countries

The Tax Cuts and Jobs Act ended the decades-long trend of U.S. companies shipping operations, headquarters, and jobs overseas. The law lowered the corporate income tax from one of the highest levels in the world, which led to an increase in investment by 20 percent in the years after TCJA. The Biden Administration’s global corporate minimum tax that it is negotiating with foreign countries would unfairly surrender taxing authority over American business income to those countries and rob $120 billion in tax revenue from the United States. Tax Subcommittee Chairman Mike Kelly (PA-16) highlighted how Biden’s global minimum tax violates the Constitution by going around Congress to pass a policy that hurts American businesses and workers.

Rep. Kelly: “Could you explain the global corporate minimum tax and how it circumvents the Constitution?”

Sen. Gramm: “This is the greatest abuse of the Constitution of the United States in my lifetime was President Biden going to Europe and negotiating a minimum corporate income tax and giving them the power to tax corporate income in America…It was extortion committed against the Congress. I can’t imagine any day that I served in the House and Senate, any president, Republican or Democrat, that I would not have opposed that circumvention of the Constitution. This global corporate minimum tax is an extraordinary abuse, which every member of Congress ought to be against.”

Protecting Working Families in a Time of Bidenflation

Contrary to Democrat talking points, middle-class families benefited substantially from the Trump tax cuts. If the lower individual income tax rates expire and are allowed to rise, the average family of four earning $75,000 would pay $1,500 more in taxes. The tax hike would come on top of Bidenflation that has cost middle-class families more than $1,000 every month. Rep. David Schwiekert (AZ-01) noted that the Trump tax cuts cut taxes for working families.

Rep. SchweikertWe need regulatory changes and we have to change the cost of delivering health care. Walk me through one more time: what does your [tax] base broadening look like?”

Dr. Paul Winfree, federal budget expert“One of the things that we have not talked about today is that the thing that is expiring next year are the individual rates. And one of the reasons why the 2017 tax bill was popular at the time and I think still continues to be popular with the middle class is that it lowers rates and it also increases the standard deduction, which decreases the number of itemizers in the tax code and that, that itself again brings more people to the table. I’m not speaking just as a budget and tax policy guy here. I’m speaking as an American. I think that if we allow those tax cuts to go away on the middle-class next year after we’ve seen again the hidden tax of inflation increase over the last few years, there will be political repercussions to that.

Small Businesses Could Face 43.4 Percent Tax Rate Without Action

The Tax Cuts and Jobs Act created a 20 percent deduction for small businesses that helped Main Street businesses expand, hire more employees, and invest more in their communities. If this provision expired, small businesses could face a 43.4 percent tax rate. Rep. Lloyd Smucker (PA-11), author of legislation to extend this deduction, otherwise known as Section 199A, asked a small business owner how his company would be impacted by a potential expiration.

Rep. Smucker: “Mr. Ervin, I know you mentioned this, but could you expand on how a 43.4 percent tax rate would potentially impact your business if we do not make 199A permanent?”

Michael Ervin, West Virginia small business owner: Simply put: ultimately, a ‘Closed’ sign would go up in my window, and not only in my window, but on the windows of most of the other businesses on my street if we had to pay that.

Trump Tax Cuts Record: Zero American Corporations Moved Offshore

The Trump tax cuts ended the decades-long trend of American companies moving their headquarters, intellectual property, and cash to foreign countries. The law made the United States’s corporate income tax rate more competitive with other countries, which kept businesses at home and attracted a 20 percent increase in new investment. Rep. Randy Feenstra (IA-04) drew the connection between a more competitive corporate rate and more jobs for Americans.

Rep. Feenstra: Between 1983 and 2015, we had 60 companies that inverted and moved their headquarters to another country. This trend was continuing on until the Tax Cuts and Jobs Act. After that, we’ve had zero —zero — inversions…We’ve actually had companies that were offshore move onshore with their intellectual property, cash, and jobs…These corporations actually create jobs, and they moved on shore. That’s the difference here when we talk about the Tax Cuts and Jobs Act.”