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Seven Key Moments – Hearing with Treasury Secretary Yellen

May 02, 2024

WASHINGTON, D.C. – President Biden’s plan to enact the highest tax increase in American history is completely backwards and will hurt workers, families, farmers, and small businesses already reeling from “Bidenomics,” warned Ways and Means Republicans in a hearing with Treasury Secretary Janet Yellen. The President’s proposed budget breaks his pledge to not raise taxes on Americans making less than $400,000. The hearing came a week after President Biden publicly promised to allow the Trump tax cuts to fully expire in 2025. 

Instead of helping working Americans facing high prices and putting the economy on a stable footing at home, the Biden Administration is making things worse – even giving taxpayer dollars to foreign governments. In particular, members warned Secretary Yellen against pursuing the global tax deal currently being negotiated by bureaucrats at the Organization for Economic Cooperation and Development (OECD) because it surrenders nearly $200 billion of U.S. profits to foreign governments, cedes America’s competitive edge to China, and bypasses Congress’s constitutional authority.  

At the same time, Secretary Yellen’s Treasury Department has created a loophole that will allow Chinese billionaires and manufacturers to receive special interest “green” tax handouts, courtesy of American taxpayers. 

“Principles” but No Plan: President Biden’s Approach to Hiking Taxes on Working Families

In recent congressional testimony, Secretary Yellen admitted President Biden has no “plan” for the looming 2025 tax hike. In his opening statementWays and Means Committee Chairman Jason Smith (MO-08) laid out the consequences for workers, families, farmers, and small businesses if the Trump tax cuts are allowed to expire. Secretary Yellen admitted that President Biden has “principles,” but no plan other than to allow the Trump tax cuts to expire and watch taxes go up on hardworking Americans.

Chairman Smith: You testified at the [Senate] Finance Committee last month. You said, ‘The President does not have a plan,’ to address the coming tax hikes. That was at the Senate Finance Committee last month. Isn’t it true that without a plan, the President would slash the Child Tax Credit in half, which means parents lose $1,000 from their pocket books for each child each year?”

Sec. Yellen: The President has principles that will guide his negotiations with Congress over how to handle this.” 

“I Need to Get Back to You On That”: Biden Administration’s Response to Helping Small Businesses 

Small Mom-and-Pop businesses rely on a 20 percent tax deduction, commonly referred to as 199A, in order to be competitive with large corporations. In 2019 alone, this deduction saved small businesses $66 billion and helped pave the way for the booming pre-pandemic economy. This deduction is an obvious win for small businesses, yet when asked about it by Rep. Vern Buchanan (FL-16), Secretary Yellen followed President Biden’s lead and refused to commit to protecting small businesses.

Rep. Buchanan: “As I look across Florida, a lot of these small- and medium-sized businesses, they do make $600,000, but they don’t take home $600,000. They take home $100,000 or $150,000 or $200,000. They leave the capital there to grow and build their business. That’s the reality and where that’s at. What’s your thoughts?”

Sec. Yellen: “As I said, I think the President feels it is important to tax those who are earning very high incomes at higher rates.”

Rep. Buchanan: One big thing is 199A. Where are you at on that? You gonna let that sunset? 199A is a 20 percent [deduction] for a pass-through entity.

Sec. Yellen: I’m not…I need to get back to you on that.”

Rep. Buchanan: That’s critically important. We went from corporate rates from 35 percent to 21 percent, but you can’t have passed through rates at 40 percent. It makes no sense…” 

Why Is the Biden Administration Surrendering America’s Economic Strength?

The Biden Administration’s global tax surrender gives up American tax dollars to foreign countries. The scheme unfairly targets American companies, whose profits represent 70 percent of the profits that will be reallocated to be taxed by foreign governments. As the Administration nears the end of negotiations, Tax Subcommittee Chairman Mike Kelly (PA-16) reiterated the need to work with and consult Congress before the Biden Administration agrees to any part of the global tax deal.

Rep. Kelly: I hate to see us keep giving up authority, and the negotiations taking place on the executive branch and then being run through the Congress at a later date. All I’m asking you to do is to commit; we need to know what’s going on and what’s taking place. I don’t like giving anybody a pen to go ahead and sign on to something in a global tax initiative. It just doesn’t make sense to me, and I think it’s totally unconstitutional. In fact, it’s just not the right way to do things.”

Green New Deal Tax Breaks for Billion-Dollar Corporations Doesn’t Make Sense

One of Democrats’ favorite talking points is that the wealthy should “pay their fair share,” yet the Democrats’ Inflation Reduction Act was stuffed with handouts for billion-dollar companies. Businesses with over $1 billion in sales receive more than 90 percent of special interest green energy tax subsidies. Rep. Drew Ferguson (GA-03) highlighted how these tax breaks create loopholes for major corporations to escape paying taxes under the guise of fighting climate change.

Rep. Ferguson: “If you’re gonna go down that road, and you’re gonna say the companies lack tax liability – Why are we doing it on green energy and not looking at pharmaceuticals, not looking at other technology. Why wouldn’t we just say to Amazon…they are a highly profitable company. Why not just say, ‘you’ve got to pay your taxes, and then you go buy a fleet of battery powered vans if you want to.’ You’re [the Biden Administration] cutting revenues. You’re giving a tax break to the very people that my colleagues on the other side of the aisle are saying have to go. They want them to pay their fair share, but they’re not going to pay their fair share because…of this green energy deal that absolutely undermines our competitiveness. It doesn’t make sense. The math doesn’t add up.”

Biden’s Corporate Tax Hike Is a Gift to the Chinese Communist Party

Since the 2017 Trump tax cuts lowered the corporate tax rate to 21 percent, America has not experienced a single corporate inversion where an American company shipped its assets, jobs, and cash overseas for better tax treatment. President Biden’s budget would raise the corporate tax rate to 28 percent, a level higher even than that of China. This rate would keep America reliant on China for critical goods like drugs and their ingredients. Rep. Brad Wenstrup (OH-02) pointed out that lowering the corporate tax rate goes hand in hand with reducing America’s reliance on China.

Rep. Wenstrup: The President’s budget proposes increasing the corporate tax rate to one of the highest in the world, even higher than Communist China, which will make it much harder to bring manufacturing home from China and to meet your desire to de-risk from the PRC [People’s Republic of China]. One example: the Chinese have a monopoly on generic medication, all the way down to the active pharmaceutical ingredients. How do we break that monopoly and reduce our health risk, our national security risk, by increasing corporate tax rates, making us unable to compete? Are you against or are you for domestic supply chain production to enhance our national security and our national health security for our critical needs? I just don’t see how increasing the corporate tax rate, making us less competitive in the world, is going to bring business back to the United States where we need it most.

Sec. Yellen: “I certainly agree with the goal of having resilient supply chains. The idea of ‘friendshoring’ means we’ll work with trusted allies, in addition to sourcing domestically. In the case of critical drugs, certainly, I think that’s an area where it’s important that we have domestic capacity and are not totally reliant on China and other countries that may not prove dependable in the future…”

Rep. Wenstrup: Who are we going to depend on then? If we’re increasing our corporate tax rate, that doesn’t make us more competitive. Are we going to rely on our allies to reduce theirs? Is that the idea? This just makes no sense.”

Sending American Green to Communist China for “Green” Electric Vehicles

Secretary Yellen’s Treasury Department created loopholes allowing Chinese billionaires and manufacturers, with likely ties to the Chinese Communist Party, to take American taxpayer dollars to build electric vehicle parts. Last month, the Ways and Means Committee passed Rep. Carol Miller (WV-01)’s legislation to close each of these loopholes. By opening the door for Chinese dominance of America’s electric vehicle market, Democrats have shown there is no price they aren’t willing to pay in chasing their extreme environmental agenda.

Rep. Miller: “I’ve introduced two bills, the Protecting American Advanced Manufacturing Act and the End Chinese Dominance of Electric Vehicles Act to improve on the foreign entity of concern definitions for the 45X and the 30D tax credits respectively. The current agreements establish a dangerous precedent that will take the U.S. decades to reverse by creating a future where our automotive and other industries are heavily reliant on foreign technologies. Without immediate passage of both of my bills, Chinese entities will receive billions of American tax dollars every single year. Secretary Yellen, yes or no, does the Biden Administration support taxpayer dollars funding Chinese entities?”

Sec. Yellen: “When it comes to electric vehicles, the IRA, which obviously the Administration supports, has foreign entities of concern restrictions coming into effect this year and next, which will severely curtail, almost prevent entirely participation of Chinese firms in producing components, or minerals, or processing that go into batteries…”

Rep. Miller: That’s not yes or no.

Yellen Admits Biden Administration Picks “Winners and Losers”

President Biden’s budget is the latest battle in the Democrats’ war on American energy and proposes a $120 billion tax hike on American energy producers. This would raise energy prices further, make America more dependent on other nations for our energy, and embolden our economic competitors. At the same time, Democrats’ Inflation Reduction Act is spending hundreds of billions of taxpayer dollars to advance Democrats’ Green New Deal agenda. In response to Rep. Beth Van Duyne (TX-24), Secretary Yellen admitted that the Biden Administration deliberately picks “winners and losers” and sees American fossil fuels as an “existential threat.”

Rep. Van Duyne: “Do you really believe that oil and natural gas production is detrimental to the long-term energy security?…Weren’t you doing that with Green New Deal policies? Giving preferences? Picking winners and losers?”

Sec. Yellen: We pick winners and losers, but they have to be ones that are positive for what is an existential threat.”

Rep. Van Duyne: “So you believe then that the oil and gas natural production is an existential threat and that it is somehow better to cut all of that production for our long-term energy security.”