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THE WOODLANDS, TX – Rep. Kevin Brady (R-TX), the Top Republican on the House Ways and Means Committee, today joined CNBC’s “Squawk Box.”
The Texas lawmaker discussed an op-ed he and Senate Finance Committee Chairman Chuck Grassley (R-IA) published in USA Today where the two tax writers pushed back on Democrats’ “Four Pinocchios” falsehood regarding worker’s tax refunds.
On The Size of Tax Refunds
Rep. Brady stressed that tax refunds fluctuate yearly, and that initial reports don’t reflect the entire picture.
“We’re a couple weeks into a very unusual tax filing season because of the partial government shutdown. Refunds vary from year to year, that’s natural. And it doesn’t even reflect the refundable credits like the earned income and the child tax credit that are an important part of these.”
“It has zero to do with your tax bill, zero to do with it. It is merely what you overpaid the IRS in your paychecks last year. Our thinking was in tax reform that most families live paycheck-to-paycheck, it’s best to drive that [relief] into their paychecks last year, starting in February and March, rather than delaying it a year. But, look, people can go at work and finetune how much they want in their weekly or monthly paycheck, what they want for their refunds. And maybe this conversation will spur more people to do that.”
A Simpler Tax Filing Process for Millions of Families
Rep. Brady also said that this tax season, millions of families will for the first time be able to use the simplest form available when filing.
“More than nine out of 10 Americans will be able to use the simplest form – we call it a postcard because that’s what it resembles. 4.5 million families won’t be doing their taxes twice with the AMT. And then with this full and unlimited expensing, a lot of small businesses won’t be caught – those are individuals, too – up in that maze of depreciation schedules. While we didn’t make it as simple as we had started out to do, we still made some pretty good strides.”
On Making the IRS a Taxpayer First Agency
Many on the Left are saying that the Internal Revenue Service needs more funding. Rep. Brady discussed the bipartisan work that was done in the House last year to redesign the IRS for the 21st century, and said we should work together to send those reforms to the President’s desk.
“We’ve always said if the IRS just sort of opens its books, is transparent, really focuses on customer service, more dollars will be coming – and I’m really comfortable with that approach. But look, the reason we passed out of the House last year almost unanimously the first restructuring of the IRS in two decades was really to redesign them toward customer service, toward taxpayer privacy, toward really a 21st-century agency. And I’m hopeful this year working with the new Democrat majority we can get that restructuring to the President.”
Rep. Brady also emphasized that the IRS needs to show lawmakers that it is currently using all tools currently at their disposal.
“Our belief for some time has been that the IRS is not using the resources it has at hand. In some cases there has been a political agenda, in other cases they really were distracted and diverted to implementation of the Affordable Care Act. We really think a refocus first will tell us what type of customer service we can get. And I will tell you, a lot of that tax collection that goes uncollected comes from an overly-complicated tax code. We hope with the new changes we made will actually be helpful in that area.”
On TCJA’s Impact on the Economy
Rep. Brady said that all the early signs are showing that the GOP Tax Cuts are working.
“Blue-collar employment is surging. Low-income workers are seeing their highest wages in a decade. Small business startups are skyrocketing. And I still believe at the end of the day, while revenues were relatively flat last year, even with the individual tax cuts we saw $105 billion more in individual and payroll taxes. Why? Because people were going back to work and they have higher paychecks – all of which, over time, I think will create more revenues.”
When pressed on the deficit, Rep. Brady said that it is spending, not revenues, that are driving our growing debt, stressing that lawmakers need to work together to fix it.
“It is on the spending side that drives the deficits. We did have, even with the tax cuts fully in place, relatively flat on the revenue side. And the difference between the 2 percent, old growth we were getting used to, and 3 percent for federal revenues is about $44 trillion more for federal coffers over time. We think growth matters. Unfortunately, the spending still continues at a higher rate. That’s where we have to get serious.”
A Call for Democrats to Focus on Growing Our Workforce, Not Merely Raising Taxes
When asked about some of the proposals from Democrats that call for taxes as high as 70 percent on families, Rep. Brady said that would be a step backward. He added that in order to continue growing our economy, lawmakers must focus on getting more people into good-paying jobs.
“Most people will say: ‘look, I’m not the wealthy. Go ahead and tax them,’ until you talk about the impact it has on the economy. I will tell you these decisions, we are moving back toward the bad old tax code. What I wish we were talking about is the greatest limiter to economic growth in America today: workers. Workforce ought to be our number one economic issue that every candidate and every elected official is talking about. It is slowing growth now, it will slow growth even further in the future, that is where we ought to be focusing.”
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