Chairman Smith: “Interest rates remaining at a 23-year high is another sign that Congress should be providing relief for working families and small businesses hammered by high prices and the interest rates that come with fighting inflation.”
WASHINGTON, D.C. – Ways and Means Committee Chairman Jason Smith (MO-08) released the following statement after the Federal Reserve kept interest rates at the highest level in 23 years:
“Interest rates remaining at a 23-year high is another sign that Congress should be providing relief for working families and small businesses hammered by high prices and the interest rates that come with fighting inflation. The tax relief package that passed the House with overwhelming support puts the needs of small businesses and workers front and center. Small businesses will benefit from $600 billion of tax incentives that give them a fair shot at growing and expanding their business, including meeting payroll and creating jobs. Higher wages and more job opportunities will give working parents an easier time at keeping up with the continued surge in prices on seemingly every basic good. Pro-worker, pro-family policies in the Tax Relief for American Families and Workers Act will go a long way to helping financially stretched working families and small businesses.”
Restoring Full Interest Deductibility
The highest interest rates in 23 years are making borrowing too expensive for American families and small businesses. The Tax Relief for American Families and Workers Act restores interest deductibility based on earnings before interest expenses, taxes, depreciation, and amortization for small- and mid-sized businesses.
- TCJA Record: In the first two years after TCJA, companies increased their capital investment by 17 percent while cutting their debt by 35 percent.
- Biggest Winner – Small Business: Small businesses spend six percent of revenue on interest expenses, compared to two percent for large businesses.
- More Jobs and Higher Wages: This fix will generate 867,000 jobs and $58 billion in additional take-home pay, helping workers stuck in an uncertain economy.
- Strengthen American Competitiveness: Ensures that the United States is a competitive location to hire, invest, and grow for manufacturing, energy production, and other critical industries.
Restoring Expensing for Research and Development
Under the Tax Relief for American Families and Workers Act, American companies will be able to immediately deduct U.S.-based R&D costs, restoring American competitiveness and innovation.
- TCJA Record: Following the enactment of TCJA, R&D investment grew by 18 percent with $2 trillion invested in new facilities and research and development activities – the highest level on record. When looking at the five years prior, R&D investment was stagnant, growing at less than a point a year at just 4.7 percent.
- More American Innovation: Economic analysis shows that restoring this provision will preserve over $70 billion in R&D investment over the next decade.
- Compete Against China: Chinese companies get a 200 percent “super deduction” for R&D costs, while the United States is one of only two developed nations requiring businesses to spread out R&D expenses.
- Lower Taxes: Losing the immediate deduction has led to higher tax bills for small, hardworking businesses – forcing them to slow their growth, reduce their workforce, or borrow funds to pay big tax bills to the IRS.
- Help “Blue Collar” Industries: 55 percent of R&D deductions are claimed by U.S. manufacturers.
Expanding 100% Expensing
Under the Tax Relief for American Families and Workers Act, employers will be able to fully deduct the cost of capital investments in equipment, machinery, and facilities, that make American businesses more innovative and productive.
- TCJA Record: Under TCJA, investment in American businesses changed course, growing 20 percent when previously U.S. companies had been cutting investment.
- Invest More in America: Making full expensing permanent would increase investment by $400 billion, boosting orders for equipment and machines from American manufacturers.
- Create Jobs: According to economic analysis, 73,000 new jobs would be created by permanent expensing.
- Increase Wages: Wages would increase by 0.3 percent because of permanent expensing, taking some of the sting out of high prices for working families.
- Help Small Business Productivity: Lowering the cost to purchase new equipment gives small businesses a boost in productivity.
- Cut Dependence on China: Full expensing further incentivizes American companies to bring their manufacturing facilities and operations back to the United States.