Tax Reform: “I see nothing but benefits for the worker.”

May 17, 2018 — Blog   

The House Ways and Means Committee, chaired by Rep. Kevin Brady (R-TX), held a hearing on “Tax Reform: Growing our Economy and Creating Jobs.” This is the first hearing in a series on how the Tax Cuts and Jobs Act is already boosting our economy.

Chairman Brady said at the start of the hearing:

“In August of 2016, CBO projected that GDP growth would slow to 2.1 percent by the end of 2018. Our families and workers deserved better than that slow growth status quo. And now, thanks in large part to the Tax Cuts and Jobs Act, the economic outlook for America has dramatically improved. Already in the first quarter of 2018 we are seeing actual growth of 2.9 percent. And CBO projects that this will accelerate to 3.3 percent by the end of 2018.”

The Chairman added:

This dramatic departure from our 2 percent slow growth status quo has helped families gain confidence once again in the American DreamThat’s because economic growth means real change for real people.”

Throughout the hearing, Members heard testimony from tax experts and business leaders, several of whom testified before the Committee in 2017 about the need for pro-growth tax reform. These witnesses shared with the Committee how their businesses are now able to compete and how our workers are already reaping the benefits of the new tax code – only five months since the Tax Cuts and Jobs Act was signed into law.

Chairman Brady asked Dr. Douglas Holtz-Eakin, President of the American Action Forum and former Director of the Congressional Budget Office:

“Can you elaborate on how some of the changes that were made are helping drive higher investment than the previous forecasts that we saw?”

Dr. Holtz-Eakin responded:

“The plans that firms are announcing for their capital expenditures are at record highs. … We’re going to see more evidence of actual spending as the year goes on; but as the data could change quickly, they did—and they went in the right direction.”

Rep. Devin Nunes (R-CA) talked about the provision for full and immediate expensing for our businesses. David Farr, Chairman and Chief Executive Officer of Emerson and Chairman of the Board of Directors of the National Association of Manufacturers, said:

“We make investments based on productivity. … I think the focus is on productivity and driving the productivity of this country, which has lagged behind too long. That’s been the big issue behind global competitiveness. I think the focus was right on capital…you’re going to see a lot more investment coming in.”

Rep. Peter Roskam (R-IL) asked Zachary Mottl, Chief Alignment Officer at Atlas Tool Works, Inc., about how demand has increased for his business’ products as a result of tax reform:

“You said…your entire book of business in 2017 has now been your whole experience for 2018. Can you describe that?”

Mr. Mottl told Rep. Roskam that his company has already matched their entire sales of 2017 in just the first five months of 2018:

“It’s the demand picture that we’re seeing here. My business has booked as many orders, as much revenue, and we’re only in the second quarter. We’ve booked as much revenue as we did the entire last year.”

Mr. Mottl went on to say that his company has been able to expand wages and benefits for his workers:

“Last year we increased our 401(k) match… We gave a bonus at the end of last year. But I think the bigger picture, the long-term picture is the wage growth. We’re in a skilled workforce shortage here…I am desperate to not only keep the employees that I have, which means I need to pay them more…I also need to raise wages to hire good people.

I see nothing but benefits for the worker. A healthy employer leads to a healthy job for the employee, and my company in the years past when we were struggling, we couldn’t afford to do those things. Now we can, now we’re reinvesting.”

Rep. Vern Buchanan (R-FL), Chairman of the Tax Policy Subcommittee, asked what tax reform has meant for Main Street:

“What are you sensing and what are you seeing especially for smaller and medium sized businesses?”

Mr. Farr said local job creators are excited:

“Over…80 percent of our [businesses] are very positive about investing right now, very positive about hiring, very positive relative to increasing wages and the benefits. For the first time in a long time, we’re seeing the U.S. government trying to help business instead of hurting business.”

Rep. Erik Paulsen (R-MN) talked about how tax reform is creating a booming economy for workers in his home state:

“This is very important to a state like Minnesota. … There is a record level, high level of optimism, and the tax reform is actually cited as the reason for that optimism. And I’ve been hearing the same things from the folks back home in Minnesota, from the employers. It’s dozens of companies who have told me about new investments, and pay raises, and better benefits for their employees as they invest in their employees…all due to the Tax Cuts and Jobs Act. … Clearly, they’re getting more breathing room to invest and grow their businesses.” 

Rep. Kristi Noem (R-SD) echoed this, saying that tax reform is good for South Dakota farmers and ranchers:

“I constantly hear from people in South Dakota how beneficial the Tax Cuts and Jobs Act was to them, and still is today for their employees and their ability to expand their farms, their ranches, their small businesses.”

Rep. Carlos Curbelo (R-FL) asked:

“What can the average family…expect in the coming months? And what does this changing economy…do for them?”

Dr. Holtz-Eakin said:

“The most immediate impacts are things like the reduced withholding – they see more cash given the existing business climate. That’s just the tip of the iceberg. … They’ll also notice that the businesses that they work in are not so tight: they have the opportunity to hire more people or pay them better or expand their business, whatever it might be. You have a lot more confidence when the environment around you is a pro-growth environment.” 

The Committee looks forward to continuing this hearing series on the impact of pro-growth tax reform. On May 23, the Tax Policy Subcommittee will hold the second hearing in this series entitled “Tax Reform and Small Businesses: Growing Our Economy and Creating Jobs.”