Republicans on the House Ways and Means Committee, the House’s main tax committee, said at a hearing Tuesday that millions of small businesses in the U.S. will be hit hard if Congress allows the tax cuts from President-elect Trump’s first term to expire. He pointed out that it would be beneficial. higher than the tax rate paid by small businesses in communist China.
Tuesday’s hearing began a debate in the new Congress over how to handle Trump’s expiring tax credits, a key provision set to expire later this year. Among these important provisions is a new 20% tax credit introduced by President Trump in 2017, known as Section 199-A, for qualified trade or It provides tax deductions for business expenses.
But if President Trump’s Section 199A deduction expires later this year, small business owners could see their top tax rate more than double to 43.4%, the same rate that businesses in communist China face. That’s about 20 points higher, said Rep. Johnson, who chairs the Ways and Means Committee. Republican Jason Smith of Missouri explained this in a report earlier this month and reiterated it during Tuesday’s hearing.
“If Congress does not act…26 million small businesses will be hit with a top tax rate of 43.4%, more than 20 percentage points higher than the tax rate paid by businesses in communist China,” Smith said on Tuesday. Ta.
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Rep. Jason Smith (R-Missouri), chairman of the House Ways and Means Committee, will speak at a hearing Tuesday about making President Trump’s tax cuts permanent. (Home Ways and Means)
Smith’s concerns were echoed by other Republicans on the committee during Tuesday’s hearing.
“I think my colleagues would like to go back to the days when taxes were higher than in communist China,” said Rep. Jodi Arrington (R-Texas). “What’s pro-American about that? How do you achieve economic growth, job creation, and prosperity with such a tax rate? We lowered the tax rate to 21%, but the top quartile of the most competitive taxes So my colleague probably wants to go back to the highest business tax rate in the free world. ”
Rep. Kevin Hahn (R-Okla.) added, “The 21% tax rate in the United States becomes 25% when you add up the average state tax rate across the country.” “Economically our biggest enemy in the world, no one can match it, is China at 25%.”
Rep. Jody Arrington will address the full Ways and Means Committee on Tuesday about what should be done about the expiring Tax Cuts and Jobs Act, passed in 2017 under the Trump administration. (Revenue Committee)
Allison Couch, founder of Ignite Accounting and one of the witnesses at Tuesday’s hearing, called 199-A “the single most beneficial deduction for small business owners.”
“Allowing this long-standing deduction to expire would feel more like a tax increase than a sunset,” Couch said in a statement Tuesday from global accounting firm Ernst & He also submitted a report to the Congressional Record at the public hearing. Young noted that 25.9 million small businesses in the United States take advantage of the 199-A deduction.
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Other provisions that Republicans and TCJA-supporting witnesses sought to make permanent during the hearings include strengthening President Trump’s child tax credit, which doubles the amount parents are eligible for; Death tax reform, which doubles the amount that can be earned, lowers marginal tax rates for individuals, and one witness said Tuesday that the measure led to an increase in workers’ take-home pay.
Close-up woman filling out personal income tax return form. (St. Petersburg)
But Democrats at the hearing argued that President Trump’s tax cut extension would benefit the ultra-wealthy more than anyone else. They also argue that Republicans are ignoring the impact of the deficit and have not offered adequate solutions for how to pay for the extended cuts, arguing that increasing the deficit will lead to higher interest rates and lower costs for the middle class. He pointed out that this could lead to an increase in economic growth and a decline in economic growth.
“There’s no free lunch here,” said Brendan Duke, senior director of economic policy at the left-leaning Center for American Progress. “Tax cuts are likely to be paid for eventually in the form of spending cuts or tax increases. In the meantime, continued or even higher deficits could mean continued or even higher interest rates. That makes mortgages, student loans, and credit unaffordable for working people. ”
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“Republicans have relied on tariffs to offset tax cuts for the ultra-wealthy, and the tax burden will continue to be skewed toward a few corporations.” [Republicans want to protect]” warned Democratic Texas Congressman Lloyd Doggett. “The biggest loss in their overall plan will be our debt, but the impact it has on the solvency of Social Security, Medicare and other investments is also very significant. So as we move forward, must consider all of these impacts and look for a tax code that is fairer to working Americans, rather than a gift to the top.”
Congressman Lloyd Doggett (D-Texas) pauses to speak with reporters inside the tunnels beneath the U.S. Capitol. (Photo by Bill Clark/CQ-Roll Call, Inc via Getty Images)
In response to the battle in Congress over the expiration of tax cuts, the fiscally conservative political advocacy group Americans for Prosperity urges lawmakers on Capitol Hill to “protect prosperity” by restoring President Trump’s tax cuts. Launched a $20 million campaign.
The campaign will include ads in all 50 states, as the group says Congress “faces a countdown to a crisis that threatens the household finances of virtually every American.” Notably, Americans for Prosperity supported Trump’s presidential candidate, Nikki Haley, before Trump became the Republican nominee.
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