The House Budget Committee chair has suggested a corporate tax rate increase as congressional Democrats actively look to repeal and revamp Republicans’ tax reform.
The committee held a February 27 hearing to examine the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97), in which Chairman John Yarmuth, D-Ky., criticized the GOP tax law.
“Under the Republican tax law, nearly all of the tax cuts are going to the top one percent and corporations,” Yarmuth said in his opening statement. “For American families this law is a huge and predictable failure. For the federal budget it’s a huge and predictable drain,” he added. Also, Yarmuth stated that a corporate tax rate increase would be prudent, though chose not to specify an exact percentage.
Further, each of the three Democratic-chosen witnesses criticized the TCJA for disproportionally benefiting corporations and wealthy taxpayers. Moreover, William G. Gale, co-director of the left-leaning Urban-Brookings Tax Policy Center (TPC), told lawmakers that the TCJA was “poorly drafted” and comprised of “complicated tax changes.”
Gale highlighted some of the following criticisms of the TCJA in his testimony:
- minimal effects on long-term economic growth;
- provides disproportionately large benefits to high-income households; and
- exacerbates federal deficit issues.
However, Republican members of the House Budget Committee referenced several “real world” examples of how the TCJA has positively impacted small businesses. To that end, committee ranking member Steve Womack, R-Ark., said that lawmakers should be hearing more from small business owners rather than tax policy experts who merely study the law.
Lana Pol, the only small business owner on the witness panel, praised the TCJA while testifying on behalf of the National Federation of Independent Business (NFIB). “The [TCJA] provided tax relief that allowed us to invest in our employees with raises and our businesses with a significant facility expansion and new vehicles,” Pol testified. “We are not alone. Record levels of small business owners are increasing employee compensation,” she added.
Notably, Pol suggested that Congress make permanent the individual and small business TCJA provisions that are scheduled to sunset after 2025. These TCJA provisions were enacted temporarily in large part because of certain Senate budget rules.
Several Democrats have criticized Republicans for making corporate tax cuts permanent while enacting temporary tax cuts for individuals and small businesses. However, House and Senate Republican tax writers are pushing for making permanent the individual and small business provisions.
Little to no movement is expected on that legislative effort in the currently divided Congress.
By Jessica Jeane, Senior News Editor