On April 11th, 2024, the House Committee on Ways and Means held a hearing entitled “Expanding on the Success of the 2017 Tax Relief to Help Hardworking Americans,” with the intent to discuss the impacts of the Tax Cuts and Jobs Act (TCJA), enacted by former President Donald Trump, and consider upcoming 2025 tax policy. Chairman Jason Smith (R-MO), led the hearing by highlighting statistical outcomes of the TCJA that, he emphasized, contributed to “creating the best economy in our lifetime.” According to Chairman Smith, U.S. median household income grew by $5,000 within the first two years of TCJA implementation, as well as the Congressional Budget Office (CBO) found that “Americans earning under $100,000 received an average tax cut of 16%.” The Chairman also continued to take aim at President Biden’s budget and spending.
Significant division and contradicting viewpoints regarding the TCJA were the main focus of the congressional hearing. Several witnesses and congressional members insisted on the various economic benefits that United States individuals saw after enactment of the Tax Cuts and Jobs Act. Witness Senator Phil Gramm (R-TX), Former Chairman, Senate Committee on Banking, Housing, and Urban Affairs, emphasized the dramatic positive change seen in median household income and the poverty rate. Mr. Michael Ervin, Founder of Coal River Coffee Company, noted that the small business deduction allowed him to invest more significantly in both his business and surrounding community. Meanwhile, Congressman Richard Neal (D-MA) voiced how the tax law did not contribute to increased wages or revenue, but rather a majority of corporate tax gains benefitted shareholders and high paid executives. Congressman Neal’s (D-MA) statement was supported by Dr. Kathryn Anne Edwards, a labor economist, who emphasized that the bottom 20% saw only a 0.4% raise from the tax cut and the middle 20% received an increase in income after tax that was 67 times lower than that created for the top 1%.According to Dr. Edwards, there was “no discernable wage increase for the bottom 90%” as a result of the TCJA and many of the tax laws’ benefits reigned from trends set by the growing economic recovery since the 2008 recession.
Child wellbeing as related to national policy and the economic or employment sectors was also a prominent topic. Although TCJA doubled the Child Tax Credit (expressed by Congresswoman Malliotakis (R-NY)), the Congressional Budget Office concluded that the 10-year estimated cost of the TCJA was between $1.9 and $2.25 trillion, 25% higher than the fully refundable and expanded Child Tax Credit (CTC) (discussed by Dr. Edwards).The expanded CTC, formerly enacted in the American Rescue Plan, aided in reducing child poverty in the United States by about 50%.
Congressman Danny Davis (D-IL) highlighted that the trillions of dollars that the enactment of the TCJA cost, if diverted, would have assisted in reducing child poverty and increasing parental obtainment of other necessary resources/programs that combat consistent barriers to entering the labor force (a main point in Dr. Edward’s beginning remarks). Dr. Edwards provided a key outlook on the impact the about $2 trillion would have had on benefitting United States families and addressing existent employment barriers. The cost of the TCJA consisted of enough money to individually fund a universal childcare and preschool program in the United States five times over, or universal paid family leave and medical leave for every U.S. worker eight times over. She noted that the United States is “in a different century than our peers in how we treat working parents” and that childcare, paid family leave, and other essential parental or child services would increase labor force participation. Congresswoman Linda Sanchez (D-CA) expressed similar views in the beneficial investment towards child and family resources leading to greater economic growth without the need for financial intermediaries such as employers. Meanwhile, despite such barriers, a Child Tax Credit work requirement was proposed by Chairman Jason Smith (R-MO).
Overall, the “Expanding on the Success of the 2017 Tax Relief to Help Hardworking Americans” congressional hearing allowed individuals from both sides of the aisle to express their differing views of the Tax Cuts and Jobs Act of 2017 and the tax laws’ economic impact.
By Emmalyn Walenda, Policy Intern
