A pro-growth tax reform plan could lead to more job opportunities and increased business investment, corporate leaders told the House Ways and Means Committee last week during a hearing where members agreed that delaying comprehensive tax reform would harm U.S. workers.
The tax code hasn’t been overhauled for 30 years. Now, House Republican leaders are laying the foundation to reform the nation’s enormously complex tax code and its many pages of special interest loopholes and regulations. They want a simpler, fairer tax plan that would lower tax rates for individuals and businesses.
The House Ways and Means Committee is now working with the Trump administration and the Senate toward an agreement on tax reform legislation.
Ways and Means Chairman Kevin Brady (R-TX), and committee members U.S. Reps. Carlos Curbelo (R-FL), Lynn Jenkins (R-KS), Kristi Noem (R-SD), Erik Paulsen (R-MN), Peter Roskam (R-IL), Pat Tiberi (R-OH) and Jackie Walorski (R-IN) took part in the hearing focused on how tax reform will grow the economy and create jobs.
“All of our members—no matter what side of the dais you sit on—know that tax reform is an economic imperative. Now is the time to go bold and deliver real results for the American people,” Brady said.
Roskam, the chairman of the Subcommittee on Tax Policy, questioned witnesses about the importance of permanent, long-lasting tax policy versus a temporary, short-term option.
John Stephens, the chief financial officer at AT&T, told Roskam that permanent tax reform is important because it allows businesses to make “consistent, significant, material capital investments that allow for the demand for jobs, demand on our suppliers” and ultimately leads to higher wages.
Curbelo asked Stephens if tax reform would lead to “more and better jobs,” and Stephens replied that tax reform is “a jobs bill first and foremost.”
A report by the nonpartisan Tax Foundation found the tax reform blueprint proposed by House Republicans last year would lead to the creation of nearly 1.7 million new jobs nationwide.
Paulsen said he often hears from Minnesota companies about the importance of having major tax reform that is permanent, promotes investment and lowers rates.
“It will boost paychecks, it will increase jobs and it will grow the economy,” Paulsen said. “Regardless of whether it’s a large or small company, these businesses, and the men and women working there, will benefit from fixing a broken tax code.”
Tiberi questioned witnesses about what the cost of delaying tax reform would be for businesses.
David Farr, the CEO of Emerson Electric and chairman of the National Association of Manufacturers’ board of directors said, “The cost of delay means lack of innovation, less new products, and less jobs.”
“We look at how much growth there will be and we pare it back based on delay and every time it is delayed we push that investment out. So it does have an impact on people, how we hire, investment and new products,” Farr added.
Jenkins, meanwhile, raised questions about the administrative complexity of the tax code and its impact on small businesses during the hearing. She noted that businesses spend approximately 3 billion hours and $150 billion in tax compliance each year. Jenkins questioned business leaders about the need to trade the highly complex tax code for a more modern system that provides certainty and allows businesses to grow.
Given that it has been 30 years since former President Ronald Reagan led the last major tax code overhaul, Noem noted the significant number of loopholes and regulations that have been added to the tax code over time.
Certain provisions of the tax code, like the estate tax, are holding family farmers and small businesses back, Noem said. The congresswoman previously introduced the Death Tax Act, which would repeal the death tax – a tax on a deceased individual’s estate that is transferred to their heirs.
“Now is the time to repeal the death tax, simplify the tax code, reduce tax rates across the board and create a system that’s going to support folks in their pursuit of the American dream,” Noem said.
In Indiana, in one of the largest manufacturing districts in the country, Walorski said during the hearing that many CEOs have told her the U.S. economy was not helped by the tax code, but has been able to succeed in spite of it.
A simpler tax code and lower rates would have a positive impact on businesses and manufacturers, particularly in the state’s 2nd District, which Walorski represents.
For example, she cited an anecdote from Peter Barrett, the senior vice president at Smoker Craft, a boat manufacturer based in New Paris, Indiana. “He said that tax cuts will allow his company to hire more workers, raise wages for their 600 employees, create new training programs, expand their plant and make new capital equipment purchases,” Walorski said.
The Ways and Means Committee plans to hold additional hearings on tax reform, with the next scheduled for May 23. That hearing will focus on border adjustment and international tax modernization as part of comprehensive tax reform.