At hearing with Treasury Secretary Yellen, Crapo highlights contrast between pro-growth tax policy and proposals that would stifle economic growth
Washington, D.C.–At a U.S. Senate Finance Committee hearing on President Biden’s Fiscal Year 2025 budget, Ranking Member Mike Crapo (R-Idaho) highlighted the nearly $5 trillion in new and increased taxes included in the President’s budget proposal—tax proposals that would slow the economy and be felt by virtually all Americans. Ranking Member Crapo highlighted the contrast between the President’s tax proposals versus Republicans’ Tax Cuts and Jobs Act (TCJA), which led to one of the strongest economies in generations. Senator Crapo secured commitments from U.S. Department of the Treasury Secretary Janet Yellen to support extending Republicans’ pro-growth tax proposals.
Click HERE to watch Senator Crapo’s opening statement.
Click HERE to watch Senator Crapo Question Secretary Yellen.
On whether the President would support extending the individual tax provisions in the Tax Cuts and Jobs Acts:
Crapo: According to the White House, under President Biden’s 2025 budget “no one earning less than $400,000 per year will pay a penny in new taxes.” . . . I agree it is a bad idea to raise taxes on Americans suffering from record inflation at this point. Interestingly, the President’s budget is essentially silent on extending the individual tax provisions of the Tax Cuts and Jobs Act, many of which expire next year. A simple yes or no question: Are you aware that the Tax Cuts and Jobs Act, which Republicans passed in 2017, reduced taxes for Americans of all income groups, including those earning less than $400,000 per year?
Yellen: Yes, and the President has made clear that he would oppose raising back the taxes for working people and families making under $400,000 when those provisions expire.
Crapo: So, he would support extending those provisions?
Yellen: He would.
Crapo: That is good news. TCJA also nearly doubled the standard deduction. Would that be included in what the President will continue to support extending?
Yellen: I cannot give you details, other than saying, whatever agreement is reached, he is committed to not raising taxes on households making under $400,000.
On whether letting the child tax credit expire would result on tax increases for taxpayers making less than $400,000 annually:
Crapo: TCJA also doubled the child tax credit to $2,000 per child. Would you agree that if the TCJA CTC provisions are not extended, this would also result in a tax hike for taxpayers making less than $400,000?
Yellen: He, as I said, is committed to not raising taxes on households making under $400,000, and has expressed a commitment to the importance of the child tax credit which has dramatically lowered child poverty.
Crapo: Well, this is good news. As I am understanding you to say, the President will support extending these policies in the TCJA that would result in an increase in taxes on people making under $400,000.
On whether hiking corporate tax rates would be damaging to economic strength and wage growth:
Crapo: If the President’s proposal to increase the corporate tax rate to 28 percent is adopted, it would make it the second-highest combined corporate tax rate in the world. Which would result in corporate inversions, capital leaving the United States, increased prices for Americans—adding on to inflation—and reduced wages. Is the President seriously considering causing those kinds of economic impacts when we need our economy to stay strong and wage growth be vibrant?
Yellen: I agree that we need a strong economy and we would not want to see capital flee from the United States to foreign shores. That is the reason we are supporting the [Organisation for Economic Co-operation and Development] OECD’s tax pact, that many countries, including the U.K., Japan, the European Union and others, are now putting into effect. They are putting into effect a 15 percent minimum tax on multinational corporations.
On the President’s international tax negotiations that would result in revenue loss for the United States:
Crapo: As you know, the budget once again proposes to align the U.S. global minimum tax with certain aspects of Pillar Two—but proposes a much more onerous version of it, including a rate 40 percent higher than the OECD deal, which is 21 percent versus 15 percent, and without any substance-based exclusion as provided under the deal.
Last year, the Administration’s budget estimated that proposal, combined with one adopting Pillar Two’s undertaxed profits rule, or UTPR, would raise over a trillion dollars. However, this year’s budget estimates for those two combined proposals come in at more than half a trillion dollars lower. Is the year-over-year $500 billion estimated decrease a result of countries adopting Pillar Two rules into law over the last year?
Yellen: Yes, in a sense. When standard procedure is to estimate what the tax savings or expense would be, under the assumption the United States adopts a policy but does not assume that everyone else does, so when there are changes abroad, it does change the estimates.
Crapo: The Joint Committee on Taxation has estimated that if both the rest of the world and U.S. enact Pillar Two next year, the U.S would still lose over $50 billion dollars. This is a revenue loser for America and is damaging to our economy.
The Counterpoint Speech…
Wyden’s Statement On Treasury Budget Proposal, Senate Debate On Tax Bill
As Prepared For Delivery
This morning the Finance Committee welcomes Treasury Secretary Janet Yellen for a hearing on the budget. This hearing always covers a range of economic issues, so I want to start with a look at the state of the economy as we meet here this morning.
Right now, the U.S. has the strongest major economy in the world — as even Trump advisor Stephen Moore agreed in a recent interview. Wages are rising significantly faster than inflation, which has come way down from its peak. The labor market has never been better for workers. There’s been real progress on income inequality. This is an era of booming entrepreneurship in America, as new business applications are up.
Go back four years, when Covid cases were filling up hospitals and Americans were stuck at home wondering if and when they’d be able to stock up on toilet paper, the forecasts for the U.S. economy were dire.
The economy under President Biden has smashed those negative forecasts to bits. Nearly every other country in the world with a developed economy would love to trade places with us in 2024.
But if you listen to Donald Trump, you’d think the U.S. is on a fast track to the dark ages. What does Trump want to do when it comes to the big economic policy issues facing this committee?
For one, the Trump allies developing a new tax agenda are cooking up plans for big tax hikes on working Americans and middle-class families. They’re planning more tax breaks for corporations and handouts to millionaires and billionaires.
Trump wants to repeal the Inflation Reduction Act, including the funding for the IRS that has vastly improved customer service and cracked down on wealthy tax cheats.
All in all, he’d run even bigger deficits and pile up more debt. That would make it impossible to shore up bedrock American programs like Medicare and Social Security. Recently he told one interviewer — in the first serious interview he’d done in months — that he believes there’s lots of room for cuts to those programs. His campaign had to walk it back, because they know his real plans on these issues are a loser with the American people.
In my view, what Americans want is a strong economy, they want a fair shake for people who don’t have big fortunes and political power, and they want some policies that drive down the cost of living in America. That’s not what Donald Trump has on offer, but that’s exactly what Democrats are focused on delivering.
For example, late last year I introduced the Billionaires Income Tax, now up to 18 senate cosponsors. President Biden’s budget includes his own similar proposal, which is also focused on ending the scheme known as “buy, borrow, die.”
A billionaire acquires an asset that steadily gains value. They borrow against it to turn it into income. And if they hold it until they die, the tax disappears. Meanwhile, people who earn a wage are paying taxes out of each and every paycheck. That’s a basic unfairness the Congress must address. The Billionaires Income Tax ought to be the centerpiece of the effort to save Social Security for future generations and uphold the Medicare guarantee.
Democrats want to do even more to crack down on ultra-wealthy individuals and big corporations who rip off typical Americans by cheating on their taxes. We want to keep upgrading taxpayer service — already vastly improved thanks to Inflation Reduction Act funding — including giving every American the option to file their tax returns directly with the IRS.
The direct file pilot program opened widely in a handful of states last week. In just a matter of days, tens of thousands of Americans have filed or started their returns using this new system, and they’re saving big on fees by doing so.
That’s progress that must continue. Donald Trump’s allies want to stop it. He’ll side with the tax prep companies against typical taxpayers, and it’s safe to say that Trump himself is no champion of tax enforcement among the uber-wealthy.
And before I wrap up, I also want to address another topic of debate in the Senate. It has now been seven weeks since 357 members of the House voted to pass my bill with Chairman Smith that expands the child tax credit and restores R&D incentives.
I’ve listened to my Senate colleagues and spoken with many of them personally. All along I’ve said I’ll work with anybody who wants to find a way to get this done quickly, and my door is open.
The number-one concern I’ve heard from Republicans is the child tax credit lookback policy. While I think the policy is important, I’ve offered to take it out of the bill if it gets this over the finish line. Working with groups, we have found a way to do this and still lift the same number of kids out of poverty. As of this morning, my offer on the lookback is still on the table.
I understand that some members prefer to wait and try to pass a bill next year. The reality is, delay will have serious consequences. A lot of innovative small businesses — for whom the R&D provision in the bill is a lifeline — are telling me they aren’t going to be around in 2025 if the Senate decides to wait.
I also believe there are a lot more than 60 members who want us to act. So I’m going to keep at it. Members are probably going to get tired of hearing from me over the next few days, but I’m hopeful that the Senate is going to get this done soon.
United States Senate Committee On Finance
Now who do you believe? Senator Wyden or Senator Crapo? Your comments below are appreciated. What do you think?
