WASHINGTON – Today, Chairman Roger Williams (R-TX) led a full Small Business Committee hearing titled “Tax Day: Exploring the Adverse Effects of High Taxes and a Complex Tax Code.” Chairman Williams issued the following statement after today’s hearing.
“I am very grateful to hold today’s hearing focused on how high taxes can suffocate any business, especially small businesses,” said Chairman Williams. “While small businesses face severe economic hardship, the Biden administration is trying to push them into oblivion. I believe the Tax Cuts and Jobs Act of 2017 fundamentally proved that tax cuts are good for all Americans, small businesses, and the American economy. We in Congress must work to ensure that the tax code works for our nation’s entrepreneurs, not against them.
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Watch the full hearing here.
Below are some key takeaways from today’s hearing:
President Williams: “Tax policy is the most important thing we can do to help all entrepreneurs facing these challenges. And when a business owner is able to keep some of their profit, they don’t just put it in the bank, let it sit there, we spend it. They hire additional workers, this creates more tax payers, or they buy additional equipment to continue growing their business. So, Mr. Huff, can you discuss how you were able to use the 199A small business deduction to grow your business? And more generally, what do you do when you are able to keep more of your hard-earned money?” Mr. Huff: “In my case, I was not familiar with the tax laws. And my CPA in 2019 called and said, “You’ve invested in equipment and made a convenience store, and the 199A and bonus depreciation is available to you.” I said, “what does that mean?” He says, “that means you have more money.” I was shocked. I call it the Easter Egg. I didn’t know it would have such an effect. Doing that, having those extra funds, I then invested in 2019 in additional technology that actually paid to keep my stores open during Covid. So the 199A and bonus depreciation helped me tremendously in those two years.”
Representative Meuser: “Mr. Wetherington, R&D tax credit. Very important. I’ve been looking at your products. Of course, a lot goes into it. Design engineers, all kinds of engineers that are being cut or even now with, with the 20 percent for over a five-year period. How has this affected your business, your profitability, your hiring, your growth, and your investment in research and development?” Mr. Weatherington: “Well, as I said in my testimony, this is delaying us in introducing major redesigns of our two flagship products, which account for 80 percent of our product revenue. Our expectation is that we will grow by 50 percent once they launch, but we continue to push them back because of the inability to cover costs without the certainty of having an R&D tax credit. We’re going back to predictability and consistency in what the code is.”
Representative Van Duyn: “It’s great to hear that we’re actually hearing from small business owners, mom-and-pop shops and others who have actually been able to take advantage of the TCJA. Mr. Hedlund, I will ask you, President Biden’s budget proposal contains many new tax provisions. Does any particular proposal stand out as the worst for small businesses?” Dr. Hedlund: “There are a lot of bad options to choose from. It’s hard to pick one, but I’d say the worst thing we can do for the economy right now is raise taxes. When people have already paid the inflation tax and regulatory tax. It will worsen the cost of living crisis, hurt our growth and not be good for the economy. Representative Van Duyn: “So you’ve heard President Biden repeatedly say he’s not going to tax anyone making less than $400,000. Is that right?” Dr. Hedlund: “Well, that promise has already been broken. As I mentioned, the inflation tax. The typical American family has seen their real income drop by $4,000 due to inflation. And that will just be compounded by the loss of thousands of dollars worth of tax breaks to them if this is allowed to happen.
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