This week, several House committees took significant steps to advance our legislative package to enact President Trump’s top policy priorities. In the Committee on Ways and Means, my colleagues and I began a meeting to consider the tax title of this package on Tuesday afternoon and spent more than 17 hours scrutinizing and deliberating before ultimately approving portions of the bill within our committee’s subject matter. Debates over tax policy can be fraught with intense emotions and misunderstanding, but it’s critical to examine the facts carefully and consider the impact of proposed policies for all Americans.
If Congress fails to complete our work and Tax Cuts and Jobs Act (TCJA) provisions are allowed to expire, the consequences are serious. Individuals making less than $400,000 per year would face a net tax increase exceeding $2 trillion at the end of this year. This would amount to the largest tax hike in American history.
To protect American workers, strengthen households, and provide economic certainty, the bill advanced this week by the Ways and Means Committee permanently preserves lower individual income tax rates, the doubled standard deduction, and the doubled child tax credit. The increased death tax exemption will continue to help hard-working family farmers, ranchers and small businesses plan for the future. Additionally, the expanded pass-through business deduction will ensure family-owned businesses have continued parity with corporate taxpayers.
TCJA lowered tax rates for hardworking Americans across the entire income spectrum. In fact, the proportion of the tax burden falling on upper-income Americans grew compared to other income brackets. The year after TCJA was passed, the share of federal taxes paid by the top one percent of earners grew from 38.5 percent to 40.1 percent.
Pro-growth policies benefit all Americans by growing wages, spurring economic growth, and strengthening the economy. By making our corporate tax rate more competitive with other countries, thereby ending the trend of American businesses moving their headquarters overseas, TCJA brought in record federal revenue, exceeding projections made by the Congressional Budget Office for 2021 and 2022.
Additionally, the measure protects all Americans from burdensome invasion into their personal finances by repealing the 1099-K reporting requirements imposed by the 2021 American Rescue Plan Act, which I have referred to as the “Babysitter Tax.” This ill-conceived attempt to monitor small, everyday digital transactions, such as those made through Venmo and PayPal, is burdensome and unworkable, and its implementation has been repeatedly delayed by the IRS.
I am also pleased language is included from my legislation, the Educational Choice for Children Act, a landmark measure to empower parents to decide how best to meet their children’s educational needs. Additionally, the bill includes language which protects American taxpayers from IRS overreach by ending the unauthorized IRS Direct File program.
While the action we took in the Ways and Means Committee this week was a strong step in the right direction, we are still at an early stage in this process. The relief provided through TCJA in 2017 was the right thing to do, and I look forward to ensuring these gains are extended and the best possible final product is delivered for American families, producers, and small businesses.