Chairman Williams: “Tax Day: Exploring the Adverse Effects of High Taxes and a Complex Tax Code”

Summary

Opening statement of Chairman Williams, as prepared for delivery and dated April 10, 2024, for a full committee hearing of the House Committee on Small Business titled "Tax Day: Exploring the Adverse Effects of High Taxes and a Complex Tax Code." Williams states that the median household income increased by $5,000 in the two years following the enactment of the Tax Cuts and Jobs Act and that some of its main provisions are starting to expire. Williams also says the House passed a bipartisan bill in January to extend some key provisions, which is still waiting for Senate action. Williams adds that small business owners will pay over 1,000 dollars per year on average to have a CPA firm prepare their taxes.

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Opening Statements

Chairman Williams: “Tax Day: Exploring the Adverse Effects of High Taxes and a Complex Tax Code”

April 10, 2024

WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a full committee hearing titled “Tax Day: Exploring the Adverse Effects of High Taxes and a Complex Tax Code.”

Chairman Williams’ opening statement as prepared for delivery:

Good morning, and welcome to today’s hearing which will focus on how tax policy significantly impacts our nation’s small businesses.

I’d like to start off by thanking our witnesses for joining us today. Your attendance is greatly appreciated, and we value your input and expertise on these issues.

As our nation’s job creators continue to face harsh economic headwinds, we must ensure the tax code works for them, not against them.

In 2017, Congress passed the Tax Cuts and Jobs Act, the most significant changes to the tax code in decades. The TCJA lessened the tax burden on small businesses and provided much needed relief for all Americans. When small businesses get to keep more of their money, they put it to work either in their businesses or their communities. I believe that the TCJA fundamentally proved how cutting taxes is good for small businesses, good for all Americans, and good for our economy.

You don’t have to just take my word for it though. The year following the law’s enactment, business revenues went up and generated the highest single year increase in government revenue since 1977. This bill also helped families – in the two years following TCJA’s enactment, the median household income increased by $5,000.

Unfortunately, some of the main provisions in this law are starting to expire, which will make it harder for businesses to continue their operations. The House of Representatives acted in January and passed a bipartisan bill to extend some of these key provisions affecting the small business community, but unfortunately this bill is still waiting for Senate action.

I hope the stories from our witnesses here today will help spark action by impressing that bill’s benefits and the time sensitive nature of these tax policies. This morning’s higher-than-expected inflation reading shows that President Biden’s tax and spend policies continue to hurt everyday Americans. Not only that, with inflation remaining stubbornly high, it will likely force the Federal Reserve to keep interest rates high which will make it more challenging for businesses to access capital. As small businesses continue to deal with inflation, labor shortages, and an onslaught of burdensome regulations, it is imperative that we don’t allow the tax code to further penalize success.

In addition to larger tax liabilities if these provisions expire, business owners are facing a new troubling reality. Statistics show that small businesses are receiving audits at an alarming rate. On average, small business owners will pay over 1,000 dollars per year to have a CPA firm prepare their taxes. If they are audited, this number rises substantially. This is just another cost that a business owner has to write off as a loss when those dollars could help build on their core business model. We in Congress must make sure small businesses are not forced to play defense against an overly aggressive IRS.

Unfortunately, we also saw in the President’s budget that he wants to increase taxes on many small businesses. We can’t tax our way to economic growth, and need to let our job creators do what they do best and generate economic activity for their communities.

I’d like to once again thank our witnesses for being here with us today. I’m very much looking forward to our conversation.

With that, I will yield to our distinguished Ranking Member from New York, Ms. Velasquez.

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