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Ranking member news | Essay
March 21, 2024
In an audience with Treasury Secretary Yellen, Crapo highlights the contrast between pro-growth fiscal policy and proposals that would stifle economic growth
Washington DC–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 billion in new and increased taxes included in the proposed president’s budget – 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 and the Republicans’ Tax Cuts and Jobs Act (TCJA), which has led to one of the strongest economies in generations. Senator Crapo secured commitments from U.S. Treasury Department Secretary Janet Yellen to support the extension of 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 a year will pay a penny in new taxes.” . . . I agree that it is a bad idea to raise taxes on Americans suffering from record inflation right now. Interestingly, the President’s budget is essentially silent on the extent of 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? year?
Yellen: Yes, and the President made it clear that he would oppose raising taxes on workers and families earning less than $400,000 when those provisions expire.
Crapo: So would he support extending these provisions?
Yellen: He would do it.
Crapo: They are good news. The TCJA also nearly doubled the standard deduction. Would that be included in the President continuing to support the extension?
Yellen: I can’t give you details other than to say that whatever agreement is reached, it is committed to not raising taxes on families earning less than $400,000.
On whether letting the child tax credit expire would result in tax increases for taxpayers earning less than $400,000 annually:
Crapo: The TCJA also doubled the child tax credit to $2,000 per child. Do you agree that if the TCJA CTC provisions are not extended, it would also result in a tax increase for taxpayers earning less than $400,000?
Yellen: He, as I said, is committed to not increasing taxes on families earning less than $400,000 and has expressed his commitment to the importance of the child tax credit, which has drastically reduced child poverty.
Crapo: Well, that’s good news. As I understand it, the President will support the extension of these policies in the TCJA, which would result in an increase in taxes on people earning less than $400,000.
On whether increasing corporation tax rates would be detrimental 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 become the second highest combined corporate tax rate in the world. Which would result in corporate inversions, capital outflows from the United States, increased prices for Americans – increasing inflation – and reduced wages. Is the President seriously considering causing these types of economic impacts when we need our economy to remain strong and wage growth to be vibrant?
Yellen: I agree that we need a strong economy and would not like to see capital flee the United States to foreign lands. This is why we support the [Organisation for Economic Co-operation and Development] The OECD tax compact, which many countries, including the United Kingdom, Japan, the European Union and others, are now putting into practice. They are implementing a minimum tax of 15% on multinational companies.
On the President’s international tax negotiations that would result in lost revenue for the United States:
Crapo: As you know, the budget proposes once again aligning the US global minimum tax with certain aspects of the Second Pillar – but proposes a much more onerous version of it, including a rate 40% higher than the OECD agreement’s 21% against 15%. percent, and without any substance-based exclusion as provided for in the agreement.
Last year, the Administration’s budget estimated that the proposal, combined with the adoption of the Pillar Two undertaxed profits rule, or UTPR, would raise more than a billion dollars. However, this year’s budget estimates for these two proposals combined are less than half a billion dollars. Is the estimated $500 billion reduction from the previous year a result of countries adopting Pillar Two rules last year?
Yellen: Yes, in a sense. When the standard procedure is to estimate what the tax savings or expenses would be, assuming that the United States adopts a policy, but does not assume that everyone else does, so when there are changes abroad, they change the estimates.
Crapo: The Joint Committee on Taxation estimated that if both the rest of the world and the US adopted the Second Pillar next year, the US would continue to lose more than US$50 billion dollars. This represents a loss of revenue for America and is harmful to our economy.