Lawmakers State Their Tax Positions on Tax Day

On Tax Day, several Members of Congress expressed their feelings about the Internal Revenue Code.  

April 18th is this year's deadline for taxpayers filing their tax returns without needing an extension, and lawmakers had plenty to say about the current set of tax laws.

Senate Budget Chairman Sheldon Whitehouse (D-R.I.) would like to stop wealthier taxpayers and corporations from being able to use “special rules that let them pick when—even if— they pay taxes.” He partially blamed the lack of withholding rules for why they don’t pay their ‘fair share.’  

“Simple fairness is reason enough to end this rigged system,” he said, adding that the lack of fairness has hurt federal government coffers.

“Letting wealthy business owners avoid Medicare taxes on their full income costs Medicare $250 billion in lost revenue.  Letting billionaires pay low or zero tax rates costs America $550 billion.  Letting multinational corporations shift profits to tax havens leaves a $1 trillion bill for everyone else to pay,” the Senator said.  

Sheldon held a hearing today titled “A Rigged System: The Cost of Tax Dodging by the Wealthy and Big Corporations” to highlight the inequities within the tax code.  

Committee Republicans participating in the hearing took a different stance when it came to taxation.  

Committee member, Senator John Kennedy (R-La.), said that taxes are already too high and that raising them would likely reduce the number of people who pay taxes in the U.S. He cautioned that higher taxes would encourage people to surrender their citizenships and leave the country.

He used the example of New Yorkers leaving the Big Apple because of high taxes (and crime).

“Some of it [relocating away from NYC] is crime, but most of it is taxes,” Kennedy said. 

The Senate Budget Committee doesn’t have jurisdiction over taxes, so this committee can’t create legislation that would modify taxes.

The House Ways and Means Committee, on the other hand, can create tax legislation that could change the way taxes are collected.

Its Chairman, Rep. Jason Smith (R-Mo.), said the Trump tax reform bill enacted in 2017 lowered taxes for lower and middle-income taxpayers.

“Republicans prioritized working and middle-class Americans by simplifying our tax system and lowering rates on middle and low income families. That’s why we doubled the standard deduction and increased the child tax credit to put more money in Americans’ pockets and eliminate the stress of weeding through itemized deductions,” he said.

The Committee’s Ranking Member, Representative Richard Neal (D-Mass.), said the current tax season ran more smoothly than last season. He attributed the improvement to the $80 billion that Democrats gave the IRS to improve its performance.

“Thanks to our investment, this filing season, the IRS answered 2 million more calls through live assistance, cut wait times dramatically, served 100,000 more taxpayers in-person, cleared the 2022 returns backlog, and launched new digital tools to help taxpayers,” Neal said.

The House Ways and Means Committee could pass legislation this year that extends many of the Trump-era tax cuts beyond their current expiration of 2025.

The House Small Business Committees also talked about taxes today. It held a hearing on the tax provisions vital to small businesses.

Committee members took diverging positions on whether the Trump tax reform bill should be extended. Their focus was chiefly on the longevity of the pass-thru deduction.

House Small Business Committee Chairman Roger Williams (R-Texas) urged extending the pass-thru deduction beyond its current expiration date.

“It is imperative that we begin looking at this law and find the provisions that helped Main Street the most, such as lowering individual income tax rates that helped 70% of all small businesses that are organized as pass-through entities,” he said.

The Committee’s Ranking Member, Representative Nydia Velazquez (D-NY), opposes the provision’s extension. She said it largely benefitted wealthier taxpayers, who don't need tax relief.

“Only 8% of those who took advantage of the 199A pass-thru deduction last year had income over $500,000. That 8% accumulated two-thirds of the $8.6 billion in tax benefits,” she said.

R&D expensing, expanding the 163(j) interest deduction, and returning Bonus Depreciation to 100% were also mentioned during the hearing. It is not clear if Congress will act on these measures this year.

Members a part of the Small Business Committee also raised the prospect that an increase in the estate tax would hurt small businesses. 

The House Small Business Committee does not have the jurisdiction to create tax laws. The committee can advance tax legislation, but it would have to be okayed by the House Ways and Means Committee before it could be subjected to a vote on the chamber’s floor.

Assuming the House Ways and Means Committee passes legislation that extends the Trump-era tax cuts, that bill would likely pass the Republican controlled House. It is not clear, however, if it would pass the Democratically controlled Senate. And if it does not pass the Senate, it does not become law.