Rep. Doggett Opening Statement at Tax Policy Subcommittee Hearing on Tax Law: For Small Business Owners, Trump Tax Scam was a Bait & Switch
Washington, D.C. — Today, the Republican Chairman had our Ways & Means Tax Subcommittee hold a public relations hearing on the effect of the tax law on small businesses. But the best time to devote some attention to the impact of the tax code on small businesses would have been before this new tax law was approved, not after, when it's too late to have any impact. Today's hearing attempted to put the best face on legislation that was poorly written and ill conceived—legislation that was designed to provide a windfall to Wall Street Banks and other multinationals and for which small business was an afterthought.
For small business owners, the Republican tax law was "bait and switch." After dressing up the pass-through provisions as a benefit for Mom and Pop small businesses, we have learned that that almost half of the overall tax benefits associated with it go to those making more than a million dollars a year. Within a few years, two-thirds of pass-through small businesses will be left with only four percent of this benefit, while more than half of it will go making to those making at least a million each year. If the length of this hearing was proportionate to the share of the benefit small businesses received in this new tax law, we would need to have concluded before the first witness even testified.
Apparently to the Majority, "small business" seems to mean real estate moguls like the Trump family. While continuing to hide his tax returns, Trump has over 500 pass-through entities that may benefit from his signing this travesty into law. When the final tax bill emerged from behind closed doors, tucked into the conference report was an additional tax break—not in any prior version—tailor made for real-estate moguls looking to benefit from the new break. The provision offered a special tax cut to LLCs that have few employees and large amounts of depreciable property assets, namely buildings: rent generating apartment and office buildings.
Small businesses deserve a level playing field. Look who they choose as winners and losers. Since the recession, small businesses have created two out of every three private sector jobs. Instead, the Republican tax bill put large multinational corporations before Main Street businesses. If you're a multinational with armies of tax lawyers and operations around the globe, you get new tax incentives to create jobs overseas, and to use accounting tricks to shift profits to island tax havens. If you're a small business making investments and employing workers here in America, you pay full freight. It's just not fair when Pfizer—with its 157 subsidiaries in tax havens—pays a much lower tax rate to fund our national security, infrastructure, and education than the corner pharmacy.
We have recently learned how one multinational corporation plans to use its windfall. Since September of 2017, when Speaker Ryan visited a Harley-Davidson plant in Wisconsin to tout the gold at the end of the corporate tax break rainbow, what has the company done with its windfall? It shuttered a plant, leading to 350 layoffs, and it showered its wealthy shareholders with $700 million worth of stock buybacks. The company plans to also open a new factory in Thailand, and thanks to the GOP tax scam, it may get a tax break for doing so.
Ultimately, small businesses are among those who will foot the bill. Those who will pay the price are the small goods and services retailers, who are usually too busy to spend much time in Washington. The small construction companies that do not have offshore accounts. The plumber that cannot hire a high-priced lawyer. Or the tech startup that will have a harder time getting access to capital. When I talk to small business owners, one of the biggest challenges they raise is having access to capital. The trillions in additional debt will not make things easier. Interest rates will rise as we borrow more and more from the Chinese and the Saudis, crowding out private investment, and constraining access to capital.
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