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SALT LAKE CITY — Tax policy has an impact on the economy. Utah Rep. Blake Moore, the vice chairman of the Republican Conference, and Treasury Secretary Janet Yellen could at least agree on that much.
What they couldn't see eye to eye on was the type of tax policy that brings economic benefits; is it former President Donald Trump's existing tax framework, or President Joe Biden's proposed one?
Moore, a Republican who represents Utah's 1st District, said he heard from his Democratic colleagues about the "strong" economic recovery after the pandemic, but they forgot to mention that the Tax Cuts and Jobs Act of 2017, the provisions of which are mostly set to expire in 2025, served as a building block in the recovery.
The Utah congressman noted he wasn't an elected official at the time this tax policy became law, so it wouldn't be "boasting" to tout its successes.
"When Democratic control took over in 2021, there was massive spending but the same tax code, the same tax rates, still existed," he said. "We have seen a strong economic recovery, unemployment is low, and I can absolutely point to the fact that we have had a consistent (and) simpler tax code that strengthened the middle class ... since 2017."
Citing a book titled "Never Split the Difference: Negotiate As If Your Life Depended On It," Moore pointed out the corporate tax went from 35% to 21% because of the Trump-era cuts. Biden has proposed hiking it up to 28%. "It almost feels like lazy to me," he said, adding it appears as if Biden is trying to simply "split the difference."
The Biden administration's proposed budget included $3 trillion in tax increases for billionaires and corporations to help bring down the national debt.
Apart from these hikes, the White House also wants to expand "the Earned Income Tax Credit, Child Tax Credit, and Low-Income Housing Tax Credit," as well as tax credits for health insurance premiums, as Yellen said in her written testimony.
"The Joint Committee on tax has shown that most of the cost of a 28% corporate tax rate would be borne by Americans making less than $500,000," Moore said, asking Yellen, "What specific analysis can you point to demonstrating that raising the corporate tax rate won't impose burdens on low- and middle-income Americans?"
Yellen responded that all the analysis she's familiar with concludes the Trump-era tax cuts "disproportionately benefited the wealthy and large corporations, and the corporate tax could enrich corporate shareholders at the expense of your alternative, which would have been benefits to middle-class families."
"It promised an investment boom that certainly never materialized," said Yellen, before Moore cut her off: "I don't believe you can argue (that), and if you want to come to Utah's 1st District, you can hear from companies in that district where the real wage income grew for their frontline employees."
Yellen acknowledged that some wage earners benefitted from the Trump tax cuts but the high income earners benefitted more overall. Moore pushed back, saying, "That hasn't been my experience talking to actual companies in my actual district."
House Ways and Means Committee Chairman Jason Smith, R-Mo., also criticized Biden's tax plans during the hearing.
"Instead of allowing families hit by these high prices to keep more of their hard-earned money, President Biden wants the highest tax increase on families and small businesses in American history," Smith told Yellen, according to The New York Times.
Biden has time and again promised to let the 2017 tax cuts expire. "Donald Trump was very proud of his $2 trillion tax cut that overwhelmingly benefited the wealthy and biggest corporations and exploded the federal debt," the president posted on X last week. "That tax cut is going to expire. If I'm reelected, it's going to stay expired."
But the Trump tax cuts led to lower taxes for Americans in almost every tax bracket. If they expire, does that mean higher taxes for the average American? According to the Times report, Yellen said, "The president has been very clear that no family earning less than $400,000 will face a tax hike."
