[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                   HEARING ON 2017 TAX LAW: IMPACT ON
                    THE BUDGET AND AMERICAN FAMILIES

=======================================================================

                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

          HEARING HELD IN WASHINGTON, D.C., FEBRUARY 27, 2019

                               __________

                            Serial No. 116-3

                               __________

           Printed for the use of the Committee on the Budget
           
           

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                        COMMITTEE ON THE BUDGET

                  JOHN A. YARMUTH, Kentucky, Chairman
SETH MOULTON, Massachusetts,         STEVE WOMACK, Arkansas,
  Vice Chairman                        Ranking Member
HAKEEM S. JEFFRIES, New York         ROB WOODALL, Georgia
BRIAN HIGGINS, New York              BILL JOHNSON, Ohio,
BRENDAN F. BOYLE, Pennsylvania         Vice Ranking Member
RO KHANNA, California                JASON SMITH, Missouri
ROSA L. DELAURO, Connecticut         BILL FLORES, Texas
LLOYD DOGGETT, Texas                 GEORGE HOLDING, North Carolina
DAVID E. PRICE, North Carolina       CHRIS STEWART, Utah
JANICE D. SCHAKOWSKY, Illinois       RALPH NORMAN, South Carolina
DANIEL T. KILDEE, Michigan           CHIP ROY, Texas
JIMMY PANETTA, California            DANIEL MEUSER, Pennsylvania
JOSEPH D. MORELLE, New York          WILLIAM R. TIMMONS IV, South 
STEVEN HORSFORD, Nevada                  Carolina
ROBERT C. ``BOBBY'' SCOTT, Virginia  DAN CRENSHAW, Texas
SHEILA JACKSON LEE, Texas            KEVIN HERN, Oklahoma
BARBARA LEE, California              TIM BURCHETT, Tennessee
PRAMILA JAYAPAL, Washington
ILHAN OMAR, Minnesota
ALBIO SIRES, New Jersey
SCOTT H. PETERS, California
JIM COOPER, Tennessee

                           Professional Staff

                      Ellen Balis, Staff Director
                  Dan Keniry, Minority Staff Director
                                
                                
                                CONTENTS

                                                                   Page
Hearing held in Washington D.C., February 27, 2019...............     1

    Hon. John A. Yarmuth, Chairman, Committee on the Budget......     1
        Prepared statement of....................................     4
    Hon. Steve Womack, Ranking Member, Committee on the Budget...     8
        Prepared statement of....................................    10
    Hon. Sheila Jackson Lee, Member, Committee on the Budget, 
      statement submitted for the record.........................    13
    Hon. Chip Roy, Member, Committee on the Budget, statement 
      submitted for the record...................................    19
    William G. Gale, Ph.D., Arjay and Frances Fearing Miller 
      Chair in Federal Economic Policy, Brookings Institution and 
      Co-Director of Tax Policy Center...........................    20
        Prepared statement of....................................    22
    Chye-Ching Huang, Director of Federal Fiscal Policy, Center 
      on Budget and Policy Priorities............................    27
        Prepared statement of....................................    29
    Caroline Bruckner, Executive-in-Residence, Accounting and 
      Taxation Managing Director, Kogod Tax Policy Center Kogod 
      School of Business, American University....................    42
        Prepared statement of....................................    44
    Lana K. Pol, President/Owner, Geetings, Inc..................    55
        Prepared statement of....................................    57
    Hon. Janice D. Schakowsky, Member, Committee on the Budget, 
      article submitted for the record...........................    83
Additional Materials:............................................
    William G. Gale, Brookings Institution, Tax Policy Center, 
      article submitted for the record...........................    99
    Caroline Bruckner, Executive-in-Residence, Accounting and 
      Taxation Managing Director, Kogod Tax Policy Center Kogod 
      School of Business, American University, exhibit submitted 
      for the record.............................................   122
    Hon. Janice D. Schakowsky, Member, Committee on the Budget, 
      CBO report submitted for the record........................   126

 
                   HEARING ON 2017 TAX LAW: IMPACT ON
                    THE BUDGET AND AMERICAN FAMILIES

                              ----------                              


                      WEDNESDAY, FEBRUARY 27, 2019

                          House of Representatives,
                                   Committee on the Budget,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 10:06 a.m., in 
Room 210 Cannon House Office Building, Hon. John A. Yarmuth 
[Chairman of the Committee] presiding.
    Present: Representatives Yarmuth, Scott, Doggett, Jackson 
Lee, Schakowsky, Higgins, Peters, Sires, Panetta, Horsford, 
Omar; Womack, Flores, Johnson, Woodall, Smith, Hern, Burchett, 
Crenshaw, and Meuser.
    Chairman Yarmuth. The hearing will come to order. I would 
like to begin with an announcement. I am pleased to announce 
that Mr. Seth Moulton is designated as the new vice chair of 
the committee. I look forward to working with Vice Chair 
Moulton and welcome his leadership.
    And now I want to welcome everyone to the Budget Committee 
hearing. This hearing will focus on the impact of the 2017 tax 
law on the budget and on American families. I especially want 
to thank our great panel for being with us this morning.
    Today, we will be hearing from Dr. William Gale, Arjay and 
Francis Miller Chair in Federal Economic Policy at the 
Brookings Institution and co-director of the Tax Policy Center. 
We will hear from Chye-Ching Huang, director of federal fiscal 
policy at the Center on Budget and Policy Priorities. We 
welcome Caroline Bruckner, professor at American University and 
the managing director of the Kogod Tax Policy Center. And Lana 
Pol, president of Geetings, Inc., headquartered in Pella, Iowa.
    Now, I yield myself five minutes for my opening statement.
    Once again, welcome to our witnesses. I want to apologize 
this morning to everyone here. We tried to find a tax expert, 
named Michael Cohen, thinking it would generate more attention. 
We were unable to do so. But again, we have an esteemed panel.
    We are here today to talk about the impact of the 2017 tax 
law on the federal budget and American families. It is a 
conversation my Democratic colleagues and I tried to have with 
our Republican counterparts more than a year ago. But instead 
of collaborating on bipartisan, middle class-focused tax 
reform, and instead of heeding the warnings of economists, the 
Congressional Budget Office and even our own constituents, 
congressional Republicans chose to enact massive tax cuts for 
the wealthy and large corporations, which we will discuss 
today. They did this on their own, behind closed doors, in the 
dead of night and without time for debate or any public 
scrutiny. And I exclude all my Republican colleagues here. I 
don't think anyone here was involved in that, in that process. 
Though most who are here did vote for it.
    That bill was enacted in such a hurry that senators were 
forced to read handwritten changes in the margins of the bill 
text, if they had time to read it at all. It is one of the 
reasons why there have been requests for more than 70 
corrections to the tax bill coming from Senate Republicans, at 
least.
    This tax law was based on the flawed notion of trickle-down 
economics, which has totally been discredited. The idea that 
tax cuts for the wealthiest Americans and for corporations will 
trickle down and raise the standard of living and incomes for 
everyone else. We know that has not happened.
    Under the Republican tax law, nearly all the tax cuts are 
going to the top 1 percent and corporations. The richest 1 
percent alone are receiving more than 80 percent of the total 
benefits. Our long-term economic growth trajectory has not 
improved, the federal deficit is soaring as corporate tax 
receipts plummet. There is no sign of an investment boom. Wage 
growth for workers remains weak and woefully inadequate. Most 
small business owners have seen few, if any benefits.
    Because of changes in this law, factories and jobs are more 
likely to go overseas. There are even more special interest tax 
loopholes for the wealthy than before. And that promise of 
being able to do your taxes on a postcard--well, we are still 
waiting for that one.
    Since the President signed this bill into law, we have seen 
a record-setting $1 trillion in stock buybacks, buybacks that 
make rich investors richer and fuel rising CEO pay. And, by the 
way, about a third of the benefits of those stock buybacks go 
to foreign investors. They do almost nothing to improve 
business operations or help the average worker. They have not 
improved our economic outlook and, as our witnesses believe, 
will ultimately worsen income and wealth inequality. And due to 
perverse international tax incentives in the law, it is 
possible for companies to actually reduce their taxes 
significantly more or avoid paying tax altogether--by 
generating income overseas and moving investments abroad. This 
endangers more than 15 million American workers whose jobs are 
vulnerable to being offshored.
    For American families, this law is a huge and predictable 
failure. For the federal budget, it is a huge and predictable 
drain. And that is because the premise on which this tax 
legislation was built, that it would magically pay for itself, 
is fundamentally flawed. As we will hear today, the GOP tax law 
has significantly weakened our budgetary health. It has caused 
more than a 30 percent drop in corporate receipts in 2018, with 
total receipts as a share of GDP falling to the lowest level 
since the end of the great recession. This is despite healthy 
economic growth and a tight labor market.
    As we engage in our oversight function, today we will not 
only discuss what the impact of the tax cuts have had on the 
budget but how they will impact the economy and American 
families going forward. Our budgetary challenges, and we have 
many, require smart, fiscally responsible policies, and the 
American people are demanding it.
    Today, we are going to find out just how deep the damage 
goes. We will look at the facts about the tax law's impact on 
American families. And we will set the stage for taking 
necessary action to move our nation's fiscal policies in the 
right direction. I thank our witnesses for helping us with this 
discussion and I look forward to hearing from you.
    I now yield five minutes to the ranking member, Mr. Womack.
    [The prepared statement of Chairman Yarmuth follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Womack. I thank the chairman for holding this important 
hearing and thank you to our witnesses for being here today. By 
the way, in case you didn't pick up on it, Chairman Yarmuth is 
not a big fan of the Tax Cuts and Jobs Act. I kind of just 
wanted to state that for the record.
    I would like to extend a warm welcome to Lana Pol, a 
second-generation business owner from Pella, Iowa. Thank you, 
Ms. Pol, for traveling to Washington, D.C., to share your story 
with us. I look forward to your testimony.
    As we will hear from the gentlelady from Iowa, the Tax Cuts 
and Jobs Act is working. It is delivering meaningful relief to 
workers, families, job creators, and communities across the 
country after years of sky-high taxes and a sluggish economy.
    A little more than a year after President Trump signed the 
Tax Cuts and Jobs Act into law, our economy is strong again, 
with more than double the GDP growth seen during the Obama 
administration, and Americans are feeling the difference every 
day. Americans are seeing bigger paychecks, getting to keep 
more of their hard-earned money to save, spend and invest the 
way they see fit. Wages and salaries increased by more than 3 
percent in 2018, the largest percent increase in more than a 
decade. According to the nonpartisan Tax Foundation, 80 percent 
of wage earners have seen an increase in their take-home pay.
    Americans are seeing more jobs. There are 7.3 million job 
openings, the most job openings since 2000 when the Department 
of Labor first started recording this data. Unemployment fell 
to the lowest level since the 1960s in 2018 at 3.9 percent, and 
CBO projects unemployment will continue to decline to 3.5 
percent in 2019.
    Americans are feeling more optimistic about the future. 
Consumer confidence is at an 18-year high. And, according to a 
new Gallup Poll released earlier this month, nearly 70 percent 
believe their personal finances will continue to improve next 
year.
    Job creators in my district are seizing on this 
opportunity. One of my constituents, Rick Barrows, runs 
Multicraft Contractors, a construction and industrial services 
business with roughly 700 employees. In talking with Rick, it 
is clear how the Tax Cuts and Jobs Act has made a meaningful 
difference, not only for him and his family, but for all of his 
employees. With lower taxes, Rick was able to double the 
employer contribution to his employees' 401(k)s. He was able to 
invest in leadership and workforce development. And, with the 
ability to immediately write off the cost of capital 
investments, Rick was able to dramatically expand his 
operation, acquiring and renovating an adjacent property, 
ensuring his business can continue to grow. Now, these are the 
real-world benefits that I am hearing from back home.
    Despite these successes, some of my colleagues on the other 
side of the aisle are looking for ways to reverse this progress 
and increase taxes on hardworking Americans, all so they can 
pay for more expensive government-run programs. As we recently 
heard from the CBO director, Dr. Keith Hall, these efforts are 
likely to have significant negative consequences for our 
economy and constituents we represent. All of us sitting on 
this dais today have a responsibility to get our fiscal house 
in order. And raising taxes that will stifle growth and 
investment is not the answer.
    As I have said before, we do not have a revenue problem--in 
fact, quite the opposite. With the Tax Cuts and Jobs Act, 
federal revenues in Fiscal Year 2019 are expected to increase 
by $186 billion. What we have is a spending problem, a fact 
many Democrats are choosing to ignore. Today, mandatory 
spending accounts for about 70 percent of all federal spending. 
Without taking into account proposals for massive new trillion-
dollar entitlement programs, mandatory spending is expected to 
increase to 78 percent at the end of the 10-year budget window.
    I hope that our discussion today illuminates for my 
colleagues on the other side of the aisle that the Tax Cuts and 
Jobs Act is helping local business owners, like Ms. Pol, to 
create more jobs, increase paychecks and create more economic 
opportunities for families. And to truly address the fiscal 
challenges facing our nation today and future generations, we 
must tackle the core driver of our ballooning debt, and that is 
out-of-control spending.
    With that, Mr. Chairman, I thank you for the opportunity 
and I yield back my time.
    [The prepared statement of Steve Womack follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. I thank the gentleman. And in the 
interests of time, if any other members have opening 
statements, you may submit those statements in writing for the 
record.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Now we will begin our testimony from the 
witnesses.
    I first yield five minutes to Dr. Gale.

STATEMENTS OF WILLIAM G. GALE, Ph.D., ARJAY AND FRANCES FEARING 
MILLER CHAIR IN FEDERAL ECONOMIC POLICY, BROOKINGS INSTITUTION, 
CO-DIRECTOR OF TAX POLICY CENTER; CHYE-CHING HUANG, DIRECTOR OF 
FEDERAL FISCAL POLICY, CENTER ON BUDGET AND POLICY PRIORITIES; 
   CAROLINE BRUCKNER, EXECUTIVE IN RESIDENCE, DEPARTMENT OF 
  ACCOUNTING AND TAXATION, AMERICAN UNIVERSITY; AND LANA POL, 
                   PRESIDENT, GEETINGS, INC.

                  STATEMENT OF WILLIAM G. GALE

    Mr. Gale. Chairman Yarmuth, Ranking Member Womack, members 
of the committee, thank you for inviting me to testify this 
morning. As was mentioned, I am affiliated with the Brookings 
Institution and the Tax Policy Center. My statements today 
represent my own views, not those of any institution.
    The 2017 tax cut was the biggest overhaul since 1986. It 
definitely made some needed changes to the tax system. But my 
overall assessment, based on my own research and that of 
others, is that, on the whole, the tax cut was the wrong thing 
at the wrong time. Why was it the wrong thing? Good policy 
generally meets three tests. First is a growth test, it makes 
the economy stronger. Second is a fairness test, it makes the 
economy more fair. And third is a fiscal test, it is fiscally 
sustainable. TCJA does not pass any of those tests and it 
clearly fails two of them.
    Let's start with the growth effect. That is the one that it 
does not pass. The Congressional Budget Office has indicated 
that national income after 10 years will go up by 0.1 percent 
because of the tax cut. That is a gross income number. If you 
looked at net income, it would actually be zero or lower. So it 
clearly does not pass the growth test.
    Let's look at the fairness test. The tax cut increases 
disparities in after-tax income. It gives the largest absolute 
and relative tax cuts to high-income households. So on that 
ground alone, it fails the fairness test. But it is actually 
worse than that. If you consider that the tax cut has to be 
financed in some way, Representative Womack mentioned the long-
term fiscal issue, if you consider that the tax cut has to be 
financed some way and you consider reasonable ways to finance 
the tax cut, you will find that most households will actually 
be worse off with the tax cut plus the financing than they 
would have been without the tax cut. So, it fails the fiscal 
test--I'm sorry, it fails the fairness test.
    The third test is the fiscal test and the tax cut clearly 
makes the government's already difficult long-term fiscal 
status even worse. I do not want to waste your time and I do 
not want to insult anyone's intelligence. But it is important 
to state the tax cut did not pay for itself, it will not pay 
for itself. You can look at the analysis of any reputable 
organization, including the CBO, including the Tax Policy 
Center, including the Tax Foundation and you will find that 
that is the case. So it fails the fiscal test as well.
    All right. The combination of not passing the growth test 
and failing the fairness test and failing the fiscal test means 
that what the tax cut will actually do is give more money to 
current generations of high-income households. And that will 
come at the expense of low- and middle-income households and of 
members of future generations. At the very least, I think we 
could agree that is not a model for what good public policy 
ought to do.
    There are other issues as well that make TCJA the wrong 
thing. It made tax policy more complicated, it increased 
uncertainty, it will reduce health insurance coverage, it will 
raise the cost of health insurance, it will likely reduce 
contributions to charitable causes. Again, these are not 
hallmarks of good public policy.
    So those are the reasons why I think it was the wrong 
thing. Why was it at the wrong time? Well, it was enacted at a 
time when the economy was already going strong. We had been 
expanding for eight years at that point, unemployment was low. 
It was a prime time to deal with the fiscal situation. As 
President Kennedy said, the time to fix the roof is when the 
sun is shining. We had an opportune chance to address the 
fiscal situation while the economy was strong and instead, we 
squandered that, making the deficit larger and giving tax cuts 
to high-income households.
    You should also be aware that the 2017 tax cut will make it 
harder for policymakers to fight future recessions. It reduces 
the ability of the tax system to cushion the effects of the 
recession. It reduces the automatic stabilizer function of the 
tax system.
    In terms of what you should do in response to these issues, 
I will just touch on three issues. One is to fix the issues in 
TCJA. A second is to give the IRS more resources to be able to 
do its job. And a third is to start thinking about longer-term 
revenue needs. Even if we do make judicious cuts in spending, 
the laws of arithmetic dictate that we will need to raise 
revenues and a value-added tax and particularly a carbon tax 
are the best options in that regard.
    I thank you very much for inviting me and I look forward to 
talking about all of these issues.
    [The prepared statement of William G. Gale follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Thank you very much for your testimony. I 
just want to remind the panelists that all of your written 
statements have been submitted and received by the committee. 
They will be part of the formal record of the committee, so you 
don't have to worry about that.
    And I now yield five minutes to Ms. Huang.

                 STATEMENT OF CHYE-CHING HUANG

    Ms. Huang. Chairman Yarmuth, Ranking Member Womack and 
distinguished members of the committee, thank you for the 
opportunity to testify today about how the 2017 tax law largely 
left behind low and moderate income Americans and, in many 
ways, even hurts them.
    Since 1979, the real incomes of working-class Americans, 
that is the racially and geographically diverse set of people 
often defined as workers without a college degree, have been 
virtually stagnant. The lowest income 60 percent of Americans 
saw their share of the nation's household income fall while 
those at the top saw their share gain by roughly the same 
amount.
    The 2017 tax law could have focused on helping those facing 
the steepest challenges in this economy but it largely left 
them behind. And here is a prime example. The law increased the 
maximum child tax credit from $1,000 to $2,000 per child. But 
it denied that full increase to millions of children in low-
income working families. Eleven million children in the lowest 
income working families got either no increase in the credit or 
a token increase of just $1 to $75. Another 15 million children 
got an increase of more than $75 but much less--but less often 
much less than the full $1,000 per child increase.
    Another example is the law's failure to expand the earned 
income tax credit, a provision that encourages work, lifts the 
living standards of millions of working families and helps 
children do better.
    And here are six ways that the law may, in fact, hurt many 
low and moderate-income households. First, it puts workers' 
wages and workplace standards at risk through its 20 percent 
deduction for passthroughs. That is an incentive for firms to 
buy workers' services without employing them directly, such as 
through hiring them as independent contractors or through 
another firm. And workers hired in some of these ways tend to 
be paid less than when workers are employed directly.
    Second, it retains and even creates new incentives to shift 
profits and investments offshore, risking workers' wages here 
in the U.S.
    Third, the law will leave millions more people uninsured or 
facing higher premiums because it repealed the Affordable Care 
Act's requirement that most people enroll in health insurance 
or pay a penalty.
    Fourth, it erodes the value of earned income tax credit. 
The law uses a slower measure of inflation to adjust tax 
brackets and other provisions each year. For working families, 
that means that the earned income tax credit grows more slowly 
over time. And by 2027, a family that has two children, earning 
$40,000 will see their federal earned income tax credit shrink 
by roughly $300.
    Fifth, it ended the child tax credit for 1 million children 
who are overwhelmingly dreamers who were brought to the U.S. by 
their immigrant parents.
    And sixth, it adds $1.9 trillion to deficits over 10 years. 
That raises the pressure on policymakers down the road to 
squeeze or cut critical economic security programs and 
investments that have widely shared benefits.
    Overall, in 2025, households in the bottom 60 percent will 
receive average tax cuts worth 1 percent of their after-tax 
income. But that pales in comparison to the top 1 percent's tax 
cuts worth 3 percent of their much larger incomes, or about 
60,000 each per year on average.
    That skew of the tax law increases racial inequalities. 
Decades of policy choices have set up barriers for households 
of color so they are overrepresented at the bottom of the 
income distribution, while white households are overrepresented 
at the top. That means that white households in the top 1 
percent get tax cuts worth more than the tax cuts for the 
bottom 60 percent of households of all races combined, ITEP and 
Prosperity Now estimate.
    Other winners are the tax advisers and lobbyists who are 
calling this law a bonanza.
    Looking ahead, policymakers consider new course and pursue 
true tax reform that in fact prioritizes people with low or 
modest incomes, raises revenue to meet national needs and 
strengthens the integrity of the tax code.
    Thank you, and I look forward to addressing your questions.
    [The prepared statement of Chye-Ching Huang follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Thank you very much for your testimony.
    I now recognize Ms. Bruckner for five minutes.

                 STATEMENT OF CAROLINE BRUCKNER

    Ms. Bruckner. Thank you for inviting me and, by extension, 
the American University students who are here with us today. 
Today, I want to share with you how my research indicates the 
need for a comprehensive strategy to study how some of the 
business tax expenditures included in tax reform impact women 
business owners, 99 percent of whom are small businesses; how 
health care costs for small businesses have been impacted by 
tax reform; and, lastly, the need to consider the budget 
implications of tax reform's failure to address the tax 
compliance challenges of the gig economy.
    First, this committee needs to develop a comprehensive 
strategy to study and give oversight to business tax 
expenditures to consider their impact and effectiveness with 
respect to women business owners. This research matters because 
40 percent of U.S. businesses are women business owners, yet 
they remain primarily small businesses operating as service 
firms and continue to have challenges growing their receipts 
and accessing capital. Notably, women of color are the driving 
force behind the growth of women-owned firms. And while we do 
have good news on their growth in numbers, women business 
owners still struggle to access capital to grow and scale their 
businesses. At the same time, tax plays a key role in the 
survival and growth of small businesses, primarily through its 
effect on equity infusion. However, to date, there has been no 
formal government or congressional study on how the U.S. tax 
code's more than $303 billion of expenditures targeted to small 
businesses impact women-owned firms. This is troubling 
considering in 2017, I found--I published groundbreaking 
research that found that Congress has a billion-dollar blind 
spot when it comes to understanding how business expenditures 
help these firms. In fact, three of the four small business 
expenditures I studied either explicitly excluded service firms 
and, by extension, the majority of women-owned firms, or 
effectively bypassed women-owned firms who are not incorporated 
or who are service firms with few capital-intensive equipment 
investments altogether.
    Congress doubled down on this billion-dollar blind spot 
during tax reform when it made additional multibillion-dollar 
investments in tax expenditures that our research suggests are 
less favorable to women business owners. For example, JCT's 
analysis of the new Section 199A deduction for individuals with 
business income shows that the majority, 90 percent, of the 
revenue distribution loss will flow to firms who have incomes 
greater than $100,000 of revenue. Eighty-eight percent of women 
business owners have revenues below $100,000. This inequitable 
distribution of the revenue loss is even greater and more stark 
at the higher income levels. Only 1.7 percent of women business 
owners have revenues over a million dollars, yet 44 percent of 
the revenue loss flows to those firms in this year alone.
    A second concerning aspect of tax reform is its impact on 
health care costs for the smallest of small business owners, 
those self-employed workers who buy insurance on the private 
markets. However, as part of tax reform, Congress effectively 
repealed the individual mandate, which CBO estimated would 
result in 4 million fewer people carrying insurance this year, 
another 13 million in 2027, and that premiums would increase by 
10 percent in most years of the next decade. Recent evidence 
shows that CBO was correct. In fact 2019 premiums, according to 
at least one estimate, will be an average 6 percent higher as a 
direct result of the individual mandate repeal and the 
expansion of more loosely regulated plans than would otherwise 
be the case.
    And it is not just an increase in premiums that are a cause 
of concern with respect to the impact of tax reform. The 
reported lower refunds taxpayers are receiving due to changes 
in withholding may have unintended yet painful consequences for 
taxpayers who anticipated a higher refund and put off health 
care spending until they got their refund. Banking research 
shows that Americans increase their out-of-pocket health care 
spending by 60 percent in the week after receiving a tax 
refund. For those taxpayers who are this year receiving lower 
refunds, they may have to wait even longer to pay for much 
needed health care costs.
    Finally, I am really concerned about how tax reform failed 
to address the tax compliance challenges of the 2.3 million 
Americans working in a side hustle in the gig economy. In 2016, 
I published research that shows that more than 60 percent of 
these workers do not get any tax information reporting forms, 
which means the IRS doesn't, either. Under current law, the 
platforms are not required to publish these forms to the 
workers or the IRS until those workers meet a $20,000, 200-
transaction threshold. But the reality is, most folks with a 
side hustle in the gig economy never meet that $20,000 
threshold and therefore are not getting the tax information 
reporting forms that they need to actually pay their taxes. 
This has dire consequences with respect to the budget, as well 
as their ability to fund their own Social Security 
contributions.
    However, Congress was well aware of this issue and chose 
not to act in connection with tax reform. These are issues that 
Congress and this committee should be tracking and studying as 
it moves forward with its oversight of tax reform.
    Thanks so much and I am happy to answer any questions that 
you have.
    [The prepared statement of Caroline Bruckner follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Thank you very much.
    I now recognize Ms. Pol for five minutes.

                     STATEMENT OF LANA POL

    Ms. Pol. Good morning, Chairman Yarmuth, Ranking Member 
Womack and members of the House Budget Committee. My name is 
Lana Pol. I am an owner of multiple small businesses in and 
around Pella and Des Moines, Iowa. I serve as the president of 
Geetings, Incorporated; G.I. Warehouse Corporation; Mowbility 
Sales and Service; and Creative Inspirations. Thank you for 
inviting me today to testify.
    Geetings, Incorporated, was founded in 1972 by my father, 
Delroy Wayne Geetings. Dad completed only a sixth-grade 
education but his drive and motivation made him a successful 
entrepreneur. His many businesses included a landfill, a 
filling station, a pool hall, a car dealership and an 
excavating company. Forty-seven years later, the company 
continues to operate using Dad's motto for life, ``If it's 
worth doing, it's worth doing right.''
    In 1975, Geetings expanded to the nearby town of Knoxville 
with the building of a warehouse and the founding of G.I. 
Warehouse Corporation. Additional warehouses were built to 
fulfill demand. Geetings, Incorporated, and G.I. Warehouse 
Corporation continue to operate based on Dad's original values 
of integrity, honesty, respect and loyalty and are committed to 
delivering quality service one customer at a time.
    I joined the company on a full-time basis in 1975. I bought 
out my retiring brothers in 2011 and 2012 and became the sole 
owner of Geetings, Incorporated, and G.I. Warehouse 
Corporation. In 2015, I carried on my father Wayne's tradition 
of entrepreneurship and opened two new small businesses along 
with the next generation, my children. Mowbility Sales and 
Service is an outdoor power equipment retailer and service 
provider in Pella and Des Moines. Mowbility recently purchased 
Odyssey Spas and moved into selling new products like spas, 
swimming pools and hot tubs. Creative Inspirations is a 
promotional product distributor, specializing in apparel and 
customer fulfillment also in Pella. Both of these businesses 
are rapidly expanding. I hope to pass the businesses on to the 
third and fourth generations of our family.
    The 2017 Tax Cuts and Jobs Act provided tax relief that 
allowed us to invest in our employees with raises and invest in 
our businesses with a significant facility expansion and new 
vehicles. The new tax law also increased local and national 
business confidence. Together, these factors continue to 
benefit our local and national economies. Two of the most 
significant direct benefits from the new tax law for our 
businesses were the creation of the new small business 
deduction, Section 199A, and the expansion of the small 
business expension, Section 179.
    For tax filing purposes, our businesses are organized as S 
corporations and LLCs, meaning the business earnings flow 
through to my individual tax return. The vast majority of small 
businesses are organized similarly. The creation of the new 
small business deduction provides substantial tax relief for 
businesses like ours, with a deduction up to 20 percent from 
business income.
    My accountant informed me that the new small business 
deduction will provide around $40,000 in tax relief for our 
businesses. This tax relief provides crucial cash flow that 
allowed us to provide up to $4,000 raises to our employees, the 
largest raises we have been able to provide in recent years. 
These raises increased employees' take-home pay and helped us 
retain employees. As you know, businesses across the country 
are experiencing tight labor markets, an indicator of a strong 
economy. The labor market is especially tight in Iowa. 
Retaining high-valued employees is key for our business to 
function.
    Additionally, we invested $2 million in a nearly 40,000-
square-foot expansion of G.I. Warehouse Corporation, which was 
completed in December. We are now up to 460,000 square feet in 
warehouse space. We have filled the warehouse space, another 
strong economic sign.
    The new tax law doubled the small business expensing 
thresholds of the tax code from 500,000 in 2017 to over a 
million dollars in 2018. This expansion incentivized us to 
purchase six new semi-trucks totaling a million dollars and 
will allow us to immediately expense the cost of the trucks in 
2018 instead of depreciating that amount over several years.
    I have observed other small businesses in and around Pella 
also investing in employees and companies. Multiplying our 
experience by millions of small businesses around the country 
demonstrates significant economic benefits resulting from the 
Tax Cuts and Jobs Act.
    Many of the provisions benefitting individuals and small 
businesses, like the small business deduction, sunset after 
2025. That sunset date makes small business owners nervous 
about future expansion. To provide long-term certainty and 
confidence for small businesses, Congress should make these 
provisions permanent. I urge Congress to pass bills like the 
Main Street Tax Certainty Act.
    Thank you for the opportunity to testify. I look forward to 
answering any questions.
    [The prepared statement of Lana Pol follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. I thank you all for your testimony. We 
will now begin the question and answer part of the hearing. 
And, as is our habit, the ranking member and I will defer our 
questions to the end. So I now recognize Mr. Higgins of New 
York for five minutes.
    Mr. Higgins. Thank you, Mr. Chairman.
    Firstly, Dr. Gale, you had talked about three criteria as 
it relates to testing growth, fairness and a fiscal test, all 
of which this tax cut failed. Is there any tax cut that 
actually pays for itself?
    Mr. Gale. There certainly are situations where reducing a 
tax rate could pay for itself. For example, if you had a 95 
percent tax rate on some form of income, you reduced it to 90 
percent, you would likely end up raising revenues because you 
are doubling the after-tax return there from 5 to 10 cents on 
the dollar. But none of that really applies. We are way over on 
the other side of the so-called Laffer curve.
    Mr. Higgins. Mark Zandi from Moody's Analytics, a former 
adviser to John McCain, had said that the best-case scenario 
for a corporate tax cut is a return of 32 cents for every 
dollar that you give away in a tax cut, corporate tax cut. So 
that would say to me that your return on investment from that 
tax cut is minus 68 percent. Is that a fair characterization?
    Mr. Gale. We will clearly get some revenue offset from 
corporate tax cuts. There will be some, we will not lose 100 
percent. But it really depends on what part of the corporate 
tax system is cut. Cutting the rate, which is what happened in 
2017, is the least efficient way to generate new investment. 
Because a huge amount of current corporate investment is income 
from investment in the past. And so cutting the rate does not 
do anything to boost investment in the past. You get a much 
bigger bang for the buck if you give incentives to new 
investment.
    So, for example, if we raise the corporate rate to 25 or 28 
but also moved all the way to expensing, we would get more 
investment and more revenues than the current system.
    Mr. Higgins. When this corporate tax bill was originally 
made public as a proposal, the White House Council of Economic 
Advisers had stated in a formal communication to the House Ways 
and Means Committee that this proposed tax cut would increase 
household income by between $4,000 and $9,000 and this would be 
recurring, this would happen on an annualized basis. I do not 
have any evidence that that materialized. Is there any evidence 
that there has been an increase in household income to the 
extent to which the White House Council of Economic Advisers 
had stated that it would?
    Mr. Gale. Well, the CEA was very careful not to specify a 
date by which that would happen. So I do not think anyone 
expected it to happen in the first year. But they expect income 
to rise by 4,000 to 9,000 above what it otherwise would have 
risen. I find that extremely unlikely and I will refer back to 
the CBO numbers I mentioned earlier that, after 10 years, 
national income will only go up by one tenth of 1 percent.
    Mr. Higgins. Who is the Council of Economic Advisers?
    Mr. Gale. The White House group of economists.
    Mr. Higgins. And that would include perhaps the Treasury 
Secretary?
    Mr. Gale. No, sir. The CEA is set of staff members. There 
are three members of the council, Kevin Hassett being the head 
of the council right now. And I think there are about 15 or 20 
staff members, that they work for the White House.
    Mr. Higgins. Okay. How could they be so far off?
    Mr. Gale. The document cites the literature in a number of 
ways. But I and others, when we look at the literature, reach 
different conclusions than the CEA does.
    Mr. Higgins. Who is the author of the literature?
    Mr. Gale. There are numerous, numerous articles.
    Mr. Higgins. So they are economists. They are looking for 
literature presumably from other economists. So I am just kind 
of curious as to what the Council of Economic Advisers, who 
would they defer to in order to inform them of a decision that 
they have to make a formal report on the White House Council of 
Economic Advisers stationery to Congress.
    Mr. Gale. Normally, they would look at the academic 
literature. But it is not always easy to interpret these 
numbers. For example, there was a study in Germany that half of 
the corporate tax is passed on to workers and people try to use 
that in the United States but it is not a valid comparison 
because the governmental units in Germany are much smaller than 
the overall size of the U.S. economy, so the amount of shifting 
of the tax will be different.
    Mr. Higgins. I know my time has expired but let me just say 
this. So the White House Council of Economic Advisers, who make 
a report to Congress, may have made reference to the literature 
on economics that was established by economists in Germany?
    Mr. Gale. So they cite a lot of the literature. My point 
is, I think that I and others who have looked at the same 
literature would reach different conclusions from it.
    Mr. Higgins. I yield back, thank you.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Mr. Flores from Texas for five minutes.
    Mr. Flores. Thank you, Mr. Chairman. I appreciate the panel 
for joining us today.
    Some of the testimony today, I think, has been somewhat 
inflammatory and a little bit reckless, particularly 
economically reckless. I note that on the panel, there is 
really only one person there who, like me, has signed the front 
side of a paycheck. And I would submit that gives us a much 
better understanding of the real-world economy versus the 
understanding that may come from looking at a model.
    I have a couple examples of the tax impact. I just 
exchanged text messages with a person who owns Blackhawk Aero 
in Waco, Texas. He describes this as a mom-and-pop business 
that is celebrating its twentieth anniversary this year that 
has gone from zero to $90 million in revenues during that 20-
year process.
    Here is what he says. He says the tax cuts can be directly 
attributable to our significant increase in business. Buyers 
are able to take advantage of the 100 percent depreciation on 
our products that we sell, so the sales uptick increased 
dramatically by about 40 percent. And then I am going to go on. 
He said, we have been able to raise pay, we have been able to 
invest in new facilities, we have been able to grow our 
employee base. And all of that made 2018 a record year, and 
they believe 2019 will be equally as good, moving forward.
    So then I go to another part of my district down in Bryan-
College Station, Texas. And there is a business there called 
Village Foods and Pharmacies. And it says, to highlight the 
direct results of the Tax Cuts and Jobs Act, the owner has said 
that they have been able to put together bonuses and a brand 
new 401(k) program for all employees.
    And this is just like these stories you hear all over the 
country. This is the real world. This is not something where we 
are trying to reflect some sort of the inflammatory rhetoric 
that we heard before.
    One of the things that I think is interesting is the talk 
about a carbon tax. A carbon tax would hit the families that 
some of these witnesses talked about as having been impacted 
adversely by the Jobs Act, even though they have more pay than 
they had before and more job opportunities than they had 
before. It has been said a carbon tax would hurt them the 
worst. Their cost of living would go up dramatically under a 
carbon tax regime. And with the somewhat promise that they 
would get some of it back from Washington. We have seen 
Washington break too many promises.
    We have heard claims that the tax act has increased the 
deficit. But, you know, as a person in the real world, when my 
revenues go up, then I am better off. And the country's 
revenues, the federal government's revenues have gone up from 
2017 to a record in 2018, and they are on track to go up again 
for another record in terms of receipts by the federal 
government in 2019. It is hard for me to see how that increases 
the deficit.
    Now, what does increase the deficit is spending. And this 
goes back to what the GOP leader said a minute ago, in that we 
do not have a revenue problem, we have a spending problem. And 
so we need to look at ways to address the spending.
    What we have heard from the other side of the aisle are 
huge programs they want to roll out like the Green New Deal, 
which, just we got a cost estimate on it the other day of $93 
trillion, which would represent about 90 percent of the wealth 
of all the families in this country.
    Ms. Pol, I have a question for you, since again you operate 
in the real world, not in an academic world, and you have an 
understanding of what it means, the challenges it means when 
you hire somebody and you sign the front side of their paycheck 
every few days.
    Can you talk about the impact of some of the tax proposals 
you heard from the other witnesses in their testimony?
    Ms. Pol. One of the things that was talked about that 
really stuck out to me was the health care, that it just, that 
that cost health care to go up. My experience has been in the 
last five years, we have had health care increases of 17 
percent, 19 percent, 29 percent and again this year now to 9 
percent. So I don't think that the tax, this law, had anything 
to do with this. This is prior to that. And that was through 
Obamacare when everything started skyrocketing on us. So that 
was one of the reasons that we were having a hard time. We 
have, since 1975, paid 100 percent of our employees' health 
care costs, family and all. They have no cost out of pocket. 
And it did not allow us to give any raises. And so that is why 
this was significant for us to have the raises this year.
    Mr. Flores. Thank you. I yield back the balance of my time.
    Chairman Yarmuth. I thank the gentleman. I now recognize 
Mr. Scott of Virginia for five minutes. Oh, Mr. Doggett is 
back. Mr. Doggett of Texas for five minutes. Sorry.
    Mr. Doggett. Thank you very much, Mr. Chairman. In many 
ways, the best label for this tax law is the whopper. And there 
has just been one whopper after another about it. I think Mr. 
Higgins just referred to one of the most significant ones, the 
claim that Americans would receive on average $4,000 in 
additional household income every year. We now know that not 
only do Americans have good reason to be asking, where is my 
$4,000, or as Secretary Mnuchin put it, it would be $4,500 that 
we would be getting because, in fact, the estimates I have seen 
is that over 95 percent of American workers have not received 
any bonuses or any wage hikes due to this Republican tax law.
    So while there may have been a sugar high for the economy 
in the short term, we know immense debt is coming our way. And 
the $4,000 is just still not available for most Americans.
    But that is not the only whopper. And, Ms. Huang, I would I 
would like to discuss with you the portion of your testimony 
that focused on the international side. Because certainly among 
those who received the greatest rewards were multinational 
corporations. In fact, they got a bonanza out of this.
    Now, President Trump, on one of his many tours to the golf 
course, apparently told executives that we could expect $4 
trillion that would just come pouring back when they gave this 
discounted rate on these so-called repatriated earnings abroad. 
How near have they come to the $4 trillion of repatriated 
earnings coming back to invest and create jobs here in America?
    Ms. Huang. So I think nobody has been able to figure out 
where that 4 trillion came from and, to date----
    Mr. Doggett. Well, that is like a lot his numbers.
    Ms. Huang. And to date, we have seen about 500 billion in 
repatriated earnings. And we have also seen very little of that 
flow through into increased investment or wages.
    Mr. Doggett. Right. Because, as we expressed concern when 
that tax law was being written, in fact what happened the last 
time they had a repatriation, the same thing happened again. 
And that is, the money flowed into stock buybacks and to 
dividends. So, if you were one of the American families who had 
stocks in one of these companies, you maybe did well. But very 
few, a very small portion had that.
    Is it correct that almost all of the money that has come 
back has gone into stock buybacks and dividends and some 
increase in executive pay?
    Ms. Huang. And that is absolutely not surprising, as you 
said. I think we mentioned earlier CEA Chair Kevin Hassett. 
Before this bill was enacted, another one of his promises was 
the suggestion that a lot of that money would flow through 
directly into investments in factories and jobs in the U.S., 
combined with the cut in the corporate rate.
    If you notice his language since the bill was enacted, he 
has kind of changed his story since then and saying now, oh, 
well, it was kind of expected that you would get this one-time 
sort of glut of buybacks and dividends and so on and so forth. 
So, the ultimate increase in wages for workers seems to be 
getting further and further away in terms of what we are being 
promised.
    Mr. Doggett. And then another one of the whoppers that was 
told was that there were things in this tax bill that were 
going to prevent the outsourcing of American jobs. In fact, are 
there not a number of provisions that have been added by 
Republicans in this tax law, such as the fact that you might 
pay nothing or no more than half of what you would pay here in 
America in taxes if you invest in Shanghai instead of investing 
in San Antonio?
    Ms. Huang. That's absolutely right. The basic structure of 
the law is that there is a permanently low discounted rate on 
foreign profits as opposed to profits earned in the U.S. And 
the law in a way recognizes that problem and it has a whole 
series of guardrails to try to stop shifting of profits and 
investment offshore. But one of these very measures creates its 
own new incentive to actually shift investment offshore.
    Mr. Doggett. As I think you know, I have outsourcing 
legislation to try to close all those loopholes. Is it 
important to protect American jobs by closing these giant 
loopholes that Republicans created in their tax law to 
encourage the outsourcing of jobs and investment from our 
country to abroad?
    Ms. Huang. It is vitally important. And also important to 
protect that revenue that could be put to better use investing 
in infrastructure and other shared priorities that would help 
the economy at home.
    Mr. Doggett. Thanks to all of you. I yield back.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Mr. Johnson of Ohio for five minutes.
    Mr. Johnson. Thank you, Mr. Chairman. I want to thank our 
witnesses for being with us today to have this very, very 
important discussion. You know, especially you, Mrs. Pol, for 
providing a voice of reason for small businesses. That is so 
vitally important here. Small businesses create roughly 60 
percent of the jobs in America. And without what you and others 
like you do, our economy falters in a very, very big way. So 
thanks for being here.
    You know, in my part of Ohio, small businesses like yours, 
one for example, Bully Tools in Steubenville, are staples of 
the economy and employ their neighbors in good paying jobs. 
Bully Tools manufactures equipment for gardening, roofing and 
other work and is in the planning stages of opening a second 
factory, due to the tax reforms that were passed last session, 
the Tax Cuts and Jobs Act. They were also featured at President 
Trump's ``Made in America Showcase'' in the summer of 2017 as 
the business representative from Ohio.
    The people I represent in eastern and southeastern Ohio 
are, by and large, hardworking members of the middle class. 
But, contrary to the rhetoric on the other side, they have seen 
real benefits from the Tax Cuts and Jobs Act.
    There have been some clear benefits for small businesses 
like Bully Tools, such as increasing the thresholds for the 
estate tax and the alternative minimum tax. And for the 85 
percent of families in my district who take the standard 
deduction, more of their money is tax free because the Tax Cuts 
and Jobs Act nearly doubles the standard deduction for married 
couples and individual filers. With more money at home, 
families can support our small businesses.
    So, Mrs. Pol, have you seen this type of indirect benefit 
of tax reform in your community and businesses like yours?
    Ms. Pol. Yes, we have seen our town really growing and we 
have seen new businesses coming in. We have two large 
corporations, Pella Corp. and Vermeer's, that supply a lot of 
our small businesses with work. And that is one of the reasons 
I am able to build a warehouse. So with this coming through, 
even though some of it is going to the large corporations, they 
are turning it around and also allowing small businesses to 
gain from it, which allows employees to gain.
    Mr. Johnson. Okay, well, thank you. You know, one of the 
most often repeated criticisms of the Tax Cuts and Jobs Act is 
that they are supposedly driving our country off a fiscal 
cliff. The reality is that, even with the tax cuts, the federal 
government is projected to bring in a staggering $46 trillion 
in revenue over 10 years. No nation in the world has ever 
collected more. The federal government clearly has a spending 
problem, not a revenue problem. And it is the out-of-control 
mandatory spending that is the driver of our deficits.
    What I find disconcerting is twofold. My Democrat 
colleagues have proposed to dramatically increase mandatory 
spending with a new spending wish list costing over $50 
trillion over the next decade. And, second, they want to pay 
for their new priorities by increasing taxes on Americans. I am 
assuming this would include rolling back the tax relief that 
the Tax Cuts and Jobs Act brought for all Americans.
    I would refer my colleagues in the majority to an article 
that came out in Roll Call just today. There are some examples. 
Look at the big blue states, states like New York, California, 
Illinois that are struggling to make ends meet. They have got 
rising deficits. Look at states on the other hand--by the way, 
those states have really high tax rates. Look at states like 
Texas and Florida and other states who have understood that 
there is a phenomenon that occurs when you allow the American 
people to keep more of the money that they earn.
    Now it does not match up with the static scoring of CBO and 
others here in Washington, where we play funny money deals. But 
I can tell you that the American people know real money when it 
is in their pocket.
    So, Dr. Gale, do you think it would be plausible to 
increase taxes to fully pay for the spending wish list? And, if 
so, what kind of tax increases would you suggest to pay for 
this $50 trillion of new spending?
    Mr. Gale. The CBO estimates of TCJA that show that TCJA 
loses substantial amounts of revenue are not static estimates, 
they are fully dynamic.
    Mr. Johnson. That is not the question I asked you. I asked 
you what kind of tax increase do you think it would take to pay 
for this $50 trillion wish list?
    Mr. Gale. I think there are a number of tax increases. We 
should pursue the carbon tax with offsets for low-income 
households as clearly one of them. The value-added tax with 
offsets for low-income households is clearly another. How we 
get all the way to the number you specified is a different 
question. But it----
    Mr. Johnson. That is not a number I specified; that is 
their wish list. That is the Democrat wish list, 50 trillion, 
so----
    Mr. Gale. How we get to the number you asked me about is a 
different question. I think that even if we do generate 
judicious spending cuts in Social Security and Medicare, if you 
look at the arithmetic of the budget outlook, we will need to 
raise tax revenues.
    Mr. Johnson. Please note, Mr. Chairman, I must qualify, I 
never said cut Social Security and Medicare. I want to make 
sure. Those were your words. That is not where I am suggesting 
that we cut.
    Chairman Yarmuth. Okay, the gentleman's time has expired. I 
now recognize Mr. Scott of Virginia for five minutes.
    Mr. Scott. Thank you, Mr. Chairman. Mr. Chairman, the 
ranking member has frequently asked us what our plan is, and I 
just put this chart up here to show that during Republican 
administrations, the deficit gets worse; during Democratic 
administrations, the deficit gets better. We had PAYGO, where 
if you have a wish list you have to pay for it. And therefore, 
as opposed to tax cuts that are not paid for and put us in the 
ditch.
    So in response to the question, our plan is the blue, their 
plan is the red. And in terms of jobs, next chart, you can see 
where jobs have gotten better. In about 1990, there was a 
bipartisan bill where President Bush, I guess we misread his 
lips, and jobs got better. During the Clinton administration, 
they got better. You can see it in 2009, at the bottom of 2009, 
President Obama had an economic plan.
    We passed a $1.5 trillion economic plan and you cannot 
point to where on that chart it even made any difference. So in 
terms of what our plan is, if we could get back to Democratic 
administrations, we would have a much better budget.
    Dr. Gale, let me ask you a question on tax cuts generally. 
Some tax cuts stimulate the economy, some do not. Which tax 
cuts tend to stimulate the economy?
    Mr. Gale. You will get the biggest bang for the buck for 
tax cuts that get spent rather than saved. And that, typically, 
in terms of households, that is typically money that goes to 
lower and middle-income households who tend to spend a greater 
share of their income than high-income households who tend to 
save more.
    Mr. Scott. And so this tax cut where 80 percent of the 
benefits went to the top 1 percent and corporations would miss 
that mark?
    Mr. Gale. This tax cut was not well designed to boost 
short-term consumption, right.
    Mr. Scott. And how did the tax cut miss? We heard how they 
missed women businesses. How did they miss small businesses?
    Mr. Gale. The small business literature issue is confusing. 
It is actually young businesses that create most of the jobs. 
Most of the small business sector is sort of sleepy and quiet. 
And just as you would not want to confuse small people and 
young people, you do not want to confuse small businesses and 
young businesses. So, what is important is that we generate 
incentives for young businesses to grow. But if we subsidize 
all small businesses, we are spending a lot of money without 
getting a lot of bang for the buck in terms of the economics.
    Mr. Scott. Ms. Huang, you talked about how the passthrough 
deduction hurts individual workers. Can you elaborate on that a 
little bit?
    Ms. Huang. The problem is that it actually might encourage 
companies to replace good jobs with independent contractors or 
to outsource those jobs to outside contractors. So, my 
colleague, Brendan Duke, has research that shows that it risks 
pushing more workers into low-wage firms or outside the 
protection of labor laws. So many companies already outsource 
their janitorial staff, the security guard jobs to outside 
contractors, for example. But the passthrough deduction gives 
them a tax incentive to do even more of that.
    So, if you were to take a company that was considering 
whether to retain its in-house IT department or to contract to 
an outside firm to do that same work, if they contracted to the 
outside worker, that would get the benefit of a passthrough 
deduction that they could then split. So that is a tax 
incentive to go in that direction. Now, that is not really 
encouraging entrepreneurship or job creation, it is just 
splitting firms up.
    Mr. Scott. And what is wrong, why is the worker at a 
disadvantage as an independent contractor?
    Ms. Huang. Well, in the independent contracting case, there 
is a lot of research that shows that pay and benefits and legal 
protections for independent contractors go down. So even though 
you might get a little bit of passthrough deduction, you could 
be giving up a whole lot in terms of health benefits, workplace 
protections and other benefits that usually come on top of 
wages.
    Mr. Scott. And, Ms. Bruckner, could you say a word about 
how we missed small businesses with the tax cuts?
    Ms. Bruckner. I think that we did not do careful thinking 
about what type of small businesses we are going to invest in. 
Women business owners start businesses at rates faster than 
five times the national average and yet we have never 
considered if small business tax expenditures generally 
specifically target and help those women business owners grow. 
And we do not know if the money we are investing in these 
business expenditures at all helps these businesses start and 
grow. And, in fact, my research shows that it bypasses the 
majority of women business owners who are very small and in 
services altogether. So, in essence, it could very well be that 
you are subsidizing the same firms over and over again, as 
opposed to investing where there is actually opportunity for 
economic growth.
    The absence of congressional research and study on these 
issues means that you guys are operating completely blind.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Mr. Hern of Oklahoma for five minutes.
    Mr. Hern. Thank you, Mr. Chairman, Ranking Member Womack. 
You know, as a small business owner for the last 34 years, I 
find it very interesting to listen to testimony of those who 
actually pay the taxes and those who talk about the tax policy. 
It is pretty fascinating.
    I would like to ask each one of you, I know Ms. Pol has 
created jobs. Have any of the three of you ever actually had to 
use the tax code and whichever tax code to actually create 
jobs, have employees and be responsible and be the last to get 
paid?
    Ms. Bruckner. Well, I am someone that is actively looking 
for opportunities to start my own small business. But my 
concern over health care cost is precluding me and my husband 
from starting our own small business. It is something that we 
are actively concerned about and has delayed. Like most of the 
literature shows, when you are disproportionately concerned 
about stability for health care, it delays entrepreneurship.
    Mr. Hern. Perfect. You should have been around about eight 
years ago.
    Yes, ma'am, Ms. Huang.
    Ms. Huang. I have not employed people. But I also would 
like to say that, also in the real world are the millions of 
workers who receive the paychecks. And I think their voices, 
including the 11 million kids that get $75 or less from this 
bill, is also important when thinking about the impacts on the 
real economy.
    Mr. Hern. Sure, absolutely. Mr. Gale?
    Mr. Gale. I run a small consulting business and have had 
people work for me. They were not employees, they were 
contractors.
    Mr. Hern. Fair enough. Thank you. I would like to thank 
you, Ms. Pol, for all the work you do and being the last to get 
paid, because anything that happens to expense your business 
does affect what you take home. And you make sure, as you said, 
that your employees get paid first and that all your vendors 
get paid. And that is no easy task, as a small business owner.
    You know, your story is fantastic. And fortunately, it is 
not unique across the country, as many of my colleagues have 
brought up. Many of my families in Oklahoma's first district 
benefit from the Tax Cuts and Jobs Act, as well. Today, I would 
like to highlight 22,000 of those people in my district.
    A constituent of mine, Norm S. Bjornson, is the founder of 
AAON, a Tulsa-based company who engineers, manufactures, 
markets and sells air conditioning and heating equipment. Norm 
employs approximately 2,000 individuals at his Oklahoma and 
Texas facilities. Norm announced personnel employed by AAON on 
January 1, 2018, excluding executives, will receive a $1,000 
bonus in recognition of the new tax reform law.
    Additionally, headquartered in Tulsa, QuikTrip Convenience 
Stores employs over 20,000 people, started in Oklahoma, in 
Tulsa, in 1961. Fortune has ranked QuikTrip on the list of best 
companies to work for for 14 years running. QuikTrip also gave 
their employees bonuses, including part-time employees, and 
excluding those who are considered executives. QuikTrip also 
credits the ability to provide these bonuses to the Tax Cuts 
and Jobs Act. The bonuses range from $500 to $3,000 per 
employee. Additionally, they are using savings to grow their 
company and provide opportunities for their employees.
    Finally, as a direct result of the Tax Cuts and Jobs Act, 
Cox Communications added roughly $450 million, additional 
dollars, into their employee pension investments to bring 
solvency to their plan.
    You know, I would like to say that, as a direct result of 
the Tax Cuts and Jobs Act, families in my district ended up 
with more money in their pockets this year. Small businesses 
like my own invested over $2 million last year business of the 
benefits that were brought forth. In addition to the bonuses, 
added benefits and pay raises, the average family in my 
district received a tax cut of around $1,888.
    And to me, this sounds remarkably better than proposed 
Green New Deal, which would cost each American family as much 
as $650,000 per household, we can range from 50 trillion to 93 
trillion, whichever number you want to pick. And I also find it 
very interesting that all of a sudden that our colleagues and 
the witnesses are talking more about debt after we started 
putting taxpayer dollars back into people's pockets and no one 
is talking about Democrat proposals coming from this Congress 
alone that will cost upwards of $100 trillion, and why are we 
not holding hearings talking about that, instead of how we are 
going to spend more.
    I yield back my time.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Mr. Peters of California for five minutes.
    Mr. Peters. Thank you, Mr. Chairman. We missed a real big 
opportunity to do real tax reform. Real tax perform would have 
promoted American growth and competitiveness. Instead, 
Republicans chose a path that blows up the deficit and will 
harm working families in the long run.
    And I was at the microphone protesting this move at that 
time, as were many Democrats. Because debt matters. Debt crowds 
out private investment. Debt gives us less flexibility to 
respond to emergencies. Debt increases the risk of financial 
crisis. And I sincerely hope my colleagues on both sides of the 
aisle will examine the long-term consequences of ignoring the 
debt and how this tax bill contributed to this debt crisis.
    Mr. Gale, I wanted to ask you, how much did the 2017 tax 
law increase debt and deficits?
    Mr. Gale. Under CBO's dynamic estimates, the full increase 
in the deficit would be about $1.9 trillion over 10 years. That 
is for the tax cut as it is written. If the tax cut, if the 
temporary provisions were extended, the net debt, deficit 
effect would be over $3.1 trillion.
    Mr. Peters. Right. And someone suggested that these were 
static analyses. Can you describe briefly what you mean by 
dynamic in that context?
    Mr. Gale. Sure. Static, what is called a static analysis 
incorporates a lot of behavioral responses, but it keeps the 
macroeconomic aggregates constant. So, it keeps output constant 
but it allows people to shift, for example, between different 
types of saving if it were a proposal to increase IRAs or 
something like that.
    A dynamic estimate is also called a macro-feedback 
estimate. It includes the impact on the economy, as well as 
then how that feeds back into revenues, as one of the 
congressmen was discussing. So, it incorporates all of those 
effects.
    Mr. Peters. Fair to say it is a more comprehensive view to 
do dynamic than static?
    Mr. Gale. Yes, absolutely.
    Mr. Peters. Even after the law passed and independent 
groups scored it as increasing the deficit by nearly $2 
trillion, the administration claimed that it would pay for 
itself. Secretary Mnuchin claimed, ``So we are humming along on 
where projections are and, as I have said, at 3 percent 
economic growth, this tax plan will not only pay for itself but 
in fact create additional revenue for the government.''
    Mr. Gale, is there any evidence to support this claim?
    Mr. Gale. No. There is, in principle, a growth rate at 
which the tax cut would be revenue neutral. But no one from the 
CBO to the JCT to Mark Zandi who was mentioned earlier, to the 
Tax Policy Center, to others, nobody predicts that the economy 
will grow at that rate.
    Mr. Peters. If I recall, it was something around over 4 
percent was the assumed rate at best case?
    Mr. Gale. I believe that's right.
    Mr. Peters. And again, as you said, CBO shows that the tax 
bill, even if some provisions expire on schedule, will add $1.9 
trillion to the debt by 2028 and that extending it this year 
would cost at least another $1.1 trillion through 2029.
    You know, people like to take a shot at my home state of 
California and their relatively high tax rates. I would just 
say that growth in California has been pretty strong. Do you 
agree with that understanding?
    Mr. Gale. Yes, the economics literature is pretty clear on 
this. There is a very weak relationship between state growth 
rates and state tax rates.
    Mr. Peters. Right. I would also note that in Kansas, where 
there is a huge effort to cut taxes as unprincipled as this 
effort in Congress in 2017, voters wised up and removed the 
governor because they wanted to see public investment. And 
public investment now is at a relatively low historical level 
for the United States of America. And if we wanted to encourage 
economic growth, and I hope we will discuss that in this 
committee, that would be something we would want to consider to 
invest in.
    Finally, Mr. Gale, when you give tax cuts, when you 
potentially debt finance tax cuts like we did in 2017, is it 
fair to say that the growth impacts are less than debt 
financing something like infrastructure?
    Mr. Gale. I think in general, yes. It depends on how the 
tax cut gets used. But if a significant percent of it gets used 
simply to be spent, whereas if 100 percent of the 
infrastructure gets focused on new investment, then the 
infrastructure investment will have a bigger impact.
    Mr. Peters. Well, on trade and on things like the deficit, 
I invite Republicans back to their roots and hopefully we will 
have that discussion.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Mr. Smith of Missouri for five minutes.
    Mr. Smith. Thank you, Mr. Chairman. I appreciate the 
opportunity to have this hearing, for us to highlight the 
benefits of the Tax Cuts and Jobs Act.
    I am reminded of a gentleman from my home state, Mark 
Twain. Mark Twain had a quote that said, you can't depend on 
your eyes when your imagination is out of focus. That is what I 
am reminded by so much of the conversation that I have heard 
sitting on this panel today.
    As one of the original co-sponsors and writers of the Tax 
Cuts and Jobs Act, there is a lot of not serious conversation 
when we are talking, first off, about the statement of a $1.5 
trillion debt over 10 years or a $1.9 trillion of debt over 10 
years to pay for the Tax Cuts and Jobs Act, whenever more than 
half of my colleagues on the other side of the aisle have 
signed onto House Resolution 109, the Green New Deal, which 
reports showed yesterday would cost $94 trillion, $94 trillion. 
That is $9.4 trillion a year and you all are saying that we are 
exploding the debt over $150 billion that we allow American 
taxpayers to keep of their money, not the government's money, 
of their money.
    So, my question is, to the other side, actually, is when 
you are proposing 12 Democrat colleagues of mine on that side 
of the aisle have co-sponsored the Green New Deal, who want to 
add $94 trillion, this is what we are dealing with on the 
budget committee, people that are not--not being realistic.
    What I will say is I represent one of the poorest 
congressional districts in Congress, maybe the poorest on this 
committee. The median household income in my district is 
$40,000 a year of a family of four. Southeast Missouri. And I 
can tell you that, Mr. Gale, your judgment when you look at 
things of whether it is the wrong thing at the wrong time in 
your opening statement, well I will tell you the young lady who 
got a very nice, sizeable bonus at Lowe's in Rolla, Missouri, 
when I met with her because of the Tax Cuts and Jobs Act, she 
was able to purchase a new car seat for her toddler because her 
old car seat was broken. That was at the right time, it was not 
at the wrong time, and it was for the right person.
    I can talk to you about the bank teller in Hartville, 
Missouri, who told me that U.S. Bank, because of the Tax Cuts 
and Jobs Act is now paying all their employees at at least the 
starting wage of $15 an hour. That is real money in Wright 
County, Missouri.
    I can tell you about the individuals at the call center in 
Cape Girardeau, Missouri, that received a $1,000 bonus from 
AT&T because of the passthrough of the Tax Cuts and Jobs Act, 
and the savings that they were able to pay for their kids' 
college books. That is real, real money.
    $850 in southeast Missouri is not crumbs. To some 
politicians in San Francisco, California, it is crumbs. But 
where they make their median income household of $40,000, that 
is a couple months' rent, that is a couple car payments. So, 
unless you have been to the bootheel of Missouri and you see 
what my people are experiencing, don't you say that the people 
of southeast Missouri have not benefitted.
    We see a growing economy. Right now, we have the largest 
increase in wages in over a decade. CBO said that. CBO 
predicted more than 900,000 new jobs over the next 10 years. 
These are facts.
    Mrs. Pol, thank you for being here. And I also want to 
thank you, the very last line in your statement, you encourage 
Congress to pass the Main Street Tax Certainty Act. I am with 
you, that is my legislation. So, thank you for highlighting 
that. And that causes real growth for small businesses.
    And Ms. Bruckner, I hope that you have the opportunity to 
open up your small business. And I don't know why you were not 
able to do it after the Democrats passed Obamacare, because we 
have not changed health care from when they did until last 
year. And when you look at the CBO report, they predicted that 
by eliminating the mandate, it would take 14 million people 
off. But CMS just reported that it is 2.5 million people that 
chose not to purchase health care because they could find it 
cheaper somewhere else.
    With that, Mr. Chairman, I yield back.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Mr. Horsford of Nevada for five minutes.
    Mr. Horsford. Thank you, Mr. Chairman. And first I would 
like to start by saying, being an advocate of small business is 
not a partisan issue. Coming from my district, Nevada's fourth 
district, I work very closely with my small business community, 
the metro chamber, the urban chamber, the Latin Chamber of 
Commerce, the Asian chamber. I, myself, am a small business 
owner and have helped to create jobs. And so, to suggest 
somehow that this is a partisan issue, I just do not ascribe to 
that thinking.
    But what is a real fact is that the tax scheme that was 
passed by the prior Congress gave a temporary tax benefit to 
small business but gave a permanent tax break to big 
corporations. So, while we have these slides today showcasing a 
number of small businesses by my colleagues in their district 
which we fully support, I guess the question would be why was 
there not advocacy for them, to make their tax break permanent 
instead of temporary?
    My question is related to the facts and not fake news, is 
since last year, corporate profits have increased by 13 percent 
from already near record high levels. So why did we give 
permanent tax cuts to big corporations and not help more small 
businesses so that you could predictably plan for the future 
and hire more people? Why did they approve a tax plan with no 
public hearings in 51 days and not take into account the fact 
that, again, according to the recent data available, wages are 
essentially flat since the passage of this tax bill?
    So Ms. Huang, the tax law delivered the largest tax breaks 
for the wealthiest households, specifically corporations. Many 
analysts predicted that because most of the benefits flowed to 
the richest taxpayers, economic inequality would increase. Can 
you briefly elaborate on how the tax law worsens economic 
inequality as well as wage stagnation?
    Ms. Huang. Absolutely. I think you are absolutely right, I 
think we would like to, I think proponents of the law would 
like us to picture family-run, Main Street businesses who are 
actually investing and increasing wages. But the fact of the 
matter is, the bulk of the dollars are hitting to, you know, 
the big banks that are posting record profits, the private 
equity firms that are reorganizing as corporations in order to 
get the corporate tax cut, the pharmaceutical companies that 
are getting big tax cuts without passing that on to their 
consumers or investing in the U.S.
    So overall, following those decades and decades of a larger 
share of the nation's income going to the top 1 percent, this 
tax law worsened that by giving bigger tax cuts to the very top 
than to people at the bottom and in the middle. And that in 
turn, as I mentioned in my opening, feeds racial inequities as 
well.
    Mr. Horsford. Thank you. Another point I want to touch on 
is the reality, again, real facts, that millions of taxpayers 
are now beginning to file their tax returns. And I received a 
note from a constituent, Kevin, from Las Vegas, Nevada, who 
wrote to my office and told me this is the first year that my 
husband and I are filing married jointly. Our joint refund, 
which should be in theory have been higher than we filed as 
single, since we both still deduct at the single rate. The GOP 
tax plan touted benefits for married couples making over 
$120,000 per year. But when we looked at the tax filing 
process, removing the married status and deduction, we would 
have ended up owing the government several thousand dollars 
more.
    Can either of you speak to the reality that millions of 
Americans are now going to owe more in their upcoming tax 
filing because of the GOP tax scheme that was passed last 
Congress?
    Ms. Huang. I think there is undoubtedly a lot of confusion 
around refunds and total tax liability. And that has not been 
helped at all by the rushed enactment and implementation of the 
tax law, along with some of these overblown promises that we 
have heard before. And I think overall, we are hearing a lot of 
evidence that the public knows that the law overall is tilted 
toward the highest income filers.
    I think one of the key examples that I have seen of the 
misapprehension about what the law does is the repeated 
statements, for example, from President Trump and Ivanka Trump 
and Secretary Mnuchin about what families with children would 
get, this $2,000 increase in their refunds or their child tax 
credit. When, in fact, 11 million children in the lowest income 
families will get $75 or less and millions more will get far, 
far less than the full $2,000 refund.
    So I think going forward, what we want to do is to actually 
fix that and prioritize those families so that they can see 
something of an improvement in their living standards.
    Mr. Horsford. Thank you, Mr. Chairman.
    Chairman Yarmuth. Thank you. The gentleman's time has 
expired. I now yield five minutes to the gentleman from 
Georgia, Mr. Woodall.
    Mr. Woodall. Thank you, Mr. Chairman. Thank you for those 
five minutes. I do not know if you are going to go around for a 
second round of questions. I find when I want to spend my first 
four and a half minutes making a point, it is tough to get to 
the good witnesses after that.
    I had something of value across the board. Ms. Pol, I 
wanted to start with you. Did it ever dawn on you when you 
thought about what Congress was doing as we were trying our 
very best to get good tax policy that, when you read about 
those committee hearings, that it would be one witness from one 
side of the aisle and then maybe three witnesses or more from 
the other side of the aisle, or did you think that it was not a 
stacked deck but an even playing filed, just from a distance 
back home?
    Ms. Pol. No, I would not have expected that.
    Mr. Woodall. I would not have either, and it is certainly 
the way we ran the place when we were running it and it is the 
way it is now and I think that is a shame on some issues like 
this. I heard you say specifically you made different business 
decisions, positive business decisions for your employees 
because of the passage of the tax bill.
    I heard other witnesses say unequivocally that they worried 
employees were disadvantaged not by the tax bill in general but 
specifically because of those passthrough provisions that were 
targeted at your business. And that is a legitimate concern. 
Everybody cares about employees. Do you have a more valuable 
resource in your business than your employees? Can you just go 
out and find new talent if you lose the talent that you have 
today?
    Ms. Pol. No, absolutely not. We have some specifics with 
truck drivers, especially. I just lost one to a death. I am 
going to have a hard time finding somebody in that position and 
they are valuable. We welcome them to the Geetings family when 
we hire anybody because that is what they are, they are our 
family and they are our salespeople.
    Mr. Woodall. Not surprisingly, Dr. Gale made a good point 
when he distinguished between small businesses and young 
businesses. It is not about maintaining a business model that 
is failing, it is about growing a business model and providing 
more opportunity in the community. Not to put you on the spot, 
we have not talked about this. You come from a serial 
entrepreneur family. Would you describe yourself as a small 
business or as a young and growing business?
    Ms. Pol. I would say we are young and growing yet. We are 
looking forward to more expansion.
    Mr. Woodall. I think of one of my constituent companies, 
Boehringer Ingelheim. It is a family-owned business, started in 
1885. They have been a young and growing business since 1885. 
It is now a multinational company. They can do business 
anywhere in the world they want to do business. They just 
brought an additional 225 jobs to Georgia. This is an animal 
health sciences company. These are high-paying jobs. This is 
not a $15-an-hour job, which is a great job to get. These are 
six-figure jobs that could have gone to Europe, could have gone 
to Asia and are coming to America instead, because folks have a 
choice. Multinationals do have a choice.
    If you wanted to pick your business up and move it to 
Europe or Asia, I suspect that would be a much more challenging 
model.
    I want to think about the women-owned businesses that Ms. 
Bruckner referenced. She is absolutely right, we crafted the 
tax code to focus on capital-intensive businesses because, and 
Dr. Gale may be able to speak to this, because we believe that 
capital-intensive businesses had a higher multiplier effect. 
But, yes, more small businesses are service-oriented 
businesses.
    When you think about your peers in leadership back home, 
have you heard that concern before? Folks who said, golly, 
those capital-intensive small business owners did get a special 
break that I did not get in my service business?
    Ms. Pol. I am not really hearing as much of that, at least 
in Iowa. I also belong NAWBO, National Association of Women 
Business Owners. And so, I have been active in that for a 
while. And a lot of what we are finding is, when we are 
building, when the large companies are building, when we are 
building small businesses, we actually use their services. And 
so, you know, I think it is helping out all the way through.
    And of course, we are looking at--I look at using women 
business owners, and I support that.
    Mr. Woodall. Candidly, I have not read the Billion Dollar 
Blind Spot. I am now going to have to think through that, 
because I thought that was a perfectly legitimate criticism. 
And I wish, Mr. Chairman, we had more time to actually talk 
about individual improvements. What Dr. Gale said about 
generational inequities, I think that is critically important 
that we talk about. You know, Dr. Kotlikoff has talked about 
that on a regular basis in terms of how we measure tax input.
    And one thing that I would like to get us to get back to, 
Mr. Chairman, lots of talk about consumers and lower income 
families being the stimulative effect in a tax cut. Certainly, 
that is true. Except the Tax Policy Center reports that the 
bottom quintile, bottom 20 percent, is paying a negative tax 
rate today for income taxes. About the bottom 40 percent are 
paying a negative income tax rate today. I would be interested 
to come back and have the conversation. Of course, those 
dollars are stimulative. Should we do it through the tax code 
or should we do it through the income support spending level? I 
am one of those, Dr. Gale, as you are, that believe tax 
expenditures should be measured as spending programs, not as 
tax programs, and we have not accurately measured those in the 
past, Mr. Chairman. I look forward to that partnership.
    Chairman Yarmuth. Thank you for the idea. We will consider 
that. I thank the gentleman. I now recognize Mr. Panetta from 
California for five minutes.
    Mr. Panetta. Thank you, Mr. Chairman, Ranking Member 
Womack. I appreciate this opportunity. And to all the 
witnesses, thank you for your time and your preparation, not 
just for this hearing but what you have done to be at this 
hearing. So, thank you very much.
    I am going to pick on Mr. Gale if that is all right. Just a 
couple questions for you, sir. And I am sure you were probably 
aware of this and you probably watched this hearing. But before 
the tax law was passed, you had a number of senior 
administration officials come actually into this committee and 
talk about the tax law and what they attempted and what they 
wanted to pass. And one of them was Mick Mulvaney and I am sure 
he was, at that point, OMB or one of his many positions. I 
think it was OMB at that point.
    And he said, when he testified in front of this committee, 
``We assumed for the sake of doing the budget that the tax plan 
is deficit neutral, that removing the exclusions, the 
deductions, the loopholes would lead us to a deficit-neutral 
tax plan. The dynamic benefit is only counted one time and that 
is toward the 3 percent economic growth, and I am happy to 
explain that further to you if you like.''
    What I would like for you to explain, Mr. Gale, have these 
tax cuts been deficit neutral?
    Mr. Gale. Every reputable organization that has looked at 
this has found that the tax cuts, lo and behold, reduce 
revenues. And that is including the macro feedback effect. And 
that is a very wide range of organizations. The Congressional 
Joint Tax Committee, the Congressional Budget Office, think 
tanks like the Tax Foundation and the Tax Policy Center, 
private modelers, everyone comes to the conclusion that the tax 
cuts will reduce revenues.
    There is, in theory, a growth rate that would be fast 
enough to offset all the revenues. But nobody thinks we are 
going to be anywhere near that growth rate.
    Mr. Panetta. In theory, what is that?
    Mr. Gale. It is above four. I am not sure exactly what the 
right number is. But it would be great if we could grow at that 
rate. But, and this comes back to the comments about 
imagination and the anecdotes earlier. The anecdotes are 
inspiring and we should all, you know, be moved by our 
imagination. But there is no substitute for serious analysis.
    Mr. Panetta. Understood, understood. I guess in discussing 
analysis, I guess the CBO has done, you know, obviously many 
analyses on this. And it has showed that the tax bill, even if 
it does expire on schedule, it will add 1.9 trillion, I think 
they are saying, to the debt by 2028, with interest and growth, 
obviously. And extending it this year would cost at least, I 
think, another 1.1 trillion through 2029, what they are saying.
    Mr. Gale. Right.
    Mr. Panetta. In your opinion, Mr. Gale, and if any other 
witness would like to speak to this, can we afford $3 trillion 
worth of tax cuts in this type of strong economy that we are 
experiencing right now?
    Mr. Gale. There are two issues here. One is the size of the 
tax cuts and the second is the allocation of the tax cuts. The 
size of the tax cuts are substantial. It is in the wrong 
direction as far as long-term fiscal sustainability is 
concerned. But if we had allocated the money really well to 
pressing national needs, then it might have been worth it to 
increase the deficit by that much.
    But TCJA basically says the biggest problem in the country 
is that high-income households do not have enough after-tax 
income. And so, it is allocating an enormous amount of that 
increase in deficits toward high-income households. Now, all of 
the stuff about people buying a car seat or getting a job or 
getting other benefits, those are inspiring and we should be 
doing that. But this is an incredibly poorly way to target 
those benefits. We do not have to pay off the top 1 percent of 
the population to give benefits to the bottom half.
    Mr. Panetta. And, I think Ms. Huang, you are shaking your 
head.
    Ms. Huang. In vehement agreement. And I think the other 
part that Dr. Gale has also talked about is who ends up holding 
the tab for those tax cuts for the very top. And we have seen 
over and over again in both the statements and the budget 
proposals of people who supported the 2017 tax law that their 
preferred way of dealing with deficits is to cut programs that, 
you know, on average help families of limited means, Medicaid, 
cuts to job training and assistance, education programs. So 
that is also another worry that I think is part of the picture.
    Mr. Panetta. Thanks again to all of you. I yield back, Mr. 
Chairman. Thank you.
    Chairman Yarmuth. I thank the gentleman. I now recognize 
Mr. Crenshaw of Texas for five minutes.
    Mr. Crenshaw. Thank you, Mr. Chairman. Thank you all for 
being here. I want to thank all our witnesses again.
    And I want to remind everyone what we are really here 
talking about. We are talking about a difference in philosophy. 
It is not just tax rates. It is a question of whether the 
government should be taking more of your money or whether you 
should keep more of your money. It is a difference in the role 
of government in what we believe.
    It seems to me that you all believe that the role of 
government is to tax the people as much as possible so that you 
and your benevolent fellow academics can dream up more programs 
for the government to spend money on. I don't believe that. I 
don't believe that is what the role of government is for. The 
role of government is to protect the God-given rights that we 
have and to ensure that we live as free as possible.
    The role of government is to tax people to the least extent 
possible while still taxing them enough to cover basic needs 
for government. And if we are questioning what those needs are, 
we can just look at our Constitution. They are generally pretty 
clear there. So that is what today is about.
    You said that these anecdotes are imaginative. It is 
literally not imagination to bring up anecdotes. It is 
literally not that. It is reality. So here is some reality from 
Texas. Direct results from the Tax Cuts and Jobs Act.
    McDonald's increased educational opportunities by $150 
million as a result of the tax cuts. $500 employee bonuses at 
Camp Construction Services. Reduced prices for customers at 
Center Point Energy. $500 employee bonuses at Group One 
Automotive. $1,600 employee bonuses at Cabot Oil and Gas. 
$2,000 employee bonuses at Waste Management. $1,000 to $4,000 
bonuses paid to employees at Insperity, totaling 17 million. 
Base wages raised to $15 an hour at Cadence Bancorp along with 
an increased 401(k) contribution and employee stock purchase 
plan. Covestro had a choice between three new facilities, a 
$1.7 billion facility, between Asia, Europe and Houston, so 
they chose Houston and they say it is directly because of the 
tax cuts.
    These are not imaginative anecdotes. These are real. You 
said it, so----
    Mr. Gale. I said the anecdotes were inspiring.
    Mr. Crenshaw. I did not ask. That is okay, that is okay.
    There is more money in the pockets of the people. That is 
the reality, okay? Not imagination.
    Professor Bruckner, again, we are speaking about 
imaginative arguments. You acknowledge that there is a direct 
benefit of the tax cut to people across all incomes but you are 
claiming that women do not benefit as much. Is that correct, 
yes or no?
    Ms. Bruckner. No, I am claiming that we absolutely should 
study this for the first time ever, to determine what the 
impact is.
    Mr. Crenshaw. Okay, but would you prefer another tax cut 
for women entrepreneurs? Because we might find some common 
ground there.
    Ms. Bruckner. No. What I am saying is we should take a look 
at JCT's analysis and we should coordinate among our government 
resources to study where the distribution of the income is. Are 
we investing in where there is actual growth and opportunity 
for growth? Are we investing in businesses that will generate 
more economic activity?
    Mr. Crenshaw. Fair enough. But on the health care issue, 
you took issue with the changes to the individual mandate. What 
we have gone over is that those estimates of people, quote, 
unquote losing their health care, of course, it is not losing 
your health care, you are choosing a different health care 
plan. Do you not believe in giving people that choice?
    Ms. Bruckner. I believe in creating schemes that provide a 
pathway for affordable health care for small businesses. It is 
their number one concern.
    Mr. Crenshaw. Obamacare hurt small businesses, as we know. 
And I just want to point out, the law gives people the choice. 
They are not losing something, they are choosing something 
else, and I have got to move on because I have such limited 
time.
    Ms. Huang, you took issue with the 20 percent tax cut for 
small businesses. You are claiming that that leads to lower 
workplace standards, that it encourages independent 
contracting. Do you not believe that small businesses also 
deserved that tax cut?
    Ms. Huang. So, let's look into what the definition of a 
small business is. If you look at where the revenue went----
    Mr. Crenshaw. Yes or no? You do not want them to take that 
20 percent tax cut?
    Ms. Huang. More than two thirds of the tax cut for 
passthroughs went to the top 1 percent. Those are not 
businesses that I would consider small.
    Mr. Crenshaw. Okay, let's talk about the 1 percent. What is 
the fraction of total federal revenue the top 1 percent paid?
    Ms. Huang. What is the fraction of income that the top 1 
percent gain?
    Mr. Crenshaw. That is not the question. You cannot answer 
it? All right, well, I will tell you what it is. It is around 
37 percent, according to recent IRS data. Is that fair?
    We talked about passing the fair test. So, the top 1 
percent pays more than the bottom 90 percent. Is that fair? And 
again, we have different definitions of fair.
    Ms. Huang. I don't think it is fair to cherry pick one type 
of tax----
    Mr. Crenshaw. Again, we have--you guys have been cherry 
picking this whole time.
    Ms. Huang.----when other people pay payroll taxes, state 
taxes----
    Mr. Crenshaw. I am not done. I am not done, because I only 
have 10 seconds left so I am going to use it to make a point 
here. We have different definitions of fair. And that is okay. 
But I wish we were honest about that. You believe fair is 
proportionality or, sorry, I believe fair is proportionality; 
you believe fair is egalitarianism. We have different 
approaches to governance and that is really what this is about. 
And I hope we have honest conversations in the future. Thank 
you.
    Chairman Yarmuth. Just to set the record straight, Dr. Gale 
did not use the word imaginative, he called those inspiring. 
Actually, the imaginative came from quoting Mark Twain by Mr. 
Smith.
    I now recognize Ms. Omar for five minutes.
    Ms. Omar. Thank you, Chair.
    Ms. Huang, thank you for your forthcoming testimony about 
the impact of the GOP tax cut to the American people. The 
details you shared were very insightful, though the underlying 
message you are sharing should not be a surprise to anyone 
here. Clearly, the 2017 tax cuts were just a tool that our 
Republican colleagues used to help make their rich friends 
richer.
    As you illustrated, everyday working Americans have not 
seen a dollar of the benefits that the Republicans and the 
Trump administration promised them. So, promise is something 
that came up quite a lot and I want to just go through some of 
those promises.
    There has not been any meaningful growth, wage growth, as 
they promised. We are not seeing millions of jobs added to the 
economy as a result of the cuts as they promised. We are not 
seeing a major economic boost, certainly not one that offsets 
the revenue decreases we are now facing, as they promised.
    What we are seeing is a record $1 trillion in corporate 
stock buybacks. What we are seeing is major corporations like 
Amazon, a company that is valued at $800 billion, paying 
exactly zero dollars in taxes. So, what is happening right now 
is we are paying off, as Dr. Gale said, we are paying off the 
top 1 percent on the backs of the rest of us.
    So, these promises have been made. All the while, the 
American workers are trying to balance a skyrocketing health 
care cost, mounting student debt load and impossible high child 
care costs. Where are their benefits and where are their 
promises? These tax cuts are not helping them pay those bills. 
In many cases, workers are seeing their wages go down while 
everyday cost goes up.
    So, my question to you is, giving everything that you have 
shared in your testimony, does the GOP tax cut do anything to 
improve the lives of everyday working families, families like 
the ones in Minneapolis, families like the ones in everyone's 
district that we have heard about?
    Ms. Huang. They are not, in my view, the priority of this 
tax law. I think actually something has gone seriously wrong 
when you have a $1.9 trillion tax bill and there are a single 
mother with two kids working full time minimum wage who gets 
$75 from this law and there are 11 million kids and working 
families just like her.
    So, to really fix this and prioritize those working 
families, we could have and should have seen a substantial 
increase in the child tax credit and earned income tax credit 
for those working families. And that should be the first thing 
that lawmakers prioritize when fixing this law.
    Ms. Omar. Thank you. And my colleague from Texas talked 
about rights earlier. I believe we have a right to breathe 
clean air, we have a right to have access to clean water, we 
have a right to have a planet we can live on. And a lot of my 
colleagues on the other side of the aisle talked about the 
Green New Deal. The Green New Deal is one that has economic 
growth and opportunity.
    A recent op ed on the Hill called the Green New Deal is 
Good for the Economy states that, while the Green New Deal is 
not going to be cheap, it is pale in comparison to the damage 
that unchecked climate change will inflict on the economy.
    Can you speak to what the costs would be if we are not 
investing in making sure that we have a planet we can live on?
    Mr. Gale. Thank you. The right question about the cost of 
the Green New Deal is compared to what? If we are truly on an 
existential descent, then we should be doing a lot to try to 
offset that. That does not mean--that is not carte blanche to 
do anything. We should be choosing the most effective 
interventions and most cost-effective interventions.
    But just as the congressman was talking about imagination 
earlier in respect to the tax cuts, we should be moved by the 
potential to make the planet a cleaner place. Again, that 
should not substitute for analysis of what works and what is 
the best way to do it. But the goals and the ambition that are 
laid out I think are exemplary.
    Ms. Omar. And through taxes and subsidies we could have 
economic growth and opportunity with the Green New Deal is 
what----
    Mr. Gale. Again, compared to what? If climate change, you 
know, has increasing costs over time, then mitigating that 
climate change, we should get credit for that in terms of 
looking at the economic effect. So, yeah, I think there is a 
positive outcome there.
    Ms. Omar. Thank you. I yield back.
    Chairman Yarmuth. The gentlelady's time has expired. I now 
recognize the gentleman from Pennsylvania, Mr. Meuser, for five 
minutes.
    Mr. Meuser. Thank you, Chairman, very much. And thank you, 
our guests here today, for your testimony. I--first off, I 
represent a district, the PA 9th, where the median income is 
$43,000. I don't represent the rich. Secondly, as the former 
revenue secretary for the Commonwealth of Pennsylvania, I can 
assure you that Amazon pays a lot of taxes. A lot of tax 
revenue comes in from Amazon.
    I think earlier, my colleague's main point that you guys 
wanted to try to minimize was about honesty and trying to get 
to the truth. I think that that would be a honorable baseline 
to have a good conversation here with the budget committee that 
understands the budget and the numbers.
    So, I am certainly a little confused, call it frustrated, 
with what I am hearing today from my friends on the other side 
of the aisle. What has been wrongly argued as the Tax Cuts and 
Jobs Act is responsible for this current budgetary deficit, 
first of all, is inaccurate. Right? The number is $150 billion 
and closing fast, by the way. And it is also inaccurate to say 
that this was purely a tax cut for the wealthy at a cost to the 
middle class. This could be nothing further from the truth. It 
is simply inaccurate and is not focused on reality and facts.
    The facts are middle income taxes were reduced by 3 to 4 
percent. The standard deduction doubled. I am not sure if you 
know what that means but $12,000 no longer is taxed of people's 
income. Small business did receive a 20 percent reduction. 
Seventy-five percent of the people employed in my district work 
for small businesses. This was very important. Unemployment 
nationwide is lowest since 1969 in all demographics.
    Corporate taxes, we want to sit here and beat up on 
corporations. Corporations buy most of the product from small 
businesses. They work together. Our corporate tax, yes, it was 
reduced to 21 percent. However, if you are aware of this, 
Ireland's corporate tax rate is 12.5 percent, the U.K. is 19 
percent and Vietnam is 20 percent. We have to be competitive. 
And that is what is creating more investment and more 
manufacturing in our country, and it is happening. And the 
repatriation, everybody just scoffs at that, it is getting near 
a trillion dollars. It just does not happen overnight.
    So, the goals of the tax cut are real. And, you know, I 
can't help but shake my head when I hear about all the woes and 
sorrowfulness of the deficit. You know, we spent eight years 
where there was $9.5 trillion spent and none of my friends on 
the other side of the aisle said a word about it. And, frankly, 
what do we have to show for it? Not much, not much.
    So, thanks to the tax cuts that were signed into the law 
last year by Republicans, not one Democrat voted for it, 
businesses large and small are increasing wages. That data is 
in, too. They are hiring more workers, they are investing in 
growth.
    There are many, many good American business stories in my 
district. Every day, I hear from a contractor or a builder or a 
store that tells me that they are doing better.
    Can we do better? Absolutely. That is why I am in Congress, 
to help that effort, to help create a more competitive 
environment.
    Government's role is not to create jobs. Government's role 
is to create an environment where the private sector creates 
the jobs and drives disposable income and overall incomes of 
the people.
    I want to give an example of one success story in my 
district. It is a company in east-central Pennsylvania by the 
name of Ashland Technologies. I asked them if we could speak on 
their behalf and they were very excited at that prospect, 
because they are very proud of what has been done. Thanks to 
the tax reform, AshTech was able to open a new manufacturing 
facility, hire 20 new workers and purchase nearly $2 million in 
new equipment thanks to the 100 percent depreciation, just in 
the last couple of years. This is an area where unemployment--
good paying jobs, we needed impetus such as this.
    So, I have a question for Ms. Pol. Ms. Pol, would you say 
that your business record over the last several years has been 
similar to the one that I referred to as from AshTech, hiring, 
expanding?
    Ms. Pol. Absolutely.
    Mr. Meuser. That is great to hear.
    And with my last couple of seconds, can you provide any 
recommendations as to further tax changes that would benefit a 
business such as your own?
    Ms. Pol. Well, in our business one of the ones that would 
be great is the depreciation on buildings, because I have so 
many of them. You know, it is over 39 years, and that is a long 
time to depreciate out a building. So that is one that kind of 
relates to me.
    Mr. Meuser. Great. Thank you for your testimony. Thank you, 
Chairman. I yield back my time.
    Chairman Yarmuth. Thank you. The gentleman's time has 
expired. I now recognize the gentlelady from Illinois, Ms. 
Schakowsky.
    Ms. Schakowsky. Thank you, Mr. Chairman. I ask unanimous 
consent for us to put into the record a one-pager from the 
Center on Budget and Policy Priorities called 2017 Tax Law's 
Passthrough Deduction Could Encourage ``Workplace Fissuring.''
    Chairman Yarmuth. Without objection, so ordered.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Schakowsky. Let me just say to my colleagues, I really 
do not think we ought to get into only you are telling the 
truth and we are not. We may have different interpretations of 
the data. But the idea that somehow, we are not telling the 
truth, we are not dealing with facts, I think is a dangerous 
place to go and unnecessary.
    The White House Council of Economic Advisers said the 2017 
tax law would raise the average worker's wages by $4,000 to 
$9,000, claiming the main wage suppressant over the last 40 
years, when their economic policies have been enacted, has been 
international competition in terms of low tax rates.
    Instead though, what we have seen are companies investing 
more than $1 trillion in stock buybacks. That is over 130 times 
the $7.1 billion corporations have given workers.
    Dr. Gale, have workers seen $5,000 more, somewhere around 
there, in their paychecks as a result of the Tax Cuts and Jobs 
Act?
    Mr. Gale. There is certainly no evidence to date that 
workers' gains have been anything near the 4,000 to 9,000 that 
the CEA claimed would occur. It is unclear from the CEA's 
analysis what the time frame for their analysis is. But as I 
noted earlier, CBO says that national income will only go up by 
0.1 percent after 10 years because of the tax cut.
    This is facts and analysis, by the way. And it is hard to 
see how wages would go up by the 4,000 to 9,000 above what they 
would have gone up anyway if national income is only going to 
be 0.1 percent higher than it would have been anyway.
    Ms. Schakowsky. Does not add up, does it? So, let's look 
backward here. Ms. Huang, did the wealth trickle down to 
workers in the form of wage increases after the 2003 Bush tax 
cut?
    Ms. Huang. The historical record is pretty poor on that.
    Ms. Schakowsky. So, Dr. Gale, did the wealth trickle down 
to workers in the form of wage increases after the 2001 Bush 
tax cut?
    Mr. Gale. The 2001 featured both similar cuts to 2017 
income tax rates and estate tax rates, and then there was the 
repatriation holiday a couple years ago. Wage growth was fairly 
slow in that period. You certainly do not see a big boost in 
worker compensation at that point. In particular, in the 
repatriation, there is strong evidence that firms--if you 
recall, the law then said that firms could not get the tax 
holiday for the repatriation unless they invested the money--
they could not get the holiday if they used it for dividends 
and buybacks. But subsequent evidence shows that the firms that 
got the subsidy used it for precisely those reasons, dividends 
and buybacks, rather than job expansion.
    Ms. Schakowsky. Was that in the law, that they were 
supposed to----
    Mr. Gale. That was a provision in the law back during the 
Bush administration, yes. Of course, money is fungible, so they 
basically said, well, this money we brought back we are going 
to pay to workers. But this other money which we used to be 
paying workers, now we are going to pay out to shareholders.
    Ms. Schakowsky. I see. Ms. Huang, are you aware if the 
wealth trickled down to workers in the form of wage increases 
after the 1981 Reagan tax cut?
    Ms. Huang. No, and you can look back at many different 
examples including that one, including the experience in 
Kansas, and there is very little evidence that these tax cuts 
for high income people and large businesses end up in workers' 
wages over time.
    Ms. Schakowsky. So I guess in general, I am asking both of 
you if there are any examples that you can find that trickle 
down? That is, cutting taxes for the wealthiest Americans has 
actually improved the lot significantly then, or equally, of 
ordinary working families. Dr. Gale?
    Mr. Gale. Thank you. My reading of the literature is there 
is an enormous amount of evidence, whether it is cross-country 
evidence or historical evidence in the U.S. that says that 
trickle-down economics falls far, far, far short of what is 
claimed for it.
    Ms. Schakowsky. Thank you, I yield back.
    Chairman Yarmuth. The gentlelady's time has expired. We 
have one more Republican who is on his way back to testify so 
if the ranking member agrees, we will yield to Mr. Sires for 
his five minutes and then----
    Mr. Womack. Absolutely.
    Chairman Yarmuth. Oh, here is Mr. Burchett.
    Mr. Burchett. Go ahead, go ahead.
    Chairman Yarmuth. All right, Mr. Sires, you are recognized 
for five minutes.
    Mr. Sires. Thank you, Mr. Chairman. And thank you for the 
witnesses that have been here today.
    Look, I am from New Jersey, a very high-tax state. We 
probably got hit harder than any other state with this tax bill 
that was passed last year. I am very concerned about what is 
happening in terms of the real estate market and how it is 
impacting the real estate market.
    You have people in my--well, my district is across from New 
York City. We get the overflow from New York City. They are 
high wage, they make good salaries, they come to New Jersey and 
they pay a lot of taxes, especially in the real estate market. 
New Jersey benefits greatly from that.
    I am starting to get a lot of questions from these people 
who are making good money, that they are starting to go to 
their accountant, they are starting to realize that their taxes 
may be $25,000 a year, $30,000 a year, and it is capped at 
10,000. So, some of them, this benefit that they are talking 
about, it is offset. And then we also have a state tax that is 
also capped. So, I think this tax bill stinks, quite frankly, 
in terms of New Jersey.
    I think this tax bill was put together, they rushed it, 
they did not look at the impact that some of the states were 
going to have. And obviously, it impacted a lot of the blue 
states. And, quite frankly, I think we have to change it. I 
think it is going to hurt the real estate market in New Jersey 
a great deal after they file this year. Because people are 
starting to realize that they cannot write off what they have 
been writing off in the past.
    And I know some of the Realtors are already making 
appointments in my office to say this. I have seen it slow 
down. I talked to some of the mayors in my district. They are 
very concerned about the tax bill and how it is going to impact 
their municipalities. They are concerned because they are not 
going to be able to move some of this real estate that is 
going.
    The district I represent, they called it the Gold Coast, 
you know, Hoboken, that whole area where there is a lot of 
development, a lot of good real estate has been developed.
    So, you know, how do we correct this? Do you think that 
this tax bill aggravated the real estate market in some of 
these areas? Can anybody talk to that? In other words, has 
aggravated the downturn in home sales in certain regions of the 
country.
    Mr. Gale. It certainly did in a couple of ways. The shift 
from personal exemptions to standard deduction greatly reduced 
the number of people that took the mortgage interest deduction. 
So, the number of people taking that deduction is falling from 
on the order of 26 percent to on the order of 11 percent. I am 
not sure those figures are exactly right, but it is that type 
of thing. And that, of course, will have ramifications for the 
value of real estate. The state and local tax deduction 
limitation, as you mentioned, will also have a similar effect 
in the high-tax states.
    So, I mean, this is--I do not want in any way to minimize 
the problem. This is just an example of when you change a lot 
of things, a lot of things change. Some go up, some go down. 
And it seems real estate, charitable giving, health insurance 
and things like that are among the losers in this tax reform.
    Mr. Sires. Anybody else?
    Ms. Bruckner. I think that it is definitely something we 
should measure and study after this first year of tax filing. 
Let's get a precise number on whether or not people benefitted 
with respect to the real estate provisions. I think it is 
something that certainly should be flagged for further study.
    Mr. Sires. Well, some people estimate that as many as 2 
million people in New Jersey are not going to be able to write, 
you know, the real estate tax above the 10,000 that they were 
writing before. In my district, I have 10 minutes, but what was 
good about it is that people used to come to New Jersey because 
they realized that they could write that off because they made 
high wages in New York and now they can't.
    Ms. Bruckner. I would be worried and interested in looking 
at the data on older people and older people who are still in 
their homes. I think----
    Mr. Sires. That, we have not gone into that but, obviously, 
they are impacted greatly.
    Ms. Bruckner. And that is something, and there is not data 
on that, but that is something certainly to track.
    Mr. Sires. Thank you.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Mr. Burchett of Tennessee for five minutes.
    Mr. Burchett. Thank you, Mr. Chairman, ranking member. 
Everybody is wearing orange today. I want to thank you all so 
much for recognizing the University of Tennessee in our 
upcoming victory of Kentucky this weekend. I just want to make 
note of that.
    Ms. Bruckner, I am not going to ask you any questions due 
to my collegiate history in accounting, so I am going to stay 
away from you, all right? As I stated many times, I liked first 
quarter accounting so much, I took it twice and then I pursued 
a degree in education. So, thank you.
    I guess, let's see, on the screen, Litton's Restaurant, 
that is owned by my buddy, Barry Litton. He, like my father, he 
served his country in the Marine Corps. He and his son, Eric, 
and Barry's sister, they just run a great restaurant. If you 
ever come to Knoxville and get near Fountain City, just ask 
somebody where Litton's is. It is wonderful, and it is a great 
restaurant.
    And they have, as they have told me, they have actually 
seen an uptick since the tax break and they are very grateful 
for it. And it is a small business in Knoxville, just like 99 
percent of the businesses in Tennessee are.
    And I want to ask Ms. Pol, how do I say that name, Pol?
    Ms. Pol. Yes, you are right.
    Mr. Burchett. Okay, great. In your opinion, you are the 
only small business owner on the panel, that seems to be 
correct. How has the new tax law helped you? And just give a 
specific. You know, everybody gives these numbers and 
statistics and, frankly, I get lost in all that. I deal with 
human interest and things like that. And thank you for being 
here, ma'am.
    Ms. Pol. Yeah, absolutely, thanks for having me. The 
biggest thing was being able to feel confident to give raises 
to our employees this past year. We have struggled with that 
the last few years, just due to health care costs. It is one of 
our major concerns. And so, we were able to give every one of 
our employees a raise.
    And, you know, being able to get money back on the new tax 
law as far as the small business deduction, that has helped us 
invest. We invested in a warehouse, $2 million, and then also 
doing the 500,000 to the million dollars allowed us to invest 
in six new trucks that cost a million dollars. And so, we have 
not been able to do that for the last few years. But it gave us 
confidence going forward.
    Plus, the spark of new businesses and new business that is 
coming our direction, because of the boost in the economy all 
the way around our area.
    Mr. Burchett. Great. Thank you so much for being here, 
ma'am.
    And is it Mr. Gale or is it Dr. Gale?
    Mr. Gale. It's doctor.
    Mr. Burchett. Doctor? All right, Doctor. You earned it, so 
I am going to call you that. In the energy sector, what type of 
taxes would you support? Would it be a carbon tax, a gasoline 
tax? And if so, what is your justification? And I am not going 
to jump you, I am not going to run for reelection on this.
    Mr. Gale. I think the right approach is the carbon tax, 
with an exemption for low-income households or a rebate for 
low-income households. One of the numbers I came up with 
recently was that we could pay every coal worker $250,000 in 
severance pay and the total cost would be 1 percent of the 10-
year revenue of a carbon tax. So, the impact on low-income 
communities is important. The impact on coal communities is 
important. But they are totally solvable situations.
    The advantage of a carbon tax over a gasoline tax is that a 
carbon tax taxes many forms of carbon emissions, as gasoline is 
just one of them. So as broad a base as possible. A carbon tax, 
I think, is the right thing to do there. And it would not only 
help the environment, it would help the fiscal situation and it 
would fix a big imperfection in the way the economy operates, 
which is right now people in businesses that emit carbon are 
not paying the full social cost of that carbon emission.
    Mr. Burchett. Are you familiar with--this isn't in my notes 
and this always makes my folks nervous when I get off track, 
but I always get off track, so it doesn't matter. There is a 
new bill out, have you seen it, the one--and I had a group of 
people in Knoxville just last week come to--when you said that, 
it reminded me that they came to see me about that bill. It is 
a new type of idea that actually gives rebates to folks and are 
you familiar with that legislation?
    Mr. Gale. There was a--I am not sure about the legislation. 
There was an economists' statement that was signed by a couple 
of dozen Nobel laureates and about 3,000 other people, 
including me, saying that we should do a carbon tax and we 
should rebate the money on a universal basis. That is my second 
choice.
    I signed it because it would be so much better than what we 
are doing now. My first choice would be we use the revenues for 
a variety of purposes. But the main issue is to get the carbon 
tax in there.
    Mr. Burchett. And I know I am out of time. But do you 
actually trust government with another pool of money, that they 
will actually do with it what they said they will do?
    Mr. Gale. Compared to what, again? I feel like we have to 
tax carbon and then the question is what to do about it. The 
paying back, the people who want to pay it back mentioned 
precisely the issue that you mentioned, which is they do not 
trust government to use it, so they want to send the money 
back. I trust government more than that. I think we can reduce 
the debt, we could reform taxes, et cetera.
    Mr. Burchett. Okay, thank you.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize Ms. Jackson Lee of Texas for five minutes.
    Ms. Jackson Lee. Chairman and ranking member, thank you 
very much. I have always indicated my appreciation for this 
committee because of the astuteness of all the witnesses. Let 
me acknowledge Ms. Pol, who has come a distance to share her 
story, and I think I have most of the facts of her story, and I 
thank her so very much for her testimony.
    But I think it is important for me to set the groundwork 
very quickly to indicate sadly that this GOP tax scam is a 
failure. It raises the nation's debt by 1.9 trillion at a time 
when the economy was already strong. I lived through the 2009 
debacle. In fact, I was a part of the discussion when the 
Secretary of the Treasury came late to the Congress to 
indicate, and that was of course some years before, that we 
were about to see a collapse that we had never seen before. 
That was Secretary Paulson.
    And so, I have seen the trajectory and saw what we needed 
to do, an infusion of capital that many criticized. But the 
stimulus saved a lot.
    So, we are now facing major, long-term budgetary challenges 
driven by our aging population. And rather than devoting 
resources to wise investments in our workers and small 
businesses, the GOP tax scam further burdens workers, families, 
endangers Americans' retirement security and worsens our 
budgetary outlook.
    Mr. Chairman, the verdict is in and none of the GOP tax 
scam promises have borne out. Our long-term economic growth 
trajectory is unchanged. There is no sign of an investment 
boom. Real wage growth for workers remain modest. And factories 
and jobs are more likely to go overseas. The federal deficit is 
soaring. We have the sequester. And as corporate tax receipts 
plummet into the government and the tax code is riddled with 
even more special interest tax breaks and loopholes.
    As I quickly asked you a question in testimony before one 
of our committees dealing with pharmaceuticals, question was 
asked, have you taken the tax savings and invested back into 
research which would then help bring down the cost of 
prescription drugs? To my knowledge, let me qualify my 
recollection, that not one said that they had invested those 
tax benefits to any of us.
    Let me immediately go to Ms. Bruckner in my first question. 
And that is, Professor Bruckner, what do typical women-owned 
firms look like in terms of their type, size, revenues? Did the 
GOP tax law address typical women business owners' needs in 
terms of accessing capital and growing their businesses, in 
particularly women of color?
    May I just do this, if your memories are good, may I just 
go to--excuse my papers here--go to, so you can remember, to 
Ms. Huang. Some of my friends across the aisle have already 
been rehearsing their calls to pay for the tax cuts by making 
cuts to Social Security, Medicare, Medicaid. I just came from a 
Medicare for All presentation. Who will be hurt if we pay for 
the tax cut that way and what would this mean for Americans' 
retirement security or their access to good health care?
    And to Dr. Gale, are we experiencing a Trump economic boom 
or simply a continuation of the Obama expansion began in 2009.
    I have given you only a few seconds, but I know you are 
succinct, because I need other get all three of you.
    Thank you for all your presence here.
    Ms. Bruckner. I think that when we look at the business tax 
expenditures and how they were distributed among women business 
owners, there is a real question as to whether or not there is 
an equitable distribution, particularly when you measure it in 
terms of the revenue lost. For example, 199A cost $415 billion 
but more than 50 percent of that is going to go to firms that 
have a million or more of revenues but only 1.7 percent of 
women business owners, who are 40 percent of all U.S. 
businesses, actually have revenues of a million dollars or 
more. That is just one example that warrants the specific study 
of tax expenditures.
    Congress needs to know if where you are investing you are 
getting a rate of return and women business owners tend to 
start businesses more.
    Ms. Jackson Lee. Thank you. Quickly, Ms. Huang.
    Ms. Huang. There is a big risk that low and moderate income 
Americans end up being worse off by this tax law. If the 
increase in deficits from those tax cuts primarily for the 
wealthy end up in underinvestments in basic infrastructure, 
child care, facing challenges like climate change and of aging 
population, and in fact we have seen budget proposals from 
proponents of the tax law that would cut supports in housing 
and health care and in a variety of other programs that help 
Americans achieve shared prosperity.
    Ms. Jackson Lee. I thank you. Dr. Gale?
    Mr. Gale. All right, I think there are five things that are 
affecting the economy positively right now. The first, sorry, 
the first is that we have been building on a long economic 
boom. The second is the tax cuts have definitely had a positive 
stimulus effect in the short run. Almost any tax cut that put 
money in people's pockets would do that. Third, the 2018 
spending deal that Congress reached has helped boost the 
economy. Fourth, oil prices have gone up and the U.S. is now a 
net supplier of oil so that helps the economy, whereas it used 
to hurt the economy. And fifth, the Fed has indicated that it 
is going to ease off on interest rate hikes, which also helps 
the economy. So, the tax cut is part of that, but I would not 
give all credit for everything positive to the tax cut.
    Ms. Jackson Lee. And it is countered by the deficit that is 
growing.
    Mr. Gale. That is a longer-term effect. And over time, the 
stimulative effects of the tax cut will wear out and the long-
term effects of the deficit will get bigger and that is why CBO 
predicts that by the end of 10 years, there will be virtually 
no impact on the size of the economy.
    Chairman Yarmuth. The gentlelady's time has expired.
    Ms. Jackson Lee. Thank you, Mr. Chairman.
    Chairman Yarmuth. So, it is now down to the ranking member 
and me.
    Mr. Womack. As it usually is.
    Chairman Yarmuth. It is. The ranking member is recognized 
for 10 minutes.
    Mr. Womack. I want to thank each of the witnesses that have 
been before us today. And thank you, Mr. Chairman, for having 
this hearing.
    Some of my colleagues on the other side of the aisle and 
some of the witnesses have talked about how the Tax Cuts and 
Jobs Act has led to income inequality. Let's just review some 
facts. And if these are incorrect, please take issue with them.
    Median household income is at an all-time high. More people 
than ever live in households earning $100,000 or more, fewer 
households earning less than 35,000. Share of income as it 
pertains to the top 5 percent of income earners has remained 
the same since 1995. And the share of income as it pertains to 
the top 20 percent of income earners has remained the same 
since 1995.
    So I struggle with the claims that the Tax Cuts and Jobs 
Act has led to a bigger gap in income inequality. And my thesis 
going into my opening statement was about that Washington, 
D.C., the federal government, has a spending problem not a 
revenue problem. Revenues are up but spending is up on a much 
bigger percentage of GDP.
    And then I want to go back to what was said earlier, and I 
think it is worth coming back to. And that is that, Dr. Gale, 
you said that you had created some jobs for some contractors. 
But in terms of let's just say risk, business risk, what risk 
have you taken? You have read a lot of literature but what 
risks have you taken that give you some inside view, some more 
than just a theoretical view, but what risks have you taken, 
what jobs have you created that give you authority on the 
subject?
    Mr. Gale. One of the biggest professional risks that I took 
was opting to pursue a Ph.D. That is a long process, it is not 
always a successful process.
    Mr. Womack. Did that create any jobs?
    Mr. Gale. You were asking me what risks I have taken. My 
point, if you will let me finish, is there is----
    Mr. Womack. Since I haven't got a lot of time, let me 
reclaim my time. Have you created any jobs?
    Mr. Gale. Depends what you mean by created jobs. When I 
was----
    Mr. Womack. Have you had to negotiate a health care 
program? Have you turned the key in the door? Have you had to 
buy equipment and hire people?
    Mr. Gale. When I was the head of the economic studies 
program at the Brookings Institution, from 2006 to 2009, the 
program tripled in size and we funded that increase.
    Mr. Womack. And that was someone else's money, it wasn't 
yours?
    Mr. Gale. No, it was not my money. I don't personally 
finance the Brookings Institution.
    Mr. Womack. All right, Ms. Huang, a question for you. 
What----
    Mr. Gale. We raised the jobs externally and hired people.
    Mr. Womack. How many jobs have you created, Ms. Huang?
    Ms. Huang. So, I think the premise of the question that you 
are----
    Mr. Womack. It is a real simple premise. How many jobs have 
you created?
    Ms. Huang. Well, I think it is not so simple to 
understand----
    Mr. Womack. What health care programs have you negotiated--
--
    Ms. Huang.----that workers--the workers who take home a 
paycheck and work hard----
    Mr. Womack. Let me finish my question, respectfully. All 
right?
    Ms. Huang.----for low wages and spend that money are also 
part of what keeps this economy vibrant.
    Mr. Womack. Okay. My question is, you are an expert witness 
on the Tax Cuts and Jobs Act, sitting before the Budget 
Committee of the United States House of Representatives. And a 
member is asking how many jobs have you created that gives you 
more than just some kind of academic background on the impact 
of the Tax Cuts and Jobs Act? How many?
    Ms. Huang. I don't know. I don't know when I was----
    Mr. Womack. Have you created any? Have you created any 
jobs?
    Ms. Huang. When I was a factory worker, working for minimum 
wage, I don't know what impact that had throughout the 
community.
    Mr. Womack. Okay, the witness is not cooperating, Mr. 
Chairman.
    Ms. Huang. I don't know when I was advising startup 
businesses what impact that had throughout the economy.
    Mr. Womack. Let's turn to Ms. Bruckner. Ms. Bruckner you 
did have some kind of a previous background in some kind of a 
job creation situation, did you now?
    Ms. Bruckner. Yes.
    Mr. Womack. How many jobs were created?
    Ms. Bruckner. I am not a business owner yet.
    Mr. Womack. Okay, so I think it is safe to say that, of the 
panelists here today, and we have four, that of the panelists 
here today, to critique the Tax Cuts and Jobs Act, to put under 
impeachment, if you will, the very premise that the Tax Cuts 
and Jobs Act is working, as evidenced by the fact that 
unemployment is low, wages are higher and we have gone through 
the whole litany of the benefits of the Tax Cuts and Jobs Act, 
that 75 percent, three out of the four witnesses here today, 
haven't created jobs, haven't negotiated a health care 
contract, haven't had to deal with signing the front of a check 
as well as the back of a check. These are people that spend 
most of their time in academia, through some kind of a 
bureaucratic, in some kind of a bureaucratic maze, reading a 
lot of numbers, a lot of literature, writing a lot of articles 
about it.
    But where the rubber meets the road, the only witness that 
is standing or sitting before this committee today is Ms. Pol 
from Iowa, flyover country.
    Ms. Pol, how many jobs have you created?
    Ms. Pol. Currently, we have 54 employees.
    Mr. Womack. Fifty-four employees. And where did you start?
    Ms. Pol. We started with one, my father.
    Mr. Womack. Okay, so and as my friend, Mr. Woodall 
characterized you, you are a kind of a serial entrepreneur. It 
dates back into years.
    So, Ms. Pol, I would trust that somebody that has actually 
been in the business of creating jobs and opportunity for their 
people has kind of an inside baseball look at what Tax Cut and 
Jobs Act provisions have done for your business. So would you, 
just in a matter of a few seconds, kind of give me a highlight 
as to what it was able to do for you that you would not have 
been able to do otherwise?
    Ms. Pol. Sure. As I spoke before on, that we spent the 
million dollars. And that helped, to be able to, you know, 
deduct that immediately, expense it out immediately instead of 
depreciating it out, it really, really helped us tax wise this 
year. I am in the process of buying my brothers out so I have a 
huge debt load on myself. And when we spent that money, we also 
borrowed money. And also the same way with the warehouse. I am 
not a wealthy person, you know. Even though we have these 
companies, we give back to the community, we give back to our 
employees.
    And so by doing this, we needed to do it. But it was scary 
to do in our position where we are financially with our 
company. And so having to be able to have these deductions and 
the help on that and to getting some cash flow back into our 
company kind of revitalized us.
    Mr. Womack. Giving you hope?
    Ms. Pol. Yes.
    Mr. Womack. For the future?
    Ms. Pol. Absolutely.
    Mr. Womack. Are you still thinking expansion, thinking of 
hiring more people?
    Ms. Pol. Yes, yeah. I am scared of the future, for the fact 
that it is not permanent. That is what scares me going into the 
next generation.
    Mr. Womack. But to be fair, I would also say that it is not 
just tax policy. There are a lot of other inputs rather than 
tax policy, cost of energy and, you know, competition for labor 
and a whole lot of other things. But I am going to take it 
that, in your response, you are basically saying that the Tax 
Cuts and Jobs Act has helped you, an individual business owner 
in small town Iowa actually help, help your cause, help your 
business?
    Ms. Pol. Yes, it has.
    Mr. Womack. A question for Dr. Gale. CBO Director Keith 
Hall testified before this very committee on a question that I 
had raised about elevating the corporate income tax. Because 
there is a movement afoot or at least a theory that we need 
to--we went too far, we took it to 21, we cut it 14 points and 
we need to move it back up. My friend right here from the great 
Commonwealth of Kentucky thinks 28 is the right number.
    Director Hall said that it would lead to the inverse of 
what we have seen in the passage of the TCJA, and that is we 
would see declining growth and employment.
    Do you have concerns about what would happen if, in fact, 
the corporate rate went back the other direction?
    Mr. Gale. I have no interest in disputing what Director 
Hall said. I would emphasize that the issues, the changes to 
the corporate tax should be not just to the rate but to the 
base. If we expanded the scope of expensing, we would encourage 
new investment and hence encourage new jobs. And by raising the 
rates, we would reduce the windfall gains that are currently 
accruing to people who made investments in the past.
    So, I would encourage something that raised the rate and 
transformed the base. But I think Director Hall is right, if 
you just raise the rates, you would undo some of the positive 
effects.
    Mr. Womack. All right, quickly, Ms. Huang, and I know I am 
going to be out of time here in a minute. If you follow your 
Twitter feed, it is obvious that you have an interest in a lot 
of things that involve spending a lot more money. So maybe the 
basis for your arguments about Tax Cuts and Jobs Act not 
working is the fact that allowing more people to keep more of 
their money prevents the government from having more of their 
money, which allows the government to provide more things. And 
you are big on a wealth tax, are you not?
    Ms. Huang. I think that there is a lot of room and a lot of 
different ways to raise progressive revenues to meet the fiscal 
challenges that face this country.
    Mr. Womack. You like the wealth tax, don't you?
    Ms. Huang. I like a lot of different approaches.
    Mr. Womack. What about the Green New Deal?
    Ms. Huang. I don't know the details.
    Mr. Womack. What about free college?
    Ms. Huang. I don't know the details of that, either.
    Mr. Womack. What do you think about policies about work 
requirements for people that are on the social safety net 
program that are not employed, that are single people without 
dependents and able bodied? What do you think about that 
policy?
    Ms. Huang. Many people who are beneficiaries of Medicaid 
and food stamps are, in fact, workers. And those social safety 
nets----
    Mr. Womack. Those that are not?
    Ms. Huang.----are actually very important because they help 
people over time do well in their homes and in their 
communities and be able to work. So I think it is actually 
really counterproductive to require----
    Mr. Womack. I am out of time.
    Ms. Huang.----paperwork tests that would increase the 
number of bureaucratic hoops that they would have to go through 
to get that basic assistance.
    Mr. Womack. I appreciate the witnesses. Thank you.
    Chairman Yarmuth. I thank the gentleman.
    I now yield myself 10 minutes and begin by saying that the 
ranking member is truly a friend and I have great respect for 
him, as I do for all the members. And the strategy here from 
the other side has been very clear. It has been to try and 
discredit experts who have spent years doing research and 
analysis of very important topics and to hold up individual 
examples of business people for whom the tax cuts have been 
helpful. And we understand, obviously, that the tax cuts have 
helped some people.
    My college classmate, Steve Schwarzman, who is the chairman 
and founder of the Blackstone Group, was helped substantially 
by the tax cuts. He made $700-plus million last year and I am 
sure he is very happy with the tax act of 2017.
    I started several businesses. I unlocked the door, I 
negotiated health care contracts, I worried about who was 
making payroll. I was always the last one paid. My brothers and 
sister and my father all were entrepreneurs.
    I don't think any of them, possibly my father, but I don't 
think any of the four of us siblings who have started 
businesses and run businesses would have ever said we are the 
definitive answer to the impact across the country of a certain 
policy of the federal government. I never would have been as 
presumptuous to say, because a policy had certain impact on me, 
that I know what the impact on the federal budget was. And that 
is, of course, what the purpose of this hearing is, is to 
determine what the impact of the tax cut has been and will be 
on the federal budget.
    So, let's focus on that for a second. And there seems to be 
a substantial difference in a very important question in 
relation to what the impact on the budget is. Republicans say, 
and I am not disputing that they are wrong, that revenues have 
never been higher for the federal government as they have been 
since the tax cut was passed. We Democrats say, and some of you 
in your testimony have said, revenues have been hurt by the tax 
cut and will continue to be hurt by the tax cut.
    How do you reconcile those two, assuming they are both 
true? And I actually do believe they are true.
    Dr. Gale, would you like to reconcile that?
    Mr. Gale. Yet again, it is a compared-to-what question. 
Revenues would be higher if we had not passed the tax cut. That 
seems like a very clear conclusion from everything CBO and JCT 
do. And I am sure when Director Hall testified on that, that 
that was an implication of his testimony.
    But, you know, the economy grows over time. There are more 
people. So, there is more productivity. So, you know, there is 
a natural upward trend in the level of revenues. That trend was 
simply displaced somewhat by the tax cuts.
    Chairman Yarmuth. Ms. Huang, do you want to answer?
    Ms. Huang. As a share of the economy, which is really what 
the nation can afford in terms of its resources, revenues as a 
share of the economy are at its lowest level in 50 years 
outside of a recession.
    Chairman Yarmuth. And the fundamental conclusion or 
estimate of CBO that the tax cut specifically is going to be 
responsible for an additional $1.9 trillion worth of debt over 
10 years, assuming the law stays as it is and the higher 
amount, if we extend the expiring tax cuts, that has not 
changed, right?
    Ms. Huang. Not that I am aware of. And in fact, the 1.9 
trillion, there was a question earlier, the 1.5 was the initial 
estimate, the 1.9 is the re-estimate based on later data in 
terms of how much it will cost.
    Chairman Yarmuth. Mr. Womack talked about how, and again I 
have no reason to dispute this, that income levels have not 
substantially changed in terms of percentages over the last 
decade or so. What about wealth? I did not hear him talk about 
how wealth has changed, the disparity in wealth over the last 
decade or so.
    Mr. Gale. Both income and wealth have become more unequally 
distributed in gradual processes over the last 40 years. The 
sources of the widening distribution have changed over time, 
but the trends are evident. The wealth trends are even starker 
than the income trends in terms of how much has been 
concentrated in the top 0.1 percent, 1 percent, et cetera.
    Chairman Yarmuth. Getting back again to a question of, not 
so much impact on the budget, although all of this has an 
impact on the budget, but we talked about the question of 
fairness early on. I believe Mr. Crenshaw was talking about 
fairness.
    And one of the things that occurs to me is that we have a 
fundamental issue, philosophy, as to whether we tax rental 
income or productive workers' income differently or similarly. 
Does anybody want to address that? You know, I am looking at 
these enormous incomes that we are seeing and many of those 
people are in the top 0.1 percent, who derive such a huge 
benefit from this tax cut. And it seems to me that many of 
those incomes are derived from essentially rental, what is 
referred to as rental income. They are basically not doing 
anything on a daily basis, they are getting royalties, they are 
getting dividends and so forth.
    Dr. Gale?
    Mr. Gale. Thank you. Perhaps the primary with the Section 
199A, the passthrough provisions, is that it taxes business 
income at a lower level than wage income. That gives people 
incentives to shift wage income to business income, which is an 
obvious form of tax shelter. It gives businesses incentives to 
either divide or combine to take advantage of the odd limits in 
the bill. It is incredibly complex.
    You know, these are concerns with the provision. There is 
no doubt that particular small businesses have gained from it, 
they got a tax cut. The question is, is it a well-designed tax 
policy? And by every principle we know of well-designed tax 
policy, the answer is, no.
    Chairman Yarmuth. Is there any justification you can think 
of to maintain the carried interest tax rate, which President 
Trump claimed that he was going to do away with but, 
unfortunately, from my perspective, is still part of the law 
after the 2017 act?
    Mr. Gale. I think it is pretty clear that carried interest 
should be taxed as labor income, not as capital gains. But in 
terms of taxing wealthy households and raising revenues, there 
is actually not much money in carried interest. There is much 
more money in wealth tax, taxing capital gains at death, 
undoing the 199 features and so on.
    Chairman Yarmuth. One final question, and I am really 
struck, Ms. Bruckner, by the amount of small businesses, the 
number of small businesses generating, and probably these are 
all new small businesses, growing small businesses--young, is 
that the word?--small amounts of income, and the lack of 
capital that they are dealing with. Isn't one of the issues 
here, the fact that, very few businesses, big businesses, got 
the corporate tax rate? By the way, I am not necessarily saying 
28 percent is the right number. I said, Obama was willing to go 
to 28 percent when the corporate tax rate was 35. I think we 
could afford some additional taxes, 28 may or may not be the 
right number.
    But anyway, one of the things I have heard is there is so 
much cash in the economy right now, in corporations, they have 
so much liquidity that giving them more was not going to make 
them invest because if they had opportunities to invest in 
productive activities, additional ones, they would have had the 
money to do that. At the same time, we have this problem, we 
had so many young small businesses not being able to have 
access, and this tax cut did nothing to help them. Is that kind 
of a fair reading of where we are?
    Ms. Bruckner. I think with respect to small businesses, the 
quickest and most efficient place that you can get any kind of 
equity infusion is from your profits. And one other way that 
you can do that is from lower taxes.
    I don't think there is a question that most businesses got 
some sort of tax cut, right? The bill was designed that way. 
But when we are looking at questions of equity and fairness, 
are we looking at we need to request questions about did we 
create lower taxes for the businesses who needed it most versus 
for the businesses that might have been otherwise just as 
profitable?
    And I think the question really is, with larger businesses, 
you are seeing lots of share buybacks, which is a way to 
increase shareholder value without having to actually pay 
dividends, which is a lower tax kind of strategy. Versus, you 
know, very, very small businesses that are desperate for access 
to capital, have trouble securing outside financing and might 
have needed a greater share of tax breaks. I am not saying that 
tax breaks are bad, I am saying we should be investing tax 
breaks where we think, and we should study where they think 
that we are going to have the most bang for our buck. And we 
have not been doing that.
    Chairman Yarmuth. Well, that concludes our hearing. I want 
to thank all of the panelists for all of your testimony. Thank 
you for traveling so far, Ms. Pol, we appreciate you being 
here.
    Please be advised, members can submit written questions to 
be answered later in writing. Those questions and your answers 
will be made part of the formal hearing record. Any members who 
wish to submit questions for the record may do so within seven 
days.
    I thank the ranking member once again. And, without 
objection, this hearing is adjourned.
    [Whereupon, at 12:38 p.m., the Committee was adjourned.]
    
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