[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
FIELD HEARING ON THE SUCCESS OF
PRO-GROWTH, PRO-WORKER TAX POLICY
IN THE AMERICAN MIDWEST
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HEARING
BEFORE THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
AUGUST 16, 2024
__________
Serial No. 118-FC31
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
56-529 WASHINGTON : 2024
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COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Jason Smith, Missouri, Chairman............................. 1
Advisory of August 16, 2023 announcing the hearing............... V
WITNESSES
Karen Dewalt, Vice President, Global Tax, The Home Depot......... 6
Sarah Curry, Mother, Glenwood, Iowa, and Research Director,
Iowans for Tax Relief Foundation............................... 13
Jolene Riessen, Farmer, Ida Grove, Iowa, and President, Iowa Corn 18
Steve Sukup, President and CEO, Sukup Manufacturing Co........... 22
Lana Pol, Owner and President, Geetings, Inc..................... 31
LOCAL SUBMISSIONS FOR THE RECORD
Local Submissions................................................ 129
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 143
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
THE SUCCESS OF PRO-GROWTH
PRO-WORKER TAX POLICY
IN THE AMERICAN MIDWEST
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FRIDAY, AUGUST 16, 2024
House of Representatives,
Committee on Ways and Means,
Washington, DC.
The committee met, pursuant to call, at 9:01 a.m., Central,
Oman Family Youth Inn, Logan Avenue, Iowa State Fairgrounds,
Des Moines, Iowa, Hon. Jason Smith [chairman of the committee]
presiding.
Chairman SMITH. The committee will come to order.
Without objection, the gentlewoman from Iowa, Mrs. Hinson,
the gentlewoman from Iowa, Dr. Miller-Meeks, and the gentleman
from Iowa, Mr. Nunn, are authorized to participate in the
hearing and ask questions today.
Good morning, and welcome to everyone who is joining us
today at the Iowa State Fair.
I want to thank my good friend, Randy Feenstra, for hosting
us in his home State. Randy is a true champion for rural
America and small towns because it is where he is from. I can
tell you that when he is in D.C., he always brings Iowa with
him. It is not Missouri, but it is Iowa, so----
Mr. FEENSTRA. A little better.
Chairman SMITH. We also have the entire Iowa House
delegation joining us today. Few delegations are as good as the
one up here about banding together to fight for their home
state and for their communities.
I do want to take a minute just to express my
disappointment that not one of our Democrat colleagues have
joined us here today on the committee. This is our second field
hearing in a row where none have made the effort to join us in
conducting our committee business outside the marble halls of
Washington, D.C.
We are here to sit down and have a conversation with
working people about the need to protect Americans from a $4.6
trillion in tax hikes that will happen the end of next year.
You would think that would merit at least one Democrat showing
up to listen. With proper notice, multiple weeks, there are
still empty chairs.
The State Fair couldn't be more different than the halls of
Congress, and that is exactly why we are here, to listen to
regular people, people who run a small business, work their
farm, or folks just trying to make ends meet for their
families.
Part of the problem is every dollar you earn is taxed over
and over again. Just think about all the taxes you pay every
day. You pay property tax on your house. You pay taxes on the
land you own and work. Your car and the gas to fill it up to
get to your job or to use on your farm are taxed. Taxes on your
employer means a smaller paycheck for you. That paycheck is
taxed by Washington, and then taxed again buying groceries and
other basics for your family. Once you stop working, your
retirement is taxed. Even after death, Uncle Sam still wants
his cut, and he wants your grieving family members to pay it.
Republicans look at working families and want to make it
easier to help them get ahead. And we know that a smaller
government, less regulations, and less taxation is the way to
do that.
Under President Trump, we passed a tax cut that benefited
the working class. After that tax cut, people making less than
$100,000 got, on average, a 16 percent cut in their tax bill to
the government, while the top one percent actually saw their
share of taxes go up. Workers in the bottom 10 percent saw 50
percent faster wage growth than people in the highest 10
percent. When working families prosper, America prospers.
Five million jobs were created after enactment of the Trump
tax cuts. Investment rose over 20 percent. We ended the
decades' long trend of American businesses moving their
headquarters and jobs overseas.
The lesson we should take from the Trump tax cuts is that
when we put working families first, help small businesses
succeed, and give Americans the tools to outcompete China,
America will win.
Democrats in Washington, including Vice President Harris,
they don't see it that way. They look at working families, and
they see an ATM to fund their big government spending. That is
why President Biden and Vice President Harris have both
separately promised to let these beneficial tax cuts expire in
order to raise taxes on all Americans, every single American.
Vice President Harris has actually gone so far to call it a
day one priority to repeal the Trump tax cuts in their
entirety. Letting the Trump tax cuts expire would mean the
average family of four earning $75,000 or less a year would
face a $1,500 tax increase. That means smaller paychecks for
families already struggling to make ends meet because of
inflation that has gone up more than 20.3 percent in the last
3.5 years.
The Child Tax Credit would be slashed in half. The
guaranteed deduction would be cut in half. The death tax
exemption would also be slashed in half, especially hurting
farmers in states like Iowa and Missouri. Small and family run
businesses, like so many farms are, would see their tax burden
climb to 43.4 percent, making it harder to compete against
larger corporations paying a 21 percent tax rate.
So other than tax increases, what exactly are the tax
priorities of the other side? As I said, none of my Democrat
colleagues are here to answer that question. But if they were,
my guess is they would be celebrating that today, that this
very day actually marks the 2-year anniversary of the so-called
Inflation Reduction Act becoming law. Democrats stuffed that
bill with $650 billion in special interest tax breaks for the
wealthy, their donors, big banks, billion-dollar companies, and
China. Despite its name, the Inflation Reduction Act has done
nothing to lower prices from where they were 2 years ago. It
would be better named the Inflation Expansion Act.
None of this would have happened without Vice President
Harris' tie-breaking vote in the Senate. As the tie-breaking
vote, she helped usher through a $10 trillion increase in
government spending in just their first two years in office.
This is the Democrats' plan for America, higher prices and
higher taxes for the little guy and welfare for the wealthy and
well-connected.
That is why Republicans on this committee have formed tax
teams and are traveling all over the country to build on the
successful Trump tax cuts and stop the $7 trillion Biden-Harris
tax hike. We have held over 60 meetings so far, with many more
on the way. And just yesterday, the Rural America Tax Team led
by Chairman Smith traveled through Nebraska and western Iowa to
hear how the Tax Code can help farmers and small towns.
I want to thank the witnesses for all being here today and
sharing how the Trump tax cuts made a difference for you and
your community.
We also want to hear from everyone in attendance. There
will be clipboards that our teams will pass out throughout the
process we ask that you submit for the record. We will enter
those into the official House record of the hearing and take
those back with us to Washington as we consider how to build on
the successes of the prior tax cuts.
I am pleased to recognize our generous host, our good
friend, Congressman Feenstra, for 1 minute.
Mr. FEENSTRA. Thank you, Chairman Smith.
I want to thank my colleagues for coming. We have taken
Congress out of D.C. and brought it to the breadbasket of the
world, to the Midwest, to Iowa, and I want to thank you for
being here.
I want to thank our witnesses for coming today. I want to
thank Karen, Sarah, Jolene, Steve, and Lana for taking the time
to answer the questions that we might have.
This is so important for us as a state, for the Midwest.
You think about what we have, from cattle to hogs, to dairy to
eggs, to turkeys, to biofuels, to corn and soybeans. This is so
important. This is our way of life that we are going to talk
about today. But our way of life is affected when the tax cuts
that happened in 2017 go away.
I think of our families, where we doubled the standard
deduction in 2017. We doubled the Child Tax Credit for our
families. I think of the small businesses and agricultural
community that does the 199A, pass-through credit, got a 20
percent discount. They got interest expensing reduced, got 179
depreciation increased. It goes on and on. But all these things
go away and all have a dramatic affect for our families, for
our small businesses, for our main streets. And when they are
affected, our schools are affected, our hospitals are affected,
and so many other things. That is why it is so important that
we have this discussion today.
And, finally, I just want to say, I ushered through in
2018, when the Tax Cuts and Jobs Act was passed, I ushered it
through the Iowa Senate where we did the largest tax cut at
that time in Iowa history. Well, I will say this: I did it in
the Iowa Senate, being chair of the Ways and Means, and I will
come through again for each Iowan to make sure that these tax
cuts continue to be cut as we move forward.
Thank you so much, Chairman.
Thanks, everyone, for being here.
Chairman SMITH. Thank you.
I am pleased to recognize the gentlewoman from Iowa, Mrs.
Hinson.
Mrs. HINSON. Thank you, Mr. Chairman. Thank you for coming
back to the State Fair, repeat customer. This is the second
year in the row Mr. Chairman has been here.
Thank you to our witnesses and to everyone in the audience
for coming out to talk about these important issues that affect
our businesses here, our farmers, our producers, and working
families. We are going to highlight a lot of those really
important issues today.
Mr. Chairman, I was struck by what you said about the
agenda coming out of the Harris administration, Harris-Biden
administration, and they will raise your taxes. I serve on the
House Appropriations Committee, so thank you for letting me sit
in as a guest today. But our committee is responsible for,
hopefully, judiciously spending your tax dollars.
I think there is a philosophical difference happening right
now in Washington, D.C. We believe that that is your money, not
the government's money. But our ranking member on that
committee said just a few months ago in our markups this year,
we do not have a spending problem; we have a revenue problem.
That to me is code for they want to raise your taxes and they
are addicted to spending your money.
So Democrats, including Vice President Harris, have
promised to roll back these important tax cuts that Randy was
just talking about, calling for a repeal of stepped-up basis
and expiration of the 199A small business deduction. These are
policies that so many multigenerational small family farms and
businesses rely on every single day. And these are a critical
tool to support all of our economies, but especially our rural
economy here in Iowa.
So we need to be competitive. We need to be competitive
with our adversaries like the Chinese Communist Party. And I
look forward to having the discussion today with our witnesses
and all of you and my fellow colleagues from all over the
country about how we can make sure we are returning that money,
your money, back to you.
And, Mr. Chairman, I yield back.
Chairman SMITH. Thank you.
I am pleased to recognize the gentleman from Iowa, Mr.
Nunn.
Mr. NUNN. Well, Chairman Smith, thank you so much for being
here in the heart of the heartland. You know, I think we need
more of these hearings outside of the beltway and right in the
corn belt, because this is where you are going to hear not
from, you know, politicians and lobbyists but from real
practitioners and real leaders.
I am thrilled with the lineup that we have today, and I am
grateful for members across the country on your Ways and Means
Committee taking time to come out here and learn how it impacts
your district, then learn how it impacts really the middle of
America and the jobs and the families and the lives that are
impacted directly by this.
I am proud that on day one as a freshman on this panel, I
went against the establishment to make sure that we fought for
key taxes that impact our State. Working with this team here,
we held together to make sure that biofuels were part of
America's energy solution and our national security solution.
With that, we were able to achieve it, and with your help, Mr.
Chairman, thank you for hearing us out on this.
I am also very proud, you know, as a dad of six, with two
foster kids here that are now adopted, that we have made a
priority of the Child Tax Credit. It helps every family, it
grows the economy, and it is important for our future here as
families.
And I am also privileged to help lead the HEART Act to help
families who are decimated by natural disasters like those that
happened right here in Greenfield, Iowa, where nearly a third
of the town was destroyed by severe storms and tornadoes.
The 2017 tax credit has been a critical lifeline for all
Americans, but particularly those right here in Iowa, with the
average Iowa family of four seeing a 22 percent tax cut,
because of your good work. If these are allowed to expire
through inaction or false promises, Iowans will see a 22
percent increase in their overall taxes at a time when no Iowa
family can afford it.
Because of the leadership that has happened both on this
committee and I would say with your Iowa delegation, we have
been part of the team that has cut Iowa taxes three times, the
largest tax cuts in Iowa history. We have a proven example of
how this works to grow the economy, to help all families, and
as my colleagues highlighted here, to make sure that we pay off
our debt while being successful for the future.
Because of these tax cuts, Iowans have more money in their
pockets and they invest them right in the communities that
matter, spending on their families and their communities and to
grow our local economy.
So, Mr. Chairman, thank you for doing this, and thank you
for the opportunity to join you.
Chairman SMITH. Thank you, sir.
I will now introduce our witnesses for today.
The first one is Karen Dewalt, who is the vice president
for Global Tax at Home Depot. We have Sarah Curry, who is a
mother of three from Glenwood, Iowa, and serves as the research
director at the Iowans for Tax Relief Foundation. We have
Jolene Riessen, who is a farmer from Ida Grove, Iowa, and
serves as the president of Iowa Corn. We have Steve Sukup, who
is the president and CEO of Sukup Manufacturing Company, a
family-owned grain storage and drying manufacturer based in
Sheffield, Iowa. And we have Lana Pol, who is the owner and
president of Geetings, a small trucking company based in Pella,
Iowa.
Thank you all for joining us today. Your written statements
will be made part of the hearing record, and you each have 5
minutes to deliver remarks.
We will start with you, Mrs. Dewalt. You may begin.
STATEMENT OF KAREN DEWALT, VICE PRESIDENT, GLOBAL TAX, THE HOME
DEPOT
Mrs. DEWALT. Thank you, Chairman Smith.
Members of the Ways and Means Committee and members of the
Iowa delegation, thank you for the opportunity to testify on
behalf of The Home Depot on why it is important to keep a
competitive corporate tax rate. As the largest home improvement
retailer, The Home Depot is uniquely in tune with how a
competitive corporate tax rate is essential to staying in
business in the United States.
The Tax Cuts and Jobs Act, TCJA, which reduced the
corporate tax rate to 21 percent, has been necessary in
enabling American companies like ours to create jobs, invest
domestically, and offer low prices on products for Iowans and
all consumers. I am here today to share just how much The Home
Depot invests in our great country.
In the U.S., we operate over 2,000 stores and employ over
400,000 associates. Every Home Depot job supports more than
four additional jobs across the U.S., which is more than twice
the retail average. In Iowa alone, we support more than 7,000
jobs.
In 2023, Home Depot paid $5 billion in corporate income
taxes, which is approximately 1 percent of all Federal income
taxes collected in the United States. No one can say that we
don't pay our fair share in taxes.
Since the enactment of TCJA, we have undertaken several
initiatives that demonstrate the positive impact of a lower tax
rate.
First, expansion and employment. We have invested $1.2
billion in our supply chain since 2017, establishing over 100
warehouse facilities. This has created more than 18,000 jobs in
the U.S., improved our operational efficiency, and expanded our
ability to deliver large, bulky merchandise like lumber,
insulation, and roofing to better serve our pro customers.
Second, investment in our workforce. The Home Depot
invested approximately $1 billion in frontline associate wages
in 2021 and an additional $1 billion annualized wage investment
last year, ensuring our employees are compensated fairly and
competitively. This benefits our associates and contributes to
local economies through increased spending power.
Additionally, our store managers see the benefit of our
wage investments in the lives of our associates. Our West Des
Moines store manager told the story of one of his associates, a
local Iowan whose life has changed from the Home Depot's
investment in wage. She has gone from working two jobs to make
ends meet to joining The Home Depot, growing her career, now as
a department supervisor, and just moved in to a new apartment
with her son.
Finally, we have invested significantly in technology to
create an interconnected retail experience and help our
associates provide better customer service.
Now we are embarking on our next growth chapter, planning
to open 80 new stores over the next five years, more than a
dozen of which have already opened.
These examples show that when we were given a lower rate
through TCJA, we aggressively invested it back into our
business and people. Any increase in the corporate rate will
decrease the capital that we have to invest in our associates,
stores, infrastructure, and capabilities, and will threaten to
make us less competitive. Our investments in local communities
through job creation, small business support, and giving back
help stimulate local economies and improve quality of life.
For example, we have over 80 small businesses in Iowa and
Missouri that deliver supplies to our stores. These suppliers
sold more than $140 million worth of product to The Home Depot
in 2023.
In addition, Home Depot is committed to supporting
communities with natural disaster preparedness, short-term
response and long-term recovery, which makes a real difference
when the need arises. In 2023, The Home Depot Foundation
committed more than $8 million for disaster preparedness,
response, and long-term recoveries in impacted communities from
natural disasters. And this May, the Foundation committed up to
$300,000 to harder-to-reach communities, including those in
Iowa impacted by tornadoes and severe flooding. This is an
invaluable impact of our footprint with associates in every
state in the U.S. ready and able to serve our communities.
In conclusion, maintaining a competitive corporate tax rate
of 21 percent is essential for the continued growth and success
of U.S.-based companies like The Home Depot. It enables us to
invest in our business, create jobs, and provide value to
American consumers while supporting the broader economy.
Our stores don't just sell products. They empower
homeowners to renovate and maintain their homes at a reasonable
cost, and they enable small to mid-size contractors to grow
their businesses. We urge policymakers to consider the positive
impact of the current tax rate on businesses, communities, and
the nation's economic health.
Thank you.
[The statement of Mrs. Dewalt follows:]
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Chairman SMITH. Thank you.
Mrs. Curry, you are recognized.
STATEMENT OF SARAH CURRY, MOTHER, GLENWOOD, IOWA, AND RESEARCH
DIRECTOR, IOWANS FOR TAX RELIEF FOUNDATION
Mrs. CURRY. Thank you, Chairman Smith and members of the
committee, for giving me the opportunity to comment here today
on how the Tax Cuts and Jobs Act has impacted me and my family.
My name is Sarah Curry. I am a wife and a mother to my
three boys, Phillip, who is six, Isaac, who is four, and
Benjamin, who is two.
My family lives in rural southwest Iowa on approximately 10
acres. You have to drive down about 3 miles of a gravel road to
get to my home. My husband works as a radiation oncology nurse
at the nearby hospital, and I am a research director for a
nonprofit here in Des Moines.
With three boys and two working parents, our family
benefited immediately from many of the policies included in the
TCJA. At the top of the list is the expansion of the Child Tax
Credit. For my sons, keeping more of our earnings helped us
with the needs that all parents have for babies and toddlers.
However, the tax credit has been especially significant for my
family when Isaac arrived, because he was diagnosed with autism
spectrum disorder. The cost of Isaac's medical appointments and
therapists is a large financial burden on my family, so we
redirect every dollar that otherwise would go to taxes to his
therapies.
Another benefit my family has appreciated is the increased
standard deduction. Expanding the standard deduction and
limiting major itemized deductions simplified our tax filing
process, and it has helped us as a family make decisions based
on our lives rather than the tax rules.
A third provision of the TCJA that helped my family is the
change in the marginal tax rates. Over the years, my husband
and I have worked hard, earning additional degrees,
certifications, and receiving promotions to grow in our
careers, and as a result, our taxable income has increased.
Within the TCJA we saw immediate savings. If these reduced
marginal tax rates were to sunset, our family would see an
immediate tax increase, and that would directly impact our
family budget and the resources we have for our children.
That is the personal side of my testimony. But given my
background in public finance, I also want to give you my
professional perspective on the impact TCJA will have on Iowa
families.
Iowa's tax structure draws upon the Federal Code as a
starting point for calculating our state income taxes, and so
the TCJA has ramifications for us on that side as well. Our
state once had nine income tax brackets with a top rate of 8.98
percent, but starting next year, we will have a flat tax and a
rate of 3.8 percent. State-level policymakers have worked to
reduce the tax burdens on Iowans, but a sunset of the TCJA
would erode some of those tax savings.
In 2018, state lawmakers conformed our state tax policy to
many of the TCJA provisions, so a sunset of the Federal tax
policies will present a problem. Iowa will have to figure out
how to maintain a less complex tax system for Iowans that does
not result in a tax increase while still conforming to federal
tax policy.
As a policy expert and, more importantly, as a mom, I can
testify that the increased tax liability would hurt my family
and many others, both at the federal and state level. My
family's tax burden directly affects the amount of income my
husband and I can spend on our three young children and the
pressure on us to spend time away from them working. Having a
child with special needs makes us especially sensitive.
As Iowans, we feel like lawmakers in our state have worked
hard for us to keep more of our income, by lowering the top
rates and simplifying our tax structure. As an American, I ask
you to look to Iowa and the other states that have enacted
similar reforms in response to the request of families across
America for lower taxes.
Thank you for your time and the consideration of my
testimony today.
[The statement of Mrs. Curry follows:]
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Chairman SMITH. Thank you.
Ms. Riessen, you are now recognized.
STATEMENT OF JOLENE RIESSEN, FARMER, IDA GROVE, IOWA, AND
PRESIDENT, IOWA CORN
Ms. RIESSEN. Thank you, Mr. Chairman, and welcome to Iowa.
I appreciate the opportunity to appear before you today and to
commend you for holding this important hearing on tax
implications that impact family farms across Iowa and the rest
of the United States.
My name is Jolene Riessen. I am a farmer and current
president of the Iowa Corn Growers Association that has a
membership of over 7,500 farmers and agribusiness associates.
My organization takes its direction from our grassroots
memberships, and by allowing me to speak today, you will be
hearing their concerns through me, in addition to my own
personal experiences for my crop and cattle operation in
northwest Iowa.
As a farmer, we are at a critical juncture. Currently,
commodity prices will not cover the cost of production, let
alone the extra moneys to be spent in the community, hurting
our rural and national economies. A strong farm economy makes
for a strong national economy. That is why a good tax policy is
vital to keep family farms in business.
Iowa Corn works in conjunction with the National Corn
Growers Association, and together we were supportive of your
negotiated tax package, H.R. 7024, the Tax Relief for American
Families and Workers Act. And we appreciate your work on these
important tax matters, like the bonus depreciation and Section
179 provisions.
So every year, our Corn Growers Association conducts a
member survey. We just got the results back. Over 90 percent of
our members say that tax policy is number one to them, and we
as an organization need to be focused on that. Tax policy is so
important for our farmers to continue to thrive throughout the
countryside.
So next year, I will be eligible for Medicaid, which means
entertaining thoughts about retiring and passing the family
farm on to the next generation, or for me, my two boys. So I,
as so many other farmers, are making plans for passing that
farm down to the next generation, and changing tax provisions
are a huge part of that estate planning process.
So here are my thoughts to you to carry back to Washington.
Number one, leave the estate tax rate at $13.6 million per
person and adjust it for inflation annually.
Number two, keep bonus depreciation, which allows us to not
only modernize our equipment but allows us to farm more
efficiently.
And, number three, keep stepped-up basis, which allows us
to transfer ownership of farmland and equipment, reducing
capacity gains tax for our heirs.
If these tax provisions change, it will be catastrophic for
us and so many others who need their land and equipment to keep
the farm operational.
So let me just use my farm as an example. If the current
estate tax rate stays at 13.6, I will be able to successfully
pass my ground and equipment to my boys, without placing them
in a tax liability position. However, if the current level is
reduced back to $6 million, here is what is going to happen. My
boys will either have to sell all the equipment and 70 acres or
they are going to have to sell 275 acres of land and be able to
keep the equipment.
Both choices, in my book, are unacceptable, since selling
275 acres of ground would mean that over half of the land that
they stand to inherit is going to be gone and, for me, it will
be destroying what their dad and I worked so hard to build.
So our story is more common than not. Currently, 97 percent
of farms are family-owned in the United States, so you will be
decimating what helped build the strong American farm economies
we know today. With the possible sale of the land to pay the
estate tax, chances are it is going to be a larger farmer that
buys that ground, not a beginning or a small farmer, which
would add to the vertical integration that is already going on
in the countryside.
Plus, now let's add the taxes of the sale of that land and/
or equipment and then let's go to town and try and find a local
lender to set up financing to be able to buy that equipment, to
be able to buy that land back. And if successful, interest
rates are going to be incredibly high just due to the riskiness
of that loan.
Couple that with the depressed farming commodity prices
that we have today--and, oh, by the way, corn is down another 6
cents today--will make it next to impossible to service that
amount of tax debt, so basically destroying any chance of my
sons continuing to farm the operation that has been in our
family for close to 100 years.
I know this is a lot to think about, but I want to leave
you with this: The current tax provisions are essential to
preserving family farms and farming throughout the United
States. Protecting these policies is key to ensuring that we
can pass our farms on to the next generation, because when we
protect farming and farms, we protect our communities, we
protect our food, and we protect our fuel, all things that have
and will keep our country strong and keep the United States the
envy of other nations.
Thank you for this opportunity to provide this testimony
today.
And I do have one final request, and I know this is a big
ask, but please, please, please, pass a farm bill this year. My
dad----
[Applause.]
Ms. RIESSEN. So I come from a family of six kids and,
needless to say, we fought a lot, and my dad would always say,
You got to work along, you got to get along. My dad is 90 years
old. He still farms.
So I want you to take that advice back to D.C.: You got to
work along and you got to get along. And I would certainly hope
that we see some promise in getting that farm bill passed.
And one more thing. You have a keychain there by you. You
folks are the key to getting this farm bill passed, to getting
these tax policies back on the farm for us. So please, I know
that is kind of a corny gift, but it is so important the things
that you folks will do for us out there.
So thank you so much.
[The statement of Ms. Riessen follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH. Thank you. Amen to that. Let's pass that
farm bill.
Mr. Sukup, you are recognized.
STATEMENT OF STEVE SUKUP, PRESIDENT AND CEO, SUKUP
MANUFACTURING CO.
Mr. SUKUP. Thank you.
Good morning, Chairman Smith, and all to the distinguished
members joining us. Thank you for the opportunity to appear
before you today at this important hearing. It is a special
time in our community, and we are grateful to host you.
My name is Steve Sukup. I am president and CEO of Sukup
Manufacturing. We are located just south of Interstate 35 in
Sheffield, Iowa. And I am proud to say that we are the largest
family owned and operated manufacturer of grain storage,
drying, and equipment.
For over 60 years, Sukup has been a critical part of the
U.S. food supply. We sell in every state represented here,
throughout the Midwest and from California to New York. Our
company is located in Congressman Feenstra's district, and I
would like to thank him for being here today and our entire
Iowa delegation.
The tax reform bill of 2017 was a shot in the arm for
manufacturers across our sector. Sukup has grown over the past
decades, but nothing compares to the Tax Cuts and Jobs Act when
it was signed into law. For example, thanks to lowering the
corporate tax rate to 21 percent, Sukup grew our workforce by a
third, adding 200 well-paying manufacturing jobs in our
community.
The key to Sukup's success has not only been our culture
but our dedication to creating and pushing our industry
forward. Sukup has held over 100 U.S. patents. We are
pioneering ways to make grain storage and drying more safe,
profitable, and efficient for farmers and ranchers across the
country. This is largely made possible by massive investments
in research and development.
In the years following tax reform, Sukup increased our R&D
investment by several million dollars, with 95 percent of that
money going towards engineering and staff wages, bringing well-
paying jobs to Iowa.
One of these critical R&D investments is our safety homes.
When a catastrophic earthquake struck Haiti in 2010, a Sukup
safety manager wanted to develop an efficient, quickly
assembled home from one of our grain bins to provide relief. I
encouraged him to build a prototype. And today, our safety
homes as you can see here on the fairgrounds today are changing
lives worldwide.
We also developed the world's largest 2.2 million bushel
bin for ethanol plants. That is big enough to house a Boeing
767. But, yes, the landing is difficult, even for you,
Congressman Nunn.
Unfortunately, after being part of our tax code for 70
years, the expiration of immediate R&D expensing has made it
harder for us to invest in the technologies and products of the
future. Congress should immediately reinstate the expensing of
R&D so manufacturers like Sukup can continue to innovate.
Following the passage of the 2017 tax law, Sukup went from
roughly $5 million in capital spending to almost $15 million
per year, thanks to the 100 percent accelerated depreciation.
This allowed us to fund new equipment purchases and fulfill our
mission of providing Sukup employees with reliable, safe, and
efficient equipment.
Unfortunately, full expensing began to expire in 2023. We
believe that was a mistake, and it is common sense that our Tax
Code should encourage investment that leads to growth. Many
manufacturing teams, including our company, would benefit from
seeing this provision restored, and Congress should do it
immediately.
An accountant once told me, if you don't have some debt,
that means you are not coming up with new ideas. Well, many
manufacturers like us borrow moneys to finance essential long-
term investments. Tax reform made it less expensive to take
business loans which manufacturers use to invest and grow their
operations. Unfortunately, this pro-growth standard expired in
2022 as well, making debt financing much more expensive. We are
also counting on you to preserve tax reform sensible changes to
the estate tax, so that we can ensure the third and fourth
generations of Sukups can continue in our family business.
Discussing tax policy before Congress is something of a
tradition in our family. About 20 years ago, my father, Eugene
Sukup, testified before the Senate Finance Committee, along
with Warren Buffett. Since then, thanks to tax reform, we have
had incredible growth streak in our business, and every one of
our employees and customers has benefited.
I urge you to keep that growing streak going. Maintaining
the 21 percent corporate rate, as well as the tax provisions I
just described, are so important to manufacturers everywhere.
Because of these policies, we have been able not only to
maintain our business; to provide great living, health
benefits, and soon expanded child care for our employees and in
our community, even as we aid those in need around the globe.
Again, thank you for being here today, and thank you for
looking at ways to keep Sukup Manufacturing a rural Iowa
success story.
Thank you.
[The statement of Mr. Sukup follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH. Thank you.
Ms. Pol, you are now recognized.
STATEMENT OF LANA POL, OWNER AND PRESIDENT, GEETINGS, INC.
Ms. POL. Good morning, Chairman Smith, members of the House
Committee on Ways and Means, and members of the Iowa
delegation. My name is Lana Pol, and I own a number of small
businesses here in Iowa. My businesses are Geetings,
Incorporated, a local and regional trucking company; G.I.
Warehouse Corporation, which specializes in commercial
warehousing and logistics; Creative Inspiration, an embroidery,
promotional, and customer fulfillment company; Mowbility Sales
and Service, an outdoor power equipment, trailer, and small
tractor dealer; and Odyssey Spas, which sells hot tubs and
provides services for pools and spas.
I thank you for this opportunity to discuss how tax policy
impacts small businesses like mine here in the Midwest.
Entrepreneurship runs deep in my family. My father, Delroy
``Wayne'' Geetings, founded Geetings, Incorporated, in 1972 in
Pella, Iowa. Three years later, he expanded his operations to
nearby Knoxville with G.I. Warehouse Corporation. I joined his
companies in 1975, and worked for many years with my family
running these businesses.
With the retirement of my brothers a few years ago, today I
fully own these businesses and operate them with my children.
My children share our family's passion for entrepreneurism, and
I own and operate Mowbility Sales and Services, Odyssey Spas,
and Creative Inspirations with them. It is my hope that each of
these businesses will pass on to future generations in our
family.
While each of my businesses has their own purposes and
their own unique challenges, they have all directly benefited
from the policies in the 2017 Tax Cuts and Jobs Act, TCJA,
aimed at growing small businesses, and they would each face
challenges should these provisions expire. Today I would
particularly like to focus on three provisions that are
critical to our operations: the small business deduction, 199A,
created under TCJA; the expansion of the bonus depreciation and
small business expensing in TCJA; and the estate tax.
Each of my businesses operate as a pass-through, that is,
the business earnings flow through my individual tax returns.
Like other pass-through companies, the small business deduction
section, Section 199A, created in TCJA has provided multiple
opportunities for me to reinvest and grow my businesses.
Because of this deduction, I was able to give my employees
the largest compensation increase that we have been able to
provide in many years, which in turn has helped our efforts to
retain employees, something that has not always been easy
recently.
Additionally, we were able to invest $2 million to build a
nearly 40,000 square foot expansion of G.I. Warehouse
Corporation and expand our fleet of trucks at Geetings.
Our businesses have also benefited from the expansion of
the expensing provision in TCJA. Under TCJA, full expensing for
equipment could be recognized in the year of purchase instead
of having to amortize costs over additional years through
depreciation. This change allowed us to consistently add trucks
and trailers to our fleet at Geetings, Incorporated. In fact,
the first year of this expansion, we were able to purchase and
immediately expense six new semi-trucks and, until recently, we
have been able to continue this expansion.
However, recently we have had to implement a freeze on
purchasing any new equipment. This is due to the uncertainty of
the tax provisions at the end of 2025 and because of the
increased costs of equipment. In fact, in 2018, we purchased
trucks for $158,000 each. In 2022, the trucks cost $251,000
each. If these TCJA provisions were allowed to fully expire or
otherwise be limited, it will create another hurdle to
expanding our fleet in the future.
Finally, like many family-owned businesses, the impact of
the estate tax on a small business has become more real to me
recently. My husband unexpectedly passed away earlier this
year. At the time of passing, we were working on our estate
planning, including succession planning for our family
businesses. Each of my businesses is rooted in family
operations. My hope for all of them is that they were not only
passed on to my children but their children as well.
While I agree with others that this tax should be
eliminated entirely, if Congress does not at least act to
preserve the expanded exemption of the estate tax under TCJA,
it will be increasingly harder to pass family-owned businesses
from generation to generation.
If nothing else today, I want to stress to the committee
that protecting small business is good for America. Small
businesses are the foundation of the American economy.
Without action, 30 million small businesses in the United
States will be faced with a massive tax hike, which will hurt
their ability to create jobs and give back to their
communities. I urge Congress to act swiftly to provide small
business with the certainty that they need to make these
provisions permanent.
Thank you for the opportunity to testify today. I look
forward to answering any questions.
[The statement of Ms. Pol follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH. Thank you.
I want to thank each one of our witnesses.
We will now move to the question-and-answer portion.
Mrs. Curry, as a mother of three young boys, very young
boys, you know as well as anyone the joys but also the
challenges that can come with raising kids. One policy that I
have long championed is the Child Tax Credit. This pro-working
family tax policy was created, I like to point out, by a
Republican Congress back in 1997, and strengthened by a
Republican Congress in the 2017 Trump tax cuts.
Where the Trump tax cuts are set to expire at the end of
next year, the Child Tax Credit will be slashed in half, from
$2,000 to $1,000. And as a parent, what would that mean to your
family, and what more should Congress consider doing with the
Child Tax Credit to make it even more helpful to families like
yours?
Mrs. CURRY. I mean, every dollar that my husband and I earn
that we get to keep goes towards our children. Like I said,
Isaac, he is in speech therapy, occupational therapy. We are
waiting for behavioral therapy. It is all very, very expensive.
Health insurance doesn't cover everything. You know, Benjamin
needed speech therapy because the little booger didn't want to
talk when he turned two.
So it is just, you know, expenses like that. You know, the
water heater goes out. The furnace went out right after Phillip
was born. And so looking at when we file our taxes, it happened
early spring, and in Iowa it is still very cold then. So that
was actually a really reprieve. You know, I didn't have to pay
a whole lot extra in taxes. We got a little bit back, and it
helped with that.
So, you know, taxes affect my grocery bill. They affect my
gas tank. They really, really do impact my kitchen table.
So I would just ask, I mean, for nothing else, just keep it
where it is at $2,000. An expansion would be very grateful,
especially for those young children. Early intervention is new.
It wasn't around when I was young. And so those services do
cost more money. So maybe expanding it more for younger
children versus older children would be an option to help. But,
really, reducing it by any amount would negatively impact my
family, my children, and really, specifically, our ability to
pay for services.
Chairman SMITH. Thank you.
Ms. Riessen, as a family farmer, you know how important it
is that your farming equipment is up to date. It is about
delivering the best product to your customers and about keeping
your employees safe. I know how important it is to make sure
your equipment and tools are up to date and helping you get the
most out of your land to deliver goods to market faster, more
efficiently, and in greater yields. But this investment comes
at a tremendous cost, which is why Congress included the
immediate 100 percent expensing for machines and equipment in
the Trump tax cuts back in 2017. However, that provision has
already begun to phase out. It was 80 percent last year. It
will be 60 percent this year, 40 percent next year, and then
20.
What has been the impact and what will the future look like
for family farms like yours if Congress does not address this
critical piece of the tax code?
Ms. RIESSEN. So my first thought is, if you like to eat,
you will help us with this. From my experience this spring, our
combine last fall was having issues. We looked at it this
spring. To fix it was going to be basically $80,000. The
combine is worth $120,000. So guess what? We had to get a
different combine. If I wanted a brand new one, which my boys
thought should happen, that is $750,000, $750,000 for a 2025. I
am, like, wow. That could buy me a tremendous retirement home.
But I couldn't do that to the boys.
So, anyway, ended up buying a $450,000 one. And so, you
know, when you buy that piece of equipment, you are expected to
pay it off in three to seven years. That is usually what the
finance is at, so those are pretty hefty bills that come to
play. So being able to use that 100 percent depreciation, now
it just freed up money so I can make those payments. You know,
people have 20 years--20, 30 years to buy a house. Nope. A
piece of equipment that is worth more than what a house is I
got to pay off in three to five years, three to maybe seven if
you talk well to your banker.
So by having that, it allows me to make improvements on my
farm to which--okay. So I kind of liken it to a cell phone. How
many have a flip phone or a bag phone anymore? We want new
technology. We need new technology on our farms in order to
continue to be competitive out there. And by being able to use
this, we are staying in the ball game.
Chairman SMITH. So, Mr. Sukup, we know that sound tax
policy can help America's businesses grow and innovate. We see
the spirit of innovation every day from American manufacturers
to our family farmers. America's farmers are some of the best
innovators in the world as they are consistently researching
ways to get more out of their land for today and future
generations of farmers.
In the 2017 Trump tax cuts, it sparked an 18 percent
increase in investment in research and development in this
country. As a business owner, what impact did the 2017 tax cuts
have on your decision-making, and what would the current lapse
in the ability to immediately expense R&D investment have meant
to your capabilities to invest, innovate, or grow?
Mr. SUKUP. Well, going back to 2017, we then switched to
where we were doing about $5 million a year in research and
development. We then started increasing that. We went up to $15
million. And what that did was reinvest in machinery. We are
manufacturing. So it is very heavy, capital-intensive
equipment, but it provides our employees to be more safe and
efficient and provide us to be able to put better products to
our customers across the Midwest, across the world.
And, also, with the lower tax rate, that was when we
started a clinic, actually, in our manufacturing plant
facility. Our third generation, my daughter, Emily, came up and
said--worked with some of our H.R. folks and said our employees
would really like this. Well, we reinvested into our employees.
It has been a perfect fit for us for the clinic onsite. We are
doing child care because that is so important to families
throughout our community and for us to have them have a safe
environment for their kids, but also to be able to come in and
work at Sukup at the manufacturing jobs.
Chairman SMITH. Ms. Pol, as an owner of four small
businesses--small businesses are the foundation of our
country's economy--you know how difficult it can be for Main
Street businesses to compete with larger corporations who are
taxed at a lower rate rather than as a so-called pass-through
entity.
Here in Iowa, pass-through businesses account for nearly
half of all employment in the State. Across the U.S., 98
percent of our family farms, which account for more than 90
percent of our agriculture production, are also pass-through
entities.
What would it mean for your business if the 20 percent
small business deduction that was included in the Trump tax
cuts were to expire and you face an effective tax rate of over
43.4 percent while the company Mrs. Dewalt works for pays 21
percent?
Ms. POL. That would be just devastating. You know, large
companies also have so many other advantages that we don't
have. You know, they also have the ability to make more money
than we do. So when we get hit with these large tax increases,
and it is unfair for small businesses to have so much more than
they do, so it takes that money out of our pocket, and it takes
it so we can't reinvest. We can't give raises. We have to
compete against large companies for our employees. And so it is
not always as easy to pay the wages that they can, have the
benefits that they can. So we have used that benefit to give
the wages. And so if it gets taken away, I think it is going to
be harder and harder for us to be able to compete.
Chairman SMITH. Thank you.
Mrs. Dewalt, during the Obama administration, prior to
enactment of the 2017 Trump tax cuts, we saw over 25 major
corporate inversions occur where businesses moved their
headquarters and jobs overseas to fly the flag of another
country. The Trump tax cuts made several changes to make it
more competitive for U.S. businesses to be located and do
business here in the United States.
Can you talk specifically about some of those changes and
how they can impact the decisions by U.S. businesses to keep
their operations here in the U.S.?
Mrs. DEWALT. Thank you for the question, Chairman Smith.
So the corporate rate prior to TCJA was uncompetitive on a
global scale. So the reduction certainly encourages businesses
to invest in the U.S. So at The Home Depot we are predominantly
domestic, and the reduction of the corporate tax rate to 21
percent enabled us to make significant investments: investments
in wage of $2 billion, permanent investments in wage of $2
billion, enhancing our supply chain $1.2 billion, 18,000 jobs.
So in our business decision-making, we factor in the
corporate rate and other factors when we make all of our
decisions about pricing, about wage, about expansion, and other
investments. It is key to have a competitive 21 percent rate in
the United States for companies like ours to continue this
level of investment.
Chairman SMITH. Thank you.
I now recognize Mr. Feenstra.
Mr. FEENSTRA. Thank you.
And thank you again to all the witnesses.
You know, you think about tax, and if you reduce tax, you
give families, businesses more money to do different things. We
just heard about that. What it also does, it increases revenue
to our country. Yeah, it is a shocker.
In 2017, under the Tax Cuts and Jobs Act, we dramatically
reduced taxes. And you know what happened? It grew our economy
and we brought in record number of revenue. What does that do?
That will help us reduce our debt, our $35 trillion debt, if we
continue to grow. That is why I am so passionate about it.
The other thing I am passionate about is tax inequity.
There is a lot of tax inequity. One specific one is the death
tax, estate tax. We got rid of it in the state of Iowa. I was a
big proponent of that. But we haven't got rid of it at the
federal government level.
I have 170-some Members that have signed on to my bill to
rid of the death tax. It is a pilfer tax. Think about it this
way: You collect all this land throughout your life. You die,
and all of a sudden your family member has got to pay 42
percent tax on that land. Think about that, 42 percent. That is
wrong in so many ways.
So, Mr. Sukup, I want to ask you, you are talking about the
third and fourth generation coming down the pipe. How will this
affect you if you have to pay that 42 percent?
Mr. SUKUP. We wouldn't be able to pass it on. Right now, I
am part of the second generation, my brother and I. Our third
generation is in the office every day. We have six members of
our third generation. They enjoy coming to Sheffield every day
and working throughout the different jobs of our manufacturing.
But to be able to pass it on, that would just be overwhelming
and not possible.
Mr. FEENSTRA. It would just be a killer, absolutely. And
all of a sudden, that next generation is lost.
Mr. SUKUP. And that family business closes or leaves the
community.
Mr. FEENSTRA. That is exactly right. And that happens to
small businesses and our main streets day and day--day and time
and time again.
I want to talk about something else that is so important to
Iowa. You think about, right now, over 50 percent of our crop,
corn and soybeans, goes to biofuels. Every other row virtually
goes to biofuels.
Right now, if you look at our commodity prices, our corn is
under $4. Our soybeans are under $10. Right? Now, we could
export more or we could use more of it. How do you use more?
You do it through biofuels, ethanol and biodiesel. To do that,
we have got to grow our market through sustainable aviation
fuels and other things.
So I want to talk about 45Z. All right. This is a tax
credit that can dramatically expand these markets and, in
essence, put us on the same foothold as electric vehicles.
Right now, we have a thumb on the scale for electric vehicles
and not liquid fuels. This gives us an opportunity to compete.
And if we don't, we are going to probably see our commodity
prices cut nearly in half again.
Ms. Riessen, can you talk about this?
Ms. RIESSEN. You bet. So that 45Z is going to be a game
changer for us out there when it comes to the grain price,
because with the 45Z the Nation and our domestic consumers are
asking for low carbon. So one way of doing that is through
carbon sequestration, and this 45Z helps ethanol plants get set
up to be able to do that.
So when we do that, my corn that goes to that ethanol plant
now, I am not expecting to get a lot of corn--I mean, a lot of
any tax return back from that, but what it does is make
markets, and it makes better prices. But the only way that is
going to happen is if we specifically say that we use the corn
that is produced domestically. Because at this point in time,
our friends down in Brazil are importing their ethanol into
Georgia to make sustainable aviation fuels, and my
understanding is they will qualify for this tax cut, this 45Z.
We can't let that happen. I am sorry. I mean, I love all
farmers, but not that much.
Mr. FEENSTRA. We need to use domestic feedstock. We can't
use stock from around the world.
Ms. RIESSEN. Right. And so in a recent study I just saw is,
so for every dollar invested in that 45Z tax credit, it will
return $4 to $6 for every dollar invested. So I am like, you
know what, I am sorry, I think this is a no-brainer, but you
got to take it back to Congress and get that happening.
Mr. FEENSTRA. Thank you for that.
I just want to tell everybody, we have to remind ourselves
that when our farmers are successful, our main streets are
successful, our hospitals, our schools, everything is
successful. And when our commodity prices are where they are
at--and we are going to feel it this fall, all right--no one is
going to buy a vehicle, a piece of equipment or a bin,
whatever, that is why it is so important that we have 45Z and
make sure we have that bill.
Ms. RIESSEN. Right.
Mr. FEENSTRA. I yield back. My time is up.
Thank you.
Chairman SMITH. Thank you.
Mrs. Hinson is recognized.
Mrs. HINSON. Thank you, Mr. Chairman.
I want to talk a little bit more about something that has
already been discussed today, and that is the Child Tax Credit
and the expansion of that under the 2017 Trump tax cuts.
Doubled the tax credit, increased its refundability, and raised
that income threshold. And all that does is it makes it so that
more families, more hardworking Iowa families and American
families can access that credit.
So building on that foundation, I actually introduced a
package of bills called the Providing for Life Act. It really
prioritizes the needs of our families and ensures that they
have the resources to thrive. It would expand the Child Tax
Credit, include provisions for paid family leave, support for
expecting parents and pregnancy centers, and it would
specifically increase the refundable Child Tax Credit up to
$3,500 for kids under the age of 18 and $4,500 for kids under
the age of six, also expanding the credit to unborn babies
during a woman's pregnancy.
So in addition to that, it would also make the adoption tax
credit fully refundable. This would help people like my
colleague, Mr. Nunn, over here who have taken it upon
themselves to adopt children and expand their families. Kids
deserve to have a loving, happy family, and this can help with
that.
So by broadening access to these benefits in the Tax Cuts
and Jobs Act and then legislation like what I proposed, it
would help to reduce child poverty. It would alleviate
financial pressure on real working families who often face
these unique challenges, such as limited job opportunities,
longer commutes, and higher costs for those essential services.
So, Mrs. Curry, I just wanted to ask you, you know, when
you hear about the expansions that I just talked about, even
above and beyond the Child Tax Credit, would those resources,
and having conversations with your neighbors in rural America,
really help families like yours?
Mrs. CURRY. Thank you for the question.
Yes, the expansion of the Child Tax Credit would, without a
doubt, help myself and my neighbors and others. You know, being
a part of the autism community, I know a lot of families that
are also struggling and constantly looking for support or
different services. And they are not cheap, let me tell you,
but, you know, they are our kids. You can't say no. It is what
they need to be fully functioning adults one day and to, you
know, really just exist in society. So expanding that for young
children, I think that is so valuable.
I can't tell you the number of doctors appointments we have
gone to for a heart murmur or, you know, having to find a
specialist pediatric ophthalmologist because we didn't know,
you know, if they were seeing well. And so all of those
expenses, right, and parents are just trying to do the best job
they can for their kids. And it is expensive, and it is getting
more and more expensive.
I can tell you, when I go to Sam's Club to buy chicken
nuggets and fruit for my kids, the price just keeps going up
and up and up. And, you know, I buy milk three gallons at a
time, and it is getting more and more expensive.
So, again, expanding that Child Tax Credit would help
families like mine and really help, like, our kitchen table.
Mrs. HINSON. Yeah. I have a 13-year-old now, so we feel you
on the personal level. I had no idea how much 13-year-old boys
eat. It is really gross to watch them eat sometimes. But
certainly feel that in my grocery bill, and I am sure, much
like you, I see those expenses tack up, tack up, tack up and
add up.
So I want to move to domestic manufacturing because,
obviously, that is such an important part of our rural economy
here. And we have seen and heard already about the investments
in businesses creating those jobs right here in rural America.
And our foreign adversaries, like China, continue to ramp up
their investment in work and research to gain control of our
critical supply chains. So I think it has never been more
important for Congress to really commit to pro-growth policies
that help American leadership on the global stage.
So getting to that investment, Mr. Sukup, as a business
owner, can you speak to the importance of this tax policy that
keeps us competitive not just here at home but on that world
stage? Because you sell your equipment all over the world, so
you see those impacts day to day.
Mr. SUKUP. Yes. We export containers every week out of our
company. It goes across the globe. Being able to have the--
whether it is the depreciation or the lower tax rate lets us
reinvest into our manufacturing. And I think over the last 4
years with COVID and everything, you have seen how important
manufacturing and domestic manufacturing is. And so this Tax
Cuts and Jobs Act is just critical for us to continue with that
aggressive mode.
Mrs. HINSON. So if these cuts are allowed to expire--and
you have talked about a lot of the growth you have
experienced--that will mean some hard decision-making for you
and your family?
Mr. SUKUP. Yes. No, there would be some pullback. So far,
our markets have stayed strong and, you know, we have added 200
well-paying manufacturing jobs, and our intent is to keep
everybody busy.
Mrs. HINSON. Yeah. Well, you are certainly doing a great
job of that. So thank so much for coming today.
And, Mr. Chairman, I yield back.
Chairman SMITH. Thank you.
It is great to have Dr. Miller-Meeks with us. We will
recognize you for an opening statement and for your questions.
Mrs. MILLER-MEEKS. Thank you very much, Chairman Smith and
the Ways and Means Committee, for holding this incredibly
important hearing here today in the heartland of America in
Iowa, at the greatest state fair in the country, the Iowa State
Fair.
And I also want to thank our five witnesses for taking the
time to be here. You represent the best of America, real people
facing real problems asking for real solutions.
The 2017 Tax Cuts and Jobs Act significantly transformed
the American economy, fostering an environment that stimulated
growth and improved the financial well-being of millions of
Americans. The Tax Cuts and Jobs Act provided much needed
relief for families by lowering Federal tax rates across all
income levels. As a result, low- and middle-income households
experienced an increase in disposable income, enabling them to
invest in their homes, save for education, and enhance their
quality of life.
Businesses of all sizes were also major beneficiaries of
the TCJA. With lower tax rates, companies had more resources to
invest in research and development, infrastructure, and
workforce training. As companies reinvested in their
operations, productivity increased, and wages rose for American
earners.
And as the chair of the Conservative Climate Caucus, Ms.
Riessen, your comments on the equipment that you can buy, if
you are concerned about climate, as our colleagues on the other
side of the aisle who are not here today, you would want
farmers to be able to invest in the most up-to-date equipment
that leads to precision agriculture and less inputs.
The 2017 Tax Cuts and Jobs Act catalyzed a period of
economic growth and opportunity for families, small businesses,
and corporations alike. By lowering tax rates and encouraging
investments, the TCJA not only enhanced financial security for
millions of Americans but also positioned the United States
economy for long-term success.
In conclusion, the expiration of the 2017 Trump tax cuts
would not only impose significant tax increases on middle-class
families but also hinder economic growth and stability. It
would disproportionately impact small businesses, lead to job
losses, and diminish the competitive position of American
companies in the global market, as Representative Hinson
alluded to.
As we look toward a future of economic recovery and growth
at a time when commodity prices are low, at a time when the
national debt is high, it is critical that Congress act to
extend and protect these vital tax policies, ensuring that
American families, workers, and small businesses can thrive.
The success of our economy, and indeed our nation, relies on a
tax framework that promotes investment, encourages job
creation, and promotes financial security for all Americans.
Thank you.
Mrs. MILLER-MEEKS. Mrs. Curry, thank you for being here
with us today. I understand that you had your first child back
around the same time that the Child Tax Credit was doubled from
$1,000 to $2,000 under the Trump tax cuts. And like
Representative Hinson, I also have signed on to legislation
that would extend the Child Tax Credit during pregnancy.
As a mom of three here in Iowa, can you describe to us the
impact that the child care tax credit after 2017 had on you and
your family?
Mrs. CURRY. Yes. The impact the Child Tax Credit had on me
after the birth of my first son, in that first year, we had the
smaller amount, and so we owed additional taxes when we filed.
And so we definitely felt the pinch there, new parents and
having additional taxes due.
The following year was the first year in a long time we got
a refund, and it was a welcome kind of breath of fresh air. We
didn't have to stress so much.
So, yes, the expansion of the Child Tax Credit had an
immediate impact, noticeable impact on my family.
Mrs. MILLER-MEEKS. Thank you.
Unfortunately, that provision is set to expire at the end
of 2025, which would cut the child care tax credit in half,
impacting millions of working families across the country who
depend on the Child Tax Credit to help support their children.
And I think you have elucidated well what the impact would be,
especially when you are commuting in rural Iowa to jobs.
Ms. Pol, you are from my district, the beautiful city of
Pella. Thank you for being here with us today.
What are some of the challenges that you face running a
small family-owned business here in Iowa? And what tax
provisions have helped relieve some of those challenges?
Ms. POL. I think our largest challenge is the low
unemployment that is here in Iowa. To get qualified workers, we
are constantly competing against large businesses, and we don't
always have the opportunity to be able to pay the same wages,
have the same benefits that they do.
So we were able to take the 20 percent deduction and give
large raises to our employees. We added a few more benefits to
them, and we also were able to add to our starting wage. So it
allows us to be more competitive. And coming from Pella, Iowa,
that has Pella Corporation, Vermeer Manufacturing, neighboring
3M in Knoxville, and Hormel, we compete against a lot of large
businesses for a small area.
Mrs. MILLER-MEEKS. I think the Trump tax cuts, as you said,
created the 20 percent small business deduction that benefited
Main Street businesses such as yourself across America and in
small communities. However, the Biden-Harris administration has
all but said that they would let this provision expire after
2025, increasing Main Street's effective rate to 43.4 percent.
And I think as you indicated, in order for small businesses and
entrepreneurs to exist in our country, which is the backbone of
the American economy, we need to have those provisions in
place.
And can you talk to us a little bit more about the removal
of the small business deduction, what it would mean for your
family business?
Ms. POL. Right now, especially with the economy the way it
is and with inflation the way it is, we are getting hit from
all sides, whether it is increases in equipment, increases in
parts, increases in labor costs. Warehouses have gone up and
almost doubled to buy and build a new warehouse at this point.
So now we are getting increases also in the insurance costs for
that because we do replacement costs on it. So every place that
we look at we are getting increases. Property taxes. And by
having this--if this increases too, we are going to have to
look really, really hard at, you know, how we are going to be
able to make it through the next while.
Mrs. MILLER-MEEKS. It is difficult when you are getting hit
on all sides and your federal government isn't helping to
prevent it.
Ms. Riessen, can you explain how the option of using bonus
depreciation to modernize equipment has affected the
productivity and efficiency of your farm and your ability to
plan for future growth and expansion?
Ms. RIESSEN. So my two boys who are currently farming with
me--I lost my husband 5 years ago to cancer. And so this bonus
depreciation, the death tax, stepped-up basis are all--I have
lived it, and I am telling you right now that by losing that,
you are decimating the next generation of farmers coming down
the tubes.
But to get to your depreciation part of it, by being able
to upgrade equipment--so the combine I was talking to you about
this year that, you know, would be great to live in if I could,
but--anyway, so it is going to have the GPSing. It is going to
have--it will have the ability to communicate with the other
combine so that when it comes time for, say, you are in a super
big field and you are not sure if you have got everything done,
it will tell you where there are areas at that have to be
farmed yet. So then instead of driving from one side of the
farm to the other because you forgot a strip out there, it
takes care of that. So I am saving fuel, and that is reducing
my carbon emissions because the new equipment is way more
effective as far as for, you know, the emissions part and the
mapping, and the list goes on.
So I say to me it is like, you know, am I going to use a
bag phone out there to harvest or am I going to use the best
iPhone possible in order to do my job as quickly and as
efficiently as possible.
Mrs. MILLER-MEEKS. And very briefly, because I am over
time, does that also apply to the 199A small business
deduction----
Ms. RIESSEN. Oh, yeah. Oh, yeah.
Mrs. MILLER-MEEKS. Thank you. I yield back.
Chairman SMITH. Thank you.
Mr. Nunn is recognized.
Mr. NUNN. Thank you, Chairman Smith.
Thank you again for the group for being here today and
offering real Iowa common sense on how a tax policy not only
helps grow an economy but helps everyday working families.
So, Mrs. Curry, as not only a fellow Iowan, but here in the
district together, and of all the titles you have, with the
family farm, working a nonprofit, leading advocacy for kids
with autism, I think your best title is probably mom. And the
reality is here, you know, you are reflective of 30 percent of
Iowans who benefit from this tax credit. Look, almost half a
million Iowans qualify for it, and it doubles their ability to
have savings.
I want to ask you, you know, when you got that tax credit,
that money back in your pocket, did you go out and buy an
Italian-made Ferrari?
Mrs. CURRY. No. No, sir, I did not.
Mr. NUNN. Did you hostilely take over a foreign entity,
build it offshore?
Mrs. CURRY. No.
Mr. NUNN. What did you do with your tax credit, because you
are reflective of a working-class family, to be able to help
your kids?
Mrs. CURRY. We paid our speech therapist, and we took Isaac
to a specialist eye doctor, and we bought a new water heater
that spring.
Mr. NUNN. Mr. Chairman, that is a real investment back in
our economy here. Most important, it is a real investment in
our families' and our kids' future. That is exactly what this
tax credit is meant to do, and it is so very important that we
continue to extend it into the future.
It is one of the reasons I am proud to be leading the
Keeping Siblings Act together as parents, also as a foster dad,
which I share with Mr. Smith here on the committee as well, and
as foster parents, being able to help those generation of kids
be successful, hugely important for our future.
Thank you, Mrs. Curry, for everything you do.
Ms. Pol, I want to talk with you as well. Look, you are a
small business owner. Iowa is home to over 270,000 small
businesses. In fact, here in Iowa, we have an outsized voice.
Ninety-nine percent of businesses in Iowa are identified as
small businesses. Being able to really help make this up is
huge.
Now, if these tax credits expire, 92 percent of Main Street
businesses in Iowa would experience a 43 percent-plus tax
increase. I think it is fair to say that would decimate a lot
of our small towns and communities, not just here in Iowa,
across the country.
Would you be able to keep your supply chain going if you
had tax increases like this levied on your door
instantaneously?
Ms. POL. I think it is going to be tough. You know, I am
scared what is going to happen if it does expire, because I
have seen small businesses already closing in Iowa, you know,
especially in the restaurant industry, unfortunately. And with
everything that is happening and the cost of everything, with
inflation, we are getting hit so hard the way it is, and then
if we are going to be paying these kind of increases--we have
had a really rough two years across the board with my
businesses, so we are already hurting. So with this happening,
it could be devastating to us and across the board for Iowa and
the United States.
Mr. NUNN. And, Ms. Pol, I think you are absolutely right
here. You talk about rippling effects. An increase in your
trucking business means an increase for everyone in America
with a supply chain that costs a lot more if you are paying
more taxes.
Tell me the opposite. If we are able to extend the tax cut,
how does that help out bringing down prices for every American?
Ms. POL. Well, that is great because we can continue to
invest, you know, and we do. You know, the money doesn't come
back into our pockets.
Mr. NUNN. That is right.
Ms. POL. You know, as small business owners, we reinvest.
We reinvest in the communities. We reinvest in our employees.
And that is the thing we will continue to do.
Mr. NUNN. Well, and that is one of the reasons I am proud
to support the Main Street Tax Certainty Act. It is one of the
things we have done to make this permanent so you have
permanency in your reinvestment here in our communities and
growing across the country.
Ms. Riessen--I should just call you Farmer Riessen. You
know, you have been working with us so hard to highlight the
success of an investment in America's ag, America's energy,
America's national security. You are a practitioner in this.
Look, the 2017 tax cuts offered us an explosive growth
opportunity for reinvestment. It also increased U.S. investment
by 20 percent and provided a crucial death tax exemption,
something that we want to make sure we see increased.
Talk to me about how your family farm is investing in these
new innovations. Things like sustainable aviation fuel, 45Z tax
credit, it is helping us grow our domestic energy production.
Are these tax credits really the innovation of the future that
you are using on the farm?
Ms. RIESSEN. Oh, holy cow, I can't believe you are even
asking me that. For me, that is a no-brainer. I mean, as a
farmer, when I am getting tax breaks to help invest in markets
and to invest in trade, when I have trade, I have security in
my market. I have better markets because more people are
competing for what I am growing. So, you know, just thinking as
a farmer, so every dollar I spend in the community now it gets
rolled six times, so----
Mr. NUNN. Yes, we agree with you.
Ms. RIESSEN. So it is like--so the people that I touch with
what I am doing for, you know, the farming sector of it, it is
huge. So just know that any money that--you know, everybody
likes less tax, and so any money that we do manage to save gets
invested right back into equipment or maintenance or whatever
else happens to come up. You know, we have livestock and so----
Mr. NUNN [continuing]. That is right.
Ms. RIESSEN [continuing]. We have way more equipment,
probably, than anybody else does in the countryside, but----
Mr. NUNN. Thank you, Ms. Riessen.
Ms. RIESSEN. So thank you.
Mr. NUNN. These are not just tax credits. These are tax
investments. As you say, every dollar invested is multiple
dollars returned.
Thank you, Mr. Chair. I yield my time.
Chairman SMITH. Thank you.
Mr. Smith is recognized.
Mr. SMITH of Nebraska. Thank you, Mr. Chairman.
Thank you to our entire panel and everyone participating
here today. It is great to see the entire Iowa delegation here.
It doesn't surprise me because they show up, and it is great to
work together on things like biofuels where we can stick
together. I happen to be from Nebraska, where we have a few
biofuels and other similar industries in Nebraska. But we work
together, and I think that is important. And we take from you
your perspectives and apply them.
And I am grateful to have been a part of passing the
original Tax Cuts and Jobs Act and the work and the diligence
that went into that when we happened to have votes in 2017. We
started working on that long before we had the votes, and I
think it is important to note that the diligence we are doing
right now this very moment, thanks to our chairman here
scheduling meetings, gatherings such as this, is hearing from
you as we move forward.
Now, I think it is important to note that TCJA is a very
successful tool for growing our economy. I am glad we did that
before COVID and the disruption in supply chains and various
dynamics.
I am also grateful when we can hear from a company that
pays more in taxes than they did before and they are happy
about it because they have the ability to pay that. And that
might be a company, that might be individuals as well. But I
think it is our job to hear from you and to dig down, to look
for those details so that we can, hopefully, help form the
future for more opportunity for future generations and pay down
this debt that our country has accumulated.
And so, you know, in the runup to 2017 tax reform, it is
important to note that even Barack Obama realized we were not
competitive on the corporate side. We were losing--as the
chairman pointed out, we were losing American companies, strong
American companies to relocation to other tax jurisdiction
because it was more favorable. A very logical move, by the way.
And even Barack Obama, like I said, noticed that we needed to
be more competitive.
And now he endorsed a lower corporate rate, and we wanted
to be very certain that we would be very competitive, and that
is why we chose the 21 percent rate as low as we possibly could
and still have the resources for family credits and standard
deduction--doubling the standard deduction, various components
here.
But I think it is very compelling when we hear from folks
who are paying more in taxes now than they were before and they
are happy about it, and it is instructive moving forward.
But, Mrs. Dewalt, I guess it is only appropriate that you
are with The Home Depot with a last name like Dewalt, right?
Mrs. DEWALT. Coincidence.
Mr. SMITH of Nebraska. It is coincidence. No advertising
there.
Can you elaborate a little bit on, you know, the corporate
rate--which happens to be paid by some small corporations too,
by the way. It is not just large corporations. But I am glad
that you have the footprint that you do. I would imagine some
younger folks showing cattle out here at the State Fair
probably paid your stores a few visits over time.
But can you elaborate on what you did with that 21 percent
rate, you know, those differences? You spoke a little bit about
it in your opening, but can you tell us with even more detail
how you handled that 21 percent rate?
Mrs. DEWALT. Sure. So as I mentioned, our business model
has a number of inputs, factors that we consider in investing.
And so the decrease in the corporate rate that was 35 down to
21 created an opportunity for us to really focus, double-down
on investing in our business. And we did so with our supply
chain expansion, which increased our footprint, created jobs,
and helps us to better serve our customers.
We also took care of our associates, which is one of our
core values at Home Depot. So we increased wages by a billion
dollars, permanent wage increase in 2021, and then a second
billion dollar wage increase announced last year. Those are
permanent, not bonuses, but wage increases.
We also just completed an acquisition of SRS Distribution,
which is a wholesale distributor of building materials,
primarily roofing, and that is really going to accelerate how
we serve our pro customers.
And so small businesses are essential partners to The Home
Depot. So they serve us as suppliers. I talked about the 80
suppliers, you know, here in this State. And they also make up
a large portion of our pro customers, which is a very big part
of our business, and it is growing. And our ability to be
competitive with price, to have the materials when and where
the pro customer needs them is really helping them better
manage their businesses as well. And so we see the business
community, corporate and small business, as the ecosystem that
drives the economy.
Mr. SMITH of Nebraska. Very good. Thank you.
I wish I had more time because I have a lot more questions.
But thank you again for being here, very appropriate topic in
an appropriate place.
Thank you.
Chairman SMITH. Mr. Schweikert.
Mr. SCHWEIKERT. Thank you, Mr. Chairman.
And I appreciate, you know, being someone--I am from the
desert. I am from a place called Scottsdale, and I saw more
green in the bus ride here than I think I have seen in my
entire State. And they were complaining it was hot yesterday. I
am going, it is 116 at home.
We have some real difficult decisions we have to work
through over the next year. The fact of the matter is today,
100 percent of defense of the United States is borrowed money.
One hundred percent of government, as you know it, is borrowed
money, all--Park Service, everything is all borrowed. And
about--I was just doing the math--37 percent of Medicare is on
borrowed money. This year, our income taxes, 45 percent of it
will just pay the interest. Interest is now the second biggest
spend in the United States.
We need you to grow like crazy, and then we need to find a
number of things where we are going to stop spending or do it
better, faster, cheaper, adopt technology. And there is
technology to crash the price of healthcare, because healthcare
is the primary driver of U.S. debt.
And, Mr. Sukup, you actually hit a couple of things that I
really wish we would understand: the investment in research and
development, the ability to expense a piece of equipment so you
do it better, faster, and safer. You are one of the few people
I have ever had use that word, ``safer.''
Tell me your experience of, in those years where you had
that expensing and the R&D credits--which is just a
depreciation. It is not a tax cut. It would just move up the
depreciation--how did it change your business?
Mr. SUKUP. Well, we were able to incentivize our engineers,
staff. We hired individuals to reinvest, research and
development, take a look at what we could do better and faster,
more efficiently for products for our farmers and ranchers
across the country. We take that research and development, put
it into action, and then it provides us some predictability in
the tax----
Mr. SCHWEIKERT. But did you produce--in that investment in
your research and development, did you come up with faster ways
or better or safer pieces of equipment that sort of leaped your
company forward in those couple of years that you had 100
percent of it?
Mr. SUKUP. Yes. We have developed new grain dryers that we
use across the country. We actually have some going into
pistachios----
Mr. SCHWEIKERT. Forgive me for--you'll later on explain
what a grain dryer is?
Mr. SMITH of Nebraska. Oh, yes.
Mr. SCHWEIKERT. Okay.
Mr. SUKUP. We actually dry pistachios, California and
Arizona.
Mr. SCHWEIKERT. Yes.
Mr. SUKUP. And so we use those. And they are looking for
high efficiency, to reduce the carbon outputs. We look at our
carbon footprint. And so it is going to provide better products
across the Midwest. We have to compete globally. We do that in
manufacturing.
When we invest capital equipment with the accelerated
depreciation, what has to go along with the equipment? Skilled
workers. We bring in skilled manufacturing jobs. And so we are
able to grow and expand.
Mr. SCHWEIKERT. Mrs. Dewalt, and so you are my reason the
DeWalts were always on sale, right? I just noticed that last
month.
You have spoken of--and I couldn't find it real quick how
tax reform happens. There are a number of us on this committee
that know it doesn't just happen. It took years of calculating
the money and trying to get the economic effects and what would
maximize opportunity. And it turns out the tax receipts that
came in afterwards were dramatically higher than we ever
expected in our models.
How much for Home Depot do you believe of that--moving to
the 21 percent rate, how much of it moved into wages, both in
the raised wages and the new hires? Would you speculate to
guess?
Mrs. DEWALT. Thank you for the question.
What I can say about wages is that, with the reduction of
the rate to 21 percent, obviously we have more capital to
invest. And so our wages have increased higher than wage
inflation. So we have been able to stay ahead of our wage
increases to our associates, and now our associates are at or
above $15 an hour across our stores.
Chairman SCHWEIKERT. Thank you, Mrs. Dewalt.
Mr. Chairman, I will try to find the study, but I had a
study last year that showed, and I think--and I am doing it
from memory--67 percent of the corporate tax cut went to wages.
And with your permission, I would like to enter that into the
record.
And with that, I yield back.
Chairman SMITH. So ordered.
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Chairman SMITH. Mr. LaHood.
Mr. LaHOOD. Thank you, Mr. Chairman.
I want to thank our witnesses for your valuable testimony
today. I also want to thank our friends from Iowa for issuing
us a visa to come to your state and be here and participate in
the Iowa State Fair. What a great opportunity to be here. I
actually went to college in Iowa for 4 years, and it is great
to be back. First time at the Iowa State Fair, and so really,
really grateful for the opportunity to be here with everybody.
And my district is contiguous to Iowa. I share a border
with Congresswoman Miller-Meeks and also with Ashley Hinson. My
district is very similar to the districts here in Iowa, heavy
ag district. It is the tenth largest ag district in the country
in terms of corn and soybean production. I have eight ethanol
plants that touch my district. We produce a lot of cattle and
hogs in our district, and are very involved in the biofuels
conversation too. And so it is great to be here.
And I would just--as I listen to the witnesses here today
and hear you articulate the benefits from TCJA, nobody can do
it I think better than how you guys have done it, whether it is
a large corporation, whether it is a working family, whether it
is a small farming operation, a small business, medium-size
business, and an entrepreneur.
As you have articulated what TCJA has done for you, I think
it is remarkable, and that is why we are doing these field
hearings all across the country, to hear from regular people on
what TCJA has done. And as you articulated those things, I
thought about everything that we have done with TCJA: reduced
taxes, put more money in the pockets of middle-class and lower-
class citizens, created millions of new jobs, hired more
people, moved 6 million people out of poverty when we passed
TCJA. We repatriated almost $3 trillion back to the United
States with TCJA. And the investment that we have seen in small
and medium and large businesses has been immense across the
country.
And so as I think about TCJA, it may be, in my 8 years in
Congress, the vote that we took on TCJA may be the most
impactful vote that I have taken. And I am so grateful to hear
you today articulate all of those things on why we need to be
focused on this next year for the economy and for our
citizenry.
And I also think about the Biden-Harris administration.
They chose to remain in D.C. and have proposed $7 trillion in
tax hikes, where the Ways and Means Committee has been
traveling across the country to hear firsthand about the
challenges of working Americans who are currently facing to
develop a roadmap to get our economy back to where it was
immediately following TCJA in 2017.
For example, we have set up tax teams, through Chairman
Smith, 10 different tax teams that are meeting and getting
feedback from across the country. I happen to chair the
American Workforce Tax Team, which is considering ways to
better utilize the Tax Code by hiring and retainment of more
workers, and all of us are a part of those tax teams.
I have a number of questions, but I will start with you,
Mr. Sukup. You mentioned in your testimony that following TCJA
you were able to significantly expand your business operation
and hire more workers. Can you provide more details on how
provisions from TCJA allowed you to hire and retain more
workers?
Mr. SUKUP. Well, the accelerated depreciation on research
and development was just critical on that, that we could take
that return on investment. We invested in wages and staff and
engineering, provided better products. And our customers liked
our products, and we added 200 manufacturing jobs. And with
accelerated depreciation, we add capital equipment, we need
skilled folks to run that, and so we added 200 individuals over
this time period.
Mr. LaHOOD. Excellent.
I mentioned that I have a heavy ag district. And the
potential economic growth around the biofuels industry is
something, again, I have been very engaged in and spent a lot
of time talking about. As we look to future tax policy
proposals, can you comment on the specific pro-growth
initiatives that can better support our farmers and biofuel
producers?
Mr. SUKUP. Well, it is one that, you know, I think
Congressman Feenstra said about practically one out of every
two rows of corn is going to biofuels. It provides us with
energy self-sufficiency here in the U.S., which I think is just
absolutely critical. And it can provide, going into like the
45Z, to give us more incentives to be--take less carbon out of
our air.
Mr. LaHOOD. Thank you.
I yield back.
Chairman SMITH. Mr. Estes.
Mr. ESTES. Well, thank you, Mr. Chairman.
And thank you for our witnesses for being here. It is so
heartening to hear your stories, just because it tells about
the success that has happened since TCJA was passed. And
whether you are talking about research and development or
depreciation or being able to go through estate planning or
planning your lives or, you know, how you can actually help
wages increase, as we have talked so much during this panel of
all the benefits that came out of TCJA, it is so great to be
here. We are out of the D.C. bubble, being able to talk to
people. I call it the real world out here, away from the D.C.
Beltway.
You know, being here at the Iowa State Fair, it is, I know,
a lot like the Kansas State Fair where people come for the
rides and the food and entertainment. But I know also that
people come because they want to learn more about what is going
on in the agriculture arena, what kind of innovation and ideas
that are out there.
Of course, not to be competitive, but the Iowa State Fair
did start 20 years before the Kansas State Fair did, and also I
think maybe have better marketing folks. But the one excuse I
will use is that the Iowa State Fair was started before Kansas
was a state, so we couldn't really call ours a state fair at
that point in time.
And, you know, while we are here, as we talk about all
these innovations that Americans are known for and we learn
more about what is going on in terms of how American
agriculture feeds and fuels and provides clothing for people
around the world, I know it is tough in the rural agriculture
communities. I grew up on a family farm. In fact, my mom still
lives on the farm that we have back in Kansas. And farmers have
benefited for more than a century with technological advances
trying to help provide that food and the benefits for the
world.
Tax Cuts and Jobs Act recognizes how valuable that
innovation was, and I know Americans have invented everything
from air-conditioners to zippers, so innovation is strong and
part of our way of life here. And we want to make sure we
continue to encourage that.
I am chairing the Innovation Tax Team as we go in and look
at preparations for next year, and we want to make sure that we
continue to have a tax code that actually provides and
encourages our ability to create an event and come up with new
ideas that actually make the world a better place.
Mrs. Dewalt, there is no question that countries like
China, which actually provides 10 times the tax credit of
research and development now than the United States does, and
they are starting to gain--actually, they have closed the gap
on the United States in terms of the amount of research and
development done there. Can you share your thoughts on what the
United States needs to do to be a global leader in innovation?
Mrs. DEWALT. Well, I think TCJA went a long way with the
provisions that you mentioned, the expensing, R&D focused,
bonus depreciation, lower tax rate, competitive--globally
competitive tax rate. In The Home Depot's view, it certainly
has been the most impactful to us to encourage--to allow us to
invest; not only to encourage but to allow us to invest further
in the U.S. We are primarily U.S. We have 2,000 locations here
in the U.S. that, you know, serve all communities, large and
small. And so the ability to have a competitive rate in the
United States, encouraging companies like ours to continue and
to increase investments as we have, and to encourage companies,
you know, other companies to invest and innovate in the U.S.
So I would say that there are some incredibly powerful
provisions in TCJA that encourage investment of all kinds in
the U.S., innovation and otherwise.
Mr. ESTES. Thank you for that.
And as you noted, you know, the 21 percent is only a
portion of the taxes you pay. That is the federal portion. And
that, as you said in your remarks, that you pay 24 to 25
percent, which actually puts us slightly above the developed
world in terms of the tax rate still, but it makes us
competitive in terms of being able to do that.
So we want to make sure that we continue to have the value
out of that tax code that encourages businesses to be
successful here.
Even with the lower tax code--the tax rate at the federal
level, we have seen corporate tax rates increase and tax
revenue increase. We have seen the royalty tax increase by over
$200 billion over the last 7 years, because more research and
development, more intellectual property was based in the United
States and that we were able to actually benefit from that as
far as federal tax receipts as well.
So I know I am out of time here, but I just want to thank
all of you for being here, being able to talk about the
positive aspects of the Tax Cuts and Jobs Act on each of you.
Thank you, Mr. Chairman. I yield back.
Chairman SMITH. Thank you.
Ms. Tenney is recognized.
Ms. TENNEY. Well, thank you, Mr. Chairman.
And thank you to all the witnesses and everyone for being
here. This is quite an incredible experience to be at the Iowa
State Fair.
And I am from Upstate New York, and we have--my district,
the newly conceived 24th District, is actually the largest
agricultural district in the Northeast, including the largest
dairy district. So it is very different than New York City
where my colleague, Nicole Malliotakis, lives.
But Zach Nunn said, so you are basically the Iowa of New
York. So, yeah, in a way we are. We have an incredible output
with ag, and it is really important in our district. But I am
also a small business owner, so I know what it is like to
struggle to make payroll, to deal with taxes and all those
things.
And I also want to just--I mean, I think it is just
incredible that you are all here with such a different
perspective. Every one of you has a small business perspective,
a large business perspective, the child care perspective. But
you are all talking about the one thing that changed upstate
New York in that we come from the highest taxed state is the
Tax Cuts and Jobs Act. It was incredible. I voted for it. And
it was always this stunning, oh, my gosh, I can't believe you
are voting for that from New York.
Most of the businesses, as Ms. Pol said, in our communities
are driven by small business owners, including our farmers. And
so we are just grateful to all of you for putting it in your
words exactly what the catastrophic results could be if we
don't continue with these issues.
But I wanted to just first start with Ms. Pol. And you are
an NFIB member, as we are. My business is over 40 years as
NFIB. They put out great data and great statistics and advocate
well for our small business community because we don't have
some of the larger issues. But you talked about 199A, if it
should expire.
Could you tell me just briefly what the operational changes
you would have to make in the business if that were to happen?
Ms. POL. Well, currently I think what we would do is stop
investing. You know, we wouldn't be able to expense out the
equipment. You know, we wouldn't have the extra money to
reinvest into our employees and anything else that we wanted to
pursue.
Ms. TENNEY. Well, when you stop investing, you are
coasting, and that means you are going downhill. That means you
are not preparing for the future.
Thank you.
And I just want to move a little bit to something a couple
of you touched on, especially, Mr. Sukup, you talked about
this, as well as Mrs. Dewalt. I raised my son as a single
parent, but I also took care of my parents who were across the
street with serious health conditions, and so I am part of that
sandwich generation. And it was always a struggle to find
daycare and for parents--both men and women. It depends on who
stays home, but now it is a mixed opportunity.
You know, we talked about like the--some of the things that
we worked on. I worked on a bill called the PACE Act, and that
is Promoting Affordable Childcare for Everyone, and giving
employers the opportunity to invest.
And if you could just touch briefly on if it would help you
to get an additional tax credit or benefit to help with child
care facilities right on your properties. And maybe you could
touch on that as well, Mrs. Dewalt.
Mr. SUKUP. Well, right now we are in the process, we are
hoping to open October 1, to put a 112-space child care
facility right across the street from our company. Right now it
looks like about 40 of our employees will take advantage of
that. And it is just critical to working families. You know,
some of the families both are working, whether for us or down
the road at Mason City or another community business. And, you
know, if there are families that have two of them in child
care, it is just, you know, astronomical.
And then, again, that sort of ties into the estate tax. I
don't see that I would have really said, yes, let's go do it.
But the third generation, daughter Emily, comes to Sheffield
every day, and she goes, this is important to families. Let's
do it.
Ms. TENNEY. Yeah, I would have loved to have that child
care option at my office. I had to take that risk of leaving my
son somewhere and not knowing what he was going to be--he
always survived somehow when I got back. But I know the fear of
families. They want to stick together, especially these days.
But I know, Mrs. Dewalt, you mentioned something on this
same as the child care, but would an increase in a little bit
more of a benefit for child care deductibility and also maybe
dependent care deductibility for people like me and others who
have a dependent child or family member, maybe a parent that
they have to take care of, is that something that if we
increase that benefit, would that be beneficial to your
employees?
Mrs. DEWALT. Thank you for the question.
And certainly it most likely would benefit our associates.
You know, benefits that support working families are very
important to us. I mentioned, you know, the 400,000 associates
we have. Most of those are front line in our stores, in our
distribution centers. So certainly policies that support
working families would benefit our associate population.
Ms. TENNEY. Thank you.
Well, I appreciate that. It is really incredible that you
are all talk--these are really important issues. I just want to
say one shout-out to one of the counties. I just went to the
Wyoming County Fair in upstate New York. The county
legislature--or the county supervisors do a wonderful thing.
They actually hold a meeting, their August meeting at their
county fair. And it is filled with all kinds of people out
there to see their government in action. So shout-out to Becky
Ryan, the supervisor.
And thank you, Chairman Smith, for doing this out in Iowa.
We appreciate it.
Thanks. I yield back.
Chairman SMITH. Thank you.
Ms. Malliotakis, the other lady from New York.
Ms. MALLIOTAKIS. Thank you, Mr. Chairman.
We have traveled to many parts of the country hearing from
people like you, and, you know, whether you are in Iowa,
whether you are in my home State of New York, I mean, the
reality is that the high inflation, the high interest rates,
the anti-energy policies of the Biden-Harris administration are
crushing American families and American businesses.
Sixty-six percent of Americans say they are living paycheck
to paycheck. And if they think it is hard now, that is nothing
compared to what it will be like if Democrats have their way
and allow the provisions that we are discussing today from the
Tax Cuts and Jobs Act enacted by President Trump, if they allow
that to expire in 2025.
Under TCJA, on average, Americans with less than 100k in
income got an average of 16 percent in a tax cut. We saw the
creation of millions of jobs, record low employment for African
Americans, for Hispanics, for women, for veterans. We saw the
middle-class wages across this country lifted, and we saw the
doubling of the standard deduction, which was a major credit
for working families, and also the doubling of the Child Tax
Credit for working families, lifting six million Americans out
of poverty. And important to New Yorkers, it got rid of the
alternative minimum tax for millions of middle-class families.
Last June, I introduced legislation to increase the
standard deduction by an additional $2,000 for single filers
and $4,000 for married couples. If it were law today, families
would benefit with a $33,200 tax deduction in 2024.
And while I want to increase it, sadly, Kamala Harris, the
Democrats, they have said that they want to get rid of--they
actually want to cut our deduction in half. They want to go
back to what it was before we had this critical tax relief.
So I will start with Sarah. As a family, what would the
standard deduction being increased even further mean for a
family like yours?
Mrs. CURRY. Well, I think first and foremost--thank you for
the question--reducing the standard deduction would negatively
impact my family because it would raise my taxable income both
at the federal and the state level. We experienced benefits
from tax simplicity. I didn't have to have receipts, you know,
all over the floor trying to itemize all this stuff trying to
save a buck. We were able to take the standard.
But, again, Iowa and many states use the federal taxable
income as the starting point for state taxes owed. And so with
a reduction in the federal standard deduction, my state taxes
will also go up. So I am not going to get hit once with this
tax increase, I am going to get hit multiple times over.
Ms. MALLIOTAKIS. That is right. And that is exactly why I
wanted to see the standard deduction not only kept but enhanced
to protect more middle-class families, because that is who
really benefits from it.
And with that said, the alternative minimum tax, do you
have an opinion if that were to be added back?
Mrs. CURRY. Again, you know, any tax that is brought back
that is hurting American families and taking more of our earned
money away from us so that we can't spend it on our families
and invest in our homes and our children is a bad thing.
Ms. MALLIOTAKIS. Well, that is exactly what, sadly, Kamala
Harris and the Democrats have said they intend to do. $7
trillion is what my colleague said in tax increases is what
they are proposing.
But I also--you know, I don't have a farm in my district,
but my constituents do eat, and they use energy. And so the
Biden-Harris tax and energy policies have been crushing
domestic energy production. It is driving up the cost of
everything, I believe, right.
So can you talk as farmers about how energy drives up the
cost of food for the people I represent in New York and also
maybe want to touch on some of the renewable energy sources
that we can derive from both corn--and I did visit a facility
where there was renewable natural gas from food waste, from cow
manure, and I thought that was really interesting. It is
cleaner. It is more efficient. It is more affordable than
these, you know, EVs that they are trying to push us on through
all these incentives that go to Communist China.
Would you like to comment on that?
Ms. RIESSEN. Absolutely. So just to--let's talk about EVs
for a moment. I know they are trying to do that to tractors.
And let me tell you, that is definitely not going to work. It
is going to increase the weight of that tractor by three to
four times. It is going to increase the price of that tractor
by that exact same amount. And then, oh, by the way, in the
wintertime, 60 below, they don't start.
And getting back to your being able to use other--besides
the biofuels, to use the methane, and just so you know, there
is more landfill methane given off than any other source in the
United States, so there is a place to tap.
But when it comes to using the other fuels, first of all,
right now the ethanol is available, and we can put it right
into the gas tank. We are pushing for the Next Gen Fuels Act to
be passed to increase those amounts of ethanol to be put in
fuel tanks. So--and for every percent of--this is from the
American Lung Association. So for every percent of ethanol that
we are able to put into that fuel tank, we are also reducing
our healthcare costs because we are taking particulates out of
the air.
So especially as I--and I have been to New York, and it is
amazing, but it is not Iowa. But, anyway, just the total amount
of particulates in the air just due to the pollution,.
Ms. MALLIOTAKIS. Okay. And, Mr. Sukup, I don't know if you
wanted to add to that.
But I did have one small question after this, if you will,
Mr. Chairman.
Mr. SUKUP. No, the biofuels are critical for the--supplying
us across the U.S., energy efficiency and self-sustainable here
in the U.S., and that is why we have to increase. It lowers
prices throughout. You know, going back 4 years, we were a
dollar lower on gasoline, and yet ethanol was practical and
making money.
Ms. MALLIOTAKIS. Now, I am a New Yorker, first time in
Iowa, first time at the State Fair, so a last question, very
important question, in my opinion, to wrap up the hearing here.
What is the food that I should try today?
Go down the line. Name one food, please.
Ms. RIESSEN. Pork chop on a stick.
Mrs. DEWALT. Well, I am smelling bacon right now, so
whatever that smell is, try that. That smells great.
Ms. MALLIOTAKIS. All right.
Mrs. Curry.
Mrs. CURRY. The deep-fried pickle with the ranch dressing.
Ms. MALLIOTAKIS. All right.
Ms. RIESSEN. Sorry. Pork chop or a steak.
Ms. MALLIOTAKIS. Okay. You are the second person to tell me
that.
Mr. SUKUP. Corn dog.
Ms. POL. The deep fat fried lobster on a stick.
Ms. MALLIOTAKIS. All right. Thank you.
Chairman SMITH. I want to thank the Iowa delegation for
having us. I want to thank you, Congressman Feenstra, for being
a stellar member of the Ways and Means Committee and for
bringing us up here. I want to thank the Iowa State
Fairgrounds. And I want to thank each and every one of you all
for your great ideas and the policy solutions that hopefully we
can move towards. I think that every member of this committee
will be leaving the Iowa State Fair with additional great ideas
on the Tax Code but also probably higher cholesterol.
But with that, please be advised that members have 2 weeks
to submit written questions to be answered later in writing.
Those questions and your answers will be made part of the
formal hearing record.
And with that, the committee stands adjourned.
[Whereupon, at 11:56 a.m., Central, the committee was
adjourned.]
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