    [Senate Hearing 118-562]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-562

                        THE MACROECONOMIC IMPACTS OF POTENTIAL
                                  TAX REFORM IN 2025

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

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                                ECONOMIC POLICY

                                     OF THE

                                  COMMITTEE ON
                       BANKING,HOUSING,AND URBAN AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                       ON

               EXAMINING THE MACROECONOMIC IMPACTS OF POTENTIAL TAX
                                 REFORM IN 2025

                                   __________

                               SEPTEMBER 18, 2024

                                   __________

      Printed for the use of the Committee on Banking, Housing, and Urban
                                    Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                    Available at: https: //www.govinfo.gov /

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    58-692 PDF                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                           SHERROD BROWN, Ohio, Chair

    JACK REED, Rhode Island              TIM SCOTT, South Carolina
    ROBERT MENENDEZ, New Jersey          MIKE CRAPO, Idaho
    JON TESTER, Montana                  MIKE ROUNDS, South Dakota
    MARK R. WARNER, Virginia             THOM TILLIS, North Carolina
    ELIZABETH WARREN, Massachusetts      JOHN KENNEDY, Louisiana
    CHRIS VAN HOLLEN, Maryland           BILL HAGERTY, Tennessee
    CATHERINE CORTEZ MASTO, Nevada       CYNTHIA M. LUMMIS, Wyoming
    TINA SMITH, Minnesota                J.D. VANCE, Ohio
    RAPHAEL G. WARNOCK, Georgia          KATIE BOYD BRITT, Alabama
    JOHN FETTERMAN, Pennsylvania         KEVIN CRAMER, North Dakota
    LAPHONZA R. BUTLER, California       STEVE DAINES, Montana

                         Laura Swanson, Staff Director

                   Lila Nieves-Lee, Republican Staff Director

                          Cameron Ricker, Chief Clerk

                          Shelvin Simmons, IT Director

                           Pat Lally, Assistant Clerk

                                     ______

                        Subcommittee on Economic Policy

                     ELIZABETH WARREN, Massachusetts, Chair

                    JOHN KENNEDY, Louisiana, Ranking Member

    JACK REED, Rhode Island              MIKE ROUNDS, South Dakota
    ROBERT MENENDEZ, New Jersey          THOM TILLIS, North Carolina
    CHRIS VAN HOLLEN, Maryland           CYNTHIA M. LUMMIS, Wyoming
    TINA SMITH, Minnesota                STEVE DAINES, Montana
    JOHN FETTERMAN, Pennsylvania

                  Gabrielle Elul, Subcommittee Staff Director

            Jennifer Newman, Republican Subcommittee Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------

                         WEDNESDAY, SEPTEMBER 18, 2024

                                                                       Page

    Opening statement of Chair Warren................................     1

    Opening statements, comments, or prepared statements of:

                                   WITNESSES

    Ai-jen Poo, President, National Domestic Workers Alliance;
      Executive Director, Caring Across Generations..................     3
        Prepared statement...........................................    16
    Kitty Richards, Senior Fellow, Groundwork Collaborative and
      Economic Policy Think Tank.....................................     4
        Prepared statement...........................................    23

                                     (iii)

           THE MACROECONOMIC IMPACTS OF POTENTIAL TAX REFORM IN 2025

                                  ----------

                         WEDNESDAY, SEPTEMBER 18, 2024

                                   U.S. Senate,
      Committee on Banking, Housing, and Urban Affairs,
                               Subcommittee on Economic Policy,
                                                        Washington, DC.
        The Committee met at 2 p.m., via Webex and in room 538,
    Dirksen Senate Office Building, Hon. Elizabeth Warren, Chair of
    the Subcommittee, presiding.

              OPENING STATEMENT OF CHAIR ELIZABETH WARREN

        Chair Warren. This hearing will come to order. Good
    afternoon. I want to thank Ranking Member Kennedy, our other
    colleagues, and our witnesses, who will be joining us today for
    this hearing.
        Today we are 48 days away from the election. That is just
    48 days until voters decide the direction our country will take
    next year on abortion, housing, and taxes.
        So today's Economic Policy Subcommittee hearing on the
    macroeconomic impact of potential tax reform in 2025 may sound
    a little wonky, but the reality is Congress is going to
    confront huge decisions on tax policy next year.
        Whether we want to rewrite the Tax Code or not, 2025 will
    be a crucial year for setting tax policy because in 2017,
    Donald Trump and congressional Republicans passed a $2 trillion
    tax giveaway to the wealthy and big businesses. The Republican
    tax giveaway was so big that they tried to hide the full cost
    so they set up a bunch of pieces to expire at the end of 2025
    and hoped that a subsequent Congress would just rubberstamp an
    extension without noticing how much money rich people and giant
    corporations would be getting.
        Next year, Congress will answer the questions we are
    discussing today about what the Tax Code should look like. What
    we decide will affect every American and every part of the
    economy and every part of the country over the next few
    decades.
        Whatever you care about, taxes matter. The Tax Code
    determines how much money our Nation has for programs like
    Social Security, Medicare, roads and housing, health care, and
    childcare. And the fine print of the Tax Code shapes our
    economy.
        Will the Tax Code incentivize billionaires to hoard their
    money, corporations to grow into titanic monopolies, and
    multinationals to shift jobs overseas or will it create good
    jobs and new opportunities for small businesses and
    entrepreneurs right here in the United States?
        Taxes reflect our values. They show us what and who we
    value enough to collectively invest in. For decades,
    particularly since the days of Ronald Reagan and his corporate
    friendly advisors, the tax system has reflected the values of
    well-connected billionaires.
        The 2017 Republican tax cuts centered on a $1.3 trillion
    tax cut for giant corporations. In the years since then,
    corporations have raked in record profits, including by price
    gouging consumers, but they have paid less in taxes. In fact,
    over the past half century, giant corporations have begun to
    dominate our economy. Corporate profits, as a share of the
    economy, have doubled since the 1950s. Meanwhile, corporate
    Federal income taxes as a share of GDP have fallen by half.
        Under President Biden and Vice President Harris, things
    have gotten a little better. We raised taxes on billion dollar
    corporations for the first time in 30 years thanks to my 15
    percent corporate minimum tax.
        We funded the IRS, which has since clawed back over a
    billion dollars and counting from wealthy tax cheats. But it
    has been an uphill battle. These improvements to the tax system
    came with the slimmest of majorities and were opposed by every
    single Republican Member of Congress, House and Senate.
        And believe me, billionaires and big corporations have
    fought like hell to beat back bigger reforms. Now next year,
    they will fight even harder. Lobbyists have already started
    calling 2025 the year of Tax Super Bowl.
        These lobbyists are salivating over the hours they can bill
    their corporate clients and the goodies they can win. But it's
    not a game and the outcome is not a foregone conclusion. In
    fact, I see 2025 as a big opportunity to fix our Tax Code.
        So here is the choice that Congress will face and that this
    Subcommittee meets to discuss today. Will we allow Donald Trump
    and the Republicans to implement their Project 2025 plan to cut
    taxes even more for billionaires and giant corporations while
    raising taxes on everyone else or will we move the corporate
    tax rate back up, stitch up the tax loopholes that billionaires
    wiggle through, and then use that revenue to lower costs for
    ordinary Americans from housing to childcare?
        And just as important, will we finally say enough is
    enough? That the rich and the powerful have already fed at the
    trough long enough and that it is time for them to pay a fair
    share?
        Will we have the courage to say that it is better to let
    the Trump tax cuts expire than to sign on to another
    multitrillion dollar giveaway to America's billionaires?
        I appreciate our panelists joining us for this hearing and
    sharing their expertise. We have big questions that will come
    before the Senate and the American public in the coming months.
    And I am pleased to have the chance to start that conversation
    today.
        At this point, I would ordinarily turn to Ranking Member
    Kennedy, who was right behind you. He's voting and then he will
    be here for his opening remarks.
        So how about instead of doing that, we start with our
    witnesses. We have two great witnesses to share their views on
    the impact of tax reform on our economy. And I appreciate both
    of you being here today.
        First we have Ai-jen Poo, who is the President of the
    National Domestic Workers Alliance and the Executive Director
    of Caring Across Generations.
        Ms. Poo is a tireless advocate for caregivers and a
    nationally recognized expert on elder and family care, the
    future of work, gender equality, and grassroots organizing.
        And second, we have Kitty Richards, who is an expert in tax
    and fiscal policy with groundwork collaborative. She also
    served in the Treasury Department during the Biden-Harris
    administration, and as an economic policy advisor in the White
    House to then Vice President Biden.
        So thank you both for being here today, and I look forward
    to hearing your testimony. Ms. Poo, how about if we start with
    you?

     STATEMENT OF AI-JEN POO, PRESIDENT, NATIONAL DOMESTIC WORKERS
        ALLIANCE; EXECUTIVE DIRECTOR, CARING ACROSS GENERATIONS

        Ms. Poo. Thank you, Madam Chair. I am so honored to be here
    to speak with you today and also grateful to Ranking Member
    Kennedy and Members of the Committee for the opportunity to
    testify to the economic impacts of potential tax reform.
        Again, my name is Ai-jen Poo, and I am the President of the
    National Domestic Workers Alliance and Executive Director of
    Caring Across Generations.
        We are part of Care Can't Wait, a national coalition
    working to lower the cost of caring for families and improve
    the quality of work for our Nation's care workforce.
        Every day in America 10,000 babies are born, and 10,000 of
    us turn 65. More of us are living longer, which means the
    number of older adults in America, over the age of 85, is
    expected to more than double by the year 2040. And this is a
    beautiful thing because it means more time to live and to learn
    and to contribute, to watch our children and our grandchildren
    grow. But it also means that we are a Nation in need of more
    care, more than ever before.
        And in America today, only the wealthy can afford it. We
    live in one of the only countries in the world without
    guaranteed paid family medical leave, which means that one in
    four moms returns to work within 2 weeks of giving birth.
        In every State in America, center-based childcare for two
    kids costs more than rent. A room in a nursing home will run
    you $100,000 per year. And then if you want to receive aging
    and disability care in the home, where most people want to
    receive it, it can cost anywhere from $60,000 to $288,000 per
    year. Meanwhile, the median income of a home care worker in
    America is less than $22,000 per year.
        The workers whose profession it is to help care for us
    can't care for their own families on the wages they earn. They
    also happen to be the fastest growing occupation in our entire
    workforce because of the tremendous need.
        Deciding how we spend public dollars, using the Federal Tax
    Code is one of the most powerful tools we have to lower costs
    for everyday middle class families. It reflects what we
    understand to be shared priorities and essential infrastructure
    for a strong economy.
        Just as we must invest in physical infrastructure like
    bridges and tunnels, we need care infrastructure. As Senator
    Bob Casey famously said, some people need a bridge or a tunnel
    to get to work and others need childcare, others need home
    care.
        Without these investments, tens of millions of working
    family caregivers and parents are making impossible choices
    between caring for their loved ones and working to pay the
    bills. Untold numbers of us are pushed into debt and poverty
    while the majority of our 9 million professional care workers
    are trapped in working poverty.
        The 2017 tax law decreased Federal revenue by trillions
    while doing almost nothing to address the fundamental needs of
    working and middle class families.
        Under the law, the wealthiest 1 percent of households can
    expect an average benefit of $60,000 in 2025 while the
    majority, including most family caregivers, disabled people,
    seniors, and parents, will receive less than $500. That is $40
    a month, and care workers will average even less, $70 per year.
    These tax cuts benefited the people with the least need the
    most while the vast majority of us continue to struggle.
        I recently traveled across the country to meet caregivers.
    And in Atlanta, I met Martresa, a sandwich generation caregiver
    caring for her chronically ill mother at home and a young
    daughter at the same time.
        She found a strange spot on her skin, but because she
    couldn't afford care assistance, she prioritized care for her
    family over her own. And the day before I met with her in
    Atlanta she was diagnosed with advanced stage cancer.
        Our tax policy cannot continue to deepen the inequality of
    care in America rather it should help address it, and it can.
        We must raise revenue and make investments in our care
    systems from childcare to paid family and medical leave to
    senior and disability care. I urge you to let the 2017 tax cuts
    for the wealthiest expire and use additional revenue to invest
    in the care we all need.
        2025 is our once in a generation moment to ensure that the
    wealthy pay their fair share so that we can all contribute to a
    strong economy and care for our families, too. I look forward
    to your questions. Thank you.
        Chair Warren. Thank you, Ms. Poo. Ms. Richards.

        STATEMENT OF KITTY RICHARDS, SENIOR FELLOW, GROUNDWORK
              COLLABORATIVE AND ECONOMIC POLICY THINK TANK

        Ms. Richards. Thank you, Chair Warren and Members of the
    Committee. Thank you for inviting me to testify today. Again,
    my name is Kitty Richards. I am a senior fellow at the
    Groundwork Collaborative and Economic Policy Think Tank based
    here in Washington, DC. And I am grateful to the Committee for
    holding this hearing about the really important macroeconomic
    impacts of tax reform in 2025.
        As you know, next year is going to be a big year for tax
    policymaking as the individual income tax provisions of the
    2017 tax law expire, but I want to talk about more than the
    TCJA and especially more than just its expiring provisions. I
    want to talk about how to support a thriving economy through
    tax reform. And to do that, we really need to do three things.
        First, tax reform must raise substantial new revenue, well
    above the revenue lost to the failed 2017 Tax Act. Before the
    Bush tax cuts and then their extension and then the 2017 law,
    the U.S. had a tax system that was not perfect, but raised
    enough revenue to support a fully functioning Government and
    did it progressively.
        We need revenue to support a 21st century Government that
    can restore a strong, secure middle class, build our clean
    energy future, and ensure that every American can participate
    in the economy and reach their full potential.
        I am honored to be sitting next to Ai-jen Poo, who can
    speak to the importance of investments and care infrastructure
    much more eloquently than I can and just did.
        Second, tax reform must directly redress the skyrocketing
    inequality that has characterized the American economic
    experience over the past 50 years. And we have to pay special
    attention to the persistent racial and gender disparities in
    wages, wealth, and opportunity that not only harm those
    communities, but really hold our economy back.
        This inequality is not just profoundly unfair and damaging
    to the welfare of the large majority of Americans who have been
    left behind, it also has a negative impact on economic growth
    through multiple channels.
        Third, tax reform must rebalance economic power away from
    the wealthy and corporations, putting a break on extractive
    practices at the high end that weaken economic performance
    while enriching shareholders, executives, and highly
    compensated professionals at the expense of everyone else and
    enhancing the economic power and participation of low and
    middle income workers, especially those who currently provide
    the more than $1 trillion in unpaid care work each year that
    allows all other work to happen.
        My written testimony outlines a number of ways that tax
    reform in 2025 can accomplish these goals, and I would like to
    just go through a few of them here.
        Congress should restore the corporate tax to a major source
    of progressive revenue for the U.S. Government and ensure that
    it functions as a break on corporate power and corporate
    profiteering, not an accelerant.
        This can be accomplished by raising the corporate tax rate,
    including raising it back to 35 percent, where it was before
    the 2017 tax law, for the most profitable corporations, closing
    corporate loopholes and eliminating current preferences for
    foreign source income over American source income.
        The U.S. should also move swiftly to implement the once in
    a century agreement among more than 130 countries across the
    world to prevent corporations from forcing a global race to the
    bottom in corporate taxation. Doing so will increase U.S. tax
    revenues and reduce large multinational's ability to syphon
    profits offshore.
        Congress should restore the top tax rates on high incomes
    and address the many special tax giveaways that provide outsize
    benefits to the richest taxpayers, including some introduced in
    the TCJA, like the Section 199A deduction.
        On the other end of the individual tax, Congress should
    restore the enhanced child tax credit from the American Rescue
    Plan, which cut child poverty in half before it was allowed to
    expire and expand on the success of the earned income tax
    credit by making more workers eligible for a larger sum.
        And finally, Congress must reform the way that income from
    wealth is taxed. Taxing wealth like work is more than a
    fairness issue. It is absolutely crucial to ensuring that the
    richest taxpayers pay any tax at all, let alone their fair
    share, and to rebalancing power in the economy.
        Proposals like Senator Wyden's Billionaires Income Tax or
    the Biden-Harris administration's Billionaires Minimum Income
    Tax are a hugely important part of building a tax system that
    works for workers and builds our economy. Thank you.
        Chair Warren. Thank you, Ms. Richards. And now we are going
    to start our questions with the Senator from New Jersey,
    Senator Helmy.
        Senator Helmy. Thank you, Chair. Thank you for the
    opportunity to participate in this hearing. And I know and
    thank you for your long lasting and standing leadership on tax
    policy issues that break apart what I call the consolidation of
    opportunity in this Nation and invest in opportunities that
    lift up low income and growing middle class.
        Thank you both for being here. And Ms. Poo, I'm sorry I
    missed your opening remarks, but I did have a chance to read
    them and will hopefully give you an opportunity to build on
    some of the interesting points I read.
        Ms. Richards, if I can start with you. I would like to
    discuss investments in education. And I would start by saying
    the Pell grant has had a significant impact on low income and
    middle income New Jersians.
        In New Jersey, approximately 35 percent of undergraduate
    students relied on Pell in 2021-22 academic year, as can be
    expected most of those recipients coming from low income
    households.
        Would you mind speaking with some specificity to the return
    on investment we see when we make investments in uplifting low
    income families by investing in educational opportunities for
    them and what that might mean for growing our U.S. economy?
        Ms. Richards. Absolutely. Investing in the human capital of
    future workers, current workers, and innovators in our economy
    is one of the most important things that we can do to increase
    productivity growth, increase wages, and build a really strong,
    resilient economy that can work for, you know, the next 100
    years. And Pell grants are such a great example of how we can
    do that.
        Researchers at the OACD have found that one of the major
    mechanisms by which growing inequality is stifling growth
    across the world, and especially in the United States, is the
    failure of these economies to be able to invest in the bottom
    half of the income distribution and in their human capital.
        And when you give a Pell Grant to someone who otherwise
    wouldn't be able to go to college, you are opening up a world
    of possibility for them and for them to be able to participate
    fully in the economy and become a future leader, a strong
    worker, and also deliver for their family.
        Senator Helmy. I would just note personally, Chair, my
    wife, who emigrated from Egypt when she was 10 and was a
    recipient of Federal dollars to go to her undergraduate at
    Rutgers and my children have more opportunities than we had as
    kids because, as you said Ms. Richards, that opportunity and
    investment in low and middle income families like the ones we
    came from.
        If I can stay with you, Ms. Richard, you mentioned in your
    written testimony the investments in childcare. And according
    to census data over a million of our children in New Jersey
    benefited from the expanded credit in 2021.
        Under the current law, of course, an estimated 19 million
    children under 17 receive less than a full credit or no credit
    at all because the family's incomes are too low. If we were
    able to restore the CTC to the restored amount of the American
    Rescue Plan, how do you see that in also helping the economics,
    broadly again, of the U.S. economy but specifically the
    economics of low and middle income families?
        Ms. Richards. The child tax credit expansion included in
    the COVID recovery package was a phenomenal success. It drove
    child poverty to a record low of 5.2 percent in 2021, which by
    the way it is a shame that we live in the richest country on
    earth, and 5.2 percent of our children living in poverty is a
    record low, but it was incredibly successful.
        If the program had been extended 3 million fewer children
    would have been living in poverty in 2022. It really makes
    clear that hungry children and families trapped in poverty,
    those are policy choices.
        But as you said, it also really stifles our economy. Those
    children, we have reams of evidence to show that getting high
    quality care, having a stable environment with a roof over your
    head where you are not at risk of eviction or homelessness,
    having food in your stomach when you go to school, these are
    huge determinants of your future economic success and the
    economic success of our society.
        And I would also love to add the CTC is so important, but
    investments in childcare have a return on investment as high as
    12 to 1. And, you know, these things, I would love to turn it
    over to my colleague because these things are about more than
    just family economics today.
        Senator Helmy. That is a perfect segue. And they don't
    allow junior senators to go over their time. And this is a
    great segue, Ms. Poo.
        In 2022, a study by researchers at the Joint Committee of
    Taxation on the Federal Reserve Board analyzed the impact of
    the TCJA, the Trump tax bill, in corporate returns, shareholder
    data, and worker earnings. And I quote, ``The earnings do not
    change for workers in the bottom 90 percent of within firm
    distribution.'' But as you would expect that's my ad lib. Back
    to the quote, ``but do increase for workers in the top 10
    percent, increase particularly sharply for firm managers and
    executives.''
        What I would ask if we were able to tick the corporate tax
    rate back up to 28 percent, which is what is being proposed by
    some on this side of the dais, how do you see that being
    impactful to the care economy and, again to the same way I
    phrased the question to Ms. Richards, how would we reinvest
    that in the care economy and what would that mean to uplifting
    low and middle income families, and, again, the broader
    investment in the American economy?
        Ms. Richards. Well, I think we are so--thank you for the
    question, Senator. I think we are so underinvested in low
    income and middle income families in our country that we can't
    do enough at this point to support them.
        I think that the child tax credit is incredibly important
    as a way to offer relief for low income families in particular,
    and we have seen the impact of that. And I think investments in
    the care infrastructure are long overdue and essential.
        And there is an economist at Harvard named Larry Katz who
    calls investments in the care economy triple dignity
    investments because if you think about our ability to
    investment in say the childcare workforce and making those
    poverty wage jobs better jobs, those wage increases not only
    benefit those workers and their families and communities, but
    then they enable through the services they provide to support
    millions of other working families and caregivers and working
    parents to go to work and participate in the economy. And then
    they support the next generation of children to be able to have
    access to quality care at these crucial years of their lifetime
    and older adults, people with disabilities, having the ability
    to live dignified full lives as they age.
        This kind of return on investment is exponential. And these
    investments are long overdue.
        Senator Helmy. I appreciate both of you being here. I
    appreciate your qualitative analysis and your written testimony
    on the unpaid and uncredited work that comes out of the care
    economy. And I turn it back to the Chair with tremendous
    gratitude for her leadership on these issues.
        Chair Warren. Well, thank you very much. Thank you for
    those very thoughtful questions.
        So let's talk more about the tax bill that passed in 2017.
    Donald Trump signed into law in 2017 his only big legislative
    accomplishment, a $2 trillion tax giveaway for the wealthy and
    the well-connected. And now he is out there promising to shovel
    even more tax breaks to, these are his words, his rich as hell
    donors. But the American people want to move forward, not
    backward. Eighty percent of voters want to raise taxes on the
    rich and Democrats have a proposal to do exactly that.
        Those higher taxes on the rich would give our Nation
    revenue, money to build 3 million new homes and lower rents by
    10 percent. Money to cut the cost of childcare to just $10 a
    day for most families. Money to build a better future for
    everyone.
        So let's talk about the 2017 tax law and the choice that
    the next President and the next Congress will face as a big
    chunk of it starts to expire.
        Ms. Poo, you worked on behalf of the 2\1/2\ million
    nannies, house cleaners, and homecare workers who keep American
    families going, keep them in the workplace. What was the impact
    of the 2017 Trump tax cuts on the domestic workers that you
    represent? How big a slice of that $2 trillion did they get?
        Ms. Poo. Madam Chair, the short answer is next to nothing.
    If the Trump era tax cuts were allowed to continue, the average
    care worker, like our members, would receive $70 per year in
    benefit, which is in contrast to the richest 1 percent, who
    would receive $60,000 per year.
        And by the way, a majority of American workers in this
    country earn less than $60,000 per year. So talk about
    exacerbating what is already brutal in equality in our economy
    and feeding the epidemic of low wage work that we have to
    address. We cannot allow for our tax policy to leave essential
    workers like care workers and other low wage workers behind.
        Chair Warren. All right. So that is the calculation based
    on what we have seen. But Donald Trump is doubling down. He is
    proposing $7 trillion in further tax cuts, including slashing
    the corporate rate down to just 15 percent.
        That is not all. In their Project 2025 playbook,
    Republicans in Washington have laid out a scheme to further
    shift the tax burden from the wealthy to the middle class and
    working class in order to fund $1.5 to $2.4 million tax cut for
    households making more than $10 million a year, the Republicans
    have laid out their project 2025 plan to raise taxes by an
    average of $3,000 for the median family of four.
        Now, Ms. Richards, you are a former White House and
    Treasury Department official. You are an expert in tax and
    economic policy. So tell us what impact would these proposals
    that Donald Trump and Project 2025 have already put on the
    table, what impact would these proposals have overall on our
    economy?
        Ms. Richards. The impact would be higher inflation, higher
    interest rates, weaker economic growth, and recession becomes a
    serious threat again.
        Those are direct quotes from an analysis put out last month
    by Moody's analytics after reviewing GOP plans to extend the
    expiring 2017 provisions throughout the individuals, further
    cut the corporate tax rate, and impose tariffs that would drive
    up costs for low and middle income families.
        But as you noted in your remarks, many of former President
    Trump's closest allies are envisioning an even more extreme tax
    agenda.
        Project 2025 would get rid of our current progressive
    income tax system along with nearly all of the deductions and
    credits that lower taxes for low and middle income families and
    significantly increase the income tax rate that those families
    pay. Then those savings would get funneled into cutting taxes
    for the wealthiest households at the very top.
        Experts ran the numbers recently and found that this would
    increase taxes by $3,000 for the typical family of four while
    giving between $1.5 and $2.4 million in annual tax cuts for
    those wealthiest households with more than $10 million.
        Chair Warren. So we are really talking about an income
    redistribution scheme here, right, from the wealthiest 10,000
    families in America that they get an average of how much more?
        Ms. Richards. $1.5 to $2.4 million. It's hard to nail down.
        Chair Warren. Per family?
        Ms. Richards. Per family.
        Chair Warren. For the wealthiest 10,000 and for middle
    class, working class America, they lay out how much more?
        Ms. Richards. $3,000 for the typical family of four.
        Chair Warren. So this is amazing. You know, I listen to the
    Republicans rail about wealth redistribution. Let's face it,
    wealth redistribution is happening. And what Donald Trump wants
    to see, along with his Republican friends, is let's
    redistribute even more wealth from the tiny fraction of the
    very richest Americans and let's make working families, let's
    make middle class families, pay more.
        So this is going to be--did I say that as wealth leaves
    them, it's more wealth for middle class America up to the
    richest among us?
        You know, and as you rightly say, this is what the
    economists at Moody's are telling us, they have already taken a
    look at this. You can exactly track. And Project 2025 has
    actually laid out the numbers. We don't even have to sit here
    and do the math ourselves. They are so extremist that they
    think they can tell America what they plan to do. And that
    somehow the United States is still going to go along with it,
    the voters are going to go along with it.
        I do understand why Donald Trump is trying to back off from
    Project 2025. But these are his advisors. This is his
    Republican party who is advancing this. And we are heading into
    a big tax fight in which the Republicans are proposing to take
    wealth away from working families and give more wealth to rich
    families and to do it all through the tax cut.
        So look, it is pretty outrageous. It is better to walk away
    and let the Trump tax cuts expire than to sign our names to
    that kind of a wealth transfer to help multimillionaires and
    billionaires at the expense of working families.
        But that doesn't have to be where our 2025 tax fight ends.
    I believe we can do better than that. We can raise taxes on the
    rich. We can invest in lowering costs for American families.
    And that is exactly what Vice President Harris has proposed.
    Raising revenue by taking the corporate tax rate--she is just
    saying take it back up to 28 percent and impose a 25 percent
    minimum tax on these megamillionaires and billionaires and use
    that money to help families with the cost of housing and
    childcare.
        Now Ms. Richards, let's do the comparison here. We talked
    about Donald Trump's plan is to take money away from middle
    class and working families and give it to the very wealthy.
    Vice President Harris' plan is take some of this money away
    from wealthy and give it back to middle class and working
    families in the form of providing the infrastructure for
    childcare and housing and reduce those costs.
        So can you describe overall what impact Vice President
    Harris' proposals would have on our economy?
        Ms. Richards. Sure. I think it is worth coming back to the
    same Moody's analysis that I had spoke of earlier. Their
    economists conclude that enacting Vice President Harris' policy
    would lead to strong economic growth and lower----
        Chair Warren. Strong growth.
        Ms. Richards. ----lower inflation, full employment, and
    critically Harris' policies would boost the finances of lower
    and middle income Americans. Again, direct quotes. For the
    record, Moody's also concludes that debt as a share of GDP
    would be far better under Vice President Harris' proposals
    because of how costly the GOP tax cuts are and because of the
    revenue raising proposals you just mentioned. And you can also
    think of that as an indication of how much more we could have
    to invest in care economy and the workers that really power
    economic growth in this country.
        Chair Warren. So very interesting point because you are
    really saying the effect overall on the economy of the Trump
    tax cuts would be a disaster, like higher inflation, lower GDP
    growth, lower job growth, but as a side benefit. The other
    consequence of this would be to drive up the deficit and that
    we see exactly the inverse in the way that Vice President
    Harris wants to do this by saying higher taxes on those at the
    top and more investment in bringing down costs for those in the
    middle.
        You know the next President and Congress will face huge
    decisions on tax policy. Donald Trump wants to make an America
    that works even better for those at the top. Kamala Harris and
    congressional Democrats want to tax the rich so that we can
    build a stronger, fairer America. An America where Jeff Bezos
    doesn't pay a lower tax rate than a public school teacher. That
    is the America we are working for, an America where everyone
    can get ahead, where childcare costs and health care bills are
    not crushing families, an America where every family can afford
    a home.
        That is an America worth fighting for and that is the
    battle we will be in in 2025.
        With that, I will call on the Senator from Maryland,
    Senator Van Hollen for his questions.
        Senator Van Hollen. Well, thank you, Senator Warren. And as
    I said before the hearing, I had another briefing that I was at
    so I am glad to make it. Thank you for pulling this great panel
    together.
        I thank both of you for being here. and I know Senator
    Warren and others have laid out some of the Vice President's
    plans, which would be to really invest in the middle class and
    those working to become part of the middle class.
        So I think as we listen to our Republican colleagues and we
    get a preview of what Republican claims are about what their
    tax policies would do, it is important to go back and rewind
    the tape a little bit and see what claims were made about the
    last round of Trump tax cuts which were really, as we all know,
    for the very wealthy. But I think having two experts here, we
    can dissect some of the claims they made and whether they ever
    really came true.
        As we know, the Trump tax cuts took the corporate rate from
    35 percent to 21 percent. We now raise about 1.8 percent of our
    GDP from big corporations and others, which is a very small
    amount given the magnitude of those profits.
        And now Republicans are planning to cut the corporate tax
    even further, 18 percent says former President Trump--I'm
    sorry, Project 2025. President Trump is saying in some
    categories maybe even go to 15 percent.
        So in 2017, we were told that these big corporate tax cuts
    would cause such massive economic growth that they would pay
    for themselves. So let me just start with a straightforward
    question, did they pay for themselves?
        Ms. Richards. No. That was laughable at the time, and it
    has not worn well.
        Senator Van Hollen. Ms. Poo.
        Ms. Poo. Agree.
        Senator Van Hollen. So one of the other things they claimed
    was that those cuts were going to generate a big new wave of
    investments, right? That corporations would take their tax
    savings and invest them into growing their businesses. So Ms.
    Richards, did business investment shoot up in the 2 years
    following the tax cuts when corporations first felt the effect
    of those cuts and before COVID may have distorted the data?
        Ms. Richards. Nope.
        Senator Van Hollen. Right? It is again just no ambiguity
    here. It just didn't happen. And in fact, what we saw was that
    corporations spent $806 billion in stock buybacks in 2018,
    paying off wealthy investors instead of growing their
    businesses.
        Another claim that was made was that corporations would use
    some of that tax savings to increase the wages they paid to
    their employees. In fact, Kevin Hassett, who was the head of
    Trump's Council of Economic Advisors, said there would be, and
    I quote, ``an immediate jump in wage growth''. And the former
    President predicted an average wage increase of $4,000 tied
    directly to those tax cuts.
        So, Ms. Richards, did the average American get a $4,000
    raise from the Trump tax cuts?
        Ms. Richards. No. In fact median wage growth actually
    slowed in 2018 and 2019 after the Trump tax cuts were enacted.
        Senator Van Hollen. Right. And, you know, the only people
    who saw raises were the very wealthy executives, who got about
    $50,000 on average boost in their income.
        So, Ms. Poo, did the people who were caring for our
    children and aging members of our communities get a $50,000
    raise?
        Ms. Poo. No, Senator. The median annual income for a
    homecare worker is $22,000 per year in the United States.
        Senator Van Hollen. And when those companies were making
    billions of dollars and more profits and using a lot of their
    profits for stock buybacks, did they at least lower prices for
    consumers?
        Ms. Poo. No, Senator. Prices have gone up.
        Senator Van Hollen. So prices went up. Wages did not go up.
    Stock buybacks and executive compensation went up. The deficit
    went up, and these guys want to run that movie again.
        So I appreciate both of you being here just to refresh our
    memories a little bit beyond the sloganeering as to what
    actually happened in the real world. Thank you.
        Chair Warren. Thank you very much, Senator Van Hollen. I
    always appreciate your questions. But on this one just walking
    through what were the promises made in 2017 and what did the
    data show because that same set of promises will be made in
    2025 as we go through these tax fights. And what's the old,
    burn me once, shame on you, burn me twice, shame on me. We are
    not falling for that again. So thank you. I really appreciate
    the questions.
        If you will bear with me, I have got another round of
    questions I would like to be able to ask.
        You know, for too long, Republicans have raced to cut taxes
    for the wealthy and then they turn around and slash funding for
    critical programs that many Americans rely on.
        The tax fight next year will determine how much money we
    have to help lower costs for families by making the investments
    in childcare and housing and whether millionaires and
    billionaires chip in like everyone else. So let's focus for a
    minute on childcare.
        While other Nations have invested in universal affordable
    high quality care for their children, we have stayed stuck in a
    debate over how much to cut taxes. The result, the United
    States now ranks 31st out of 38 developed countries in terms of
    tax revenue as a share of GDP and 33rd out of 37 of the richest
    Nations for their spending on childcare.
        Childcare, as you noted in your testimony, is more
    expensive than rent for the average family in America. And I
    just want to add a footnote to that, if they can find it at
    all.
        Ms. Poo. Correct.
        Senator Van Hollen. Because part of what never goes into
    that calculation are all the people who just give up, all the
    people who can't find it at all or who are using under the
    table ways of having their children taken care of that never
    show up in these statistics.
        So, Ms. Poo, why is it so difficult for families to find
    affordable, high quality childcare? Why doesn't this market
    work? Why don't we just put a little more money into people's
    hands and suddenly we will have a functioning childcare market?
        Ms. Poo. The system is broken because we have never
    invested in building it. We don't have a functioning childcare
    system in the United States.
        Right now, there are fixed costs associated with delivering
    safe, quality childcare. And childcare currently relies on a
    patchwork system of Federal and State dollars that is anemic
    and inconsistent at best.
        And in that context, the cost gets passed on to individual
    families who are struggling and also the care workforce. So you
    have families paying enormous amounts, up to 30 percent of
    their income, and workers earning poverty wages to stay in this
    work, to keep the doors open of these facilities.
        And it is unsustainable for everyone involved. The average
    childcare worker earns less than $30,000 per year.
        Chair Warren. You know, you caught me with the line, why is
    the childcare system broken? Because we never built it. I am
    reminded as you say this that I nearly got derailed from the
    lack of available, affordable childcare not once, but twice.
    Just almost got knocked completely off and was saved because I
    had an elderly Aunt B who came to live with me for 16 years in
    order to see me through all of my childcare needs for all those
    years.
        What is so frustrating to me is it was hard for me when
    there were fewer women in the workforce when we kind of felt
    like the first wave of mamas going into the workforce.
        It was just as hard for my daughter. And now it appears
    that it is going to be just as hard for my granddaughters
    because we continue not to make this investment. The idea that
    a family can take out of its own income to pay for an entire
    childcare infrastructure is just nuts. We don't ask families to
    go pay for all the costs of second grade.
        We say that we all pitch in so that we can afford to build
    an education system, K through 12, and make that available for
    all of our kids, but we are not doing it on childcare and
    families, babies, and childcare workers are the ones who are
    paying the price for this.
        But it takes money to make the system work, and look at the
    billionaires right now. They are just not paying taxes. Elon
    Musk and Jeff Bezos want to keep sitting on their growing piles
    of wealth protected by armies of lawyers and accountants and
    wealth managers and lobbyists who ensure that the money they
    make doesn't count as taxable income.
        Ms. Poo, tell me, is that option of just deciding not to
    pay taxes and build your wealth out and to live on it knowing
    you will be protected by an army of accountants and lawyers and
    lobbyists available for our childcare workers? Are they doing
    the same thing there?
        Ms. Poo. No, Madam Senator. If they were, I would not be
    here testifying today.
        Chair Warren. You know, is it available to middle class
    families? You know, people who have got two folks in the
    workforce. They are earning median wages. Is it available to
    them?
        Ms. Poo. It is not.
        Chair Warren. You know, this is the part we have to
    remember, the extraordinary inequality not just an outcome, but
    inequality in opportunity to build something in this country.
        The top 1 percent in this country just hit a record $44.6
    trillion in wealth. That is almost as much as the bottom 90
    percent of Americans have scraped together. But that top 1
    percent is barely paying taxes.
        And every year that goes by with the wealthiest Americans
    paying so little is another year in which their grip over our
    economy grows stronger while everyone else struggles to get by.
        Donald Trump and congressional Republicans understand this
    dynamic. And instead of working to reverse it, they are
    tripping over themselves to promise their wealthy donors even
    more tax giveaways next year.
        But President Biden and Vice President Harris have a much
    better idea. They have a plan to ensure that anyone who has
    more than $100 million in assets--and just so you know, this is
    the top 10,000 richest, megamillionaires and billionaires that
    they pay at least 25 percent of all the income they make in
    taxes. That is still far less than the top individual tax rate.
    But for the first time, it would force the 10,000 richest
    Americans in America to stop hoarding their wealth and hiding
    it from the IRS. Now, Ms. Richards, if we pass the Biden-Harris
    Billionaires Minimum Income Tax affecting just the top one-
    tenth of 1 percent of all Americans and then invest that money
    in affordable childcare for all Americans, what kind of return
    on our investment would we get?
        Ms. Richards. Investments in childcare have undeniable
    payoffs. The return on investment can be as high as 12 to 1.
    Meanwhile, billionaires sitting on stock for years and years
    for tax purposes is actually bad for the economy. It makes it
    less dynamic. It makes us less able to grow and innovate.
        So the return on investment would be huge.
        Chair Warren. So I think this is really an important point
    to make. You know, you could be somebody who just doesn't care
    about kids. Doesn't care about care. But just making a
    hardnosed investment decision, investing in billionaires, which
    is what a system does when it says you can sit on those piles
    of wealth and not pay taxes on them. Doing that has the effect
    of actually making the economy work less vigorously.
        They hold on even when they should sell. They don't make
    good investment decisions day-to-day. They make tax driven
    decisions because we have privileged one form of wealth and
    holding on to that wealth.
        The difference, of course, is if we tax that wealth and
    particularly decided to invest it in a care economy, I think
    you described it as the consequence would be more mamas and
    daddies can go to work, right, and be able to work more
    productively. More care workers would be paid a wage that lets
    them support themselves, their families and their economies,
    and the third generation--the next generation payoff, and more
    children would get a better start in life. And this is the
    reason to say pay taxes here so we can make this investment
    there is a payoff of about 12 to 1.
        It makes no sense to pass that up. And that is what is
    going to be in front of us in this tax fight in 2025. Taxing
    the ultrawealthy is good for the economy. It is fair. And it is
    popular. Four out of five Americans support raising taxes on
    the richest Americans, Democrats, Republicans, and
    independents. And next year Congress needs to listen to them,
    not to the billionaires that are trying to fund political
    campaigns right now.
        2025 is an opportunity to reshape the Tax Code. And we need
    to do more than just be on defense about the Trump tax
    extensions for the billionaires. We need to be on offense by
    looking at the whole tax system and saying we can make better
    investments with our Federal dollars.
        So thank you all for being here. I really appreciate this.
        You know, thanks to decades of lobbying, the U.S. Tax Code
    is stuck in a doom loop. It is rigged to benefit the richest
    corporations and the richest people instead of designed to help
    working families. We have a chance to change that in 2025 and a
    chance to fight for a Tax Code that reflects our values. That
    means investing in middle class and working people. It means
    making billionaires and big businesses pay their fair share.
    And it means rejecting bad deals that throw pennies to ordinary
    Americans while showering the ultrawealthy with even more tax
    giveaways.
        Thank you to both of our witnesses for being here today and
    for providing this testimony. For Senators who wish to submit
    questions for the record, those questions are due 1 week from
    today. That is Wednesday, September 25.
        For our witnesses, you will then have 45 days to respond to
    any question.
        Thank you again. Thank you for being here. And with that,
    this hearing is adjourned.
        [Whereupon, at 3:15 p.m., the hearing was adjourned.]
        [Prepared statements supplied for the record follow:]
                        PREPARED STATEMENT OF AI-JEN POO
      President, National Domestic Workers Alliance; Executive Director,
                           Caring Across Generations
                               September 18, 2024
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                      PREPARED STATEMENT OF KITTY RICHARDS
     Senior Fellow, Groundwork Collaborative and Economic Policy Think Tank
                               September 18, 2024
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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