[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
PROSPERITY ON MAIN STREET: KEEPING TAXES
LOW FOR SMALL BUSINESSES
=======================================================================
JOINT HEARING
BEFORE THE
SENATE COMMITTEE ON SMALL
BUSINESS & ENTREPRENEURSHIP
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
APRIL 8, 2025
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 119-008
Available via the GPO Website: www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
60-081 WASHINGTON : 2025
=======================================================================
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
NICK LALOTA, New York
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
TROY DOWNING, Montana
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
NYDIA VELAZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
HERB CONAWAY, New Jersey
MAGGIE GOODLANDER, New Hampshire
Lauren Holmes, Majority Staff Director
Melissa Jung, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Roger Williams.............................................. 1
Hon. Joni Ernst.................................................. 2
Hon. Nydia Velazquez............................................. 4
Hon. Ed Markey................................................... 5
WITNESSES
Mr. Tom Click, President, Chief Executive Officer, and Co-
Founder, Patriot Industries, Louisa, VA........................ 8
Mr. Preston Brashers, Research Fellow, Tax Policy, The Heritage
Foundation, Washington, DC..................................... 10
Mr. Jerry Akers, President, Sharpness Inc. and MOCA Inc., Palo,
IA............................................................. 11
Ms. Anna Zimmerman, Founder & Owner, Zimmerman & Co CPAs Inc.,
Cincinnati, OH................................................. 13
APPENDIX
Prepared Statements:
Mr. Tom Click, President, Chief Executive Officer, and Co-
Founder, Patriot Industries, Louisa, VA.................... 53
Mr. Preston Brashers, Research Fellow, Tax Policy, The
Heritage Foundation, Washington, DC........................ 56
Mr. Jerry Akers, President, Sharpness Inc. and MOCA Inc.,
Palo, IA................................................... 63
Ms. Anna Zimmerman, Founder & Owner, Zimmerman & Co CPAs
Inc., Cincinnati, OH....................................... 71
Questions and Answers for the Record:
Questions from Hon. Cantwell to Mr. Click and Answers from
Mr. Click.................................................. 81
Questions from Hon. Cantwell to Mr. Brashers and Answers from
Mr. Brashers............................................... 83
Questions from Hon. Cantwell to Mr. Akers and Answers from
Mr. Akers.................................................. 87
Additional Material for the Record:
American Council of Engineering Companies (ACEC)............. 89
American University.......................................... 91
Anonymous letter............................................. 98
Associated Builders and Contractors (ABC).................... 99
Atlantic letter.............................................. 101
Biotechnology Innovation Organization........................ 107
Engine....................................................... 109
Fortune...................................................... 113
Innovator Alliance........................................... 114
IntervalZero................................................. 118
National Association for the Self-Employed (NASE)............ 123
National Council of Farmer Cooperatives (NCFC)............... 126
Small Business Majority...................................... 130
Small Software Business Alliance (SSBA)...................... 136
Technology Councils of North America (TECNA)................. 142
U.S. Chamber of Commerce..................................... 147
U.S. Chamber of Commerce - A Matter of Survival.............. 151
Vertex Pharmaceuticals....................................... 168
WMUR TV letter............................................... 169
YahooFinance JP Morgan....................................... 171
HOUSE-SENATE JOINT HEARING
PROSPERITY ON MAIN STREET: KEEPING TAXES LOW FOR SMALL BUSINESSES
----------
TUESDAY, APRIL 8, 2025
House of Representatives,
Committee on Small Business,
and
United States Senate,
Committee on Small Business &
Entrepreneurship,
Washington, DC.
The Joint Committees met, pursuant to notice, at 10:05
a.m., in Room 210, U.S. Capitol Visitor Center, Hon. Roger
Williams [chairman of the Committee on Small Business]
presiding.
Present: Representatives Williams, Stauber, Meuser, Van
Duyne, Ellzey, Alford, Wied, Downing, Schmidt, Velazquez,
McGarvey, Scholten, McIver, Cisneros, Morrison, Latimer, Tran,
Simon, Olszewski, Conaway, and Goodlander.
Senators Ernst, Young, Hawley, Husted, Markey, Booker,
Justice, and Hirono.
Chairman WILLIAMS. I would like to say good morning to
everyone. And as we get started with it, I will lead us in
prayer and then Senator Ernst will lead us in the Pledge of
Allegiance, so can you stand, please? Bow your heads.
Heavenly Father, God of all people, thank you for allowing
us to meet today and discuss great things in this country and
to do as good a job as we can do under your leadership.
We appreciate the opportunity to serve you and to serve
this great institution. In your name we pray, Amen.
Senator ERNST. Please remain standing and recite the
pledge.
I pledge allegiance to the flag of the United States of
America. And to the Republic for which it stands, one nation
under God, indivisible, with liberty and justice for all.
Chairman WILLIAMS. Good morning, everyone, and I ask
unanimous consent to hold today's joint hearing before the
House Committee on Small Business and the Senate Committee on
Small Business and Entrepreneurship. Without objection, so
moved. I now call the joint hearing before the House and Senate
Committees on Small Business to order. Without objection, the
Chair is authorized to declare a recess of the committee at any
time.
I now recognize myself for my opening statement. I want to
thank our witnesses for being here today. Many of you have
traveled a long way to share your experiences and perspectives
and we deeply value your time and your voice.
Additionally, I would like to take a moment to welcome our
colleagues from the Senate. Both chambers of Congress coming
together to conduct this joint hearing underscores the
importance of today's topic. Keeping taxes low for small
businesses. Extending small business tax cuts will drive growth
on Main Street America.
Today's hearing will focus on the importance of making the
Tax Cuts and Jobs Act of 2017 permanent to continue to enable
main street to thrive by providing much-needed tax breaks to
small businesses.
As the nation continues to recover from the Biden
administration's disastrous economic policies, this hearing
could not come at a more important time. Small businesses are
the engine of the American economy. In order to excel, they
need to be able to put their hard-earned money back into their
businesses instead of forking it over to the federal
government. This is especially true when those tax dollars fund
and anti-small business government like that of Joe Biden over
and over again. This committee had heard how the Biden
administration's policies have negatively impacted main street.
Last Congress, a small oil and gas operator testified that
the Biden administration was trying to ruin their industry
financially. Can you imagine that? Your tax dollars going
towards the salaries of bureaucrats only for them to tell you
that they want you to lose your life's work.
For the sake of small business owners and entrepreneurs
across the nation, we re-elected President Trump. Under his
leadership Main Street America is more hopeful than ever and
President Trump's 2017 TCJA was the most significant tax system
overhaul since 1986,
These tax cuts brought rapid growth in job creation, U.S.
GDP, and domestic investment. Many of the tax cuts in the TCJA
are set to expire at the end of this year. This would devastate
small business and the U.S. economy at large.
Making the provisions that benefit small businesses
permanent is critical in sustaining economic growth and
fostering an environment where small businesses can succeed.
Just last week, a small business owner testified before the
House committee that the TCJA saves his business $11,000 last
year allowing him to reinvest those funds back into his
business. This is just one example of why we need to extend
President Trump's 2017 tax cuts. Small businesses should enjoy
a tax system that encourages their success. In turn, we will
see the job creation, innovation, and economic growth and when
Main Street America succeeds, the American economy succeeds.
With that, I now recognize Chair Ernst for her opening
remarks.
Senator ERNST. Thank you, good morning, and thank you
Chairman Williams, and I appreciate your friendship and our
ability to work together on behalf of America's small business.
I am glad that we can hold this joint hearing of our two
committees today to examine an issue that impacts every small
business in America. Eight years ago, working alongside
President Trump, Congress passed the most significant
simplification of our tax code in decades, the Tax Cuts and
Jobs Act of 2017, otherwise known as the TCJA.
The TCJA provided relief to every American, simplifying and
reducing personal income tax and expanding important deductions
used by small businesses across the country. These changes have
allowed small businesses to thrive and contributed to the
incredible growth we saw under President Trumps' first term,
which led to strong real wage growth for workers the lowest
unemployment rate in 50 years, and annual GDP growth that
reached 3 percent.
These tax provisions have also allowed small business
owners, including our witnesses today, to grow their businesses
and reinvest in their communities and their employees.
But the reality is these gains are in jeopardy if Congress
allows the TCJA to expire, and Americans would suffer the
largest tax increase in history. Small business owners will be
hit particularly hard if the TCJA expires as over 96 percent of
small businesses are structured as pass-through entities that
benefit from the qualified business income deduction and the
general reductions in personal income rates.
The TCJA empowered small business owners to invest in
themselves through provisions like bonus depreciation, enhanced
business expensing, and the R&D deduction. More importantly,
the TCJA enabled small businesses to invest more in their
employees.
I have heard from small business owners all over Iowa who
use that extra money to provide their workers with health
insurance, parental leave, and retirement plans. I have also
talked to small business owners who hired staff and expanded,
but who would have to make hard decisions about who to keep if
these cuts were to expire.
When I talk to Iowans back home the message is clear. They
can't handle a tax hike. Workers are also concerned that if
employees have to give more of their revenue to Washington,
jobs and benefits will have to be cut, on top of the higher
taxes they will have to pay due to the individual rate hikes.
The consequences are real to workers and their families.
I also want to address a tax policy issue of particular
concern to Iowans. The TCJA reduced the death tax, giving
families the ability to keep their farms and businesses after a
loved one's passing. This change was particularly important in
my state, preventing families from being forced to sell off
farms or businesses that had been theirs for generations.
The bottom line is that America's small businesses need the
TCJA along with the certainty it provides. If we let the TCJA
expire now, Americans and small business owners will be forced
to shoulder another $4 trillion in new taxes.
When small businesses grow, the American economy grows. I
strongly support making the TCJA permanent and will fight to
ensure that the interests of small businesses continue to be a
priority in this Congress.
I would like to thank our witnesses for being here today
and I look forward to your testimony.
I yield back.
Chairman WILLIAMS. The gentlelady yields back.
And I now recognize the Ranking Member and my friend
Velazquez for her opening remarks.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Throughout the past 40 years our tax code has been
repeatedly adjusted to favor the wealthy and the largest
corporations, funneling wealth upward and hollowing the system
that built the largest middle class in world history. This time
is no different.
Americans largely feel that the tax code is built in favor
of the wealthy. According to a recent survey, 90 percent of
small businesses agree in the belief that the tax system favors
large corporations. Now, Republicans and the Trump
administration are trickling down. Not only are they proposing
to permanently entrench the inequality of the TCJA into our tax
code, but the president just last week unilaterally enacted one
of the largest middle class tax hikes in history. This will
have devastating effects on the economy, particularly for small
firms who operate on thin margins and don't have sophisticated
supply chain management skills to navigate these complex and
onerous tariffs.
These tariffs will raise prices in the midst of a cost of
living crisis, lower growth, and cause layoffs and business
closures across the economy. When President Biden left office
the U.S. economy was in a Goldilocks zone, low unemployment,
falling inflation, falling interest rates, record business
creating, and stocks at all-time highs.
Many of the investments we make in infrastructure, clean
energy, and reshoring domestic manufacturing were just
beginning to work their way through the economy. It was the
envy of the world.
Yet, in less than 3 months, President Trump has squandered
that progress. In the first quarter, American stocks posted
their worst performance relative to the rest of the world in 23
years. Banks and analysts are unanimously warning of a
recession in the next year while inflation is already jumping
and interest rate cuts are paused. This is President Trump's
economy.
In a time when our nation suffers extreme levels of income
and wealth inequality, the Republican plan is to continue to
shift the tax burden onto the working class while lavishly
cutting taxes for the top 1 percent and adding to the deficit.
But what about fiscal responsibility and cutting the
deficit? Despite projections that extending the TCJA over the
next decade will cost up to $4 trillion, they are using budget
gimmicks to say that it costs nothing.
According to one of my Republican colleagues, this is fairy
dust. I agree. Instead of cutting taxes for small firms and
working families, they are proposing to cut vital resources for
the most disadvantaged people. From $880 billion in cuts to the
Medicaid program, which provides health care to our nation's
poor, to hundreds of billions of dollars in cuts to nutrition
assistance programs that help families put food on the table.
To the extent that they have tax cuts for the working class
and seniors, through no tax on tips, overtime, and Social
Security, I ask what good is no tax on tips if restaurant
margins are erased by tariffs and they are forced to close?
What good is erasing taxes on Social Security if the
administration is rendered incapable of distributing benefits?
The Republican budget and the economic policies of
President Trump are a disaster for our country. These policies
are the exact opposite of what we need right now. They will
raise costs significantly for the working class and cause main
street businesses to lay off staff or close altogether.
They are spiraling our economy into recession as we speak.
We can still work together to deliver genuine relief for main
street. We could extend the enhanced premium tax credits to
keep healthcare costs from spiking for small businesses next
year. We could expand tax credit for childcare, which will grow
the workforce and keep small businesses competitive.
We could reform 199(a) and ensure the bulk of benefits go
to those who need it the most.
We have a duty to reject policies that deepen inequality
and undermine the future of small businesses and working
families. Today's hearing is an opportunity to clearly confront
those dangerous choices, stand up for small businesses and
fight for an economy that works for everyone, not just those at
the very top.
My colleagues could stop this carnage at any time. I call
on them to reclaim tariff powers along with the power of the
purse and return them to Congress and work with Democrats on
delivering genuine tax relief for the middle class in a
fiscally responsible way.
Thank you. I yield back.
Chairman WILLIAMS. The lady yields back.
And I now recognize Ranking Member Markey for his opening
remarks.
Senator MARKEY. Yes, thank you, Chairman Williams.
Less than 100 days in, this administration has only
delivered pain for main street across America. Since Trump's
tariff announcement last week, the stock market has lost
trillions of dollars and analysts and JPMorgan say it is likely
the United States will enter a recession this year.
The Commerce Secretary Howard Lutnick said that going
through a recession would be, quote, `` worth it.'' Small
Business Administrator Loeffler called Trump's tariffs,
``salvation''--for small businesses.
Donald Trump posted on Truth Social over the weekend that
big business is not worried about tariffs. Meanwhile, small
businesses are calling Trump's tariffs salt in the wound that
is just now beginning to heal.
As a result of these tariffs, small businesses like Clem's
General Store in Spencer, Massachusetts, is having to consider
hiring freezes or scaling back the store's selections. These
reckless tariffs and the impending retaliation will ruin many
small businesses.
97 percent of exporters and importers in the United States
are small or medium-sized businesses. They do not have the
ability to absorb the increased supply chain costs leading to
thinner profit margins, forced closures, mass layoffs, and
increased costs for customers.
Small businesses are having Pepto Bismol moments in the
marketplace. They are just holding their stomachs every single
day as they see all of this turmoil and uncertainty be
introduced into a marketplace.
And it is estimated that American households will pay an
additional $3,400 in costs. Small businesses in their
communities cannot afford this. And it is clear who this
administration serves, and it is not small businesses or
working people.
The budget resolution passed by the Senate this weekend
lays out a plan that would send trillions more in tax breaks to
big corporations and the wealthiest in our society, all at the
expense of essential programs like Medicaid and SNAP and
investments in NIH to find the cure for Alzheimer's and cancer
and diabetes, but that millions of hardworking Americans are
looking to protect their families. And that is unacceptable.
The wealthy do not need another tax giveaway. The top 1
percent of the wealthiest households hold one-third of all of
the wealth in this country. The three wealthiest men in
America, who sat right behind Donald Trump at the Inauguration,
Elon Musk, Jeff Bezos, and Mark Zuckerberg, their net worth of
those three people is equal to the bottom 50 percent of our
entire population combined. And they are going to get massive
tax breaks under this legislation? That is just crazy.
These three people are absolutely not deserving of another
tax break. And that is what the Republicans are doing. Their
proposed tax policies would supercharge wealth inequality in
our society.
Even the Republican's so-called small business tax
deduction, Section 199(a), does not primarily help true small
businesses. Instead, the vast majority of these tax breaks of
what government would spend on this deduction goes to the
highest earners.
I would support a provision if it was tailored to true
small businesses. In fact, according to a 2023 report by the
nonpartisan Joint Committee on Taxation, 55 percent of the
Section 199(a) benefits go to the top 1 percentile in our
country. Those aren't small business people. The upper 1
percentile are not by definition small businesses. They get 55
percent of the tax break in, quote/unquote, `` the small
business tax break'' that the Republicans want to put extended
into this whole process.
We need a small business policy that benefits true small
businesses, not the $5.8 trillion in the tax giveaway which
they are planning on continuing and putting on the books. We
need tax breaks for working families. We need childcare tax
breaks. We need to protect Medicaid. We need real tax reform in
this country that will propel our economy, not this drain on
the limited revenues we have in the country to send more to the
upper 1 percentile. That is not the problem in our society
right now.
I look forward to this hearing and it just feels great to
be back here in the House of Representatives where I served for
36 years. And I just love this institution.
And I yield back.
Chairman WILLIAMS. The gentleman yields back.
And I now will introduce our witnesses. Our first witness
here with us today is Mr. Tom Click. Mr. Click is the president
and chief executive officer and co-founder of Patriot
Industries in Louisa, Virginia. And Mr. Click and his wife
Sarah founded Patriot Industries in 2010. Prior to that, Mr.
Click spent 10 years in the metals industry and most recently
as vice president of market development for Norsk Hydro
Aluminum and previously as vice president of Marketing and
Product Development for Indalex Aluminum.
Before entering the metals industry, Mr. Click managed the
product management and engineering departments for the Amerock
Division of Newell Rubbermaid. Mr. Click is an advisory board
member of the GENEDGE Alliance and a member of the Virginia
Growth and Opportunity Foundation.
Mr. Click holds a Master's of business administration from
the Gatton College of Business in economics and a Bachelor of
business administration from the University of Kentucky. We
appreciate you being here today and your wife.
Our next witness with us today is Mr. Preston Brashers. Mr.
Brashers is a research fellow in the Heritage Foundation's
Grover M. Hermann Center for the Federal Budget in Washington,
D.C.
Mr. Brashers has been with the Heritage Foundation since
2021. Prior to that, Mr. Brashers was a tax policy specialist
in the research and fiscal analysis division of the Washington
State Department of Revenue and a transfer and pricing manager
at PricewaterhouseCoopers. He also contributed to the analysis
for the Heritage Foundation's budget blueprint for fiscal year
2023 and the budget blueprint for fiscal year 2022.
Mr. Brashers holds a Ph.D. and Master of Science in
economics from the University of Kentucky.
Did you all know each other in school? Same?
And earned a Bachelor of Science in economics from the
University of Washington. I want to thank you for joining with
us today.
Now, it is my honor to yield to Chair Ernst to introduce
our next witness.
Senator ERNST. Thank you, Mr. Chair.
And I am pleased to have a fellow Iowan with us today. Mr.
Jerry Akers is the president of Sharpness, Inc. and MOCA, Inc.,
and is from Palo, Iowa. Mr. Akers started his journey as a
Great Clips franchisee and with the help of his two daughters
and son-in-law he now operates more than 40 franchises across
three different businesses in both Iowa and in Nebraska.
He holds a Bachelor's degree from Upper Iowa University,
the Peacocks right? That is right. The Fighting Peacocks.
Again, thank you for taking the time and making the trip to
Washington, D.C. to share with this committee your perspective
on the Tax Cuts and Jobs Act. And thanks to your family as
well.
Mr. Akers has a fantastic family and I hope to hear about
their experience with your business as well.
Thank you and I yield back, Mr. Chair.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize the Ranking Member from New York, Ms.
Velazquez, to introduce our last witness appearing before us
today.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Our final witness today is Ms. Anne Zimmerman, the Founder
and Owner of Zimmerman & Co CPAs, Inc., a public accounting
firm with offices in Cincinnati and Cleveland. Since the mid-
1980s she has provided financial and tax services to small
businesses and individuals and acts as the off-site CFO for
many businesses.
She also co-founded and sold a number of businesses,
including a large IT cloud company in 2017. She is currently a
Co-Chair of Small Business for America's Future, a small
business advocacy organization that helps to ensure
policymakers prioritize main street by advancing jobs and
equitable economic framework that works for small business
owners, their employees, and their communities.
She holds degrees in both business management and
accounting from the University of Cincinnati and Northern
Kentucky University. Thank you for being here this morning.
Chairman WILLIAMS. The gentlelady yields back.
And I want to thank all of you myself for being here today.
And before recognizing the witnesses I would like to remind
them that their oral testimony is restricted to 5 minutes in
length.
If you see the light in front of you turn red it means that
your 5 minutes is up and concluded and you should wrap up your
testimony. If you get around 5 minutes and hear this, you need
to stop. Okay?
And with that, I now recognize Mr. Click for his 5-minute
opening remarks.
STATEMENTS OF TOM CLICK, PRESIDENT, CHIEF EXECUTIVE OFFICER,
AND CO-FOUNDER, PATRIOT INDUSTRIES; PRESTON BRASHERS, RESEARCH
FELLOW, TAX POLICY, THE HERITAGE FOUNDATION; JERRY AKERS,
PRESIDENT, SHARPNESS INC. AND MOCA INC.; AND ANNA ZIMMERMAN,
FOUNDER & OWNER, ZIMMERMAN & CO CPAS INC.
TESTIMONY OF TOM CLICK, PRESIDENT, CEO AND CO-FOUNDER, PATRIOT
INDUSTRIES
Mr. CLICK. Chairwoman Ernst, Chairman Williams, and
distinguished Members of the Senate Committee on Small Business
and Entrepreneurship and the House Committee on Small business,
thank you for the opportunity to provide testimony on the
importance of permanently extending provisions of the Tax Cuts
and Jobs Act, TCJA, benefitting privately owned businesses like
Patriot Industries and our employees.
Since the passage of the 2017 Tax Cuts and Jobs Act, our
investments in equipment and workers have increased, fueling
economic growth at Patriot. If Congress does not act this year,
both our business and our employees will be hit with a massive
tax hike.
Furthermore, without the extension of Section 199(a),
businesses like Patriot are at risk of falling victim to the
ongoing consolidation of economic power that is shifting
control away from America's main street and further into the
hands of a few dominant and oftentimes foreign-owned
corporations.
My wife Sarah, who is with me here today, and I started
Patriot in 2010 with 1,000 square feet of space and one manual
conduit threading machine that I purchased on eBay for $5,000.
Like so many small businesses in America, we encountered both
triumphs and setbacks along the way.
In addition to navigating complex tax policies, burdensome
regulations, and the high cost of compliance, I faced a life-
threatening illness. If it weren't for our entire work family
pulling together during that difficult time, Patriot might not
have survived.
Thankfully, I recovered and together we built a company
that epitomizes the American Dream. Today, in 2025, Patriot has
three USA-based factories totaling 140,000 square feet and we
employ nearly 100 work family team members and we pay our bills
on time.
While Patriot is successful today, our humble beginnings
remind me of how fragile small businesses can be. The 2017 Tax
Cuts and Jobs Act was a game changer. It reduced financial
roadblocks for small businesses like ours, allowing us to
reinvest, expand, and create more jobs.
One of the most impactful provisions was the 20 percent
deduction for small businesses which gave pass-through entities
like ours the ability to grow at a faster pace and compete on a
level playing field with larger corporations.
Additionally, the expansion of immediate expensing laws
allowed us to write off the full cost of purchasing new
equipment rather than depreciating it over decades. This change
was critical for manufacturing companies like ours, which rely
on high-cost machinery.
Since 2017, we have invested nearly $4 million in advanced
manufacturing equipment. If the law reverts to the old system
business expansion will slow and small companies like ours will
be forced to delay investments that drive innovation and job
creation.
Beyond the business benefits, lowering income tax rates
across the board meant that every worker kept more of their
hard-earned money. The expansion of the child tax credit and
the doubling of the standard deduction provided additional
relief for working families, allowing them to save more and
invest in their futures.
If these tax cuts expire our employees will face a direct
pay cut through higher taxes, making it harder for them to
afford necessities and plan for their financial security.
Beyond immediate tax relief, another critical reason
Congress must act now is to prevent the devastating impact of
the estate tax, or as many call it, the death tax. Personally,
I would like to reframe it as the survivor's tax since the
people who actually have to pay it are the spouses and their
children.
Some believe the estate tax is a well-deserved tax on the
rich. In reality, it punishes family-owned businesses at the
exact moment the company is being passed to the next
generation.
At Patriot we have spent years growing our company,
reinvesting in equipment, expanding operations, and creating
jobs. But if I were to pass away unexpectedly, the federal
government could demand a 40 percent survivor's tax on the
business our family has spent our lives building.
To meet that burden, my family might be forced to lay off
workers or even sell the business entirely. The real danger
comes from how the estate tax applies to non-liquid assets.
Patriot maintains over $10 million in inventory across 11
states to mee the needs of our customers. This inventory along
with the heavy equipment we use is considered part of the
business' valuation when calculating the estate tax.
Unlike large corporations with massive cash reserves, small
businesses like ours don't have that kind of liquid case
available. The estate tax could easily cripple our ability to
keep Patriot in the family.
To plan for pain, the 40 percent survivor's tax, family
businesses must divert money away from hiring, expansion, and
innovation and instead use it on attorneys, consultants, and
insurance policies, which will ironically be valued as part of
the estate that is being taxed.
Estate planning should be a part of every company's long-
term strategy, not decided by a black swan event. I have seen
firsthand the benefits of the TCJA for our family business and
work family team. I urge Congress to permanently extend these
provisions as well as further reforms, such as the repeal of
the estate tax to support family businesses like Patriot
Industries, which are the backbone of our economy.
Thank you for the opportunity to share my perspective and I
look forward to the discussion here today. God bless you and
God bless America.
Chairman WILLIAMS. the gentleman yields back right on time.
I now recognize Mr. Brashers for his 5-minute opening
remarks.
TESTIMONY OF PRESTON M. BRASHERS, RESEARCH FELLOW ON TAX
POLICY, THE HERITAGE FOUNDATION
Mr. BRASHERS. Chairman Williams, Chairwoman Ernst, Ranking
Member Velazquez, Ranking Member Markey, and Members of the
committees, thank you for giving me the opportunity to testify
today.
My name is Preston Brashers. I am a research fellow for tax
policy at the Heritage Foundation in the Grover M. Hermann
Center for the Federal Budget. The views I express in this
testimony are my own and should not be construed as
representing any official position of the Heritage Foundation.
It is fitting that the title of today's hearing says, ``
Keeping Taxes Low for Small Businesses,'' as opposed to cutting
taxes. Some have mischaracterized what is at stake here.
The small business tax provisions from the Tax Cuts and
Jobs Act have been in place for nearly 8 years and if Congress
allows them to lapse, then American entrepreneurs and small
businesses would face a tax hike of more than a trillion
dollars over the next decade. So, it is worth emphasizing that
this is not about cutting taxes. It is about avoiding an
enormous tax hike.
Indeed, most small business owners would probably reject
the notion that their taxes are low in the first place. TCJA
included more than just tax cuts but also structural reforms,
simplifications, and base-broadening revenue raisers. In
addition to some permanent changes, TCJA temporarily suspended
certain flawed elements of the tax code that had punished
business owners and entrepreneurs who choose to invest in their
workers and in the American economy.
Those expiring provisions will be the focus of my testimony
today. TCJA addressed some of the more egregious problems that
existed in the tax code until 2017. For example, it makes no
sense to tax income from business investments before a business
has actually earned that income, but that is effectively what
happens when the tax system forces businesses to capitalize and
depreciate such business expenses over many years or decades
instead of allowing them to deduct those costs when determining
their current taxable income.
To address that problem, TCJA implemented full and
immediate expensing for capital equipment and machinery. For 5
years between 2018 and 2022, the tax treatment for these
formerly depreciable capital assets was corrected but,
unfortunately, full and immediate expensing, also known as
bonus depreciation, is now gradually sunsetting.
One of Congress' top priorities should be to lock in full
and immediate expensing not just for another few years but
permanently.
Similarly, Congress should address one of the unfortunate
compromises of TCJA, the 5-year amortization of research and
experimental costs. That provision is structured in a way that
delays to a later year 90 percent of the value of deductions
for expenses related to research and experimental activities,
including employee compensation costs, material and supply
costs, costs of obtaining a patent and certain operations,
management, and travel costs.
The resulting short-term financial hit from this
artificially accelerated tax liability can be severe for
startup companies with limited cash flow and limited access to
capital markets.
TCJA also expanded death tax exemptions, helping to shield
family farms and businesses from a devastating 40 percent
federal tax on assets passed down to family members. Allowing
the death tax exemption to be cut in half, which will happen if
TCJA expires, could be the death knell for some asset rich but
cash poor small and mid-sized family businesses.
Finally, no other expiring provision in TCJA had a larger
impact on the amount of taxes paid by entrepreneurs and small
business owners than the 20 percent pass-through deduction,
known as Section 199(a). While some reforms or improvements to
the design of 199(a) are certainly possible, simply letting the
provision lapse would be unthinkable to millions of American
business proprietors who claim the deduction.
Collectively, the expiring TCJA provisions benefiting small
businesses were an indispensable part of the 2017 legislation's
success. If lawmakers want to revitalize the economy and ensure
that American small business owners and entrepreneurs can
thrive, then extending these provisions should be a top
priority.
Lawmakers could multiply the economic growth associated
with these small business-related provisions by ensuring that
they are made permanent. Congress also has the opportunity to
build on TCJA's success for small businesses by expanding and
improving on expensing provisions in the bill, for example, by
mitigating the harmful phaseout of the Section 179 small
business expensing deduction.
Thank you.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Akers for his 5-minute opening remarks.
TESTIMONY OF JERRY AKERS, PRESIDENT, SHARPNESS, INC., AND MOCA,
INC., ON BEHALF OF INTERNATIONAL FRANCHISE ASSOCIATION
Mr. AKERS. Good morning, Chair Williams and Ernst, Ranking
Members Velazquez and Markey, and distinguished Members of the
committee. My name is Jerry Akers, and I am a franchisee
business owner of Great Clips and the Joint Chiropractic. I own
and operate with my wife Nikki and two daughters Sam and Shelly
32 Great Clips and four of the Joint Chiropractic locations in
my home state of Iowa, as well as Nebraska. I am also a co-
author of a bestselling book, `` Live It to Own It.'' It is a
franchise bootstrap guide book leading to the formation of Z-
Dynamics which is tasked with paving the way to success for
franchise business owners.
I appreciate the invitation to appear before this committee
to share my story of small business ownership and discuss the
views of local business owners everywhere as it relates to tax
policies that support business, our workforce, and our local
economies.
I have experienced firsthand the remarkable impact that
franchise businesses can have on local economies and
communities, job creation, and economic growth. My wife and I
have created a community of our own employing over 250 team
members that have been part of our system over the past several
years.
These team members are treated as an extension of our
family and receive industry-leading wages and Fortune 500
benefits while working for a small franchise organization. Much
of our continued success in our business and team members is in
part due to the many important provisions of the Tax Cuts and
Jobs Act.
Many of the individual and small business provisions are
expiring at the end of this year and are critical to locally-
owned franchise businesses. I appreciate the urgency with which
Congress is seeking to address these as the uncertainty created
by their looming expiration is giving small business pause as
they make investment decisions that will allow them to grow and
create jobs.
First, much like the rest of the small business owners, the
199(a) tax deduction for qualified businesses' income has been
an important lifeline. It has enabled me and almost all
franchisees to increase investment in business driving growth
and innovation, while the extra financial breathing room has
allowed us to hire more employees and provide better benefits
to existing team members.
More importantly, this deduction has helped level the
playing field allowing businesses like mine to compete with
larger corporations and provide a level of financial stability
that has been valuable.
The thought of these hard-earned gains being jeopardized is
deeply unsettling. It is not just about numbers. It is about
the livelihoods of families, the vitality of communities, and
the spirit of entrepreneurship.
The TCJA also allows businesses to immediately write off
100 percent of the cost of capital investments in qualified
property. For our business, the influx of cash flow is crucial
for reinvestment, remodeling, and expansion, and managing
operational cost.
Unfortunately, bonus depreciation has already begun to
phase out. It stands at 40 percent for this year and it will be
phased out entirely in 2027 absent congressional action. While
the bonus depreciation provision provided a substantial boost
to small business, its phase down creates a growing concern
about increased tax burdens and potential disincentives for
investment.
Third, TCJA allowed an increase in the estate tax exemption
to $11 million throughout the end of this year. This provision
is critical to allowing family businesses like mine to be
passed down to the next generation without selling or taking on
crushing debt.
This is very personal to me. Our daughters are minority
partners at this time in our Great Clips location and will
eventually own 100 percent of that business. Whether or not
they do and that generational transfer can happen, hopefully,
will happen here in Congress and may well depend on what
Congress does as it acts.
Other provisions like the business interest deductibility
has been crucial for the franchise community. Prior to 2022,
business expense deductions were limited by Section 1630(j) to
30 percent of their earnings before interest, tax,
depreciation, and amortization, or IBITDA. Interest deductions
are now limited to stricter limitation.
This change combined with rising interest rates is proving
to make incremental investments by small businesses much more
expensive. On average, a business affected by the change could
see a threefold increase in its incremental tax burden, facing
both higher interest rates and financing improvements and a
very high tax rate.
The truth is for many small business owners like me, the
TCJA provisions have been a lifeline. It has provided a sense
of stability allowing me to reinvest in my business, hire new
employees and provide better benefits and weather economic
fluctuations.
The prospect of losing that feels like a rug being pulled
out from under me. In the already volatile economic climate,
the added layer of tax uncertainty creates a sense of anxiety,
especially for those who operate on tight margins.
Small businesses are accustomed to taking risk but the
threat of a significantly higher tax burden feels like an
unfair and unpredictable obstacle in franchising and all small
businesses.
I am ready to be a resource for this effort and I thank you
again for the opportunity to testify. I am happy to answer any
questions.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ms. Zimmerman for her 5-minute opening
remarks.
TESTIMONY OF ANNE ZIMMERMAN, FOUNDER AND OWNER, ZIMMERMAN & CO
CPAS, INC., SMALL BUSINESS FOR AMERICA'S FUTURE
Ms. ZIMMERMAN. Chairman, Ranking Member, and distinguished
committee Members, thank you for this opportunity to testify
today. I am Anne Zimmerman, president and CEO of Zimmerman & Co
CPAs and Co-Chair of Small Business for America's Future, a
national coalition of small business owners and leaders.
As a tax professional serving the small business community
and a small business owner myself, I bring a dual perspective
to this discussion. I see firsthand how the tax code impacts
our ability to form, grow, and compete in a marketplace
increasingly dominated by large corporations.
Small businesses are the backbone of our economy
representing 99.9 percent of all U.S. firms, employing nearly
half of private sectors workers, and contributing 43.5 percent
of GDP. Today, these businesses face challenges amid mounting
economic uncertainty. The NFIB Small Business Confidence Index
shows confidence falling sharply in Q1 2025, largely due to
unpredictable tariffs and global trade tensions that have sent
markets tumbling, creating fear and uncertainty for planning.
A recent survey of our network shows 51 percent of
respondents have postponed expansion and hiring until policies
stabilize. At this moment of vulnerability, we need a tax code
that provides stability and supports our success.
As we approach the expiration of TCJA provisions we must
honestly evaluate whether they have delivered on their
promises. The evidence clearly shows that for most small
businesses they have not.
The Congressional Research Service found that Section
199(a)'s benefits area skewed. Over half the total dollars went
to business owners with incomes above $500,000 who represent
less than 5 percent of eligible taxpayers.
I see this inequality daily in my practice. I recently
prepared a return for a restaurant owner who employs 11 people.
He received just $700 in savings from 199(a), hardly
transformative for his business.
The same day I prepared a return for someone with over $4
million in income who received $6,700 for the same deduction
simply because of his investments in real estate partnerships.
He employs no one.
A survey of small business owners in our network confirms
these aren't isolated cases. Only 6 percent increased business
investment or raised wages and 3 percent hired more employees.
Most telling, 43 percent reported no positive impact at all.
So instead of simply extending TCJA provisions that help
some but left most behind, here are some solutions that
Congress should implement to help Main Stret. Exempt the first
$25,000 of small business profit from federal income tax to
deliver immediate relief to entrepreneurs in critical early
years.
Simplify the tax code to remove the financial burden that
creates a competitive disadvantage.
Create a small business standard deduction to reduce
compliance costs for early stage businesses.
Establish a tax credit for hiring first employees to help
entrepreneurs make the crucial leap to employer status.
Look for responsible ways to pay for tax reform that level
the playing field for small business without slashing valuable
programs like Medicare, Medicaid, and Social Security.
Increasing the corporate tax rate from 21 percent to 28
percent would ensure corporations pay their fair share while
generating substantial revenue.
Close unfair loopholes that disadvantage small businesses.
Eliminating just the roundtripping loophole alone would
generate nearly $70 billion over 10 years for deficit
reduction, healthcare costs, or small business support.
Continue IRS service improvement and modernization plans.
This is crucial. The IRS was able to collect more than $1.1
billion in unpaid tax debts from the top 1 percent in 2024, up
from just $38 million a year prior.
Ensuring wealthy individuals and large corporations pay
their fair share generates significant revenue to help our
communities.
The expiration of the TCJA presents a rare opportunity to
create a tax code that truly supports all American small
businesses and we should seize it.
Thank you.
Chairman WILLIAMS. The gentlelady yields back.
And we will now move to the Member questions under the 5-
minute rule.
I recognize myself for 5 minutes. Mr. Click, in your
testimony you talk about the importance of reinvesting in your
business with the money you save with the small business pass-
through deduction. This critical provision, Section 199(a),
leveled the playing field for small businesses and fueled their
growth.
So the question is, if this provision expired how would it
limit your ability to reinvest and grow your business?
Mr. CLICK. Without equipment we would grow slower. We would
still be methodical. We would still invest in the company but
being able to expense everything in the first year makes it a
lot easier to accelerate your plans. So, our 10-year plan might
become a 7-year plan, a 5-year plan.
Chairman WILLIAMS. Thank you.
Mr. Brashers, the 2017 Trump tax cuts allowed small
businesses to immediately expense research and development
costs which incentivized innovation in the defense industry
tremendously. That provision expired in 2022 and here we are a
few years later while China and other foreign adversaries are
taking advantage and are offering a 200 percent tax credit for
the same research and development. So, wouldn't you agree that
this has put our national security at risk?
Mr. BRASHERS. I think the research and development
amortization is a bad policy to have 90 percent of the
deduction pushed off after the first year. I think it is
especially harmful to small businesses. But, as you say, to any
company that is doing research and development it is going to
have harmful effects.
Chairman WILLIAMS. You know, in terms of U.S. global
competitiveness and American security what will the future look
like if Congress fails to reinstate immediate R&D expensing?
Mr. BRASHERS. I think you are certainly going to see if R&D
[expensing] is extended and brought back, because it has
expired at this point, I think that will boost the amount of
research and development that is happening. I think it is going
to be dollar for dollar perhaps the biggest bang for the buck
in this package of tax provisions.
It is just a very high priority for so many businesses and
that it just makes no sense for the tax code to penalize
companies for engaging in research and development activities
that are going to benefit not just them but their employees and
the American economy and others that are going to be able to
benefit from those innovations that they come up with. So, I
think it is critical.
Chairman WILLIAMS. Mr. Akers, as a franchise owner, which I
am also a franchise owner, you know how important it is that
your equipment and machinery is up to date. You want to be able
to deliver and provide the product for your customers but this
investment comes at a cost and that is why Congress included a
100 percent bonus depreciation, which we have talked about this
morning, in the TCJA.
However, that provision that we talked has already begun to
phase out, so what did this provision help you buy the tools
and equipment needed to make your business a success and give
customers the service?
Mr. AKERS. Thank you for the question. The bottom line is
when you are in a retail-oriented business you have got to be
at the top of your game. You have got to be able to have new
equipment. You have got to have equipment that is cutting edge.
You have got to have things that make an impression.
You simply cannot do that if you are held back by not being
able to deduct that at the right time. If it is spread over
several years we are going to delay those improvements.
By the way, that also impacts our throughput which means it
hurts employment because we don't need as many employees if we
can't be on top of it.
Chairman WILLIAMS. Well, if you get a chance to write it
off it opens up more cash to buy something else, right, and----
Mr. AKERS. Absolutely and that many times goes back to
employees, whether it is increased benefits or increased wages.
Because we have got X amount of money to spend we have got to
decide where to do it. If we are paying it in, you know, longer
deductions it is going to be hard to spend that on the
employees.
Chairman WILLIAMS. I yield back.
And I now recognize Chair Ernst for 5 minutes of her
questioning.
Senator ERNST. Yes. Thank you, Chairman Williams.
Mr. Akers, again, thanks for making the trip out here to
Washington, D.C. and for representing Iowa small business.
As you know, the TCJA provided significantly higher
exclusions from the estate tax for families dealing with the
death of a loved one. This is an issue that impacts our
farmers, business owners, and capital-intensive industries and
owners like yourself who have built a successful enterprise
that your family helps to operate today. Personally, I support
an end to the death tax altogether.
That said, can you discuss how important the estate tax
changes from the TCJA are for you and your family, your
daughters and son-in-law, and what you have had to do in
anticipation of losing the higher exemptions under the TCJA?
Mr. AKERS. The bottom line is we are stimulating the
economy by hiring really smart CPAs and attorneys to try and
figure out a way to do this without letting our daughters lose
it.
I am very passionate about this. I am a farm boy from Iowa
that comes from very little, and we have built up a really good
business over the years with one intention and that has to have
something to pass down to the next generation.
That is going to happen. The only question is what will
Congress do to help allow us to make that happen without the
kids taking on multi-millions of dollars in unnecessary loans.
Senator ERNST. Yes, thank you, Jerry.
And, Mr. Click, as well, can you answer that? Do you have
any concerns about the estate tax and how that will affect your
family?
Mr. CLICK. Yes, absolutely. We do have a plan in place but
just removing the estate tax, the survivor's tax, would give me
a lot more peace of mind.
Senator ERNST. Yes, thank you.
Mr. CLICK. We have three children just now coming into a
phase of their lives where they might be interested in the
business.
Senator ERNST. We hope they are.
Mr. CLICK. I do.
Senator ERNST. And, Mr. Click, again, thanks for being here
today as well. The changes to bonus depreciation and immediate
expensing in the TCJA were transformative and nearly every
Iowa-based manufacturer I have spoken to has made it clear how
important it is to them in ensuring they can maintain and
expand their operations.
So, can you give a little more detail to that and why bonus
depreciation and immediate expensing are so important to our
small businesses in capital-intensive industries like
manufacturing equipment?
Mr. CLICK. Yes. The equipment is very expensive. It is
something that is a great asset for many, many years but it
does wear out over time and you need to replace it. You need to
repair it.
And if you are a business like Patriot where you are intent
on expanding, new locations require a completely new set of
equipment.
Our most recent factory was created down in Houston, Texas.
It was about a $2 million investment. Most of that is four Haas
CNC Machine Centers, sorry, five Haas CNC Machine Centers and
all the other support equipment that goes with that. Being able
to deduct that immediately makes it a lot easier for us to look
for the next location.
Senator ERNST. Yes, 2 million bucks. That is pretty hefty
for small business so----
Mr. CLICK. That is a good value. That is a good value.
Senator ERNST. Yes, absolutely.
Mr. Akers and Mr. Click, as our small business witnesses
here I want to know how you and your staff will be affected if
the TCJA is not extended? What are the one or two things you
will have to do to keep your businesses afloat, and what does
that mean for your workers?
And, Jerry, we will start with you, please.
Mr. AKERS. Yes. As I mentioned before, there is a limited
amount of money to go around in a small business like ours so
we have to make decisions about it if this is not put back in
place, frankly, that money will end up coming from our
employees at some point in time in only that it will slow down
the improvements in wages and it will slow down the
improvements in benefits
So again, we want to be able to do both. We want to be able
to continue to modernize and grow and expand and then take care
of our employees, but we cannot do both without the help of the
TCJA.
Senator ERNST. Thank you.
And, Mr. Click?
Mr. CLICK. Yes. The tax hike on them personally is probably
the first thing that everybody is going to feel but it will
slow down the acceleration of the business. And over the years
we have added benefits. When we started we had no health
insurance. We had no 401(k). We have both of those now.
We have funds set aside for the employees. We pay bonuses
every year. There is only one pot of money for this and this is
a component that will help make sure that we manage that pot of
money appropriately and for the employees and for the work
family and for the company.
Senator ERNST. And thank you both.
And, Mr. Chair, I just want to note that both of them have
responded that much of the return that they get from the TCJA
they are rolling right back into their employees, whether it is
wages, benefits, bonuses.
So, thank you both for representing our small businesses
today, and I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Ranking Member Velazquez for 5 minutes.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Ms. Zimmerman, the president just unilaterally enacted
significant tariffs on virtually every country except Russia.
Can you discuss the biggest economic policy blunder in the past
century and explain how this will disproportionately harm small
businesses?
Ms. ZIMMERMAN. Thank you. Absolutely. The small business
uncertainty index is higher than it has been, I think the
second highest ever, even higher than COVID right now. The
uncertainty is killing small businesses. They can't plan. They
don't know if they are going to open a new one.
And I spoke just recently with the gentleman that owns a
coffee shop out west and he was already $50,000 into opening
his second location and he is having to put that on hold simply
because of the tariffs that have been enacted. He is going to
pay it on everything that comes in. He can't negotiate.
We as small business, truly small businesses, don't have
the negotiating power that a large business has, so for his
situation Starbucks can go to their suppliers and say I am 50
percent of what you sell. And they can negotiate. They are not
going to get the whole cost of that.
But then there is a watershed effect that comes down that
we as the small businesses are going to pay even more of it
because the suppliers have to make it up.
Ms. VELAZQUEZ. Thank you. This is just the beginning.
Without the tariffs even in effect the Atlanta Fed has dropped
the real-time GDP estimate for the first quarter to -3.7
percent. Consumer sentiment has crashed to the lowest level in
years and inflation expectations are higher than they ever were
throughout the Biden administration.
People understand this will be catastrophic. The share of
consumers expecting higher unemployment over the next year is
the highest since 2009, and these were all measures taken
before Trump's tariff announcement.
Ms. Zimmerman, so many Americans feel that the game is
rigged and small businesses agree. According to your group's
survey, 90 percent of small businesses think the tax code
favors large corporations.
Based on your conversations with small businesses, what
makes them feel this way?
Ms. ZIMMERMAN. Well, they don't get--a true small business
isn't really truly on a level playing field, so yes, bonus
depreciation may be great but we already have 179 that up to
$1.2 million you already got to write that off.
So, the small businesses I know generally don't buy more
than $1.2 million in equipment each year. That is a large one.
I mean, there are some very successful business people here but
90 percent, I believe it is, or 75 percent of the small
businesses in this country make 75,000 or less.
The million dollars is not what they are worried about.
Surviving, having an employee, being a part of their community,
we as the true main street people can't separate community from
employees from our business.
Ms. VELAZQUEZ. You know, I find it astonishing that my
colleagues act as if the pass-through deduction is the be-all
and end-all of small business tax cuts. Sure, everyone who can
navigate its complexity gets a little something but with over
half of the total benefit going to the top 1 percent we need to
seriously consider reform before we can move forward
responsively.
Ms. Zimmerman, on top of the tax code that favors the
wealthy, Republicans are proposing steep regressive tariffs and
a new tax cut for the rich paid for by gutting Medicaid by $80
billion, education by over $300 billion, and nutrition programs
by over $200 billion. The goal seems to be funneling wealth
upwards from the middle class to the rich. What impacts do you
think this will have on small businesses on the trust of our
institutions?
Ms. ZIMMERMAN. An absolutely devastating impact.
Ms. VELAZQUEZ. I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Ranking Member Markey for 5 minutes.
Senator MARKEY. Thank you, Mr. Chairman. The announcement
of President Trump's new tariffs should actually be called
obliteration day instead of liberation day. Liberation day for
Trump is taking us back to the days of Smoot-Hawley, Herbert
Hoover, and the eve of the Great Depression.
Foreign countries have already started retaliating with no
end game in sight. He is making it up as he goes along. And
Trump's reckless actions will raise costs for small businesses
and working families.
We have already heard from small businesses across the
country concerned about how they will weather the impacts from
Trump's trade war. For example, in Massachusetts, a small
business in the hospitality industry told my office that their
suppliers, which include local restaurants, grocers, and other
small businesses, have already raised their prices just with
the threat of a tariff war.
So, Ms. Zimmerman, how will tariffs hurt small businesses,
including the ones that you work with?
Ms. ZIMMERMAN. It puts them at a great disadvantage. As I
said earlier, we don't have the negotiating ability and the
negotiating power. We also have thinner margins and so the
tariffs are harder for the smaller businesses to take.
And the economic uncertainty, I mean, they are on one day,
they are off one day, they are on one day. You know, somebody
tweets that they might be postponing and then the market jumps.
How do you plan? 51 percent of our network said we can't plan.
We are going to put everything on hold.
Senator MARKEY. And for a small business, a truly small
business, that is potentially catastrophic. Is that right?
Ms. ZIMMERMAN. It absolutely is. And the numbers in a small
business, too, that it would take to put us under is so much
different than the big numbers that you all have to deal with
in your work every day.
You know, if we can save $70 billion by changing the
roundtripping, closing up that one loophole, how far would that
go for small business? How many individual main street
businesses would that keep open?
Senator MARKEY. So according to the Urban Institute, in
1963 the top 1 percent had 36 times the wealth of the middle
class. Since then that wealth gap has almost doubled with the
aggregation of the wealth in the upper one percentile.
Entrepreneurship can help close that gap between the ultra-
wealthy and everyday Americans, however, policies that grow the
wealth gap will hurt entrepreneurs, given that 75 percent of
small businesses use personal savings to start their firms.
America's tax policy should not provide small businesses
with pennies while large businesses and wealthy individuals
rake in millions.
As I mentioned in my opening, even the so-called small
business tax deduction, or section 199(a), does not primarily
help true small businesses. The top 1 percent of all earners
take home 55 percent of that tax incentive. That is not a small
person. You are making over a million. You are not in any need
of a tax break right now.
Ms. Zimmerman, as an accountant you have helped countless
businesses large and small file their taxes. In your
experience, what kinds of businesses benefit most from the so-
called small business tax deduction?
Ms. ZIMMERMAN. Well, obviously, larger small businesses is
the first. I can tell you that 43 percent of our small business
owners told us they couldn't even figure out if they were
eligible for it because they don't have accountants.
You know, if you are making $75,000 a year how much do you
have for all that tax planning available? You are feeding your
family. You are feeding your neighbor's family. The complexity
is beyond crazy. It doesn't allow for certain firms. It doesn't
allow for this, it is for that.
Even I spent a long time trying to weed through it.
Senator MARKEY. Yes. So, that is what really bothers me. I
see Elon Musk now. He is saying, well, the deficits. It is a
huge problem for our country. We have got to destroy the
Department of Education, destroy NIH funding. We are going to
have to go in and loot Medicaid that serves about, you know, 30
percent of our country.
Grandma and grandpa are in nursing homes. 70 percent of
people in nursing homes are on Medicaid and half of them have
Alzheimer's. He is saying loot all that money. Give it to tax
breaks.
And who gets it? People who make more than $1 million a
year. Can we really afford that because we have to take the
money from grandma and nursing homes, kids who need an
education? These are just crocodile tears coming from Elon Musk
and the Republicans about their concern about deficits even as
they call for huge tax breaks for the wealthiest in our
society.
Chairman WILLIAMS. Next we have Congressman Stauber from
the great state of Minnesota for 5 minutes.
Mr. STAUBER. Thank you very much, Mr. Chairman. I see my
colleagues on the other side of the aisle are bringing out
their old, dusty playbooks again. I would just say when we talk
about tariffs I represent northeastern Minnesota.
President Trump put the 232 steel tariffs that saved the
iron range and they were so good that President Biden kept them
on. We have to understand the opportunities that we have
because the secondary positive effects in northeastern
Minnesota because of those tariffs they are still in business
today.
And remember, northeastern Minnesota mines the iron ore
that makes almost 82 percent of this nation's steel, which is a
strategic national security issue. So, the tariffs that
President Trump put on the steel industry and President Biden
kept on worked. They saved the iron range. And as the iron
range in northeastern Minnesota go, so does the state of
Minnesota.
Chairman Williams and Chairwoman Ernst, thanks for holding
this meeting today. In northern Minnesota, as I said, small
businesses they are not just the backbone of the economy. They
are the heart of the economy, whether it is a precision
manufacturing facility in Duluth, Minnesota, a family-run
logging operation in Grand Rapids, or a fifth generation farm
in Chisholm, or a manufacturing facility in Forest Lake.
These are the folks who create jobs, train young workers,
and keep our small rural towns alive. That is why the Tax Cuts
and Jobs Act of 2017 was so important. It wasn't just a tax cut
but a signal that the government wanted our small businesses to
take our economy to that next level.
The 20 percent deduction for pass-through businesses under
Section 199(a) leveled the playing field for small firms
competing against large corporations. This provision has helped
thousands of Minnesota pass-through businesses like S-
corporations and sole proprietors reinvest in their operations,
raise wages, and hire new employees, as many of you testified
today.
Mr. Click, your business has seen remarkable growth over
the past 15 years. If the Section 199(a) deduction sunsets at
the end of this year, how would that impact your ability to
invest, hire, and even stay competitive?
Mr. CLICK. It is all about the equipment. You know, our 10-
year plan we would like to have five more fabrication
facilities around the country. And as I said earlier, each one
costs about $2 million, so that 10-year plan without the
Section 199(a) coming back they push off from 10 years to 12
years or longer.
Mr. STAUBER. You have you have to stay competitive.
Mr. CLICK. We have to stay competitive. We have to keep
advancing. We have the most advanced equipment in this
industry. We have more advanced equipment than anyone else in
the industry combined, and I would like to keep that.
Mr. STAUBER. Yes. And the way you survive is in
continuously investing in that advancement in the equipment so
you can stay competitive.
Mr. CLICK. Absolutely.
Mr. STAUBER. Because if you don't, you are going to be out
of business. Will that be true?
Mr. CLICK. It would be impactful. I don't think we will be
out of business. We basically reinvented threading conduit and,
again, we want to keep that title and keep growing.
Mr. STAUBER. Yes. Capital purchases like equipment or new
technology are foundational to long-term growth.
Mr. Akers, from your experience as a franchise owner how
did 100 percent bonus depreciation improve your ability to grow
your business? And what risk do you see if this benefit is not
made permanent?
Mr. AKERS. Bottom line is since that was put into place we
have grown our business by about 25 percent in the number of
units, which is a huge explosion for the Midwest for rural
America, as you said. With that goes 50 jobs or some something
in that neighborhood.
So, being able to reinvest in that has accelerated our
growth and will continue to accelerate the growth in the
future, as well as allow us to give more benefits and wages to
our employees.
Mr. STAUBER. You know, you just said the loss of 50 jobs.
That is real in small town Iowa or small town Minnesota. People
in this town don't understand that. We talk about small
businesses being the engine of our economy. We have the
opportunity right now to do that.
I was a small business owner for 31 years. It wasn't easy.
It wasn't easy raising four kids and my brothers would say we
have got to come up with $7,000 apiece by next Friday because
we can't meet net 90.
You folks are the engine of our economy. Don't ever forget
that. Don't let this town change your mind or anybody on this
dais change your mind. Small businesses are the engine of our
economy. They are going to make America even better.
Your private investment, you have got to reach in your
wallet, take that risk for the American Dream and be successful
and employ those people that live in our rural small towns. We
are depending on you. Don't quit ever.
And I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize another person from Kentucky, the great
state of Kentucky, Representative McGarvey for 5 minutes.
Mr. MCGARVEY. Thank you, Mr. Chairman. I did see that Mr.
Click and Dr. Brashers definitely went to the University of
Kentucky, which I appreciate.
I also want to take a moment right now to just say we are
really thinking about all of the small business owners in
Kentucky who are dealing with the historic flooding right now
in our state. It is really bad and it is ravaging many parts of
our state and small businesses are crushed right now dealing
with that.
So, obviously, now is not the time to be cutting back on
something like FEMA or to hollow out an agency like the Small
Business Administration which helps the federal relief efforts
for our small businesses hit with this uncertainty.
We have talked a lot about tariffs say. You know, I want to
talk a little bit about tariffs as well. Tariffs are a tool. A
tool is neither good nor bad. A hammer is a tool. It is pretty
good for putting a nail in a wall. It is not so good for fixing
your iPhone.
How you use a tool matters and Donald Trump is wielding
this tool in a chaotic way without any strategy, without any
plans in a way that is definitively hurting businesses, small
businesses, and American workers.
One of the ways he is hurting our country with his current
tariff plan is just the uncertainty of it. We had a day a
couple of weeks ago where tariffs were on on Monday, off on
Tuesday, on on Wednesday, off on Thursday.
Right now people are unsure what he is doing. If you read
any coverage of this, conservative, liberal, whatever, they are
saying what is the president actually going to do? Is he going
through this? How does this matter?
And the uncertainty that small businesses face every day
regardless of what the president decides to do when he wakes up
in the morning is enough already, but this uncertainty that he
is causing by escalating these trade fights on average every 3
days since taking office is not good for business. And the
markets right now certainly reflect that.
So, I want to ask you, Ms. Zimmerman, I am sure you have
heard a lot from terrified small business owners who are
grappling with this uncertainty over the last several weeks.
How does this uncertainty alone harm small businesses?
Ms. ZIMMERMAN. My colleague who is here with me today, a
friend and colleague, has a manufacturing company in
Pennsylvania, been in his family for 100 years. Barely survived
COVID with all of that going on, came out on the other end
successful, and now he is being hit with this, which is much
worse than what he was hit with there.
His supplies come in from out of the country. He has no
negotiating power. He doesn't know how much to order for his
Christmas, you know, season because he has no idea. How do you
figure that out when you have no idea?
And if I might say, Representative, the words level playing
field have been used by all of us many of times today. How is a
40 percent tax cut for the biggest businesses and a mere 20
percent deduction, not tax cut, but deduction, an even level
playing field when that is what the small business has gotten?
Mr. MCGARVEY. Right and it is not.
Ms. ZIMMERMAN. That is not level.
Mr. MCGARVEY. It is not a level playing field and what we
want for our small businesses, for main street, which remains
the backbone of the American economy. We were talking about
these tariffs again and why is it, you have mentioned this, but
drill into why the tariffs cause such disproportionate harm to
these small businesses?
Ms. ZIMMERMAN. Well, I think it is the thin margins. It is
the inability to negotiate. You know, if I am selling a widget
and I am truly main street down the block from me that is my
neighbor that is running that store. How does he have any
negotiating ability when Walmart has already told that same
supplier that you will not pass that whole tariff on to me or I
will go somewhere else.
Because my neighbor when she does that they don't care. Go
ahead. I am going to take care of Walmart.
Mr. MCGARVEY. Flipping from the tariffs now to the tax
increases, which you talked about, if the House votes this week
on the full extension of the Trump tax bill, which would give
the top 0.1 percent of Americans disproportionately, not to
mention the top 1 percent of Americans, while giving the rest
of us very little, one of the ways that they are trying to pay
for that--it is still going to add to the debt.
One of the ways that they are trying to pay for that is by
cutting healthcare. That will also have an impact on small
businesses, won't it?
Ms. ZIMMERMAN. Absolutely. We help our employees navigate
that and it will make it impossible.
Mr. MCGARVEY. Thank you, Mr. Chairman. I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Van Duyne from the great
state of Texas for 5 minutes.
Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
I want to thank our witnesses for joining us here today.
Time and time again what we hear loud and clear from businesses
all across the country is they need certainty, parity, and
simplicity in the tax code. And as we move through the budget
reconciliation process we must keep small businesses at the
front and center of our priority.
I am sitting here today listening to Members on, you know,
colleagues on the other side of the aisle saying that the idea
that under the Biden administration the economy was just fine
and dandy, that is an absolute lie.
Under the Biden administration we saw twice the inflation
that we have seen under the Trump administration. And when you
look at stats from the Bureau of Labor Statistics that
indicates that real average hourly earnings for private sector
employees actually dropped 2.24 percent between 2021 and 2024.
That is not a great booming economy.
On the flip side, when you look at the TCJA results, the
bottom 50 percent of earners paid less income tax than ever
before, and the bottom 20 percent saw their federal tax rate
dropped to the lowest level in 40 year. So somehow the idea
that working Americans did not benefit from the TCJA, again, is
an absolute lie.
The tax cuts also enabled businesses to raise wages leading
to a 4.9 percent increase in real wages between 2018 and 2019.
That is the fastest wage growth that we saw in two decades.
Additionally, real median household incomes in the U.S.
rose by $5,000, a larger increase than the previous 8 years
combined. And overall, individuals and families received $3 out
of every $4 from the total 2017 tax cut package demonstrating
its direct benefits to American households. So, the idea that
only large corporations are benefiting from this, absolute lie.
So earlier this year, I joined my colleague Representative
Smucker in co-sponsoring the Main Street Tax Certainty Act to
make the small business pass-through deduction permanent.
I have also signed on to Representative Arrington's ALIGN
Act to restore and make full bonus depreciation permanent.
I have joined Representative Estes on his American
Innovation and R&D Competitiveness to permanently allow for
immediate R&D expensing.
These three provisions, cornerstones of President Trump's
signature tax reforms, have brought about some of the greatest
investments in innovation in our nation's history and the
numbers back it up.
According to NFIB, letting the 199(a) deduction expire
would force 60 percent of small businesses to raise prices and
nearly 44 percent to delay or cancel capital investments. On
the other hand, making the deduction permanent would create 2
million jobs annually and that is more than 8,000 in just Texas
24 in my district alone.
So, Mr. Click, how would your business be harmed if the
section 199(a) deduction were to sunset?
Mr. CLICK. Again, as I have said, it would slow us down. It
would also slow down our plans to make more products here in
the USA that, unfortunately, the country has stopped making.
And I know there is a lot of talk about tariffs. I am
definitely not a tariff expert but I can tell you from personal
experience when my wife Sarah and I put the company together we
made sure that our products were made here in the USA. And we
are the only company that guarantees all of our aluminum
products are made here in the USA, mostly in Virginia, our
feedstock.
The products that we import represent less than 2 percent
of our revenue, and again, we have been through the tariff
discussion before and see minimal impact from that. But I don't
want to slow down. I want to continue. I want to make those
products that we have to go to other countries for right now.
Ms. VAN DUYNE. Having an aluminum manufacturer in my
district and listening to them complain about how the unfair
competition with the rest of the world that the U.S. government
has placed on them, they really appreciate that. And I thank
you for your buying from American business members.
Mr. Brashers, in your research you emphasize the role of
full and immediate expensing and replacing the IRS' complex
rules for depreciation. Assuming that you agree that businesses
have to deduct capital investment expenses over 20 years is
impractical, just how important is full and immediate
expensing, especially to capital-intensive small businesses?
Mr. BRASHERS. Well, just to give you some idea, just think
about the inflation that we have just been going through where
we had 8 percent, 9 percent, even 5 percent inflation, and you
think about that deduction and you are telling business owners
that they are not able to actually claim that deduction for 20
years.
What ends up happening is ultimately you are only
potentially getting about half of the deduction for some of
these 20-year assets. And so it is quite harmful.
Ms. VAN DUYNE. All right, thank you very much.
And I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Simon from the great state
of California for 5 minutes.
Ms. SIMON. Thank you. Thank you, Chairs and Ranking Members
and thank you witnesses for coming this way and telling your
stories and giving us a wonderful perspective.
In reading the reading materials in the homework, it is to
me clear that this hearing is not necessarily about the
prosperity of main street.
In fact, it seems as if many of us are pretending that tax
cuts for the wealthy will somehow trickle down to the small
business owners who are being pushed to the edge right now.
And yes, 2 years ago, 6 years ago, 10 years ago, 20 years
ago small business owners in this country have consistently
struggled in many of our communities to make ends meet. This
hearing is actually about ignoring the fact that the real
economic emergency is one that we are not talking about right
now across the country.
There are tens of thousands of workers, many of them
veterans, first generation Americans, many of them disabled,
running small businesses, many folks who have been fired from
our federal government also first generation Americans, many of
them veterans, many of them disabled.
These are not tech giants but we fired folks from our own
government. Small businesses can't safely rely on an SBA in
this moment that is being dismembered in real time. We have
talked to hundreds of small business owners in our office and
they have said clearly they can't get through. No one is
answering their request.
And if the SBA has to manage $1.6 million in student loans
then they can't focus on the conversations that we are having
today, the mom and pop vendor on main street, on Broadway
Stret. We are not investing in main street in having these
conversations. We are ripping out the social safety net and we
are calling it fiscal responsibility.
So, let's stop pretending. The economy is not working for
working people. It is not creating opportunity. In this moment
we know that is true. It is not creating a class of folks who
can and thrive in real time.
In fact, we are discarding people, skilled workers and
small business owners at the same time with no support, no
capital, and no roadmap moving forward. If this hearing was
truly about prosperity we would be talking about target
investments, targeted investments that expand access to not
only capital and real resource in real time, but also expanding
access to healthcare, solidifying public infrastructure, and a
tax system that honors work, not wealth.
Instead, we are watching a slow collapse, a real collapse,
and there is no up from here unless we change course.
I have a question to Mr. Zimmerman and thank you for being
here, excuse me, Mr. Zimmerman. Thank you for being here today.
Ms. Zimmerman, you serve real business owners, real folks,
people holding together families, communities, and folks who
are disbursing paychecks to real everyday folk in community.
And in this moment, as the administration disbands critical
safety nets, disbands the services that are supposed to support
these small business owners, disbands the SBA with no clear
strategy moving forward, what are your clients afraid of most?
And what would an actual true investment right now, not
performative tax cuts, look like for them?
Ms. ZIMMERMAN. My clients' risk is not surviving through
this uncertainty. It is not surviving through the tariffs. We
can talk about maybe tariffs being, as you said, a tool and
maybe being successful coming out the other side but they are
not going to be there on the other side for this. They are
going to be gone by then.
And those are my neighbors. And by cutting Medicaid and
Medicare and all these safety nets, the SBA, even the IRS where
we are taking away tools that they are using directly, you
know, my colleagues who have larger businesses maybe even
employ 100 or 200 people, they are not going to the SBA
directly. They have lawyers and bankers and stuff.
Ms. SIMON. That is right.
Ms. ZIMMERMAN. I am talking about the true main street
entrepreneur who relies on that.
Ms. SIMON. I want to thank you for your answer. Andthat you
have such little time but I think you pinned it correctly.
As your clients continue to navigate entrepreneurship in
this economy where the foundation that they stand on is being
pulled out from under, I hope we get it right. I hope we get it
right.
And thank you all so much for being here today. I
appreciate your testimony.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Alford from the great state
of Missouri for 5 minutes.
Mr. ALFORD. Well thank you, Mr. Chairman, and thank you,
Chairwoman Ernst, for holding this important hearing today. I
would also like to thank the senators here for making the trek
over the House.
Thank you to all of our witnesses for being here today on
your own time and own dime. American experienced its greatest
economy in my lifetime under President Trump, and that was no
coincidence. It was thanks to the Tax Cuts and Jobs Act of
2017.
The TCJA allowed Americans to take the leap. It allowed
businesses to flourish. It allowed our country to move forward
as one nation under God. It ushered in the hope and reality of
the American Dream as small business owners around our nation
were all living their own version of it.
Allowing the Tax Cuts and Jobs Act provision to expire and
increasing taxes will not only further hurt the competitiveness
of our small businesses; it will crush them. The jobs that they
provide will no longer be there. The communities they serve
will suffer. People will go out of business.
It will chill the hope and reality of the American Dream on
main street that we all saw was possible just a few years ago.
I would urge my colleagues, Republicans and Democrats, senators
and representatives, to work together to make sure that the
2026 does not usher in the largest tax increase in U.S.
history.
And let's get one thing straight. Enough of the lies and
deception and gaslighting. This is not a tax cut for
billionaires and millionaires. This is an extension of tax
policy that is going to allow mom and pop businesses in the 4th
Congressional District of the great state of Missouri to stay
in business, to hire people, to make rural parts of America
flourish.
Mr. Brashers, many of my Democratic colleagues have painted
an extension of this Tax Cuts and Jobs Act as handouts for
oligarchs, tax cuts for the rich. Can you explain why they are
wrong?
Mr. BRASHERS. After the Tax Cuts and Jobs Act was passed we
actually saw that the bottom 50 percent paid a smaller portion
of federal taxes than they did prior to the TCJA. The idea that
the TCJA was simply a giveaway to the very wealthy is just not
backed up by the facts.
Mr. ALFORD. And, in fact, it is going to be a big deterrent
to starting small businesses in America, will it not?
Mr. BRASHERS. Yes.
Mr. ALFORD. Explain that.
Mr. BRASHERS. Yes, absolutely. So, what we are talking
about right now with the extension of these provisions, keep in
mind that the corporate rates that has been locked in, so if
you were to allow this to lapse what you would actually have
would be that the small businesses would be slammed with a 20
percent tax increase in the case of the 199(a) deduction.
And all businesses would be hit with tax increases from the
expensing and all these other provisions we have been talking
about today. These would be pretty much across the board for
businesses. They are going to be paying significantly higher
taxes and absolutely it is going to hit the small businesses
the hardest.
Mr. ALFORD. Mr. Akers, let's dive into this just a little
bit more. If this section 199(a), the pass-through business
deduction is eliminated for Main Street America, what is that
going to mean to business in America, 33 million small business
owners?
Mr. AKERS. Well, the bottom line is that money has got to
come from somewhere. If we are paying more in taxes we can't
use it for other things. Again, I reiterate most of that comes
from increased prices to consumers. It comes from lower future
benefits and wage increases for our employees.
Our piece of the pie is as an owner is very narrow. It is
very tiny. We cannot give up any more of it so it has got to
come from somewhere else.
Mr. ALFORD. Thank you. I have 24 counties in my district
from south of Kansas City over to The Lake of the Ozarks down
to Springfield. I am in the district all the time. I talk to
small business owners.
They are deathly worried and rightfully so about us not
getting this done and them not being able to compete against
the big guys. We must--we must renew these provisions. It is
not a tax cut for the rich. It is not for the billionaires and
millionaires. This is for mom and pop. This is for the people
who run the sawmills for black walnut in the state of Missouri.
It is for people who have sign companies in Sedalia, Missouri.
This is not about the rich. It is about making America
wealthy again through small business. Thank you so much and I
yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Senator Hirono from the great state of
Hawaii for 5 minutes.
Senator HIRONO. Thank you. It is Hirono. I thank the two
Chairs for this, and I say Aloha to our witnesses. I am glad
that Ms. Zimmerman is here.
The bottom line is that who is going to benefit or who
benefited from the 2017 tax changes? And, Ms. Zimmerman, I
think you described small businesses as a 90 percent of small
businesses who are making what or have revenues of what did you
say?
Ms. ZIMMERMAN. 75 percent earn end up with--live off of
$75,000 or----
Senator HIRONO. $75,000 for the 75 percent.
Ms. ZIMMERMAN. Yes, something like that.
Senator HIRONO. And how many of these are the small
businesses, and there are thousands of small businesses that
fit into that category?
Ms. ZIMMERMAN. Oh, yes.
Senator HIRONO. How many of them do you think benefited
from the 199(a) tax provisions?
Ms. ZIMMERMAN. Well, we know that it is to the degree----
Senator HIRONO. This is the category of the 75 percent. I
am not talking about the ones who have franchises and over 100
employees.
Ms. ZIMMERMAN. Well, if you think about it, if they made
$75,000 or let's even say 100 to make it simple, okay? So, if
they made 100 then they get a deduction of 20 and their tax
rate at that rate is only 12, so they are getting $2,000,
$2,400. That is their benefit. How many employees are they
going to hire with $2,400 is what I am saying?
And I am hearing about sunsetting. We can't let these
sunset because it would kill small businesses. Absolutely, but
there are other options than sunsetting.
Don't you have the right as our representatives and
senators to improve it instead? don't you have the right to
change it? Why did we have a 40 percent cut for the Amazons of
the world and I got a 20 percent deduction, which actually I
don't get, but I won't go into the technicalities of it----
Senator HIRONO. So, Ms. Zimmerman, we are going to be
confronted with extending the 2017 tax bill so if we were to
focus on the 75 percent of small businesses who I think I would
describe as truly small businesses, how would we change? What
kind of changes would we make to, for example, 199(a) or any of
the other existing provisions that we were asked to simply re-
up?
Ms. ZIMMERMAN. Well, 199(a) is very complex and that is
part of its problem.
Senator HIRONO. Well, I know that.
Ms. ZIMMERMAN. Yes, and so perhaps simplifying the overall
code so that the truly small business benefits. Give them a
credit for their first employee. Many of those businesses it is
just one person. If they want to grow they are hiring their
first one, right? Give them a credit for hiring that.
Give them a standard deduction ability so that they don't
have to track every receipt when they are out mowing people's
lawns, right? And they can instead take that standard
deduction.
Close some loopholes to push money back to small
businesses.
Senator HIRONO. So, I think that the information that we
have that the 2017 tax bill actually benefited the richest
people in our country and corporations, I don't think there is
any amount of gaslighting that is going to change those
statistics.
So, what I am interested in, again, is how do we truly help
the majority of small businesses as described by you, Ms.
Zimmerman, folks who are bringing in less than $75,000 a year
and those are--that would not be the two gentlemen who own
businesses who are on this panel, by the way. You do not
constitute small businesses as described by Ms. Zimmerman.
So, I am going to be very interested in finding out, you
know, what provisions we can put into this bill, well, actually
that would presume that I actually--that there are provisions
in the bill that actually help people. I think not. But again,
I just want to thank you for being real, Ms. Zimmerman.
Ms. ZIMMERMAN. Thank you.
Senator HIRONO. Thank you for being here.
Thank you for both of our Chairs.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Wied from the great state of
Wisconsin for 5 minutes.
Mr. WIED. Every single day in my offices both in D.C. and
the district receive requests from local small business owners
asking me to support the extension of the 2017 Trump tax cuts.
I would like to tell them directly that I am fully committed to
advocating for the extension and codification of the important
tax breaks for small businesses.
Those on the other side of the aisle don't support this.
They bemoan the growing federal deficit and falsely claim that
by extending the Trump tax cuts we will add to our federal
debt.
Let me be clear. The federal government does not have
revenue problem. We have a spending problem, not to mention
this, maybe the first time ever the American people have heard
Democrats concerned about debt.
Instead, they spent their time proposing one bloated
federal budget after another. Rather than cheering on our
efforts to cut discretionary spending and make sure the
American people are prioritized by our own government, they
spent their time claiming we are attacking democracy.
The message from Democrats is clear. They want to raise
taxes on everyday Americans to pay for DEI programs in Serbia,
Sesame Street in Iraq, and transgender surgeries in Guatemala.
They want to punish American small business owners by saddling
them with added regulatory costs that make it harder for them
to do business.
Republicans are focused on our primary mission, helping the
American people and allowing main street to prosper again. One
of the common misconceptions about the Trump's tax cuts is that
they primarily benefit the wealthy.
Mr. Click, if we took one provision of the Trump's tax
cuts, the 199(a), a CRS report found that 80 percent of 199(a)
claims were filed by those making under $200,000 a year and 98
percent of all claims were filed by those making under $1
million. How vital are 199(a) deductions for businesses making
under $1 million a year to maintain and potentially expand
their small business?
Mr. CLICK. I think they are absolutely critical, and I
think all the small businesses are actually tied together. You
know, there was a comment that we may not represent businesses
that make less than $75,000 but I can tell you from personal
experience of the years where I made less than $75,000 while
risking everything for this company. I think we might represent
what these smaller businesses would like to grow into and
become.
And without this, without the TCJA, it is going to go much
slower and it is going to be much harder for the smaller
businesses that maybe are designed to be a lifestyle business
instead of something that is much larger.
Mr. WIED. Very good. I would agree. In my business we could
have lost $100,000 or maybe made $50,000 or maybe we made
$200,000 in it and sometimes you don't have control over. It is
a very difficult thing.
Mr. Akers, as a former small business owner I know the
benefits of section 168(k) bonus depreciation for small
businesses to replace equipment and machinery. In my district
we have over 1,000 manufacturing firms employing almost one-
quarter of our working population, with 89 percent of those
manufacturing firms in my district are classified as small
businesses.
With Republicans working to return manufacturing back to
the United States right now, how important would raising the
bonus depreciation back to 100 percent be for small
manufacturers looking to expand their business?
Mr. AKERS. Well, I would add that it is important for every
small business, not just manufacturers, but thank you for the
question. The bottom line is we want to grow.
I agree with Mr. Click. You know, we are being
characterized as being not small business, but the fact is each
and every one of us started out with one unit losing money,
risking millions of dollars of our own money, and sometimes not
getting a paycheck.
So, it is critical that we have the opportunity to continue
to grow and expand because, once again, most small businesses
want to grow into more than one unit or two units or three
units and they cannot do that without these benefits.
Mr. WIED. Thank you. I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Scholten from the great
state of Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you, Mr. Chairman, and thank you so
much for holding this critical hearing today. We are seeing
unprecedented attacks on our small businesses across the
country and they are struggling to keep place in a market that
increasingly does not work for them here in the great state of
Michigan, where we are at the center of the attacks on
businesses across the country, where tariffs are reaching an
all-time high.
You know, we know it all too well. We are facing budget
before the Congress this week that will add additional burdens
if we are not careful. Studies from organizations like the
International Monetary Fund and the Tax Policy Center have
found that foreign investors retained more earnings as a result
of the TCJA's reduction in effective tax rates.
Let's be clear about who benefits from an extension of
these tax rates. My colleagues on the other side of the aisle
are essentially proposing that we cut critical services like
Medicaid and SNAP to pay for tax cuts that benefit not only the
wealthiest our nation, but also those who don't even live in
this country.
Ms. Zimmerman, do you agree that the federal government
should ensure that large companies both here and abroad pay
their fair share of taxes before we allow poor and middle class
workers to foot the bill of a plan they do not stand to benefit
from?
Ms. ZIMMERMAN. I do. Thank you for the question and let me
clarify. I am not an adversary of my colleagues here on the
panel. I commend them and applaud them for their success in
business, and I think their continued success is just
instrumental in our company. So, I don't--in our country
growing. I don't want to make that split.
But what I am saying is we don't have to fix this with that
proverbial hammer. Can't you stop the fact, I mean, yeah, there
are statistics all over. Half of the 199 pool, half of it went
to people, the top 5 percent, okay? So, throwing statistics
around, yeah, we got some more. Maybe we paid a little more.
My daughter and son-in-law they are a union teacher and
firefighter and I thank them for what they do.
Ms. SCHOLTEN. I thank them for what they do as well.
Ms. ZIMMERMAN. And when the TCJA came through I have
started many a business. I own my own business. I got a much
bigger savings than they did as they raised their four
children.
And to me that is where we needed a little finesse.
Surely we can do something to change this so that we are
not shoving all this money to the higher income levels or to
foreign investors, as you say.
And the social safety net is so very important for the
smaller businesses. They can't survive if their community is
not healthy, bottom line. We are one with our community.
Ms. SCHOLTEN. It is essential. Thank you. One message that
I consistently hear from business owners back home is the need
for more workers. We are experiencing a shortage across
industries, small businesses in particular. We feel that and
see in practice that the current administration's practices are
exacerbating some of those conditions.
I want to stay with you just for one second. You suggest in
your testimony that a tax credit for entrepreneurs who are
hiring employees for the first time may be a good idea. Can you
expand a little bit on that idea and tell us how some policies
like these, which give targeted support to businesses in early
stages, could help us address some of these larger workforce
issues?
Ms. ZIMMERMAN. Right, because that is not using the hammer
right.
Ms. SCHOLTEN. Yes.
Ms. ZIMMERMAN. Let's make those small changes. All of these
millions of businesses that are making below $100,000 they are
getting ready to hire their first employee or they have just
hired their first employee----
Ms. SCHOLTEN. That is right.
Ms. ZIMMERMAN.--that everybody on this panel will tell you
that is a scary leap of faith going off the cliff when you hire
that first person.
And yes, we are putting our own money into hiring them. And
yes, we are putting our own money in to make payday. So, a
credit for that first employee that comes back immediately
through the payroll credit system. We have that in place. That
would be very helpful.
Ironically, funding the IRS, and I know. I am a CPA and I
have to deal with them but it helps small businesses who have
to work with them more as a--it shouldn't be adversarial. We
are trying to be compliant and we can't if you close the
offices all down.
Ms. SCHOLTEN. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Senator Husted from the great state of Ohio
for 5 minutes
Senator HUSTED. Thank you, Mr. Chairman. Thank you for
inviting us to join you today for this hearing.
I thank all of you for being here and what you contribute
to the world through your work. My wife is a small business
owner but she's like most small business owners. 81 percent of
small business owners in America are sole proprietorships. They
don't have any employees. I would like to focus my conversation
on those businesses that have employees, the other 19 percent
are, the ones who beyond themselves create jobs for others.
And I want you to think about the TCJA in that context. If
it were to go away versus if we renew it, how would that impact
your employees? How does that impact?
And I will start with you, Mr. Click. How does the
structure of how we assemble the tax code across the board and
everything that has been discussed today, how does that impact
your employees and your ability to take care of them?
Mr. CLICK. Thank you, great question. You know, I have said
it several times that it slows down the businesses, but it is
also that the business is also very interconnected. And the
equipment and the employees as a work family we all, kind of,
work together.
To keep growing the company, to keep investing in equipment
means that I have got new skills that my employees are going to
get to learn. They are going to get paid a higher wage as we go
away from the very basic manual operations to more advanced CNC
operations or even driving trucks, something more valuable to
the company.
Taking away the TCJA slows that down tremendously. We will
keep going but it makes it much easier when everyone is on the
same page and pushing in the same direction.
Senator HUSTED. And I presume that that is not only
improving their skills?
Mr. CLICK. Improving their skills and improving their
wages.
Senator HUSTED. Improving their wages and----
Mr. CLICK. Absolutely.
Senator HUSTED.--productivity gains?
Mr. CLICK. It's a direct 1:1. As soon as they get that
skill----
Senator HUSTED. Get to where you can more all the time?
Mr. CLICK. They get paid more absolutely.
Senator HUSTED. Benefits, wages, all that?
Mr. CLICK. Benefits, bonuses, annual bonuses, mid-year
bonuses, the turkeys that we give out for Thanksgiving, all of
that is impacted by this. It is all tied.
Senator HUSTED. So in the end, it is good for small
businesses but it is good for your employees.
Mr. CLICK. It is great for the employees and it is great
for the smaller businesses that are the sole proprietor that
provide services to companies like Patriot.
Senator HUSTED. Mr. Akers, would you like to share some
thoughts on, reflect on that question?
Mr. AKERS. Yes, thank you very much. Our employees are a
part of our family, to be very honest with you. I know it is
trite but the bottom line is that we can't do any of the
business we do without our employees, so we pay higher than
normal industry standard wages already.
When the tax cuts came through the first time we increased
the wages by about 20 percent. They have gone up another 10 or
15 percent since then. We will continue to raise them.
Our benefits are by and large huge over most of our
competition, so we can only do that when we have got extra
money that we can do something with. One other thing, the
communities we are in they are dramatically impacted by the
money we give back to them and that comes from this same fund,
the ability to have that money back so that we can redistribute
it.
Senator HUSTED. So, let me just, I have a contention that
if you look at history those nations that are the most
economically and militarily successful are the ones that are
the most innovative, the ones where technology allows them to
be successful.
In the context of your business and think of your
employees, how much does the investment in new technologies and
job training mean to your productivity levels, which allow you
to compete against foreign competition and improve the overall
quality of the work environment for your employees?
Mr. Click?
Mr. CLICK. That is a great question, and I am so glad that
you asked it. The technology that we brought into our industry
had never crossed over. We are in a 100-year-old industry that
was essentially unchanged up until 15 years ago when we came in
because advanced manufacturing is the reason that Patriot
exists today.
And when we take the bankers through and other people
through the company I show them this bank of 16 CNC machines.
First shift we will run all 16 of them with four employees.
Second shift we will run 10 or 12 with two or three employees,
and on third shift we will run seven or eight with zero
employees.
And do you know what beats offshore wages? Zero wages on
that machine overnight. It runs automatic. It produces the best
quality products on the planet.
Senator HUSTED. And that allows you to do Made in America.
Mr. CLICK. Absolutely it does.
Senator HUSTED. And it allows you to continue to make
investments to continue to compete and to have a thriving
business where you can employ people?
Mr. CLICK. Yes, sir.
Senator HUSTED. And so you would say that the renewal of
this is essential to American success and prosperity?
Mr. CLICK. Absolutely it is. It is critical.
Senator HUSTED. Great, thank you. I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Tran from the great state of
California for 5 minutes.
Mr. TRAN. Thank you, Mr. Chairman.
Ms. Zimmerman, just last week former President Trump, I am
sorry, President Trump and his administration proposed one of
the largest tariff tax increase on American people since the
1960s and already we are seeing the economic ripple effects.
The U.S. market had its worst week since the start of COVID and
families are feeling it.
These tariffs are taxes on consumers raising prices on
everyday goods, groceries, cars, appliances, housing materials.
These are the essentials for working families and they simply
can't afford to pay more at a time when household budgets are
already stretched thin.
Let's be clear. No one voted for more expensive groceries,
more expensive children clothing, more expensive cars, and more
expensive household goods. No one voted for President Trump to
tank the stock market and the economy.
And yet, this is what Donald Trump's economic approach is
delivering. He is creating a recession. In fact, just
yesterday, JPMorgan said, `` Trump's tariffs will send the U.S.
into a recession.''
At the same time, small businesses are facing uncertainty.
Supply chains are being disrupted and many Americans could soon
see job losses as a result.
Ms. Zimmerman, the United States is currently experiencing
a cost of living crisis. Everything from rent to groceries to
energy are being squeezed by the consumers. How do you expect
tariffs to affect the cost of living crisis?
Ms. ZIMMERMAN. Well, what it really does is it creates a
dangerous negative feedback loop. It creates higher prices
which reduces spending, right, which causes business decline,
which causes job losses, which causes future spending
reduction. I mean there is no question.
If it is going to cost the average family $3,800 more just
to buy what they are buying now, they are not going to have as
much to spend at their local businesses period. Some of those
businesses are going to go out of business.
Mr. TRAN. Thank you for that. I was a proud small business
owner myself before coming to Congress. I know that Healthcare
is one of the biggest challenges facing small employers, not
just for themselves but also for attracting and retaining
workers. Large corporations often have the resources to offer
group health insurance plans, but small businesses are
frequently left to navigate the individual market.
That is where the enhanced premium tax credits have made a
real difference by lowering the cost of health insurance
through the Affordable Care Act marketplace, especially for
people who are self-employed or working in small shops. These
tax credits have helped level the playing field and save
thousands of dollars the year for small businesses.
Ms. Zimmerman, my Republican colleagues are more interested
in providing tax cuts for millionaires and billionaires than
extending a tax credit that helps small business owners buy
health coverage. Considering this, can you speak to how these
enhanced tax credits have impacted your ability to afford
quality coverage for yourself, your family, or your employees?
And if these tax credits were to expire at the end of the
year, what would that mean for your business?
Ms. ZIMMERMAN. One of the biggest competitive disadvantages
we all have here, and certainly smaller businesses have, is
health insurance. We can't get a reasonable policy for our
employees and so then on the marketplace what we do is we help
our employees eat--well, actually we don't now. I should change
that. We did when it came out.
We would help our employees go out and find some and we set
up a HR, you know, plan and paid back some of the premiums as
we were allowed to tax free. Without that marketplace, a lot of
people are going to go uninsured again. And small businesses
are going to lose their employees to the P&Gs and GEs of the
world, which are the big companies in Cincinnati that can give
them stellar benefits that we just can't afford.
Mr. TRAN. Yes. I agree with that. Thank you.
Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Meuser from the great state
of Pennsylvania for 5 minutes.
Mr. MEUSER. Mr. Chairman, I thank you very much.
And certainly thank you to our witnesses. The so-called
TCJA of 2017 led to years of record low employment, GDP growth,
real wage growth, and record high tax revenues. Families saw
their median household incomes increase.
Real wages grew. Six million people were lifted out of
poverty and main street businesses saw $66 billion in tax
revenues, all the while tax revenues, federal tax revenues grew
dramatically. That is a record. That is a fact.
Now, Congress is working to deliver on the American first
agenda in the so-called one big, beautiful bill, reconciliation
bill which will rein in--the plan is for it to rein in wasteful
spending and reignite our economic growth.
So, last week in our Small Business Committee hearing we
heard some testimony from witnesses that brought out that only
1 percent of small businesses make a profit of over $1 million,
so one out of every hundred business makes less than in net
income of $1 million.
That being said, do any of you believe that the TCJA was a
handout to billionaires, as is often stated?
Mr. Click?
Mr. CLICK. No, definitely not, just by the sheer math of
it, the amount that goes out to the owners of the company. It
was fractionally impacted it.
Mr. MEUSER. I appreciate that.
Mr. BRASHERS. No, I don't agree with that statement at all.
I think, as Mr. Click was saying, the exact opposite was true.
It was designed very specifically to avoid just being a
giveaway to the very rich and they, if anything, targeted the
bottom half of the income distribution more.
Mr. MEUSER. Thank you.
Mr. Akers?
Mr. AKERS. Not at all it. It dramatically impacted us and
anything that impacts us in a positive way creates more
revenue, which creates more taxes, which is a big cycle sending
more money back to D.C. So, it is positive for everybody the
way that I see it.
Mr. MEUSER. Right. And something tells me that added
revenue that you gained went back not into your pocket but into
the business, which is pretty much what 100 percent of small
businesses tell us.
Mr. AKERS. Absolutely true. The majority of it goes back to
either growing the business or funding more benefits for our
staff.
Mr. MEUSER. Thank you.
Ms. Zimmerman, would you like to answer that?
Ms. ZIMMERMAN. Let me be clear. I think you misunderstand
me. I don't want you to raise taxes on small businesses. I
think that would be a mistake, but it is not a black or white
yes or no question here.
You know, renewing the TCJA small business deduction does
nothing at all to fix the problem that we----
Mr. MEUSER. All right. I just really wanted a yes or no if
it was a tax cut for billionaires. Thank you.
The R&D expensing, how important, Mr. Click, is that to
your business as well as the bonus depreciation that would
expire should we not pass TCJA, that we know?
Mr. CLICK. Yes. The R&D will be more valuable as we go
forward in time. We had already done the development before
that was allowed.
But the bonus depreciation that is absolutely critical to
the business plans. It makes it a lot easier and if it is
permanent it makes it a lot easier to make that 10-year plan
into a 20-year plan.
Mr. MEUSER. I couldn't agree more, from my business
experience as well as my time in the field working with small
businesses to our time on our Small Business Committee.
Mr. Brashers, same question?
Mr. BRASHERS. Yes, I think absolutely. So many small
businesses have very thin margins and so if you are talking
about taking a deduction away from them and if you started with
the 2 percent margin and then all of a sudden you take away
this deduction for your workers that are in R&D, all those
supplies and materials that are going into R&D, you take that
away and you push it back 5 years or at least a portion of it,
especially for small businesses with limited access to capital
it can be devastating.
Mr. MEUSER. Thank you.
Mr. Akers, same question?
Mr. AKERS. Yes. It leads to growth and money from anywhere
it leads to growth for us and that leads to added benefits for
everybody up and down the system. So, when that money is sent
back to us, that extra depreciation, we reinvest it right back
into the business.
Mr. MEUSER. I have 40 seconds left. I am just going to ask
each one of you your thoughts on the president's plan, the so-
called America first agenda, the taxes, the regulations, the
making energy that much more competitive, and as we move along
with this tariff issue, would you rather see an increase on
let's call them taxes on foreign manufacturers or would you
rather see an increase on taxes American manufacturers?
Mr. CLICK. That's a really tough question. You know, I am
not going to advocate for more taxes on foreign companies, but
I think if you set the stage for American companies to be
successful we will.
Mr. MEUSER. Great, thank you.
I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Olszewski from the great
state of Maryland for 5 minutes.
Mr. OLSZEWSKI. Thank you very much, Mr. Chairman and to
fellow Members of both the House and Senate committees here.
I just want to open by saying as we have highlighted within
this committee and throughout this Congress, we know that small
businesses are, in fact, the backbone of America, so thank you
all for the work that you do. Thank you for being our job
generators.
Thank you for supporting economy as being fabrics to the
community, even doing things like sponsoring local sports teams
and offering those unique goods and services that are so
critical.
Two observations that I have today. You know, first of all,
is as we are talking about this idea of keeping taxes lower on
our small businesses and our producers, the silence on these
tariffs, this Trump tax is absolutely deafening. We are talking
about how do we lower taxes for our businesses at a time when
we have just seen the single largest tax increase enacted in
peacetime history of the United States. So, let that sink in.
We are having a hearing about how do we keep taxes low for
our small businesses when we are not talking at all or not
pushing back at all against the fact we just saw the largest
tax increase in peacetime history in the United States. I want
to say, you know, as we should come together in a bipartisan
way to push back against those tax increases, I come to this
work and welcome the opportunity to sustain some of these
strategic investments in our small businesses so that we can
keep things moving.
But, you know, the facts of the matter are that these tax
changes in this law probably should be done more thoughtfully
and comprehensively than an outright extension. The data shows
that the implementation of the current tax policy skews
incredibly high to the risks, the wealthy, the ultra-wealthy.
And so while perhaps not just for billionaires, the income
of the top 1 percent of Americans are seeing the average tax
cut of $60,000 a year under these provisions, which is fine
until you compare it to the bottom 60 percent of Americans who
saw a mere $500 tax cut.
You know, we also know that this is failing to deliver the
promised economic benefit. The Trump administration promised
that by a conservative estimate we would see a $4,000 boost in
income but new research is showing that workers who make
$114,000 or less, in fact, have seen no boost.
And so, I think I just wanted to share for the record that
we welcome the opportunity to continue the investments we have
heard today, but I think we can do that without just writ large
embracing this wholesale extension that does not benefit all
Americans.
So, I guess with that mind, if we were to be more
thoughtful about that, Ms. Zimmerman, could you just talk a
little bit about what in your view the kinds of impacts we
might see on a small business if instead of just merely
extending and seeing this completely inequitable distribution
of tax benefits that we were instead to, sort of, incentivize
work and expand and invest more in things like the earned
income tax credit, the child tax credit, other things that
incentivize work but also support businesses and business
owners putting money back in the pockets of hard-working
Americans?
Ms. ZIMMERMAN. I would say exactly. I would say that is
what this is all about. Again, I don't want you to increase our
taxes. I don't want you to increase any one of our small
business taxes. We are doing a lot of good work here on the
ground and we are good for the economy.
And coming out of the 2008 recession we led with the new
jobs being created, we being small businesses. So, we are going
to need that again because it looks like we are going to have
to come out of something again, right?
But to forget the fact that the TCJA gave absolutely twice
the tax savings to the large corporations in this country than
they did to any one of us on this panel misrepresents the whole
concept of, oh, you don't want us to extend this?
Well, it is not that I want you to raise the tax. I want
you to do it smarter, do it better. Don't not do it.
Mr. OLSZEWSKI. Thank you for that, and we welcome the
opportunity again to sustain the investments that do benefit
our small businesses while not giving those incredible benefits
to large corporations and the ultra-wealthy.
So, Mr. Chairman, I will yield back with that and say I
welcome the opportunity to really dig in and do this right as
opposed to a wholesale extension that only grows our deficit
and misses the mark on some of these important investments.
Thank you.
Chairman WILLIAMS. Okay. The gentlemen yields back.
I now recognize Representative Downing from the great state
of Montana for 5 minutes.
Mr. DOWNING. Thank you, Mr. Chairman and I greatly
appreciate the House and Senate Small Business Committees
hosting this joint hearing today on such a critical issue.
The 2017 Tax Cuts and Jobs Act was a tremendous lifeline
for small businesses across the nation and especially in my
home district of central and eastern Montana, in particular,
the estate tax provisions.
And I think there has been a false narrative that has been
played here that this is unduly affecting, you know,
millionaires and billionaires but the reality of it is in my
district I have a lot of small businesses that are farms and
ranches that, you know, can be, you know, land rich and cash
poor.
And the estate tax provisions of the TCJA have been vital
for these small farmers and ranchers across my district. And by
doubling the estate tax threshold for individuals and married
couples, the Trump tax cuts have ensured that farmers and
ranchers can focus on their work and livelihoods rather than
preparing for the eventual tax punishments that will be
inflicted on their grieving families.
I am going to start with Mr. Brashers. In your testimony
you accurately point out that the estate taxes
disproportionately impact small farmers and ranchers who are,
quote, `` land rich but cash poor.''
If the TCJA a estate tax provisions were to go away, you
know, what impact would this have on the continuation and the
productivity of agricultural land across our nation? And
something I worry about is production agricultural land, you
know, coming out of production.
Mr. BRASHERS. Well, thank you so much for the question. The
reason that it matters so much for ranchers and farmers is that
you have this tax that is imposed on assets beyond a certain
level. And think about valuing those assets, think about the
estate planning that has to go into that. It is very--as
opposed to someone that just has a large amount of cash. It is
easier to think about estate planning when you are just talking
about cash but when you are talking about a cash poor but asset
rich----
Mr. DOWNING. Thank you for that. I am just going to move on
a little bit here. To what degree would you say our small farms
and ranches are forced to divert their resources away from
farming and into liquid assets, attorneys, and accountants?
Mr. BRASHERS. Yes. I mean, what you are going to end up
having is these family businesses, family farms, they have to
break up and in a lot of cases I can't give you a specific
statistic. I can look into trying to find out those numbers for
you, but it is, especially for what you are doing with this, we
are talking about a tax that accounts for 0.6 percent of the
federal budget. So, it is quite small and there was no
meaningful impact from expanding that exemption.
Mr. DOWNING. With this potential negative impact on
agricultural production, how do you believe that may or may not
jeopardize our national security and interests and increase our
reliance on foreign products?
Mr. BRASHERS. Yes. I mean, we are moving away from, kind
of, the small business model of Americans passing on their
businesses, their farms, their ranches to themselves and they
may choose to sell that to foreign investors. That is
absolutely a possibility.
Mr. DOWNING. So beyond agriculture are there any other
small businesses or industries critical to national security
that would be impacted disproportionately by the expiration of
these tax cuts?
Mr. BRASHERS. The tax cuts broadly? So, yes, anyone
involved in research and development is going to be a critical
one. Anyone that is investing heavily is, especially where we
are trying to get companies to invest here in America, invest
in new equipment and machinery, these expensing provisions are
critical for that.
Mr. DOWNING. Thank you.
Mr. Click, you rightfully labeled the estate tax as the,
quote, `` survivor's tax.'' Given the impact that state taxes
have on grieving families shouldn't we get rid of them
altogether?
Mr. CLICK. Yes, absolutely. It makes no sense. You have
already paid taxes on all the money that you have earned, all
the assets that you have got. And as a company like the farmers
with an illiquid asset in our inventory around the country you
can't just generate the cash to be able to pay that.
Mr. DOWNING. So, how would you have to adjust the
operations of your small business, Patriot aluminum products,
if the TCJA estate tax provision expires?
Mr. CLICK. For the company at large it just means more time
on planning and money spent on consultants and attorneys
instead of on inventory and employees.
Mr. DOWNING. I appreciate that.
Mr. Akers, you importantly highlight in your testimony that
small businesses are deeply involved in illiquid assets that
are difficult to pay off like real estate and machinery. So,
can you talk more about how expansions to the estate tax could
result in a liquidity crisis, as you mentioned in your
testimony?
Mr. AKERS. Yes. Similar, just like farmers coming from the
Iowa, we have the same issue there. When you are investing in
all of those things you can't turn that into cash overnight, so
if you end up having a death in the family that leads to one of
those estate planning issues that money has got to come from
somewhere.
You cannot do that. You don't have the liquidity to do that
because your money's invested in time, in land, and materials,
equipment, and that type of thing. So, it is critical and you
will lose farms and businesses by doing that.
Mr. DOWNING. Thank you for your answers. I have run out of
time so, Mr. Chairman, I yield.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Conaway from the great state
of New Jersey for 5 minutes.
Mr. CONAWAY. Thank you, Mr. Chairman and thank you for
holding this hearing today. I have been listening to a lot of
the commentary and questions and answers and I just want to
make a few comments.
The Tax Cuts and Jobs Act in 2017 resulted in the deficit
growing by $2 trillion, Now, that deficit is something that is
going to have to be dealt with and paid by average people all
over this country while the benefits of that tax cut, as we
know and has been documented, went to the wealthiest people in
the country, to the billionaires and millionaires, and God
bless them, It would be great to have that kind of money.
And he would be even greater, as they do, to often pay zero
income taxes, which many people in this room, including yours
truly, has to pay their taxes. And as Warren Buffett and others
have pointed out, what is the fairness of that?
When you look at these policies I think, and I hope the
American people will ask the question, does it seem fair to
you? Are the benefits of the policy that we are bringing
forward being distributed in a way that makes sense when you
look at our entire population? We are one nation after all.
And this Tax Cuts and Job Act certainly didn't meet that
test. It was a test for me.
And this next round of this, or the renewal of this, we are
hearing now that we need to raise the debt ceiling by another
$2 trillion. And we are going to see the same, kind of, just
amount distribution of the benefits of this. And historically,
people ought to know that in a developed economy such as ours
with even robust growth rates, that this tax cut, just this
last one, will never be paid for by the growth that is touted.
Never happen.
Now, if you are an emerging economy where you can grow
along at a clip of 7 percent, 8 percent, yes, you can pay for a
tax cut like that. But in developed economies such as ours,
United States, Europe, that kind of growth from what I am told
by experts just will not materialize. And so, the American
people need to understand that historical fact as they
contemplate this next round of these cuts.
In my state of New Jersey if these cuts, to pay for these
cuts, the kind of cuts that need to be made to Medicaid as an
example, $14 billion comes to the state of New Jersey to help
pay for insurance and a safety net that keeps a nursing home
open for that sandwich generation that are taking care of their
kids, trying to get them off to college and dealing with an
elderly parent or other relative in a nursing home that will
close if these Medicaid dollars do not come back to our state.
We are a donor state after all. Can we make up for these to
keep these institutions open, hospitals, nursing homes by
raising the tax revenue in New Jersey? I think New Jersey will
be like many other states. We will find they won't be able to
do that.
And the expansion and access to health insurance under the
ACA, if these supports go away as the other side wants to do,
we will see a 10 percent increase in insurance that people have
to pay or people will go without and the number of uninsured in
our society certainly at large in New Jersey will increase
significantly.
Talking about tax increases, the tariff represents nothing
but a tax increase on average people. We had an income tax in
the mid-1800s. We had tariffs as well and they decided to
rebalance it because the tariffs were being paid for by the
poorest people, the low income people in the country.
And so they decided let's change this around. We will
reinstitute an income tax and then 1 percent on $3,000 to
$5,000 that would be great, but we reduced the burden on
regular people. That is what happened.
Here we are, I guess, claiming that that era should be
revisited upon the American people yet again, even after the
experience that we ought to have with the Depression and the
worldwide devastation that that caused driven by tariffs.
Now, we have, Ms. Zimmerman, and I know you deal with the
IRS and I have got to get this question out really quickly, you
deal with them all the time. It has been starved of resources.
If you have a complicated tax situation you might get away
without paying any taxes at all. Small businesses have to deal
with them to get their work done. Can you comment on the
starvation that has occurred to the IRS and what that means for
your ability to run your business and comply with the laws most
people want to do?
Ms. ZIMMERMAN. Well, I have a few seconds so I will say
that we are losing about $700 billion in revenue by cutting
back on the IRS' ability to enforce.
Chairman WILLIAMS. Okay, thank you. The gentlemen yields
back.
I now recognize Representative McIver from the great state
of New Jersey for 5 minutes.
Mrs. MCIVER. Thank you, Chairman and Ranking Member for
convening this very important hearing today.
And thank you to each of our witnesses for being here today
with us. As mentioned over and over today, and even in previous
hearings, the small businesses are the backbone to our economy
and we must ensure that our tax policies support their growth.
Tax policy can often decide whether a small business
entrepreneur can hire workers, invest in themselves, their
communities, or even expand. For too long the tax code has
favored large corporations while small businesses are left
carrying the brunt of tax burdens without sufficient help.
This is especially true now as we see the continued gutting
of the Small Business Administration by the current
administration in the face of a severe economic uncertainty. We
must work toward a tax code that is fair and responsive to the
needs of small business owners and ensure the government is
meaningfully here to provide real assistance to businesses in
need.
To Mr. Brashers, you were a contributor to Project 2025,
which the president began implementing on day one despite
previously saying he didn't know anything about it. Since then,
he has followed its directives to the tee, gutting the Small
Business Administration with mass layoffs, implementing
tariffs, and supporting a budget that would destroy Medicaid
and SNAP benefits all to create a tax code that punishes the
middle and lower class while only benefiting the wealthy.
Do you agree, Mr. Brashers, that your Project 2025 has been
a failure for small businesses?
Mr. BRASHERS. I appreciate the question. I am primarily
here to talk about the expiring provisions of the Tax Cuts and
Jobs Act.
Mrs. MCIVER. Is it a yes or no?
Mr. BRASHERS. I would disagree with that statement.
Mrs. MCIVER. Of course you would. Then why have small
business entrepreneurs lost millions in wealth this week alone
as our economy heads towards a recession? Why do you think that
is happening?
Mr. BRASHERS. So, sorry, the Project 2025 was a
collaborative effort from many conservative institutions. I was
a contributor to that. It had a menu of options for a lot of
different parts of the government. Some of those are being
adopted, some of them are not being adopted, and that is
something that the Heritage Foundation has been a part of for
many years, many decades going back to the 1980s.
So, I think scapegoating Project 2025 is not accurate.
Mrs. MCIVER. Going back to the question, in your opinion as
a contributor to Project 2025, what is your opinion why many
small business entrepreneurs lost millions this week and why
are people predicting that we are on our way to a recession?
Mr. BRASHERS. I mean, right now, obviously, we are looking
at there is some uncertainty because of the tariffs and that
was a conscious decision of the administration that they
understand that they are trying to make deals and they are
trying to negotiate on this.
And so, I am personally not involved in the tariff
discussions. I don't have any insights into that and a lot of
people--there is a lot of conversations presumably happening
behind closed doors that I am not aware of, so I am not going
to speculate as to where this all ends. And I think ultimately
that is the most important thing for businesses is what the
final outcome of all this is.
Mrs. MCIVER. However, was tariffs mentioned in Project 2025
plan?
Mr. BRASHERS. As a matter of fact there were two ideas.
There were----
Mrs. MCIVER. Correct.
Mr. BRASHERS. On the tariff point there was a section that
was written that was pro-tariff and there was also a section
that was written that was anti-tariff.
Mrs. MCIVER. So, thank you for acknowledging a point that,
yes, there is a lot of uncertainty around tariffs and that is
why we are seeing many small entrepreneurs and small businesses
lose money this week and many predicting we will be into a
recession.
I will say this in ending in my comments. Women lie, men
lie, but the numbers and the data don't. With that, I yield
back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Morrison from the great
state of Minnesota for 5 minute.
Ms. MORRISON. Thank you, Mr. Chairman and Ranking Member
for holding the hearing.
And thank you to the witnesses for taking the time to
testify today. I just want to start by saying I think we all
agree that we want a tax system that benefits small businesses.
Small businesses, as we have all said, are the backbone of our
economy and keep jobs in our communities.
But I believe a tax code that benefits our small businesses
is a tax code that pays also for the essential services that
small businesses rely on. Millions of small business employees
rely on Medicaid, for example. Thanks to the Affordable Care
Act, Medicaid expansion has been crucial to decreasing the
number of uninsured business employees.
Between 2013 and 2022 an additional 2-1/2 million small
business employees received health insurance through Medicaid
and the uninsured rate of small business workers dropped by 9
percent.
The Republican budget that the Senate passed last week and
that the House will consider this week will require an $88
billion spending cut from the Energy and Commerce Committee
which, by definition, will have to target Medicaid.
Additionally, the ACA premium tax credits that help cover
the cost of premiums for health insurance and make health
insurance more affordable for small businesses are set to
expire at the end of this year. If we fail to extend these tax
credits nearly 4 million Americans will become uninsured, and
the average premium payment will increase by 93 percent.
90 percent of small business owners report healthcare-
related tax credits are very important to their ability to
afford health insurance for themselves and for their employees.
So, Ms. Zimmerman, could you help explain how cuts to
Medicaid and the expiration of the ACA tax credits will impact
small businesses?
Ms. ZIMMERMAN. Yes, thank you. It will definitely impact
small businesses. It will force small businesses to drop
coverage and lose employees to larger businesses. We will
definitely lose that competitive edge. We will have to absorb
more cost cutting into already thin margins or eliminating our
ability to invest in growth in our companies.
And, you know, wages are going to go down to compensate for
the extra cost in the benefit that. I think the smaller the
business the more impact it is going to have on them for sure.
It is really going to hurt main street.
Ms. MORRISON. Thank you. And you also during your testimony
mentioned, I know we have had a lot of tariff questions, but I
have to have a turn, too, that the tariffs announced last
Wednesday have created uncertainty and unpredictability for
small businesses.
Small businesses are particularly dependent on imports and
rely heavily on trade for components used in manufacturing.
They lack the negotiating power that larger corporations have
and operate with tighter margins than big businesses.
Can you speak to what you are hearing from small businesses
about how most recent tariffs will affect them? And what steps
we in Congress can take to help insulate small businesses from
the worst of these effects?
Ms. ZIMMERMAN. Well, Congress could take back the power of
the purse to the legislative branch and consider small
businesses in doing so. It has always been my understanding, I
am not a history major, but I thought that was your job. Trying
to figure out what to buy now for the Christmas season so we
can sell then, impossible right now, impossible.
Knowing that costs are going to go up, knowing that small
business owners knowing they can't compete with the big
businesses of the world, we are going to very possibly get even
more of a price increase than the tariffs because we are going
to have to compensate for all the strangleholds the big
businesses put on suppliers.
And they are going to have to make it up somewhere and, you
know, threatening to quit with. I supplier doesn't make a huge
difference when you are a small business it doesn't move the
needle.
Ms. MORRISON. Thank you so much for your testimony, and I
appreciate your reminder to Congress that we should take back
the power of the purse.
Thank you, Mr. Chair.
And thanks again to the witnesses. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Senator Justice and Baby Dog from the great
state of West Virginia for 5 minutes.
Senator JUSTICE. Okay. I have Baby Dog with me here, too,
you know, but she is outside. But I will just hold her right
there for just a few minutes, okay?
I had the luxury and the honor of being the governor of
West Virginia the last 8 years, and I can tell you just this,
and I can tell you this as point blank as point blank can be.
Our small businesses in West Virginia are the backbone of
us period. And with all that, our small businesses are the
backbone of this entire country period. That is all there is to
it
Now, I am a plain spoken guy. I challenge the media all the
time. You find something that knowingly I have told you is not
true, and they can't do it because I am not going to do that.
You know, I was brought up in a way with my father that
absolutely I was expected to tell the truth and that is what I
am going to do.
With that being said, we have got to extend these tax
breaks and these tax cuts. If we don't, absolutely we are going
to get in real trouble. Absolutely our small businesses depend
on this in every way, and if we don't watch out, you know, bad
things could happen and bad things could happen really soon.
Now, with that, I have tried in the state of West Virginia
to do anything and everything I could to provide additional tax
breaks or tax cuts. You know, I am really proud that when we
were there, you know, over the 8 years we cut taxes I think 26
different times for all kinds of different things and a lot of
different agencies.
But the one thing we never lost focus with was just how
important our small businesses really truly are and the fact
that we have got to keep them going and keep them going in a
way that is absolutely moving the ball and moving the ball
forward.
Now, in addition to all that, you know, from a standpoint
of a pass-through, you know, by making it accessible that
really and truly we could pass through to the individual
absolutely it is so, so important.
And so with that being said, we have got to continue to do
exactly what we are doing or try to find even ways to make it
even better now.
And in regard to the estate tax, I have got a real quick
story to tell you and this is as true as true could ever be.
You know, you see I don't speak from a bunch of notes. I speak,
you know, from experience and from the heart.
Now, the other thing is I didn't come here as a 40-year-old
looking to be a Committee Chair, you know, or whatever it may
be. I came here to try to do one thing and that is in my own
way shake up the world.
You see we have got so much that we have got to do here and
there is so much that is screwed up about this town and
absolutely from the standpoint of all the goodness that can be
done if we all focused on getting off of our soapboxes and
getting off of the cameras and really trying to do the job that
we are supposed to do.
You see I never took anything, anything as the governor. I
don't want anything now. I don't want the next hot tip. I don't
want a thing for me. I want to do what our forefathers did, and
I am the real deal on that.
You know, our forefathers stood up. Many of them lost their
farms. Many of them lost everything they had for this
unbelievable nation. And so with all that being said, that is
what we all need to be doing.
Now, I am not going to go on and on about that. I just want
to tell you just a story real quick. My dad died in 1993. He
was an only child. He lived in a little coal camp house and if
you were there, if you went there today, you know, that house
has one bedroom, one bathroom,
My mom she was one of 10 kids and they never, ever, my
grandparents every time I ever visited them they never had
indoor plumbing. Now, so with all that being said, all of a
sudden my dad worked really hard with my mom and then he built
a level of riches that for all practical purposes we thought my
dad was a wealthy guy, you know. And all of a sudden he died.
And he had done all kinds of estate planning and everything
else and literally in 1993 I absolutely worked through all the
wickets and tried to some way keep our small family business.
And with all that being said, through all that we worked,
and we owned probably about 60 percent between he and I
together of our small family business.
Through all that literally I sold every single thing he
had, every single thing he had. And at the end of the day Jim
Justice, Jimmy Justice at the time, took care of my sister and
literally paid all the obligations, and it took about 3 years
to be able to do it.
And what money flowed to me was zero.
Chairman WILLIAMS. The gentleman's time is up.
Senator JUSTICE. So, I would tell you just this that it is
the estate planning there our small farms or whatever it may
be, we got to do that, too. So, I am with you. I am with you
1,000 percent I thank you so much for letting me speak. Thank
you.
Chairman WILLIAMS. The gentlemen yields back.
I now recognize Representative Cisneros from the great
state of California for 5 minutes.
Mr. CISNEROS. Thank you, Mr. Chairman.
Thank you to our witnesses for being here today.
Ms. Zimmerman, the Trump administration claims it wants to
restore U.S. manufacturing. The SBA even announced a Made in
America manufacturing initiative, but in your testimony you
mentioned corporate tax loopholes.
Does our tax code incentivize large corporations to move
production back to the United States?
Ms. ZIMMERMAN. Not so much. If you have got enough planners
in place you can save a lot of money by moving it in, moving it
out, and bringing it back. You can cut your tax rate to 10.5
percent if you do what they call roundtripping. And, of course,
I don't think any of us are doing that but the big companies
certainly are because it is costing I believe $70 billion that
would be available for other programs.
Mr. CISNEROS. And do these corporate tax loopholes put
domestic small businesses that manufacture in the United States
at a disadvantage, in your opinion?
Ms. ZIMMERMAN. Well, certainly, because they don't have the
same skills and finesse available to them that the large
companies do. And a lot of them being part of their community
they may not take advantage of them anyway because, you know,
our employees, as has been said here by my colleague next to
me, they are a family. We are not going to send those jobs
overseas. So, yes, a definite disadvantage.
Mr. CISNEROS. Right. And just, you know, the tax code I
would say for small businesses it is already complex and it is
burdensome. Did Elon Musk and DOGE cutting IRS staff, how is
that going to help small businesses at all?
Ms. ZIMMERMAN. It is going to entirely make things worse. I
have advocated for a long time that we go back to having a
small business hotline where a small business who is trying to
be compliant can call in and get some information.
They were getting to a point where they could answer some
questions, at least they could answer our calls and that is all
gone again with the cut in staffing.
Mr. CISNEROS. Yes. So, right now you would say, I guess
again in your opinion, that just with the cuts they are not
going to be more efficient and definitely they are not going to
be more responsive?
Ms. ZIMMERMAN. Well, they are definitely not going to be
more responsive, and they are not going to collect the dollars
that we need. Ironically, they are the one agency that pays for
itself if you let them enforce.
And so, it has just never been very logical to me why we
would cut that back. I think we are probably going to lose, the
number is huge, $700 billion I believe is the number by cutting
back all that enforcement that we just added for the IRS. And
that enforcement wasn't aimed at small businesses. It was
coming from the top 1 percent.
Mr. CISNEROS. Yes. And look, while my colleagues claim they
want tax cuts for small businesses they are also defending the
Trump tariffs. And I am sure you answered this question
numerous times, and I am going to ask you to answer it one more
time just to give a little emphasis there, but how are these
tariffs, which are really taxes, how are they going to impact
small businesses?
Ms. ZIMMERMAN. They are having a huge impact on small
businesses. They are causing to lose a competitive advantage
against big businesses who have negotiating power with their
suppliers that small businesses don't have.
They are causing them not to be able to plan how much
inventory should I have in to meet the Christmas rush. Well, we
have no idea because we don't know what the prices will be
because we don't know what the tariffs will be because we don't
know anything from day-to-day.
Mr. CISNEROS. Yes. With that, I thank you for your answers.
And with that, I yield back.
Chairman WILLIAMS. The gentleman yields back.
We are almost ready to close our hearing and I want to
thank everybody. Does anybody--if I give you 1 minute did you
have any closing arguments that you would like to say?
Mr. Click? Well, this is not a batting order, I mean, you--
yes, ma'am?
Ms. ZIMMERMAN. Very important to me, you know, I work with
Small Business for America's Future and we support all small
businesses. I am not by any means--some of the representatives
and senators here made it sound like we were adversaries. We
are not. We are in this for the same thing. We are helping our
communities. We really are.
But how we can say that just extending the TCJA is the best
thing is what gets me. I certainly don't want tax increases. I
want an explanation of why the large companies in this country
got twice the tax cut that I got and my clients got when the
law went in.
And I would like that to be rebalanced so that we all can
really use the level playing field without smirking as a
phrase. Thank you for having me.
Chairman WILLIAMS. Next, 1 minute.
Mr. AKERS. Yes. We all have different opinions and
different viewpoints on how to make this happen but if small
business is truly the backbone of America, which has been
expressed here by both sides of the aisle, we have no choice.
We have to figure out how to get through this.
I can speak as my small business and as most of our
friends. We have seen a huge impact by the tax cuts that we
have been able to get, so we are going to continue to reinvest
that as long as we continue to have that benefit.
Secondly, I am going to pass my business down. The fact
that I can do it either easy or hard and how much money it is
going to cost is going to be directly impacted by what happens
in this forum. Thank you.
Mr. BRASHERS. I am actually going to agree with Ms. Anne
Zimmerman on something. I think we can improve on the TCJA. I
think there are things that can be done better and so I don't
think it is necessarily something that should just be rubber
stamped exactly as it is.
So, I think this committee and Congress has a very
important job ahead to find ways to make it better, and I think
it can. But with that said, I do think that the Tax Cuts and
Jobs Act as it was passed was a tremendous success.
Some of the statistics out there that we haven't had a
chance to mention, unemployment rate hit a 50-year low, labor
force participation rate was growing at the fastest pace in 20
years, real median household income rose 7.8 percent in 2019, a
record dating back to 1954.
Homeownership was growing at the fastest rate in 15 years,
U.S. stocks were booming, and as I have mentioned earlier, the
net wealth of the bottom 50 percent was actually at the highest
level since pre-Great Recession.
Chairman WILLIAMS. Okay.
Mr. BRASHERS. The poverty rate was down so it was a
tremendous success, and I think we can actually improve that.
Chairman WILLIAMS. Thank you.
Mr. Click, you are our fourth place hitter, cleanup hitter.
Mr. CLICK. Thank you, sir.
Chairman WILLIAMS. Thank you.
Mr. CLICK. Yes, I think there is a lot we can agree on. I
think there are definitely opportunities to improve. I do think
it is critical though to extend the existing TCJA right now,
keep those in place, give some certainty to these businesses.
Keep in mind that, you know, small businesses are the
backbone of America's economy. We create the jobs that pay the
taxes. We are the engine of growth that is going to keep
growing the country and the growth of the innovation.
Chairman WILLIAMS. Okay, thank you.
And our last person to be heard from is Congresswoman
Goodlander from the great state of New Hampshire for 5 minutes.
Ms. GOODLANDER. Thank you so much, Mr. Chairman.
And thank you to our witnesses for being here today. There
is a lot that we agree on. I want to start by asking each of
you do you agree that our tax code is too complicated and the
compliance burdens are too great?
Mr. CLICK. Yes.
Ms. ZIMMERMAN. Yes.
Mr. AKERS. Yes.
Mr. BRASHERS. Yes.
Ms. GOODLANDER. Ms.----
Chairman WILLIAMS. Yes.
Ms. GOODLANDER. Ms. Zimmerman, can I get a yes? Okay, thank
you.
I want to ask you, Mr. Click, how much time and energy by
way of resources does your small business have to dedicate to
tax compliance?
Mr. CLICK. Yes, it is a lot. I mean, we have a professional
CPA firm and we have professional staff, an absolutely
fantastic person in the company who had years in public
accounting to help us grow. And without her I don't think we
would be where we are here today.
Ms. GOODLANDER. Well, Ms. Zimmerman, you shared with us in
your written testimony that the Section 199(a) deduction is so
complex that the vast majority of small business owners
actually cannot determine if they qualify. Many, far too many,
can't determine if they qualify and far too many can't take
advantage of this.
Can you speak to, from your perspective, what you believe
Congress should be doing in the days ahead to address these
disparities which really hurt small businesses overwhelmingly?
Ms. ZIMMERMAN. Balance the tax cuts between big business
and small business, simplify the code, give some first employee
credits to give some immediate relief to people trying to enter
the employer field, staff the IRS, those are a number of them.
Ms. GOODLANDER. I appreciate that. You also testified to
the need to close a series of loopholes in our tax code. What
top three loopholes would you advise Congress to take a hard
look at closing?
Ms. ZIMMERMAN. Oh----
Ms. GOODLANDER. Or maybe just your top loophole? I come
from the Live Free or Die state. We are not big on loopholes.
Ms. ZIMMERMAN. Yes. If I had to pick the top one I would
probably say roundtripping. I think that, which allows
corporations to pay actually a 10-1/2 percent tax instead of 21
so they are lower than even our lowest rate or right down there
with it, and that costs us about $70 billion a year.
Ms. GOODLANDER. Thank you for that. Can we all agree that
tariffs are taxes?
Ms. ZIMMERMAN. Yes.
Mr. CLICK. I don't think so, no.
Ms. GOODLANDER. Okay.
Well, I will ask you, Ms. Zimmerman, because you noted in
your testimony that the pervasive feeling of uncertainty that
small businesses are feeling I hear it every single day from
small businesses all across my state. The uncertainty is
crippling. The uncertainty is bad for the bottom line.
Can you speak to what you are hearing from small businesses
about what threats of trade wars and tariffs that are being
imposed have had on our small businesses around the country?
Ms. ZIMMERMAN. Yes. They are absolutely afraid that it is
going to cut into the small business share of business in this
country because they are going to get hit the worst by tariffs,
increasing prices from the tariffs because they aren't able to
negotiate like the big companies.
They just don't have the same ability to do that. Their
suppliers, when you are 0.1 percent of your supplier instead of
50 percent of your supplier guess what? They don't listen to
you. They don't negotiate with you.
And so that is going to make a huge difference to main
street, huge.
Ms. GOODLANDER. Well, thank you for that.
I would like to enter into the record an article from the
Concord Monitor about the Viking House, which is a small
business in Concord, New Hampshire, in my district. It shares
the story of Emily Glavin who runs this small business. She has
been doing so over for over a decade.
She weathered the COVID-19 pandemic. She put her heart and
soul into this business. And what she sees is clear, and I
think it is clear to many of us in this room today that the
costs from these tariffs, as she put it, `` will be passed on
to us.'' And I think she is right.
Simply put, these tariffs are taxes on hard-working people
and on small businesses, on consumers, and on American families
who are going to be paying the cost for trade wars, senseless
trade wars.
Ms. ZIMMERMAN. A it is going to put some of the small
businesses out of business.
Ms. GOODLANDER. It sure will. Well, I thank you for your
testimony today.
And with that, I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentlelady yields back.
And I want to thank our witnesses for their testimony. I
want to make sure nobody runs over each other trying to get to
that bathroom now we when we leave, but I want to thank you for
appearing before both the House and the Senate committees
today.
Now, without objection, Members have 5 House legislative
days until April 30 to submit additional materials and written
questions for the witnesses to the Chair. Those questions will
be forwarded to the witnesses. I ask the witnesses to please
respond promptly.
And again, thank you for being here. We appreciate it very
much.
And if there is no further business, without objection, the
joint committee hearing is adjourned.
[Whereupon, at 12:45 p.m., the Joint Committees were
adjourned.]
[Ms. Anna Zimmerman did not respond to questions in a
timely manner.]
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