    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

    LOWER TAXES, STRONGER MAIN STREET: THE BENEFITS OF THE WORKING FAMILIES
                                    TAX CUTS

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

                                    HEARING

                                   before the

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD
                                 APRIL 15, 2026

                                   __________

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 119-034
                 Available via the GPO Website: www.govinfo.gov

                                       _______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    63-455                    WASHINGTON : 2026

                       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
                            BRAD FINSTAD, Minnesota
                              TONY WIED, Wisconsin
                          ROB BRESNAHAN, Pennsylvania
                              BRIAN JACK, Georgia
                 KIMBERLYN KING-HINDS, Northern Marina Islands
                             DEREK SCHMIDT, Kansas
                            JIMMY PATRONIS, Florida
                              CLAY FULLER, Georgia
                   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
                        MAGGIE GOODLANDER, New Hampshire

                      Sean Dillon, Majority Staff Director
                     Melissa Jung, Minority Staff Director

                                C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Roger Williams..............................................     1
    Hon. Nydia Velazquez.............................................     3

                                   WITNESSES

    Mr. Garrett Watson, Director of Policy Analysis, Tax Foundation,
      Farmington, AR.................................................     5
    Ms. Traci Tapani, Co-President and Owner, Wyoming Machine, Inc.,
      Stacy, MN......................................................     7
    Ms. Becky Renfro Borbolla, Senior Vice President, Renfro Foods,
      Inc., Fort Worth, TX...........................................     8
    Mr. Michael Negron, Senior Fellow for Economic Opportunity,
      Center for American Progress, Washington, DC...................    10

                                    APPENDIX

    Prepared Statements:
        Mr. Garrett Watson, Director of Policy Analysis, Tax
          Foundation, Farmington, AR.................................    35
        Ms. Traci Tapani, Co-President and Owner, Wyoming Machine,
          Inc., Stacy, MN............................................    43
        Ms. Becky Renfro Borbolla, Senior Vice President, Renfro
          Foods, Inc., Fort Worth, TX................................    50
        Mr. Michael Negron, Senior Fellow for Economic Opportunity,
          Center for American Progress, Washington, DC...............    53
    Questions and Answers for the Record:
        Questions from Hon. Scholten to Mr. Michael Negron and
          Answers from Mr. Michael Negron............................    56
    Additional Material for the Record:
        Associated Builders and Contractors (ABC) Letter.............    59
        Small Business Majority Letter...............................    61
        Baltimore Sun Letter.........................................    64
        American University Letter...................................    68

    LOWER TAXES, STRONGER MAIN STREET: THE BENEFITS OF THE WORKING FAMILIES
                                    TAX CUTS

                                  ----------

                           WEDNESDAY, APRIL 15, 2026

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The Committee met, pursuant to call, at 10:32 a.m., in Room
    2360, Rayburn House Office Building, Hon. Roger Williams
    [chairman of the Committee] presiding.
        Present: Representatives Williams, Meuser, Van Duyne,
    Alford, Wied, Bresnahan, Schmidt, Velazquez, McIver, Cisneros,
    Morrison, Latimer, Tran, Simon, Olszewski, and Goodlander.
        Chairman WILLIAMS. I would like to welcome everybody to
    today's hearing. And before we get started, I would like to
    recognize Congresswoman Van Duyne from the great State of Texas
    to lead us in the Pledge of Allegiance and the prayer.
        Would you please stand.
        Ms. VAN DUYNE. We are going to go ahead and start with our
    prayer for today.
        Heavenly Father, grant our leaders wisdom to choose what is
    right, courage to act with integrity, and humility to serve
    with honor. Guide them to seek truth over power and the good of
    the people above all else. Help us as citizens to be engaged,
    responsible, and united in purpose. May our nation be led with
    justice, strengthened by truth and grounded in your guidance.
    Amen.
        If you would join me in the Pledge.
        All. 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. Before we begin this important hearing,
    I would like to briefly note for all Members that
    Representative Van Duyne and I will be hosting a roundtable in
    Fort Worth, Texas, on Monday, May 4. So please contact
    Committee staff if you have any questions about the logistics
    and the schedule of that. That is for your information.
        So good morning to everybody. I now call the Committee on
    Small Business to order. Without objection, the Chair is
    authorized to declare a recess of the Committee at any time.
        I ask unanimous consent to name Mr. Wied from the great
    State of Wisconsin as Chairman of the Subcommittee on
    Contracting and Infrastructure. Without objection, so moved.
        I now recognize myself for my opening statement.
        Welcome to today's hearing titled, ``Lower Taxes, Stronger
    Main Street: The Benefits of the Working Families Tax Cuts.''
    To begin with, I would like to start off and I would like to
    ask, who in this room wants to pay more taxes? Raise your hand
    if you do.
        Okay. I see none. We are going to move on.
        So--which is why we will discuss how Americans and small
    businesses can keep more money in their pockets.
        I want to also thank our witnesses for joining us today and
    sharing their expertise and experiences. It is important to
    hear about the practical realities of impact of the Working
    Families Tax Cuts Act that congressional Republicans and the
    Trump administration delivered for the American people. Your
    perspectives will help the Committee continue to craft policy
    that serves the needs of small businesses. And I also thank my
    colleagues for joining us as we learn how the Working Families
    Tax Cut Act is benefiting Main Street America.
        Today, the Committee will examine the provisions of the
    Working Families Tax Cuts Act--the largest tax cuts in American
    history--that are especially beneficial to small businesses and
    Main Street America. We will hear how these provisions provide
    greater stability and predictability, enabling small businesses
    to make strategic long-term business decisions with confidence.
        In addition, the Committee will explore how the Working
    Families Tax Cuts Act supports broader economic recovery by
    putting more money back in the hands of small businesses,
    expanding their capacity to invest in their businesses and
    strengthening the economy.
        From 100 percent expensing to no tax on tips, this bill is
    already putting more money back into the hardworking American
    pockets. In fact, just the other day, I was dining at a
    restaurant in my district, and a waitress came up to me to tell
    me that the no tax no tips was allowing her to send her
    daughter to cheerleading camp. This is a simple yet impactful
    story of how this bill supports main street.
        Small business owners have demonstrated remarkable grit and
    resilience in the face of ever-evolving challenges. As a car
    dealer myself, I have experienced many of these challenges
    right alongside them.
        The Working Families Tax Cuts Act offers critical support
    and stability at a time when small businesses need it most. For
    a small business to thrive, they must have the agency and
    flexibility to allocate their capital and resource in ways that
    reflect their unique priorities and circumstances. The Working
    Families Tax Cuts Act provides that freedom, empowering small
    businesses to make the strategic decisions necessary to grow,
    invest, and succeed.
        This hearing is an important opportunity for the Committee
    to deepen its understanding of how the tax policy directly
    shapes its success and stability of small business and to
    identify where our work must continue. We are committed to
    ensuring that our Tax Code works for small business,
    entrepreneurs, workers, and their families who drive this
    economy.
        I want to thank all of our witnesses again today for coming
    up here, leaving your homes. I look forward to the conversation
    ahead.
        Now, with that, I yield to my friend and our distinguished
    Ranking Member from New York, Ms. Velazquez, for her opening
    remarks.
        Ms. VELAZQUEZ. Good morning, everyone. Thank you, Mr.
    Chairman, and welcome to all witnesses this morning.
        Republicans have called this hearing to celebrate the One
    Big Beautiful Bill or, according to their second or third
    rebranding attempt, the Working Families Tax Cuts. It is their
    only policy achievement in the past year, and it is a total
    disaster.
        The centerpiece of this law's supposed benefit for small
    business is the pass-through deduction, costing nearly $736
    billion over the next 10 years. While framed as a small
    business tax cut, it mostly delivers six-figure windfalls to
    the already wealthy and relatively little to middle-class small
    business owners. The top 1 percent captures 55 cents of every
    dollar under this provision. The only rigorous academic
    research on the pass-through deduction found no measurable
    increases in investment, employment, or wages. It is another
    example of failed trickle-down economics.
        It gets worse. To help pay for those tax cuts for the rich,
    Republicans cut Medicaid, stripping 7.8 million people of
    health insurance. On top of that, they refuse to extend the
    Enhanced Premium Tax Credits, resulting in an average premium
    increase of $1,500 for over 4 million small business owners.
    For most middle-class small business owners, that premium
    increase alone wipes out the entire benefit of the pass-through
    deduction.
        Then, they cut $187 billion from SNAP, taking food
    assistance from 4 million people in a typical month. These are
    the customers that small grocers, farmers markets, and local
    food businesses depend on. Tax cuts don't mean a thing if your
    customers disappear.
        It gets worse. While Congress was passing this bill, the
    President was unilaterally imposing the largest middle-class
    tax hike in a generation. According to new analysis, the
    average small business importer paid $306,000.00 more in
    tariffs over the past year than the year before.
        Large corporations can absorb tariff volatility. They have
    supply chain teams, capital reserves, and Washington lobbyists
    that can score them exemptions. But the restaurant owner, the
    small manufacturer, the retailer with one supplier must absorb
    it directly in the margins and by raising prices on their
    customers. Most of these tariffs were ruled unconstitutional,
    but the refunds small businesses are owed have yet to be paid.
        But wait. It gets even worse. Trump's illegal war in Iran
    has sent energy costs soaring, from the gas prices that fuel
    our commute, to the diesel prices that move every product in
    our economy, to the fertilizer prices that determine the cost
    of our food. Multiple analysts are warning of a global
    recession.
        Small business owners cannot plan, hire, or invest in this
    environment. The higher tax refunds that families are receiving
    will be swallowed whole by higher gas prices, redirecting the
    so-called Working Families Tax Cut directly to Big Oil.
        While there are many provisions Democrats have supported in
    the past, like bonus depreciation and expensing for R&D, we
    could not support this abomination in its totality.
        The One Big Beautiful Bill adds over $4 trillion to the
    national debt while transferring wealth from working families
    to millionaires and billionaires. Whatever relief people did
    get has been upset by tariffs, by healthcare, by gas, and by
    the growing cost of living crisis that Republicans have refused
    to address.
        Republicans called this hearing to celebrate their sole
    accomplishment, but small businesses are not celebrating today.
    They are surviving, barely.
        I yield back.
        Chairman WILLIAMS. The gentlelady yields back.
        I now want to introduce our witnesses.
        Our first witness today is Mr. Garrett Watson. Mr. Watson
    is the director of Policy Analysis at the Tax Foundation. He is
    an expert in federal and state tax policy, and his work has
    been featured in The Washington Post, The Atlantic, Politico,
    and other major outlets. Mr. Watson previously worked as a
    senior program manager at a think tank where he conducted
    policy research on economic opportunity and labor markets. He
    earned a bachelor of arts degree in economics and philosophy
    from St. Lawrence University and is a leadership network member
    at the American Enterprise Institute.
        Want to thank you for being here today very much. Look
    forward to our discussion.
        Our next witness is Ms. Traci Tapani. Ms. Tapani is a co-
    owner of Wyoming Machine, a manufacturing company based in
    Stacy, Minnesota. She has spent more than three decades leading
    operations across sales, engineering, production and quality in
    the manufacturing sector. Ms. Tapani currently serves on the
    Small Business Policy Council for the U.S. Chamber of Commerce,
    is a Member of the Fabricators and Manufacturers Association,
    and is a Board Member at the Women in Manufacturing
    Association. She earned a bachelor of science in business from
    the University of Minnesota and has been recognized by the
    Manufacturing Institute with the STEP Ahead Award.
        Appreciate you being here today and look forward to our
    discussion.
        Our next witness today is Becky Renfro Borbolla, who is my
    good friend, as her family is, from the great State of Texas.
    Ms. Renfro Borbolla is the senior vice president of Renfro
    Foods, a family-owned manufacturing company in Fort Worth,
    Texas. A third-generation leader, she has played a key role in
    expanding the company's distribution across the U.S. and
    international markets while leading operations, logistics, and
    export sales to grow the brand's global presence. Ms. Renfro
    Borbolla has received numerous honors, including induction in
    the Specialty Food Association Hall of Fame and the 2016
    Businesswoman of the Year Award from the Fort Worth Hispanic
    Chamber of Commerce. She has earned a associate of arts degree
    from Tarrant County College and a bachelor of science from
    LeTourneau University.
        And I look forward to hearing your words today, and say
    hello to your family.
        I now recognize the Ranking Member, Ms. Velazquez, to
    briefly introduce our last witness appearing before us today.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        Our final witness today is Michael Negron, senior fellow
    for economic opportunity at the Center for American Progress,
    with a focus on economic development, consumer protection, and
    small business policy. Prior to joining American Progress,
    Negron served as a special assistant to the President for
    economic policy in the Biden-Harris administration, where he
    worked with several federal agencies to develop, coordinate,
    and implement small business policy, consumer protection
    initiatives, and other policy areas. A former U.S. naval
    officer, he also served in the White House Office of Management
    and Budget and the U.S. Department of Defense. He earned a J.D.
    from Harvard Law School, a master's from the University of
    Memphis, and a bachelor's in foreign service from Georgetown.
        Thank you, Mr. Negron, for being here today. Welcome.
        Chairman WILLIAMS. The gentlelady yields back.
        And again, we want to thank all of you and appreciate all
    of you being here today.
        Before I recognize the witnesses, we got some rules we got
    to adhere to. And I would like to remind all of you that your
    oral testimony is restricted to 5 minutes in length. If you see
    the light in front of you turn red in front of you, it means
    your 5 minutes is concluded, and you need to shut it down and
    you should wrap up your testimony. If you continue to go, you
    will hear this to remind you your time is up, okay?
        So with that in mind, I now recognize Mr. Watson for his 5-
    minute opening remarks.

    STATEMENTS OF MR. GARRETT WATSON, DIRECTOR OF POLICY ANALYSIS,
       TAX FOUNDATION; MS. TRACI TAPANI, CO-PRESIDENT AND OWNER,
     WYOMING MACHINE, INC.; MS. BECKY RENFRO BORBOLLA, SENIOR VICE
     PRESIDENT, RENFRO FOODS, INC.; AND MR. MICHAEL NEGRON, SENIOR
     FELLOW FOR ECONOMIC OPPORTUNITY, CENTER FOR AMERICAN PROGRESS

                      STATEMENT OF GARRETT WATSON

        Mr. WATSON. Chairman Williams, Ranking Member Velazquez,
    and Members of the Committee, thank you for the opportunity to
    testify today on the impact of the 2025 reconciliation law on
    small businesses and opportunities for future reform.
        The 2025 law delivered important improvements by making
    permanent key provisions from the 2017 Tax Cuts and Jobs Act.
    This provided much needed certainty for small business owners
    and making long-term decisions about investment, hiring, and
    expansion. Notably, the law made permanent the Section 199A
    deduction and the lower individual tax rates that apply to
    small pass-through businesses which comprise most small
    businesses in the United States.
        The law also strengthened incentives for investment by
    restoring full expensing for short-lived assets like equipment
    and expensing for domestic research and development.
        These provisions reduce the tax penalty on investment by
    allowing businesses to deduct costs immediately rather than
    over time. As a result, they support higher levels of capital
    investment, productivity and wages, and are expected to
    contribute meaningfully to long-run economic growth. Tax
    Foundation estimates that permanence for 100 percent bonus
    depreciation and R&D expensing will increase long-run economic
    output by about 0.7 percent and create about 180,000 full-time
    jobs.
        However, despite these improvements, the Tax Code does
    remain overly complex and costly to navigate for smaller firms.
    Small business owners must devote significant time and
    resources to compliance, resources that could otherwise be used
    to grow their operations. Provisions like Section 199A, while
    beneficial, are also among the most complex in the Tax Code,
    particularly for higher income filers who must navigate
    detailed wage and capital limitations.
        There are clear opportunities for further reform.
    Policymakers should prioritize simplifying the existing
    provisions, expanding full expensing to a broader range of
    investments, including all structures, and improving the
    treatment of business losses. Many small businesses face delays
    in realizing the full value of deductions because losses must
    be carried forward, reducing the real value over time due to
    inflation and the time value of money.
        In addition, broader policy uncertainty continues to weigh
    on small businesses in 2026. Recent tariffs, for example,
    increase input costs for firms, and they rely on imported goods
    that can reduce their ability to invest, hire, and grow. Even
    when tax policy moves in a positive direction, uncertainty in
    other areas can offset those gains and lead businesses to delay
    or scale back their plans, as we have seen over the past year.
        Looking ahead, policymakers should focus on creating a more
    stable, predictable, and neutral tax environment that includes
    simplifying the Tax Code, ensuring consistent treatment across
    different types of investments and across different sizes of
    firms, and reducing barriers to claiming incentives, like
    research and development credits, which small businesses often
    underutilize due to administrative complexity compared to
    larger firms.
        Ultimately, a simpler and more stable tax system would
    allow small business owners to spend less time navigating
    compliance and more time doing what they do best: innovating,
    investing, and creating jobs for our communities.
        The 2025 reconciliation law was an important step forward,
    but more can be done to reduce complexity, expand those
    investment incentives, and provide certainty for small
    businesses that are needed to grow and succeed.
        Thank you, and I look forward to your questions.
        Chairman WILLIAMS. The gentleman yields back.
        And before I go to our next witness, I want to clarify
    something. You don't see a lot of our colleagues here right
    now. People are going to come and go today. You haven't made
    anybody mad, but they--we have other hearings, and so they will
    come and go as we continue this hearing.
        So with that in mind, I now recognize Ms. Tapani for her 5-
    minute opening remarks.

                       STATEMENT OF TRACI TAPANI

        Ms. TAPANI. Thank you, Chairman Williams, Ranking Member
    Velazquez, and Members of the Committee, for the opportunity to
    testify today. My name is Tracy Tapani, and I am co-president
    and owner of Wyoming Machine, a manufacturing company in Stacy,
    Minnesota. My family-owned company specializes in sheet metal
    fabrication, and we offer a variety of services to clients,
    from laser cutting to welding. I also serve on the Board of
    Directors for the U.S. Chamber of Commerce, and I am the
    incoming chair of the Chamber's Small Business Policy Council.
        The U.S. Chamber serves and supports more than 5 million
    small businesses through membership, a nationwide federation,
    and digital platforms, giving small business representation
    resources and a powerful voice at national scale.
        Anyone who has operated a business knows that long-term
    investment requires certainty. On this tax day, small
    businesses like mine are already benefiting from the certainty
    provided by the Working Families Tax Cuts, which strengthen
    cash flow, enhance predictability, and empower main street to
    plan for growth. The Working Families Tax Cuts also support
    workforce training and helps hardworking Americans keep more of
    their wages. Today, I will highlight how these policies are
    helping small businesses in sectors like manufacturing.
        First, tax policy that provides permanency and immediate
    expensing reduces risk and unlocks investment. Manufacturing is
    capital-intensive. When we invest in equipment, we are not
    buying nice-to-have items. We are buying capability to compete
    and to keep production here at home.
        Nearly all U.S. manufacturing firms are small businesses.
    Because these firms are capital-intensive, full and immediate
    expensing directly enables investment and equipment that drives
    productivity, stable jobs, and U.S. manufacturing
    competitiveness. Specifically, the 100 percent bonus
    depreciation for new equipment contained in the tax law is
    hugely helpful.
        Before this reform, smaller manufacturers could only deduct
    40 percent of the cost of major technology purchases in the
    first year and 20 percent in the second, meaning we had to
    carry more of that cost for longer. The new rules allow full
    deduction upfront, giving a business like mine the ability to
    invest and advance manufacturing technology, like handheld
    laser welding and other productivity tools.
        In 2025, our welding department was running about 5 weeks
    behind schedule for months. The kind of backlog puts a small
    manufacturer in a tough position. When you can't deliver on
    time, customers have to look elsewhere, including overseas. I
    struggled to find skilled TIG welders we needed to keep up with
    this demand. Fiber laser welding lets less experienced operator
    do the work that normally requires a top-tier TIG welder. That
    is why investing in fiber laser welding became urgent for us,
    so we could clear the backlog, meet delivery dates, and keep
    customers from sourcing elsewhere. Full expensing and the
    certainty that it will remain in place helped us make that
    investment faster before delays turned into lost customers.
        Just as important as equipment is the workforce needed to
    run it. The workforce training and short-term Pell that will
    begin this summer under the Working Families Tax Cuts have also
    had a positive impact on small businesses like mine. While we
    eagerly await that funding option, I have confidence it will
    help lead more Americans directly into the workforce, filling
    in-demand jobs like welding.
        I have this confidence thanks to partnerships like the one
    we have established with Pine Technical and Community College
    in Pine City, Minnesota. We currently partner with students in
    short-term programs by providing internships and part-time jobs
    that add real-world experience to their classroom training.
    Even before short-term Pell is available, I currently have a
    student working at Wyoming Machine who is enrolled in short-
    term training, and she is already contributing on the shop
    floor, using our handheld laser welding technology.
        For small manufacturers, short-term Pell can accelerate the
    pipeline into welding and machining jobs by helping students
    afford short programs and by strengthening employer-connected
    work-based learning.
        Congress also made a commonsense decision to remove taxes
    on overtime. In my metal fabrication business, overtime happens
    when we are responding to customer demand on short notice. For
    example, when a customer lands an unexpected sale of equipment
    and needs a rush order fulfilled, our team may put in extra
    hours to meet that demand, and they should be able to keep more
    of their hard-earned money for stepping up. When my employees
    can keep more of that hard-earned money in terms of wages, they
    are more inclined to continue stepping up, ultimately leading
    to a happier and stronger workforce.
        Thank you again for the opportunity to testify. The Working
    Families Tax Cuts are enabling small businesses to do what we
    do best: build, innovate, and create jobs.
        I look forward to answering your questions.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Ms. Renfro Borbolla for her 5-minute
    opening remarks.

                   STATEMENT OF BECKY RENFRO BORBOLLA

        Ms. RENFRO BORBOLLA. Good morning, Chairman Williams,
    Ranking Member Velazquez, and Members of the Committee. My name
    is Becky Renfro Borbolla of Fort Worth, Texas, and I am the
    senior vice president of Renfro Foods, a third-generation
    family business that produces Mrs. Renfro's salsa, sauces, and
    relishes.
        Mrs. Renfro's was started by my grandparents shortly after
    the Great Depression when my grandmother and grandfather,
    Arthurine and George Renfro, began creating delicious spices
    and vinegars in their home on Gould Avenue in Fort Worth.
    ``Mam-Maw'' Renfro preferred to be called ``Mrs. Renfro,'' so
    it was a natural that their products, which soon expanded to
    syrups and the southern relish commonly known as ``chow-chow,''
    were named in her honor.
        During the 1960s, my grandparents sold Mrs. Renfro's
    products at fruit and vegetable stands in Fort Worth, and
    eventually expanded our product line to include hot sauces and
    picante sauces. This is when our family's business truly began
    to become the brand that it is today.
        Before long, my grandparents' company outgrew their home,
    and they purchased a building nearby on Stella Street, where
    our company is still headquartered today. Mrs. Renfro's
    products are now sold in supermarkets, gourmet food stores, and
    gift shops in all 50 States and in more than 30 countries
    worldwide.
        Family has always been central to Renfro Foods.
        We just recently lost my uncle. Sorry.
        Okay. So my father, Bill, and his siblings, Jack and Linda,
    spent much of their childhood at the building on Stella Street.
    As adults, they joined the company devoting their time to
    growing Renfro Foods. Dad was the company's longtime CEO
    leading corporate strategy functions at the business--sorry--
    and his brother Jack was the COO handling the manufacturing.
        Today, my cousin Doug, my brother James, and I are the
    third-generation management of our family's company. Through it
    all, we have remained a small family company in the same
    building in that fast growing Texas city known as ``where the
    West begins.'' We have made it because we stayed true to the
    things Mam-Maw and Paw-Paw Renfro cared about from the
    beginning: True to family, true to flavor.
        This passage of the Working Families Tax Cuts in July of
    last year was critical for businesses like ours, family-owned
    small businesses whose products can be found around the world
    yet remain deeply rooted in our local communities. What began
    as a modest enterprise has, over generations of hard work and
    reinvestment, become the foundation of our family's livelihood,
    past, present, and future.
        The certainty provided by permanently extending key
    provisions of the Tax Cuts and Jobs Act that supports small
    businesses has helped ensure that this work can continue into
    the next generation.
        As others on the panel will discuss today, the permanency
    of provisions like the 20 percent small business deduction
    under Section 199A, along with policies that support growth and
    investment, such as full bonus depreciation, helps businesses
    like ours to continue to compete with much larger companies
    operating in the same market space. Small businesses are
    grateful that Congress acted to prevent a massive tax increase
    and to provide the stability necessary to plan, invest, and
    hire without the uncertainty of temporary tax policies.
        For family-owned businesses, the increase in permanence of
    the estate and gift tax exemption was especially meaningful. It
    provided long overdue certainty and allows families like mine
    to focus on long-term planning, reinvestment, and succession,
    rather than costly estate planning to prepare for a sudden tax
    change that can disrupt decades of work. That stability has
    been invaluable.
        As Congress considers ways to continue strengthening this
    support, there are opportunities to build on that success.
    Ideally, eliminating the estate tax, often called the death
    tax, altogether would be the most complete solution to allow
    family-owned businesses to grow, reinvest, and transition
    across generations without disruption.
        I appreciate the Committee's consideration of these issues
    and the opportunity to share my family's experience today. I
    look forward to any questions you may have. Thank you.
        Chairman WILLIAMS. The gentlelady yields back.
        On a personal note, you did very good under tough
    circumstances.
        Ms. RENFRO BORBOLLA. Thank you. I fly home tomorrow for his
    services. Sorry.
        Chairman WILLIAMS. I now recognize Mr. Negron for his 5-
    minute opening remarks.

                      STATEMENT OF MICHAEL NEGRON

        Mr. NEGRON. Thank you.
        Thank you to Chairman Williams, Ranking Member Velazquez,
    and Members of the Committee, for the opportunity to address
    you today. I also appreciate being on a panel with small
    business owners and Garrett and hearing their stories.
        First, just a little bit about my background. I have been
    fortunate to have small business owners throughout my direct
    and extended family. My father-in-law had a successful
    chiropractic practice in northern Michigan for decades before
    he retired to work now as a real estate agent in Florida. His
    brothers and sisters all own or owned small businesses--in some
    cases, multiple businesses--in northern Michigan. Decades ago,
    my mother and her sisters unsuccessfully tried their hand at
    opening a small Guatemalan restaurant underneath an ``L'' stop
    in Chicago, and my sister is a small landlord in Providence.
        I have also been able to work on policies to try and help
    small businesses at every level of government: state, federal,
    local. As policy director to Chicago mayor Rahm Emanuel, some
    of our first actions in office in 2011 focused on small
    businesses. We eliminated 70 percent of business licenses to
    reduce red tape. We eliminated a decades-old per-employee head
    tax that was charged to businesses that the current mayor has
    tried to bring back. At the state and the federal level during
    the pandemic, I was able to work on emergency relief programs
    to help keep small business doors open.
        I am here to talk about what the One Big Beautiful Bill Act
    and the broader Trump agenda has meant for small businesses.
    The reality is that the benefits of this bill, while there are
    good stories here and there, have flowed to a minority of small
    businesses, primarily wealthier and larger businesses, while
    most are facing higher costs due to his broader agenda:
    tariffs, the war in Iran, cuts to healthcare and other
    programs.
        Under the administration's broad imposition of tariffs on
    products coming in from virtually every country, the typical
    household is paying about $1,700 more in tariffs over the
    course of the first year of the administration. All Americans
    are facing these higher costs, but small businesses in
    particular are hit hard.
        I recently released an analysis with some colleagues at the
    Center for American Progress that found that your typical small
    business importer--there are about 236,000 of them--saw their
    tariff costs triple, with an average monthly increase of
    $25,000 a month, due to these tariffs. Overall, these small
    business importers paid $306,000 more in tariffs from March of
    2025 to February of 2026 compared to the previous year.
        Another major area of heightened costs for Americans and
    small businesses is healthcare. Healthcare premiums doubled on
    average amongst the 20 million Americans--the more than 20
    million Americans with subsidized marketplace coverage due to
    the expiration of their Affordable Care Act Enhanced Premium
    Tax Credits. About half of those affected individuals are
    either small business owners, self-employed individuals, or
    employees at businesses with fewer than 25 employees.
        Small businesses are also facing huge spikes in gas and
    diesel costs due to the war in Iran. Gas prices are up 40
    percent. Diesel prices are up more than 50 percent. And we have
    seen FedEx, UPS, Amazon, and the U.S. Postal Service all
    announce higher fuel surcharges or other shipping costs, citing
    the spike in fuel costs.
        In the past week, we have seen indicators of consumer and
    business inflation come in hot with year-over-year increases in
    the Consumer Price Index of 3.3 percent and in the Producer
    Price Index of 4 percent.
        And then on the other side of the ledger, the tax benefits
    of the One Big Beautiful Bill Act have flowed to a smaller,
    wealthier subset of businesses. And the tax cuts themselves,
    the refunds that people are receiving, have failed to live up
    to the expectations that were set by this White House.
        As noted, the One Big Beautiful Bill Act made permanent the
    qualified business income deduction. And since its creation in
    2017, this deduction has primarily benefited wealthier business
    owners. Half of the benefits of the 199A deduction to date have
    gone to millionaires, and two-thirds have gone to people
    earning more than $500,000 a year.
        So when reviewed in the full context, I believe the story
    of the One Big Beautiful Bill Act is that the benefits it
    offers in the form of reduced taxes are mostly enjoyed by
    wealthier Americans and businesses. The relatively fewer
    benefits it has offered to everyone else are right now being
    outweighed by higher costs due to tariffs, due to cuts, and due
    to the impact of the war in Iran. This is not a legacy to
    celebrate today.
        Thank you for the opportunity to speak today, and I look
    forward to the discussion and any questions.
        Chairman WILLIAMS. The gentleman yields back.
        We will now move to Member questions under the 5-minute
    rule that we discussed earlier. I recognize myself for 5
    minutes.
        Ms. Renfro Borbolla, the Working Families Tax Cuts were
    designed to ease the financial burden on families and small
    businesses, helping them invest in their employees, expand
    operations, and plan for the future. So my question would be,
    could you explain how the estate tax provisions affect your
    long-term business planning, and specifically, do these
    provisions make it easier to ensure the continuity of your
    business?
        Ms. RENFRO BORBOLLA. So I would love to see, as I call it,
    the death tax go away and capital gains go away. We want to--
    you know, I pay taxes. My grandmother paid taxes. Our company
    paid taxes. And then grandma passes away. We have to pay taxes
    on the taxes that we have already paid. And a lot of companies
    have to sell the farm, have to sell the company or a portion of
    the company to be able to pay those taxes. And that is horrible
    that generational companies and farms are having to be sold to
    pay taxes on taxes that they have already been paid.
        Chairman WILLIAMS. All right. Thank you for that.
        And, Mr. Watson, congressional Republicans ensure that the
    Working Families Tax Cuts includes provisions to improve small
    businesses' cash flow and access to incentives. My question is,
    can you walk us through how these provisions reduce barriers
    for small businesses trying to invest and trying to grow?
        Mr. WATSON. For sure. So the 2025 reconciliation law
    provided for permanence for 100 percent bonus depreciation for
    short-lived assets, so they can immediately and fully deduct
    the costs of those investments. And that is particularly
    important for small businesses just because they often don't
    have the cash flow or the margins necessary to wait to take
    those deductions in future years. Large firms, big corporations
    have the liquidity on hand to go ahead and wait there, but for
    small businesses, it can make a very big difference.
        It is especially true for domestic R&D expensing, which is
    something else that was made permanent in the law. And one
    thing that was also important was that permanence part because
    it sets aside that uncertainty. Folks don't have to worry about
    changes in the underlying law or uncertainty about what will
    happen in Congress, which was a game changer for folks. And we
    find that that is the biggest bang for their buck, meaning
    benefits economic growth for the revenue that you lose comes
    from expensing for R&D and for those investments.
        Chairman WILLIAMS. Thank you.
        Ms. Tapani, as you know, the Working Families Tax Cuts Act
    extended and made permanent the 100 percent bonus depreciation,
    which we have all been talking about this morning, while also
    adding a new provision of no tax on overtime. So could you
    describe how these specific elements of the Working Families
    Tax Cuts have benefited your business and your employees?
        Ms. TAPANI. Certainly. The only way that U.S. manufacturers
    can remain competitive in this global economy is to invest in
    equipment. We need people, we need equipment, and raw materials
    to be successful. And if you are not constantly investing in
    equipment, you cannot meet the needs of your customers. I mean,
    I am dealing with enormous manufacturers in the State of
    Minnesota and throughout the country that have ever-increasing
    demands and needs, so to be able to invest in that equipment is
    really helpful. It is also helping us close the skills gap,
    which I think is important.
        When we can't deduct the cost of that equipment right away,
    I might as well get out a crystal ball and try to predict what
    is going to happen in the future. Manufacturing has been in
    contraction, in and out of contraction, for the past several
    years, and my crystal ball doesn't show me when that is going
    to come to an end. So being able to make a decision today to
    buy something and expense it is everything to my business. It
    is serving my community and my customers.
        As far as my employees go, when they have to work overtime
    to help us get a project done that has come in unexpectedly for
    a customer, they might have to leave their children in daycare
    for longer. They might have additional expenses. Everybody
    knows people are experiencing higher grocery costs and some
    other costs. The more of that hard-earned money that they can
    keep is important to them. Their happiness and their ability to
    pay for their everyday needs--their childcare, their
    healthcare, whatever that might be--matters to me. So I am
    thankful that they can keep more of their overtime pay.
        Chairman WILLIAMS. Thank you. The gentlelady yields back.
        Well, with the time we have left, I want to say one thing
    about the inheritance tax. One of the things--and with your
    help--with your help, Ms. Renfro, we were able to take it from
    $11 million per couple to $30 million--or $15 million to $30
    million. So that helps a lot of people so we don't lose the
    family farm. Thank you for your help on that. I appreciate it.
        With that in mind, I now recognize the Ranking Member for 5
    minutes of questions.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        Mr. Negron, as the saying goes, the purpose of a system is
    what it does, not what it claims to do. We hear a lot of
    wishful thinking from our Republican colleagues about what they
    want the pass-through deduction to do, from increasing
    investment to creating jobs, but rarely do they contend with
    the actual outcomes.
        Mr. Negron, what does the pass-through deduction do?
        Mr. NEGRON. Well, on its face, it reduces the tax burden of
    sole proprietors, S corps, and partnerships who are now
    allowed, going forward, to deduct 23 percent of their qualified
    business income, which is essentially their net profits.
        What we have seen is, essentially, the more income you
    have, the bigger benefit that you get from the deduction. Now,
    there are income caps in the QBI provision, about $550,000 or
    so married, $270,000 joint--or individual. And what we are
    seeing is that these benefits are really skewed towards the
    wealthiest businesses. I have used some of the numbers--half
    going to millionaires, two-thirds going to people who earn more
    than $500,000, only 6 percent to businesses that earn less than
    $150,000. And so the $736 billion going forward for the next 10
    years, it is primarily going to the wealthiest businesses.
        Ms. VELAZQUEZ. And of the academic research that exists on
    the effect of the pass-through deduction, have they found a
    measurable increase in employment, wages, or investment?
        Mr. NEGRON. No. As you mentioned, the definitive study on
    this from February of 2025 in the Journal of Public Economics
    found no benefit to wages, to job creation, or to physical
    investment.
        Ms. VELAZQUEZ. About three-quarters of the people who claim
    this deduction make less than $200,000 per year; arguably, the
    people who are most in need of tax relief. How does the size of
    their tax benefit compare to someone who makes millions of
    dollars per year?
        Mr. NEGRON. Well, just to give you one example, using just
    Joint Committee on Taxation analysis, businesses that earn less
    than $150,000 were making about $425 on average in tax benefits
    through the pass-through deduction compared to hundreds of
    thousands in benefits that go to wealthier businesses. And that
    $425 can get canceled out pretty quickly when you look at
    tariffs, when you look at gas prices.
        Ms. VELAZQUEZ. While Republicans were passing a $4 trillion
    tax cut for the rich and cutting $1.5 trillion in healthcare
    and food assistance for the poor, the President was enacting
    the largest middle-class tax hike in a generation through
    tariffs. How are tariffs affecting small businesses in
    particular?
        Mr. NEGRON. Well, I would point to a couple of different
    things. So first, it is just the costs themselves. You know,
    what are tariffs? Tariffs are a tax. Tariffs are a tax that a
    consumer, a business has to pay to bring a product in from
    another country. They pay it at the port of entry--plain and
    simple, it is money. But also more red tape. You have to
    actually--because the tariff system is more complicated, you
    are having to track the products that you are bringing in more
    carefully, not only to make sure you are paying the right
    amount, but to avoid any compliance issues.
        And I think the third is just predictability. Right now, if
    you are a business, you are a toy store, you are a neighborhood
    retailer, you are trying to plan for Christmas. The picture is
    a little murky. You have got the 10 percent across the board
    tariffs that the President put in place following the Supreme
    Court decision. That should end in mid to late July. What is
    coming after that? What is next?
        So it is very hard to plan right now for that future, and
    that is just another barrier hanging over the heads of small
    business owners.
        Ms. VELAZQUEZ. Thank you, Mr. Negron.
        Mr. Watson, when it comes to the interaction between the
    President's two main economic policies, how does the cost of
    the tariffs affect the overall impact of the One Big Beautiful
    Bill?
        Mr. WATSON. So I think Michael got this right in that
    tariffs are a tax. And the risk is that that tax, which is
    going to be passed onto consumers and American workers, there
    is a risk that it is going to offset a big portion of the tax
    cuts that were delivered last year, particularly when you look
    at the distribution of that. Lower income folks, working class
    folks, larger portion of their after-tax income is going to be
    eaten up by those tariffs. And so that is probably one major
    reason that we should be reconsidering that regime.
        Ms. VELAZQUEZ. Thank you. I yield back, Mr. Chairman.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Ms. Van Duyne from the great State of Texas
    for 5 minutes.
        Ms. VAN DUYNE. Thank you so much, Mr. Chairman.
        And I want to thank all of our witnesses for joining us
    today. I am especially excited to have our north Texan here,
    Ms. Becky Renfro Borbolla of Renfro Foods, testifying in front
    of the Committee today. We just had your Fort Worth Chamber, I
    just met with earlier, and they wanted me to give you a hard
    time, and I told them I wasn't going to do that. I asked what
    questions that I should ask and they said maybe not.
        But this past summer, Republicans passed the Working
    Families Tax Cuts, and it was the most consequential tax
    package in generations. Today, I am proud to celebrate the
    several transformative small business provisions contained in
    this landmark legislation which will deliver real and lasting
    benefits to small business owners across the nation.
        This bill made permanent the 20 percent qualified business
    income deduction under Section 199A, providing critical long-
    term relief to millions of pass-through businesses. It restored
    100 percent bonus depreciation and immediate expensing for
    business investments and qualified property like machinery,
    making it much easier for small business owners, not
    billionaires, to invest in new technologies and stay
    competitive. It also reinstated full and immediate expensing
    for research and development, allowing, again, small business
    entrepreneurs to invest in new ideas, products, and
    technologies to fuel the next wave of American innovation.
        That being said, I think the most critical and crucial
    aspect of the Working Families Tax Cuts is that it made these
    provisions permanent. For far too long, small business owners
    operated under the cloud of temporary tax relief and impending
    expirations, and now they have certainty that they need to
    effectively plan for the future. They have told us over and
    over again they can plan if they know what the rules are, but
    when the rules consistently change, they don't know how to
    invest. It is actually said that the previous tax bill from
    2017, because it had a date set to expire, that we might have
    missed out on as much as 80--I am sorry--$800 billion of
    investments.
        So I just have a quick question. How many of you are
    billionaires on this panel? How about billionaires in the room?
    No? But you are all here to testify on, like, the benefits of
    this bill, right?
        So it is not just like the massive billionaire companies. I
    think that is an important thing to note.
        This morning, I started off--I had an 8 a.m. roundtable
    where we had eight people--eight constituents in Virginia that
    talked about how important this small--you know, to small
    businesses this Working Families Tax Cut bill is. These are not
    large companies. These are not massive corporations. These were
    small mom-and-pop shops that it really made a difference to.
        Ms. Borbolla, I want to ask you, how beneficial is it for a
    company like Renfro Foods to have a solid picture of what the
    tax environment will look like 5, 10, 15 years out?
        Ms. RENFRO BORBOLLA. It allows us to pay our employees
    more, provide benefits. We have matching 401(k). We pay 100
    percent of their healthcare insurance premiums and 50 percent
    of their dependents. That is huge. We cannot do that if we
    don't know what the taxes are going to be tomorrow or in 5
    years.
        Ms. VAN DUYNE. So are you investing more and, like,
    upgrading and scaling up in the future growth of your business
    as a direct result?
        Ms. RENFRO BORBOLLA. Yes, we are. And one of the things we
    upgraded that the bonus depreciation helped us was we put in a
    line--a new production line that ran--took us from running 100
    jars a minute to 200 jars a minute, and then the pandemic
    happened. And our sales doubled overnight because people are
    staying home and they were buying salsa, chips, pasta sauce,
    pasta, all the comfort foods. And allowing us to do that
    allowed us to stay in business and fill orders.
        And our employees loved it because they were getting lots
    of overtime and they loved all the overtime. And in 2 years,
    out of 70 employees, we had five cases of COVID in our entire
    plant.
        Ms. VAN DUYNE. That is incredible.
        Ms. Tapani, what was the best part of the tax cuts bill for
    you?
        Ms. TAPANI. I would start by saying that leading up to the
    expiration or potential expiration of many of the things that
    were in the 2017 tax bill, it was very stressful for small
    business owners, because here we are in 2025 not knowing what
    could happen at the end of the year. So we started off, you
    know, in the end of 2024, the beginning of 2025, not being able
    to make a plan for anything because we don't know what the tax
    situation is going to be.
        In my particular business, besides the fiberoptic laser
    welding that I mentioned, we have made an investment in fiber
    laser cutting. Representative Stauber is not in the room right
    now; he came to my facility to see that. And we were able to
    use bonus depreciation on that equipment as well.
        Sometimes when you think of people's equipment--I am a
    small business--you might not realize that if I buy a laser
    cutting machine, we are talking about 500 thousand to a million
    dollars of an investment for me. I am putting my company at
    risk. I am putting my family at risk. I am putting my employees
    at risk when I make a decision like that. Being able to deduct
    immediately makes a huge difference.
        Ms. VAN DUYNE. Great. Thank you very much.
        Ms. Borbolla, quick question. Where can we buy your salsa
    in D.C.?
        Ms. RENFRO BORBOLLA. Okay. Chevy Chase, supermarket----
        Ms. VAN DUYNE. There you go.
        I yield back. Thank you.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Mrs. McIver from the great State of New
    Jersey for 5 minutes.
        Mrs. MCIVER. Thank you so much, Chairman, and thank you to
    the Ranking Member for hosting this hearing today. I want to
    thank each witness for being here.
        And, Ms. Borbolla, I want to offer my condolences to you
    and your family, and praying for you all with the loss of your
    uncle.
        Small businesses are struggling. They didn't know what they
    were doing in 2025, and now in 2026, they still don't know what
    they are doing. Here we are almost a year after Republicans
    passed the big ugly bill, and the economy is not stronger. It
    is on the brink of collapse. Inflation and gas prices are
    skyrocketing, job growth has stopped, wages are declining, and
    confidence in the economy is at a record low. The
    administration's plans to rob the working class to give money
    to the wealthy has raised costs and cut healthcare and
    nutrition assistance. Working families and young people are not
    feeling relief. They are falling behind. Small businesses
    depend on these customers to keep their lights on. When
    families pull back, those businesses have to shut their doors.
        The reality is simple. The big ugly bill is creating an
    economy that only produces profit for the 1 percent.
        Mr. Negron, I want to thank you for your testimony. It was
    a MasterClass here. One, because it had a lot of facts, right.
    A lot of facts, a lot of numbers, and honestly I might print it
    and put it on the front door of my office so people understand
    exactly what we are dealing with here.
        Inflation on everyday goods is skyrocketing, that you
    talked about, and incomes for families--the incomes families
    rely on to pay for these are plunging, literally.
        How is this combination killing the purchasing power of
    working families, and how does that hurt small business? I know
    you talked a little bit about it on your testimony, but can you
    elaborate a little more about that?
        Mr. NEGRON. Yes. First, and if my wife is watching, the
    fact that you called anything that I have done a MasterClass, I
    hope she is taking that to heart.
        So I would say a couple things. First, we have talked about
    the fact that people are paying more, so it is a $1,700 per
    household just for the first year due to the tariffs, just the
    fact that small business importers are paying more. Those costs
    get spread around.
        But what we are also seeing is due to this war. The price
    of gas is up more than 40 percent, the price of diesel up more
    than 50 percent. The price of jet fuel is up more than 90
    percent. The price of fertilizer is up more than 50 percent.
    And so you see that first at the pump, but then it makes its
    way through everything else: grocery prices, online purchases,
    plane tickets, you name it. The longer this goes on, the more
    it will filter through the economy.
        And so you see these headwinds that are being imposed by
    these policies. And on the other side of the ledger, we just--
    my organization just put out a study yesterday showing that the
    increase in refunds under the One Big Beautiful Bill Act is
    coming in about $650 less on average per taxpayer than what the
    White House had anticipated. So instead of a thousand dollar
    bump in refunds, we are seeing closer to $350.
        And so when you line those all up against each other, the
    costs of these policies are exceeding the benefits of those tax
    cuts to the vast majority of people. And I think that is the
    economic headwinds that we are facing.
        Mrs. MCIVER. Yes. Thank you for that.
        You know, small business bankruptcy surged 67 percent from
    last year due to the worsening of the economy. And you talked
    about the one big, you know, beautiful bill, and the
    administration and policies. How have, you know, they helped or
    how has this bill helped create this increase in, you know,
    small business bankruptcies, you think, in your opinion?
        Mr. NEGRON. Well, I would just say that the uncertainty of
    the tariff regime, the additional costs, those are likely
    contributors. I haven't seen studies that unpack that increase
    in bankruptcy, so I am speculating just on the basis of what we
    know to be the case is that people are facing--businesses are
    facing higher costs due to the tariff taxes.
        Mrs. MCIVER. Yeah. Thank you for that.
        With that, I yield back.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Mr. Wied from the great State of Wisconsin
    for 5 minutes.
        Mr. WIED. Thank you, Mr. Chairman. And thank you to all of
    our witnesses for being here today.
        You know, after 4 years of overregulation and over $1
    trillion in increasing compliance costs under the Biden
    administration, the Working Families Tax Cuts are a major step
    forward towards leveling the playing field for America's small
    businesses. From the codification of 199A deductions and the
    R&D expense deductions, to the creation of new opportunity zone
    and no taxes on tips and overtime, Republicans are committed to
    helping entrepreneurs start and grow their businesses.
        As a former small business owner, I know firsthand the
    importance of many of the pro-small business tax provisions
    that were included in the Working Families Tax Cuts. For some
    businesses, these deductions can be the difference between
    growing their small business and laying people off. We have
    already seen the benefits of these tax cuts as in March alone
    our economy added 178,000 jobs. I look forward to our
    discussion today about the Working Families Tax Cuts and how
    this Committee can improve the important part of our nation's
    economy, which is main street.
        Mr. Watson, one of the most common lies folks on the other
    side of the aisle like to tell is that the Working Families Tax
    Cuts only benefits the wealthy and the big, big businesses. If
    we look at one aspect of the Working Families Tax Cuts, which
    is the 199A, a report from the bipartisan Congressional
    Research Service found that 80 percent of the 199A claims were
    filled by those making less than $200,000 in a year.
        How important are 199A deductions for the smallest of
    America's small businesses?
        Mr. WATSON. Part of the motivation for 199A, of course,
    was, in 2017, we reduced the headline corporate tax rate from
    35 percent to 21 percent, and it was really important that we
    had some degree of parity between those larger corporations and
    smaller firms so that they didn't think about the type of
    business that they need to be to get the tax cut. And the 20
    percent deduction helped create that parity and simplified that
    difference. And as you said, a lot of small businesses do claim
    that deduction when they have net income. Also, when you look
    at the weight of economic activity, a lot of, you know, big
    firms who hire a lot of folks who earn a lot of income are
    getting a lot of that benefit. That is because they are
    contributing to the economy. So that is what we would expect
    under a progressive tax system.
        Mr. WIED. Ms. Tapani, manufacturing employs almost a
    quarter of working-age people in our district, in Wisconsin's
    Eighth Congressional District, with over 90 percent of the
    manufacturers are small businesses. How have the Working
    Families Tax Cuts allowed you to reinvest your tax savings into
    your manufacturing business?
        Ms. TAPANI. I think in a number--sorry. I don't know how to
    use a microphone apparently.
        You know, I have already talked about investments in
    equipment. I know that I have heard a number of people mention
    that people's wages are not increasing. At Wyoming Machine,
    that is not true. Ever since we came out of the COVID pandemic,
    people's wages have been steadily rising. April is the month in
    which my employees, all of them, will receive a pay change.
    They will be receiving it this year. They received a bonus at
    the end of last year. Even people that were temporary employees
    that were working for me received a bonus even though they are
    not actually employees of Wyoming Machine at this point in
    time.
        So we are investing in people. We are investing in
    equipment. We are using some of the money that we have
    available to us to employ people with disabilities in our
    community, working with organizations like RISE who employs
    people that need extra assistance in the workplace. We are
    working with our high schools and our technical colleges to
    provide internships and part-time jobs for people so that they
    can earn necessary--or learn the necessary skills that they
    need to move on.
        So I don't agree with this idea that we are not investing
    back in our business. I know a lot of small business owners.
    Some of them are my customers, some of them are my suppliers,
    some are my colleagues on the Small Business Policy Council,
    and I have yet to hear someone who doesn't have a story about
    how they have invested back in their business, in their
    employees, and in their communities.
        Mr. WIED. Thank you.
        Ms. Borbolla, a family-owned business like yours takes a
    long-term view and must balance responsibility with
    sustainability for employees and the next generation of
    business owners. So from your perspective, how has the Working
    Families Tax Cuts helped you invest in employees in the long-
    term stability of your business?
        Ms. RENFRO BORBOLLA. The same as Ms. Tapani. We have given
    a pay raise every year. We gave bonuses at the end of December.
    And we have generational workers. We have mom and son and
    grandson working for us. So we are--the management side is
    multigenerational, but also our employees are
    multigenerational. They tell their son and daughters and
    grandchildren, You need to go to work for the Renfros. And we
    want to keep them, so we pay higher wages so that they don't
    leave us. And we have had a few leave and find out the grass is
    not greener on the other side and they come back.
        Mr. WIED. Thank you all very much. I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Ms. Simon from the great State of
    California for 5 minutes.
        Ms. SIMON. Thank you.
        Thank you, Chair Williams and Ranking Member Velazquez, for
    holding this hearing. And I really want to thank our panel
    today.
        And, ma'am, thank you so much for talking about workers
    with disabilities and working with RISE. They are a fantastic
    organization. And it is small business owners like you who are
    really, really living this idea of inclusivity. As a person
    with disabilities and who has advocated for workers with
    disabilities, there are far few folks like yourself. So thank
    you so much.
        I would like to align myself with my colleagues' concerns
    about the negative impacts felt by small businesses in this
    last year and a half. And, you know, I want to actually frame
    my comments to focus on the systemic implications of H.R. 1:
    the indiscriminate tariffs, cuts to Medicaid and SNAP, and
    increasing cost of living of many of the employees that we have
    talked about today. Rent is higher. Groceries are higher. Gas
    is ridiculous. Folks, not just business owners but workers, are
    feeling squeezed to a point of no return.
        A specific example point that I would like to discuss is
    the ACA tax credits which expired in December of last year. So
    consider a story of a small family business in my district, an
    architectural firm, founded as a first-generation small
    business, and it has been operating successfully for 20 years.
    They are a micro-business, less than 10 employees. But they
    weathered the storm of 2008 and weathered the storm of COVID
    and continued to move forward until--until--because of the
    lapse in healthcare subsidies used to offset tax breaks for the
    wealthy in H.R. 1, their own health insurance for their lovely
    and amazing and hardworking employees, their premiums increased
    by 245 percent. 245 percent. Premiums increased from $765 a
    month to $1,800 a month per employee. This is an increase of
    more than $13,000 a year per employee for bare-bone health
    coverage.
        The increase has wiped out the discretionary income and has
    devastated the small business' ability to grow and to hire,
    much less give raises. The business recently brought in a new
    employee, a new mom, whose expertise they need to expand the
    firm. But this year they could not offer her health benefits.
        So I have a lot more written here, but I am just going to
    go straight to my question for Mr. Negron. The Center for
    American Progress--and again, thank you for your testimony
    today--estimates that over 5 million small businesses get their
    health insurance from the Exchange. Five million small
    businesses in this country get their health insurance from the
    Exchange, and 4.4 million saw an average premium increase of
    over $1,500 per month.
        Now, how does this cost compare to any benefit many small
    middle-class businesses get through the deduction?
        Mr. NEGRON. So just one basis of comparison, looking at
    business owners with less than $150,000 in income, according to
    the Joint Committee on Taxation, that subset of businesses--
    middle-income, mom-and-pops--saw a benefit of $425 on average
    from the 199A deduction, $4.5 billion in total in relief for
    that group of businesses.
        On the other side of the ledger, those businesses will pay
    about $5.8 billion more due to the expiration of the Enhanced
    Premium Tax Credits. That is about $540 more per business. And
    so you see just right there they are out about $120 just on the
    basis of that loss of Enhanced Premium Tax Credits.
        And then just to repeat a point I had made earlier, you
    also have millions of employees of small businesses of less
    than 25 employees who benefit from this, and that means less
    certainty for those employers in terms of attracting top
    talent, right. If you can't offer that benefit because you are
    too small, if the government is doing it through these
    policies, it makes it easier to compete for workers with bigger
    businesses who can usually offer better packages of benefits.
        Ms. SIMON. And wouldn't you agree that some of these small
    businesses who are no longer able to provide healthcare, that
    their employees are more likely to be sick, their pregnant
    employees are more likely to have maternal health issues,
    disabled employees are less likely to get the--not only the
    medication, but the supports they need to be able to not only
    be good workers but good parents and good citizens?
        Mr. NEGRON. Yes. I think a loss in coverage or more
    coverage costs can result in higher absenteeism at work,
    missing days because of being sick, being less productive at
    work, just being less happy, and that is not good for the
    business.
        Ms. SIMON. Thank you all for being here today. We really
    appreciate your testimony. Thank you, sir.
        I yield back.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Mr. Bresnahan from the great State of
    Pennsylvania for 5 minutes.
        Mr. BRESNAHAN. Thank you, Mr. Chairman, and thank you to
    our witnesses for being here today.
        The Working Family Tax Cuts Act is a strong step towards
    making sure our economy is built to grow and built to last.
    During the 2026 tax year, 45 percent of all filers have claimed
    at least one new tax cut. That is real relief, and it means
    more money staying in the pockets of hard working Americans. On
    top of providing much needed relief for American families, it
    delivers pro-growth policies that benefit the small businesses
    that power our local economies.
        Over the past few weeks, I met with business owners across
    northeastern Pennsylvania, from mom-and-pop diners in Luzerne
    to a drilling tool manufacturer in Jessup and everything else
    in between, and they all told me the same thing: predictability
    and stability matters. When you make key provisions permanent,
    like the 23 percent pass-through deduction for small businesses
    restoring 100 percent expensing and the doubling of Section 179
    small business expensing to $2.5 million, businesses can
    finally plan ahead with confidence knowing where the goalposts
    are.
        My first question will be for Ms. Tapani. You spoke about
    how important overtime pay is for your employees. What are you
    hearing from your workers about keeping more of that income
    this season and putting it back into your pockets--as well as
    just a little public service announcement, today is April 15
    and it is tax day. I was able to finalize mine just this
    morning. But to that, what does that mean to your employees and
    their ability to retain those hard dollars?
        Ms. TAPANI. Being able to return--or retain more of what
    they earn in overtime pay matters to them. When an employee has
    to work overtime, as I have already said, they are giving up
    something. They are giving up time with their family, they are
    giving up an opportunity to attend a sports event, they might
    be paying more in daycare. So keeping more of that money does
    matter to them. I have had some employees mention that they are
    more likely to volunteer to do overtime when it is needed. No
    employer wants to have to mandate that employees work overtime
    in order to get a job done or fulfill our customer
    requirements, so their willingness to be voluntary about it is
    super important.
        I heard one of my employees tell me that his wife also
    works in manufacturing and she has worked a lot of overtime
    this year. They saved hundreds of dollars on their taxes this
    year because of that provision, and it really mattered to them.
        Mr. BRESNAHAN. Thank you for that.
        And I am going to pivot to Ms. Borbolla. Ms. Borbolla, did
    I pronounce that correctly?
        Ms. RENFRO BORBOLLA. Yes, you did.
        Mr. BRESNAHAN. Okay. Bresnahan, so I empathize.
        But someone who comes from a multigeneration family
    business, I know how the uncertainty of the Tax Code, and
    again, knowing how important it is where those goalposts are so
    you can make adequate planning for your family business. How
    has the added stability around the estate tax provision in a
    small business pass-through deduction changed the way your
    family is planning for the future of your company?
        Ms. RENFRO BORBOLLA. Well, we definitely know now, because
    of the estate tax being increased, that we will not have to
    sell some of the business. My uncle just passed away, and so we
    will not have to sell some of the business to pay the estate
    taxes on his estate.
        Mr. BRESNAHAN. I guess something that we had always
    struggled with was we went from a first-generation family
    business to a third-generation family business, and not knowing
    what the future would be for a business, it allowed us to
    encapsulate a lot of the unknown. And when you had different
    provisions set to sunset out and, you know, making those plans,
    how easy was it or challenging was it for you to work with your
    accountants and, you know, do you feel that your professional
    service advisers were adequately informed with leading you
    through that transition? And I am sorry to hear about your
    uncle.
        Ms. RENFRO BORBOLLA. Thank you. Yes. Between our estate
    planning attorneys and our CPA, they actually both work
    together to help us work through making a plan for all the
    generations. My grandparents actually started the plan, and it
    has followed us through all the years and actually helped us
    save on paying taxes.
        Mr. BRESNAHAN. And how many employees does Renfro Foods
    currently have?
        Ms. RENFRO BORBOLLA. We have 35 employees and 35
    temporaries that work for us right now.
        Mr. BRESNAHAN. Well, thank you for providing family
    sustaining careers for those 35 permanent employees and 35
    temporary employees.
        And with that, Mr. Chairman, I yield the balance of my
    time.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. Tran from the great State of California
    for 5 minutes.
        Mr. TRAN. Thank you so much, Mr. Chairman and the Ranking
    Member, for holding today's hearing.
        You know, almost a year ago, congressional Republicans
    voted to cut over $1 trillion in Medicaid and Affordable Care
    Act spending and $200 billion in nutrition assistance through
    H.R. 1. Now the White House is proposing to cut even more. The
    President's fiscal year 2027 budget request, a skinny request
    that came out 2 months late, dedicates nearly 70 percent of
    proposed spending, $1.5 trillion, to the Pentagon while cutting
    investment in health, education, housing, and small businesses
    by $300 billion.
        I sit on the House Armed Services Committee as well as this
    Committee, so I know how important it is that we have a strong
    defense budget for our national security, but ensuring that
    Americans have a roof over their head, food on the table, and
    hospitals that can treat them is also a matter of national
    security.
        America thrives because of our robust private sector and
    our many entrepreneurs, but when the federal government stops
    investing in healthcare access, workforce training, community
    development, and potentially entrepreneurs are left struggling
    instead of growing, and main street loses customers. Small
    business owners can afford this when they are--small business
    owners cannot afford this when they are being squeezed by
    rising healthcare premiums, tariffs, and skyrocketing fuel
    prices tied to the Iran war.
        Mr. Negron, H.R. 1 pass-through deduction is the primary
    tax cut aimed at the wealthiest of businesses. How could it be
    reformed to benefit primarily those who need it the most?
        Mr. NEGRON. Thank you. So as has been noted a couple times
    here, the 10-year cost of the revised 199A is $736 billion over
    the next 10 years, which is a lot of money. And a couple ways
    in which you could improve upon this, just one example is the
    Mom and Pop Tax Relief Act, which is a bill, I think H.R. 3249,
    which would--sponsored by Representative Gwen Moore, among
    others, which would replace 199A with a bottom-up flat tax
    deduction of $25,000, with an income cap of $400,000 for
    married filing joint and $200,000 for individual returns. So
    that is one example of a more progressive version of this kind
    of tax deduction that could also reduce paperwork for people if
    it functions essentially as a standard deduction for your mom-
    and-pop businesses.
        And I imagine it was--I haven't seen a score of this, but
    when two-thirds of the current benefit are going to businesses
    with over $500,000, you would think that would save a lot of
    money that could go into either deficit reduction or you could
    be putting it to other purposes to help small businesses, help
    working families.
        Mr. TRAN. Thank you so much for sharing that. And, Mr.
    Negron, even before the war in Iran, inflation had been
    trending upward for some time, particularly from places like
    the Producer Price Index, which you mentioned. That affects the
    cost of goods for businesses. What items are driving this
    inflation and how are businesses coping?
        Mr. NEGRON. Yes. So the key--sorry. So the key drivers on
    the last two Producer Price Indexes were elevated. We had 4
    percent just announced--year over year just released earlier
    this week. Last month it came in higher than expected at 3.4
    percent, and the big drivers are energy costs, food costs; in
    terms of services, transportation and warehousing services are
    major drivers. And so those are just added costs that
    businesses are starting to face. We have now seen 2 months of
    it where it has come in hot and it will--those costs will
    ultimately make their way to consumers as businesses have to
    pass those along.
        Mr. TRAN. Let me ask you this. Because of the war of choice
    by this administration, oil prices have spiked, driving up gas
    and diesel prices. Can you discuss how those prices increases
    affect other goods?
        Mr. NEGRON. Yeah. So first, obviously, people see it at the
    pump. Gas prices are up 40 percent, and so that is something
    people see immediately. But diesel prices are up even more, and
    that is something that extends into everything. The cost of
    trucking, moving a pallet of goods from one part of the country
    to the other, diesel affects that, and so you can start to see
    these costs go into your grocery--into grocery prices.
        Fertilizer is up more than 50 percent. The combination of
    fertilizer and diesel, more cost for farmers. Another cost you
    could see at the grocery store. Shipping costs are going up. As
    I mentioned earlier, Amazon, UPS, FedEx, the Postal Service are
    announcing increases in shipping costs due to the fuel costs.
    That is something that people who are shopping at Amazon or you
    are shopping online at Walmart, you will start to see that in
    the cost of goods.
        And then jet fuel is up 90 percent, travel is getting more
    expensive, and so some people will bite the bullet, pay more
    for their flights. Others won't travel at all, and that means
    reduced business in tourism if this prolongs for months and
    months and months.
        Mr. TRAN. I appreciate your testimony.
        And with that, Mr. Chairman, I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. Cisneros of the great State of
    California for 5 minutes.
        Mr. CISNEROS. Thank you, Mr. Chairman. Thank you and the
    Ranking Member for bringing us together today. I want to thank
    our witnesses for being here.
        And, Ms. Renfro Borbolla, my sympathies are with your
    family. My family just recently lost my father-in-law, so, you
    know, my prayers are with you all.
        Look, I am in favor of providing working families with tax
    cuts, but unfortunately, this Republican-led Congress has not
    passed any such bill or no such act. What I remember, you know,
    is in passing the One Big Beautiful Bill that does nothing to
    help--only serves to help the wealthy and does nothing for
    working class families. Rebranding the bill doesn't change
    that. It doesn't change the law, nor what it does. It insults
    the intelligence and it is a slap in the face of the working
    American people.
        I am all in favor of the real tax cuts, as I said, for
    working families and the small businesses that are grinding it
    out on a day-to-day basis. Any success they are achieving is,
    frankly, despite this administration, not because of it.
        I come from a working-class family. My mother was the lunch
    lady. My father was a Vietnam vet who worked various jobs. I
    know how important a real tax break can be for those living
    paycheck to paycheck or small businesses trying to balance
    their thin margins. But the law touted by my colleagues across
    the aisle did not deliver the economic growth they promised.
        In fact, it is hurting working families because of the
    historic healthcare cuts that they used to pay for it. They are
    bearing the brunt of chaotic taxes in the form of tariffs. They
    are being forced to pay 21 percent more for gas. The Consumer
    Price Index in March spiked to 3.3 percent year over year.
    Consumer sentiment is at a record low. Small business
    bankruptcies are up 67 percent. But President Trump and his
    family have made almost $4 billion, and corporate profits hit a
    record $4.4 trillion.
        So, Mr. Negron, who is benefiting more from this tax law,
    working families or the wealthy?
        Mr. NEGRON. I think the evidence shows that the wealthy are
    benefiting more. And to the extent that everyone else is
    benefiting in the form of lower taxes, it is being outweighed
    by far by rising gas prices, tariffs, and cuts to healthcare
    and other programs.
        Mr. CISNEROS. You just answered my next question right
    there. So President Trump--Mr. Negron, President Trump stated
    this month that the U.S. Government should not support
    childcare because we should prioritize wars instead. I hope my
    colleagues across the aisle don't take that as marching orders,
    but should the employer-provided childcare credit cut end, what
    kind of devastating effect would that have?
        Mr. NEGRON. Well, what I would say about what the
    President's statement is that budgets are reflections of
    values, and here we have a clear statement that we cannot
    afford things that people need, healthcare and childcare, that
    help businesses. We have heard on this panel today businesses
    who are benefiting from when their workers receive good
    benefits, and so it is in businesses interests.
        And so if you have the President saying that we cannot
    invest in those things that help workers and businesses because
    of a war that is fundamentally a war of choice, that is a very
    strong statement about the current direction of the federal
    government and it is one that I certainly find concerning.
        Mr. CISNEROS. Thank you very much for that.
        Mr. Watson, the Tax Foundation found that tariff rates have
    changed 50 times in the past year. Can you explain how this
    kind of uncertainty affects small businesses' ability to plan
    higher and invest?
        Mr. WATSON. For sure. There has been, yeah, a lot of
    changes to tariff policy, both in terms of ever changing rates
    and, of course, different applications under different sections
    of the law on which products are going to be allowed, what
    exemptions are allowed over the last 12 months, and that has
    produced a lot of uncertainty for businesses. It is one of the
    top concerns that they have particularly for businesses that
    are importing a lot of goods or have complicated supply chains
    abroad.
        And, of course, looking forward, even with SCOTUS striking
    down the IEEPA-based tariffs in February, this latest Section
    122 round of tariffs produces more uncertainty because there is
    uncertainty about what will happen if Congress steps in in July
    and what the regime may look like moving forward. So providing
    that certainty or eliminating those new tariffs would be
    helpful for small businesses.
        Mr. CISNEROS. Thank you for that. And, Mr. Watson, policies
    like no tax on tips and no tax on overtime sound great to a lot
    of people and may deliver some benefit, but the Tax Code is
    increasingly complex. How do these provisions in H.R. 1
    complicate the tax preparation for small businesses and their
    employers? I am being told employees are having to do this on
    their own. They are not getting any benefit from the companies
    at all.
        Mr. WATSON. Two things on that. We did see some simplicity
    from keeping the expended standard deduction, but the new
    deductions for tips in overtime can be complicated and more
    guidance from the IRS will be needed to help iron that out as
    folks are trying to figure out what they qualify for.
        Mr. CISNEROS. Well, thank you all for your time today, and
    I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. Alford from the great State of Missouri
    for 5 minutes.
        Mr. ALFORD. Well, thank you, Mr. Chair, and thank you,
    Ranking Member, for holding this today.
        This Committee really exists for one reason, that is to
    champion main street and make sure that small businesses have
    the tools, the resources they need to do businesses, to start
    businesses, to be the fabric of America.
        We have seen firsthand now what happens when tax policy
    gets right. The Tax Cuts and Jobs Act unleashed one of the
    strongest economies in modern history, and the Working Families
    Tax Cuts builds on that success by making those pro-growth
    policies permanent, and permanence matters. Small businesses do
    not operate on 1-year timelines. They make decisions years in
    advance about hiring, capital investments, and expansion, and
    when tax policy is uncertain, those decisions don't get made.
    Those investments don't get made.
        Working Families Tax Cuts and Jobs Act delivers that
    certainty, and with it growth. We are already starting to see
    that. It strengthens main street by expanding Section 199A
    deduction for pass-through corporations, restoring 100 percent
    bonus depreciation, and increase in Section 179 expensing so
    small businesses can reinvest in themselves. It supports
    innovation by allowing full and immediate expensing of research
    and development, and it puts more money in the pockets of
    working Americans through provisions like no tax on tips and no
    tax on overtime.
        I want to share with you a little story. Two weeks ago, a
    76-year-old man named Melvin, who lives in Benton County in
    Warsaw, Missouri, near Lake of the Ozarks, called our office.
    He was almost in tears. He said, Congressman, you have got to
    tell this story to the American people. I said, What is it? His
    daughter is a hair stylist. She works a lot on tips. Her
    husband works a lot of overtime in his job. They have not
    gotten a refund in years, and this year they just opened their
    mailbox, opened that envelope, and the check was for $12,000.
    That is real money, not just for Warsaw, Missouri, but anywhere
    in America.
        This bill is about more, though, than tax relief. It is
    about creating an environment where small businesses compete,
    plan, and succeed. Monday, the Small Business administrator,
    Kelly Loeffler, came to our district and visited a good friend
    of mine, Franco Cupini, who owns a great Italian restaurant in
    Kansas City. And he told the administrator firsthand the
    benefits that it was having for his business and his employees
    who were getting large refund checks, the immediate expensing
    that he was able to conduct for his small business. And I am
    telling you, Franco Cupini is not a millionaire and not a
    billionaire.
        I want to know, Mr. Watson, how many small businesses are
    classified as an S corp pass-through corporation in America?
        Mr. WATSON. The majority of small businesses are pass-
    through firms, either being a S corp or a sole proprietorship
    or a partnership.
        Mr. ALFORD. How many of those--I looked it up. There is
    about 5 million operating as an S corp in America. This comes
    from your website. How many of those have a income of greater
    than half a million dollars?
        Mr. WATSON. I am not sure about the exact amount, but a
    large number of them do not have that level of income.
        Mr. ALFORD. Right. I looked it up on your website. It is
    about 3.1 percent.
        Mr. WATSON. Uh-huh. Yeah.
        Mr. ALFORD. We are talking about a large--millions of
    companies, startups, mom-and-pops who have invested their time,
    their resources, their blood, sweat and tears, a lot of times,
    into the small businesses who now have a shot at success and
    competing with the big guys. And yes, are some corporations
    benefiting from this tax? Yes, they are. I will admit that.
        But you are also seeing some of the largest refunds we have
    seen in years. The average this year, the IRS just reported
    that it is more than 11 percent up from last year. Some are
    saying 24 percent by the time everyone gets filed. An average
    so far of return of $3,400 dollars in America. That is real
    money.
        And so, yes, Mr. Negron, we are celebrating today. We are
    celebrating the hard work that this Committee, the Republican
    Conference put in, even though no Democrat voted for the One
    Big Beautiful Bill, the Working Families Tax Cut. They all
    voted to raise taxes on America. We all voted to reduce and
    make permanent these deductions so that families can keep their
    farms, so that business owners can keep their businesses and
    thrive in America and contribute to the fabric of America.
        Thank you, Mr. Chairman, and I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. Olszewski from the great State of
    Maryland for 5 minutes.
        Mr. OLSZEWSKI. Thank you, Chairman Williams, Ranking Member
    Velazquez, and to our witnesses for being here today.
        I am excited to share some facts. Actually, I am
    disappointed to share some facts, because they are not that
    great: today's conversation discussing the impacts of the One
    Big Beautiful Bill, which President Trump and my Republican
    colleagues are now desperate to rename. But that makes sense to
    me, because so many of my constituents are the working families
    this law purports to support, and they have nothing beautiful
    to say about this legislation.
        Unfortunately, their complaints are validated by the data.
    The big ugly bill massively increases our nation's debt by a
    whopping $3.4 trillion. That is $25,000 that will have to be
    paid back by every American household.
        So, what do we get in exchange? Well, the nonpartisan
    Congressional Budget Office determined that the combined
    effects of just the President's tariffs and the not-so-
    beautiful bill decreases net income for 99 out of 100 American
    households. Everyone loses, except literally the top 1 percent,
    those that make more than $700,000 annually.
        By 2027, the poorest American households will lose a net of
    $1,650 dollars or 3.4 percent of their income. The middle 20
    percent of earners will see their overall income decrease by
    $1,300. And the top 1 percent of those households will receive
    a net increase in income of nearly $5,000, with the ultra-
    wealthy doing exponentially better. I don't know anyone who
    would call that a good investment.
        There are also real-life impacts on our nation's small
    employers. For example, the $187 billion of SNAP cuts not only
    ends a critical lifeline for seniors, children, older adults,
    veterans, but it also harms small businesses. SNAP supports
    more than 200,000 jobs in independent grocery stores and
    another 45,000 jobs in agriculture, manufacturing, and
    transportation industries. It is not complicated. When
    consumers can no longer afford their groceries, those stores
    suffer.
        Under this bill, the rich get richer and the rest of us
    have fewer means to support the small businesses in our
    district. We might do less dry cleaning, wait more weeks
    between our hair cuts, eat out less or perhaps not at all.
    Americans feel it in their pocketbooks and in their everyday
    lives. The One Big Beautiful Bill is anything but beautiful. It
    is ugly, it is mean, and it makes the American Dream even
    harder to realize.
        Mr. Negron, would you generally agree with the analysis
    presented here, and would you agree with the sentiment that, if
    it comes out of your pocket, it doesn't matter what you call
    it?
        Mr. NEGRON. Yes.
        Mr. OLSZEWSKI. And I know you had an engagement with
    Representative Tran, so I don't want to reengage that too much,
    but that analysis excludes gas and the surcharges that you
    talked about. It excludes the fertilizer cost and the rising
    cost of food, the increases in mortgage rates. Isn't that yet
    another cost that Americans are bearing?
        Mr. NEGRON. That is right. The analysis that is on that
    chart there, I have colleagues at the Center who worked on this
    or a similar chart, and that was based solely on the cuts and
    the tariffs, not factoring in the cost of the Iran war, which
    show that this picture looks even dimmer for working Americans.
        Mr. OLSZEWSKI. And we know that we are also in the midst of
    a cost-of-living crisis after years of high inflation. Over a
    year ago, we finally had inflation trending back down in the
    right direction.
        How has inflation been under this administration, and what
    policies would you have Congress consider to bring down the
    cost of living?
        Mr. NEGRON. Yes. Well, we have seen inflation indicators
    start to--one, they have kind of stayed sticky around 3
    percent, so above the federal reserve's target rate for most of
    the life of this administration. There are studies, one in
    particular from the Harvard Business School, that believes that
    about .7 percent of CPI inflation is due to tariffs. And so we
    have had persistent inflation higher than what would have
    happened had the tariffs not been in place. The Iran war is
    threatening to accelerate it even further.
        And so quick list of things that you could do or that one
    could do is, one, pull back these Section 122 tariffs the
    President put in place after the Supreme Court struck down his
    emergency tariffs. That is one example.
        You could restore the Enhanced Premium Tax Credits which
    will help more than 20 million Americans better afford their
    health insurance.
        You can get more serious about building new homes. You can
    get down cost of housing by moving this bipartisan bill in the
    House, the Housing for the 21st Century Act. There is the
    bipartisan ROAD to Housing Act in the Senate. Move those bills,
    build more homes, that will get housing costs down. Just three
    examples that come to mind.
        Mr. OLSZEWSKI. Appreciate that.
        Americans are being crushed. It is time that this Congress
    actually do something and push back against policies that are
    hurting everyday working Americans.
        With that, I yield.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. Meuser from the great State of
    Pennsylvania for 5 minutes.
        Mr. MEUSER. Wow. Okay. Hey all, how are you?
        Thank you for your work, thanks for being entrepreneurs,
    thanks for driving our economy. And our role here is to try to
    assist that, right. I mean, that is what you would hope your
    government would do. Be advocates for small business,
    particularly on this Committee, and do everything possible to
    remove the barriers so as you could grow your businesses, your
    enterprises, treat your employees well, and build products that
    are useful.
        I spent nearly 25 years doing that, helping grow a small
    business to a large business.
        How the government thinks and some members think that
    raising your taxes by a lot, 25 percent perhaps, is a good
    thing and somehow is ugly and evil and all those other things
    is insane. Also, let's--or just highly irrational or completely
    illogical or just political commentary, because we are told
    that the BBB or Working Family Tax Cut was all about
    billionaires. Okay.
        I have 795,990 people in my district. Not one of them is a
    billionaire. Okay? I don't work for billionaires. Okay? None of
    us do. So the--what we are able to at least celebrate today on
    tax day is the fact that you are getting returns, the fact that
    25 million small businesses are paying 22 percent less taxes
    than they would have if we would have abided by what every
    single Democrat in the U.S. House and the U.S. Senate voted
    for.
        As well, 26 million people are receiving no taxes on
    overtime. In some cases, that adds up to $3,000, $4,000. We
    have 6 million people, elderly, who are receiving Social
    Security that are not paying any taxes on the $6,000 deduction
    on Social Security. So there is all kinds of--and that is a
    reason why our economy, even in spite of the other issues that
    need to be resolved, is doing extremely well certainly versus
    the rest of the world, from an energy standpoint and everything
    else.
        So anyway, I will just ask you, Mr. Watson, do you feel
    that the environment that you are in that has been created
    over, say, the last 12 months--now, I know the tariffs are
    definitely an issue. I mean, let's talk about that. The problem
    is, though, in 2019, 2020, we had 50 percent tariffs against us
    from our number one competitor, China. That was very, very
    difficult. I know from the industries that I was in companies
    were being wiped out because of that. Products were coming in,
    literally they were selling them for what my industry they were
    making them for. The President wasn't going to live with that
    anymore because how manipulative their exchange rates are and
    their ability to have slave labor basically. Okay? So they had
    huge tariffs on us. We had no tariffs on them.
        That has been reversed. India--and you know what? Our
    allies in Europe, really the same thing. And Canada. Canada
    had, you know, on our dairy farmers and everything else, had
    basically an embargo on dairy for American imports and we had a
    3 percent or 2.5 percent tariff on them. Guess what? We
    rethought tariffs and we are reversing it and eventually it
    will be--it will be equal. That is the whole idea to create
    that true parity.
        But anyway, the tax cuts, today is tax day. How has the--
    what they refer to as the ugly bill, how has it benefited you?
        Mr. WATSON. So I think just speaking broadly on the tariff
    point real quick, I think certainly it is the case if we can
    get to a equilibrium where we are feeling good in terms of
    bilateral trade and those agreements are better when we are on
    solid footing and there is more parity there in terms of other
    nontax, you know, trade barriers, that would be a win. I think
    the question is, how long will that take, and what is the
    uncertainty and disruption in the meantime? So hopefully we can
    get there, if not in this administration, in the future when it
    comes to trade policy overall.
        Mr. MEUSER. In this administration, I agree with you.
        Mr. WATSON. Yeah. And then on the tax cuts, I think--you
    know, I think it is important to say that a big part of that
    underlying law was making permanent the 2017 cuts which avoided
    a tax hike on 62 percent of Americans. And that is really going
    to kick in next year because that is--during the next year's
    tax filing season, because they would have had that higher tax
    bill then. So I think that is another thing on top of the new
    cuts.
        Mr. MEUSER. Ms. Tapani, real quick, are any tax credit you
    mentioned expensing and bonus appreciation, your thoughts?
        Ms. TAPANI. The R&D tax credit is incredibly important to
    small businesses, and I know a number of them who are using the
    money that they are saving through the R&D tax credit to
    reinvest in their businesses, to expand their facilities, and
    we see that time and time again.
        Mr. MEUSER. Thank you all very much.
        I yield back, Mr. Chairman.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Ms. Goodlander from the great State of New
    Hampshire for 5 minutes.
        Ms. GOODLANDER. Thank you, Mr. Chairman. And thank you to
    our witnesses for being here today for this important hearing
    on H.R. 1, the President's so-called Big Beautiful Bill.
        I must say this bill has been absolutely brutal for my home
    State of New Hampshire. It has been brutal for New Hampshire
    small businesses. And we have talked a lot about why that is so
    in this hearing today, but just to share with you, healthcare
    costs have been jacked up for every small business in my State,
    and that is because of the biggest cuts to healthcare in
    American history. We have seen our best healthcare providers
    literally go out of business because of these cuts.
        We have some of the highest energy costs in America in New
    Hampshire, and they have only gone up as a direct result of
    this bill. The invoice is extreme and it has been absolutely
    brutal for the hardworking people of my State.
        We have talked about what was supposed to be one of the
    real upsides of this devastating blow to working people, which
    was making the Section 199A deduction permanent, and we have
    talked about who has benefited from this.
        Mr. Negron, I just want to give you an opportunity to say a
    bit more on that front. You know, when I look at small business
    people in New Hampshire, we are talking about, on average, an
    annual salary of $124,000, which is actually pretty good in
    terms of the national average. So can you just--in your written
    testimony, you really put a fine point on this, what we are
    talking about in terms of the share of who is actually
    benefiting from this Section 199A deduction.
        Mr. NEGRON. Yes. Happy to. So a couple things that I would
    point out. So first, about half--a little under half of the
    filers for the 199A deduction made less than $150,000 in income
    in the year in which they filed. They received 6 percent of the
    benefits of the deduction. The 10 percent of taxpayers who
    filed for the deduction who made more than $500,000 received
    two-thirds of the deduction. And so you can see that there is a
    major difference in who is receiving the benefits just in terms
    of dollars. And so that is, I think, probably captures most of
    the story there.
        Ms. GOODLANDER. And so that 6 percent who did capture the
    benefits, I think you mentioned that the benefits were around
    $429?
        Mr. NEGRON. Yes. $425, yeah.
        Ms. GOODLANDER. And you put that up against the costs of
    the trade war, which is what I want to come to in a second, and
    where do we end up when you do the final math on that?
        Mr. NEGRON. Well, I think it is in the negative generally
    when you look at the higher cost due to tariffs. And, you know,
    happy also to talk about gas prices. I don't know if you were
    going to take me there, but----
        Ms. GOODLANDER. Yes, we will go there. But first I want to
    talk about red tape and compliance costs, because, Mr. Watson,
    your testimony should give each and every one of us pause. We
    are talking about $536 billion in compliance costs for the U.S.
    Tax Code, 7.1 billion hours spent complying with IRS tax filing
    and reporting requirements every year. For Section 199A, you
    pointed out this is a major source of complexity, which may
    explain why working people and small businesses aren't
    benefiting from it. You mention in your written testimony $20
    billion in compliance costs in 2024 alone.
        Can you talk to us about how we can cut the red tape and
    simplify?
        Mr. WATSON. Sure. I think there is several options there.
    Of course, one is with 199A in particular, there are, you know,
    a series of restrictions and guardrails meant to, you know, for
    good reason, try to reduce a tax avoidance, reclassifying
    income, so there is these wage and capital limitations built
    into the law. But for folks particularly who are not extremely
    high earners, that is a source of complexity and confusion,
    especially if there are entire industries that don't qualify.
    If folks don't know that getting into business, that could be a
    rude awakening and surprise there.
        So I think there are options to simplify that, to either
    better target the deduction, especially to encourage more
    investment, which I think is something that we did see in the
    2025 law that we could do more of to target in that--dial in
    that deduction more, and that could actually save a little bit
    of money too.
        More broadly, I think, and on tax day it is really
    important that there is still a lot to be done. There was a big
    emphasis in my testimony on broader complexity. Folks are still
    feeling the pressure there. There are a lot of forms that they
    have to file. The IRS is going through a lot of tumultuous
    issues nowadays, and there is a lot of paper forms too that
    they are still dealing with. So digitization, taxpayer services
    are also going to be essential.
        Ms. GOODLANDER. And the IRS has never been dealing with
    staffing cuts in the way they have, which has really harmed
    small businesses. I am out of time, but I want to thank our
    witnesses again.
        I yield back, Mr. Chair.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Dr. Morrison from the great State of
    Minnesota for 5 minutes.
        Ms. MORRISON. Thank you, Chairman Williams and Ranking
    Member Velazquez, for holding the hearing. Thanks to our
    witnesses for being here today.
        During the past few weeks, I had the opportunity to meet
    with small business owners throughout my district, and what I
    have been hearing over and over again is that this is just a
    really hard time for small businesses.
        Last year, they were hit with unexpected and unpredictable
    tariffs, as we have discussed this morning, which they are
    still being forced to pay, despite the Supreme Court ruling.
    Earlier this year, during Operation Metro Surge, small
    businesses across Minnesota sustained heavy losses in sales and
    revenue, and now they are facing soaring energy prices and
    supply chain disruptions due to President Trump's war on Iran.
        Our small businesses are reaching a breaking point, and
    rebranding the so-called One Big Beautiful Bill Act isn't going
    to solve any of the problems this administration has created
    for them.
        Mr. Watson, I appreciated that during your testimony you
    highlighted that much of the economic damage caused by
    President Trump's tariffs fall on small business and how this
    results in higher costs for consumers and declining wages for
    workers. For nearly a year now, I have been asking this
    administration to exempt small businesses from these tariffs.
    Would you support a tariff exemption for small businesses?
        Mr. WATSON. I think that, yeah, there is strong rationale
    for that, especially keeping even the de minimis exemption that
    is being challenged by the administration in place at minimum
    for businesses that have small dollar items that are going
    across the border. It is particularly helpful for them.
        Ms. MORRISON. Appreciate that. Thank you.
        Mr. Negron, the Center for American Progress estimates that
    over 5 million small businesses get their health insurance from
    the Exchange and 4.4 million saw an average premium increase of
    over $1,500 because the Republican majority let the Enhanced
    Premium Tax Credits expire.
        Why was the expiration of these premium tax credits
    especially hard on small business owners and employees?
        Mr. NEGRON. Well, I think there is--in a couple of ways.
    One, many small business owners themselves receive their
    healthcare coverage through the exchanges, but we also know a
    large share of employees at small businesses, particularly
    under 25 employee businesses, receive their care through the
    exchanges. Of the 20-plus million who receive care through the
    exchanges overall, about half are either small business owners,
    self-employed individuals, or employees of these really small
    businesses. And so it is not just directly out of the
    pocketbook of the business owner, but for many it is affecting
    their employees and their ability to be competitive as a hiring
    destination because larger businesses can offer better
    benefits.
        If you are a really small business, knowing that the
    exchanges are out there, it allows you to compete for workers
    in a way that you couldn't if that wasn't there or if the
    coverage was much more expensive.
        Ms. MORRISON. I appreciate your explaining that. You know,
    I am a physician myself, and watching the effects of this One
    Big Beautiful Bill are pretty heartbreaking. We are creating a
    healthcare catastrophe that is going to have to be addressed.
        I also want to note that while some of the One Big
    Beautiful Bill was offset by cutting critical food assistance
    and healthcare for millions of Americans, much of it was not
    paid for and will add over $4 trillion to our national debt
    over the next 10 years.
        Mr. Negron, how will this affect capital for small
    businesses and our economy overall?
        Mr. NEGRON. Well, I think you are seeing it in a number of
    different ways now, and it will play out depending on the
    outcome of these tariffs and the outcome of the war in that
    higher costs across the economy could start to slow demand. We
    have already seen the job market slow down considerably. 2025
    was the worst year for job creation since 2003, outside of a
    recession year. And when you look at the data, you see that
    liberation day is a clear dividing line. Job growth was more
    than 100,000 per month prior to April 1--or prior to April 2,
    and since then it has been fairly anemic.
        And so these are trends that if they are not reversed
    because of changes in tariff policies or changes in the war,
    you could see that continue to act as a drag on the economy. We
    could see borrowing, cost of capital remain elevated because of
    a lack of confidence about the federal fiscal situation, so
    Treasurys could remain elevated, which will result in higher
    borrowing costs. We are already seeing that in the mortgage
    market. Mortgage rates had gotten below 6 percent for a brief
    spell in late February and have since gone back up to just
    under 6.4 percent driven by this war.
        And so there is a lot still to be done. Decisions could be
    made to change course, but at the moment, these different
    factors will slow down the economy, and it really didn't need
    to be that way, because the economy is resilient, but all of
    its headwinds are due to policy decisions that are being made
    by the administration.
        Ms. MORRISON. It is a pretty chilling prognosis, but I
    agree with you, it is not too late. We could change course. The
    Republican majority could stand up to this President.
        Thank you, Mr. Chairman. I yield back.
        Chairman WILLIAMS. The gentlelady yields back.
        I would like to thank our witnesses today for their
    testimony and for appearing before us today. And we are praying
    for the Borbolla family as you go the next day or two.
        Without objection, Members have 5 legislative days to
    submit additional materials and written questions for the
    witnesses to the Chair which will be forwarded to the
    witnesses. I ask the witnesses to please respond promptly.
        If there is no further business, without objection, this
    Committee is adjourned.
        [Whereupon, at 12:16 p.m., the Committee was adjourned.]

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