![https://img.particlenews.com/image.php?url=0seJCB_0sO4L22e00](https://img.particlenews.com/image.php?type=thumbnail_580x000&url=0seJCB_0sO4L22e00)
Austin Ramirez, president and CEO of Husco International Inc. in Waukesha, Wisconsin, testified on Thursday, April 11, 2024, before the U.S. House Committee on Ways and Means, urging the panel to extend 2017 business tax deductions. (Screenshot from committee webcast)
WASHINGTON — As Congress gears up for negotiations ahead of the 2017 tax law’s expiration, economists and small business owners urged U.S. lawmakers Thursday to extend or make permanent the Trump-era tax cuts.
Business owners from West Virginia and Wisconsin testified at a hearing before members of the House Committee on Ways and Means, advocating for the continuation of deductions that they say allowed them to reinvest in their operations.
The Tax Cuts and Jobs Act of 2017, which expires at the end of 2025, allowed some business owners to deduct up to 20% of qualified business income. The bill also temporarily cut taxes on new equipment purchases and other qualified assets, but those incentives are phasing out.
For individuals , the TCJA temporarily lowered marginal tax rates across most income levels and expanded the standard deduction and child tax credit, among other changes.
Large corporations saw the top corporate tax rate permanently drop to 21% from 35%.
“Seven years ago, Republicans passed the Tax Cuts and Jobs Act under President Trump, delivering relief to millions of families and small businesses and creating the best economy in our lifetime,” Committee Chair Jason Smith, a Missouri Republican, said during his opening remarks.
“Here’s the bottom line: Congress must act soon to prevent what will be the largest tax hike in history on workers, families, farmers, and small businesses,” he later added.
Democrats on the committee slammed the bill as a “corporate tax giveaway.”
“We knew that their tax scam would disproportionately benefit the wealthy and well-connected. We knew that it wouldn’t pay for itself. We knew that big corporations, not their workers, would feel the most benefit,” said the committee’s ranking member, Richard Neal of Massachusetts.
The Democratic-invited witness, Kathryn Anne Edwards, a labor economist at the RAND Corporation, said “unless the intention of the 2017 tax law was to directly transfer income to the richest Americans at incredible expense to ordinary Americans, it was a failure.”
Extending the law could cost the government between $3.3 trillion and $3.6 trillion over the next 10 years, Edwards told the panel, citing estimates from the Committee for a Responsible Federal Budget and the Tax Policy Center.
A ‘landmark’ change
But small business owners say the law has been a financial lifeline.
Michael Ervin, founder of Coal River Coffee Company in St. Albans, West Virginia, told the panel that his five-year-old business has benefited from the 2017 tax code changes, particularly the temporary income deductions for sole proprietorships, partnerships and S-corporations.
“After the passage of the Tax Cuts and Jobs Act, LLCs and other pass-through businesses like mine were able to benefit from the newly minted Small Business Deduction, also known as the 199(a) deduction. This provision has allowed me to deduct up to 20% of my business income, which has let me invest in my business, my employees, and my community,” said Ervin, who employs roughly a dozen people.
If Congress does not extend the special deduction or make it permanent, Ervin told lawmakers that he will face a “significant tax hike” and be at a disadvantage compared to nearby large businesses.
“Down the street from my location is a larger competitor, Tim Hortons. In two years, if my taxes go up, the corporate rate will remain 21%. Tim Hortons will be paying a 21% federal rate and a 6.5% state corporate rate for a total combined rate of 27.5%, while my total combined rate will be closer to 45%. This disparity will make it extremely difficult for me to compete,” Ervin told lawmakers.
Austin Ramirez, president and CEO of the Wisconsin-based Husco International Inc., also told the panel that the pass-through deduction has “leveled our playing field with our peers organized as corporations.”
Husco, a privately held family-owned manufacturer of hydraulic and electromechanical parts for vehicles, employs about 1,600.
Ramirez said the TCJA enabled his business to do the “most significant renovation of our Waukesha, Wisconsin headquarters in 70 years.”
The company has invested $50 million to renovate its office space and shop floor, allowing the addition of nearly $150 million to its top line since 2017, Ramirez said.
Temporarily extending Trump tax cuts
Going forward, Smith said, congressional tax writers should note that the law “provided a critical blueprint that Congress can build upon to make lasting improvements to our tax code.”
“The House has already shown strong bipartisan support for key provisions of the 2017 law by passing the Tax Relief for American Families and Workers Act earlier this year. But there is still much work to be done,” he said, referencing a bill he sponsored and negotiated with Democratic Sen. Ron Wyden of Oregon.
The hearing happened against the backdrop of stalled negotiations in the U.S. Senate on the act referred to by Smith, a short-term tax bill that garnered rare widespread bipartisan support in the House in January.
The bill, which would temporarily revive expired or expiring business tax breaks and expand the child tax credit, passed on a 357-70 vote.
While House Republicans overwhelmingly supported the legislation, GOP senators oppose provisions of the bill that would temporarily expand the refundable portion of the child tax credit and allow households to calculate the credit based on their previous year’s earnings, if higher than the current year’s.
Business owners at a February hearing before the Senate Committee on Finance implored the upper chamber to pass the bill.
Ramirez, the Waukesha business owner, also expressed on Thursday to the committee his support for the Tax Relief for American Families and Workers Act , which would revive an expired 2017 incentive for businesses that allowed them to immediately write off research and development expenses.
“Husco’s inability to expense these costs since 2022 has cost us more than $20 million in liquidity, wiping out a large portion of the TCJA benefits and creating a disincentive to invest in innovation,” Ramirez testified.
Other temporary measures enacted under the TCJA expire on Dec. 31, 2025.
GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
The post Small business owners ask U.S. House tax writers to extend Trump-era deductions appeared first on West Virginia Watch .
Comments / 0