March 21,2024

Crapo Blasts President’s Budget: “Higher Taxes for the Majority to Support Government Subsidies for the Few”

At hearing with Treasury Secretary Yellen, Crapo highlights contrast between pro-growth tax policy and proposals that would stifle economic growth

Washington, D.C.--At a U.S. Senate Finance Committee hearing on President Biden’s Fiscal Year 2025 budget, Ranking Member Mike Crapo (R-Idaho) highlighted the nearly $5 trillion in new and increased taxes included in the President’s budget proposal—tax proposals that would slow the economy and be felt by virtually all Americans.  Ranking Member Crapo highlighted the contrast between the President’s tax proposals versus Republicans’ Tax Cuts and Jobs Act (TCJA), which led to one of the strongest economies in generations.  Senator Crapo secured commitments from U.S. Department of the Treasury Secretary Janet Yellen to support extending Republicans’ pro-growth tax proposals.

Click HERE to watch Senator Crapo’s opening statement.

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Click HERE to watch Senator Crapo Question Secretary Yellen.

On whether the President would support extending the individual tax provisions in the Tax Cuts and Jobs Acts:

Crapo: According to the White House, under President Biden’s 2025 budget “no one earning less than $400,000 per year will pay a penny in new taxes.” . . . I agree it is a bad idea to raise taxes on Americans suffering from record inflation at this point.  Interestingly, the President’s budget is essentially silent on extending the individual tax provisions of the Tax Cuts and Jobs Act, many of which expire next year.  A simple yes or no question: Are you aware that the Tax Cuts and Jobs Act, which Republicans passed in 2017, reduced taxes for Americans of all income groups, including those earning less than $400,000 per year?

Yellen: Yes, and the President has made clear that he would oppose raising back the taxes for working people and families making under $400,000 when those provisions expire.

Crapo: So, he would support extending those provisions?

Yellen: He would.

Crapo: That is good news.  TCJA also nearly doubled the standard deduction.  Would that be included in what the President will continue to support extending?

Yellen: I cannot give you details, other than saying, whatever agreement is reached, he is committed to not raising taxes on households making under $400,000.

On whether letting the child tax credit expire would result on tax increases for taxpayers making less than $400,000 annually:

Crapo: TCJA also doubled the child tax credit to $2,000 per child.  Would you agree that if the TCJA CTC provisions are not extended, this would also result in a tax hike for taxpayers making less than $400,000?

Yellen: He, as I said, is committed to not raising taxes on households making under $400,000, and has expressed a commitment to the importance of the child tax credit which has dramatically lowered child poverty.

Crapo:  Well, this is good news.  As I am understanding you to say, the President will support extending these policies in the TCJA that would result in an increase in taxes on people making under $400,000.

On whether hiking corporate tax rates would be damaging to economic strength and wage growth:

Crapo: If the President’s proposal to increase the corporate tax rate to 28 percent is adopted, it would make it the second-highest combined corporate tax rate in the world.  Which would result in corporate inversions, capital leaving the United States, increased prices for Americans—adding on to inflation—and reduced wages.  Is the President seriously considering causing those kinds of economic impacts when we need our economy to stay strong and wage growth be vibrant?

Yellen:  I agree that we need a strong economy and we would not want to see capital flee from the United States to foreign shores.  That is the reason we are supporting the [Organisation for Economic Co-operation and Development] OECD’s tax pact, that many countries, including the U.K., Japan, the European Union and others, are now putting into effect.  They are putting into effect a 15 percent minimum tax on multinational corporations.

On the President’s international tax negotiations that would result in revenue loss for the United States:

Crapo: As you know, the budget once again proposes to align the U.S. global minimum tax with certain aspects of Pillar Two—but proposes a much more onerous version of it, including a rate 40 percent higher than the OECD deal, which is 21 percent versus 15 percent, and without any substance-based exclusion as provided under the deal.

Last year, the Administration’s budget estimated that proposal, combined with one adopting Pillar Two’s undertaxed profits rule, or UTPR, would raise over a trillion dollars.  However, this year’s budget estimates for those two combined proposals come in at more than half a trillion dollars lower.  Is the year-over-year $500 billion estimated decrease a result of countries adopting Pillar Two rules into law over the last year?

Yellen: Yes, in a sense.  When standard procedure is to estimate what the tax savings or expense would be, under the assumption the United States adopts a policy but does not assume that everyone else does, so when there are changes abroad, it does change the estimates.

Crapo: The Joint Committee on Taxation has estimated that if both the rest of the world and U.S. enact Pillar Two next year, the U.S would still lose over $50 billion dollars.  This is a revenue loser for America and is damaging to our economy.