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House Ways & Means Subcommittee Hearing on COVID-19 Tax Relief

House Ways & Means Subcommittee on Select Revenue Measures

“Tax Relief to Support Workers and Families During the COVID-19 Recession”

Thursday, June 18, 2020

Witnesses

  • Amy Matsui, Senior Counsel, The National Women’s Law Center
  • Indivar Dutta-Gupta, Co-Executive Director, Georgetown Center on Poverty and Inequality at the Georgetown University Law Center
  • Allison Bovell-Ammon, Director of Policy Strategy, Children’s HealthWatch at Boston Medical Center
  • Martha Rodriguez, Preschool Educator, Renton, WA
  • Kyle Pomerleau, Resident Fellow, American Enterprise Institute (AEI)

Opening Statements 

Subcommittee Chairman Mike Thompson (D-Calif.)

In his opening statement, Thompson called on the Senate to pass the HEROES Act quickly in order to provide economic relief to financially vulnerable Americans. Specifically, Thompson expressed support for expanding the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and the Child and Dependent Care Credit. Thompson also called for implementing a more generous Employee Retention Credit, a move intended to help businesses maintain payroll and cover fixed costs. Thompson highlighted the merits of COVID-19 relief legislation, advocating for the Access Technology Affordability Act, legislation that would help blind employees obtain equipment needed to efficiently work from home.

Subcommittee Ranking Member Adrian Smith (R-Neb.)

In his opening statement, Smith said that Congress’s primary focus should be on reopening the economy and incentivizing safe return to work protocols. Specifically, he expressed his support for H.R.7066, a measure that would give Americans two weeks of enhanced unemployment benefits when they return to work. While acknowledging that the Payroll Protection Program (PPP) was successful, Smith expressed an interest in exploring new ideas to help businesses maintain liquidity. In conclusion, he asked the committee to work on a bipartisan basis to provide tax relief necessary for employers to run their businesses and to ensure economic opportunities for all workers.

Testimony 

Amy Matsui, Senior Counsel, The National Women’s Law Center

In her testimony, Matsui asked Congress to address racial and gender disparities when developing COVID-19 relief tax policy. Specifically, she expressed support for the EITC, CTC, and making the Child Dependent Care Credit refundable. She concluded by calling on the Senate to pass a second round of economic impact payments through the HEROES Act, especially for dependents and families left out of the CARES Act.

Indivar Dutta-Gupta, Co-Executive Director, Georgetown Center on Poverty and Inequality at the Georgetown University Law Center

In his testimony, Dutta-Gupta said that the CARES Act failed to match the financial struggles that families are facing and that the committee should leverage the tax code to better assist individuals and families. He expressed support for expanding the EITC, increasing the maximum CTC, and making the Child Dependent Care Credit fully refundable. Additionally, he suggested that the federal government allocate more money for direct assistance and avoid ending anti-recessionary spending prematurely. Dutta-Gupta concluded by voicing his support for the HEROES Act and warning that people of color are especially at risk if Congress fails to provide additional relief.

Allison Bovell-Ammon, Director of Policy Strategy, Children’s HealthWatch at Boston Medical Center

In her testimony, Bovell-Ammon warned that without a strong federal response, the economic downturn as a result of the COVID-19 pandemic could have a serious impact on the health of an entire generation of children. She spoke in favor of the EITC and CTC, pointing to evidence that recently categorized the EITC as a key evidence-based and cost-effective intervention for improving health in early childhood. Bovell-Ammon echoed other witnesses in asking the Senate to pass the HEROES Act which would provide support to groups left out of the CARES Act, specifically immigrants, teens and adults with disabilities. She also asked the committee to use the tax code to administer cash benefits throughout the economic recovery, calling it “part of the nation’s public health infrastructure.”

Martha Rodriguez, Preschool Education, Renton, WA

Rodriguez described her experience as a working mother who has been financially impacted by the COVID-19 pandemic, losing both of her jobs and currently unable to access unemployment insurance. She asked congress to make changes to the tax code and build a plan that supports the health of struggling families.

Kyle Pomerleau, Resident Fellow, American Enterprise Institute (AEI)

Pomerleau highlighted the successes of the various tax provisions included in the CARES Act, highlighting their role in providing economic relief to individuals and businesses. He continued that while there are signs that the economy has improved, more relief will be needed. As Congress considers new relief programs, Pomerleau suggested they be temporary and targeted at individuals and businesses affected by the pandemic. He criticized “narrowly targeted” tax deductions for certain industries and for the HEROES Act provisions to lift the limit on State and Local Tax (SALT) deductions. He acknowledged that relief measures will add to the national debt, but warned against raising taxes or cutting spending, as such actions would impede economic recovery.

Question & Answer

Economic Inequality & Tax Credits

Reps. Lloyd Doggett (D-Texas), John Larson (D-Conn.), Judy Chu (D-Calif.), Linda Sanchez (D-Calif.), Suzan DelBene (D-Wash.), Gwen Moore (D-Wis.), Dan Kildee (D-Mich.) and Thompson all discussed the economic inequality they observe in the U.S. and how to amend the tax code to better address such inequality. Larson specifically noted the importance of additional investment in programs that already have high rates of participation, such as the EITC, CTC, and Social Security. In response to a variety of questions on this subject, Dutta-Gupta emphasized the need to raise the minimum wage, provide additional childcare funding, continue direct financial aid to families, as well as expand the EITC, increase the maximum CTC, and make the Child Dependent Care Credit fully refundable. Matsui and Bovell-Ammon concurred with Dutta-Gupta’s recommendations, adding that these tax credits help to reduce poverty, increase work force participation and positively impact children’s health. Matsui said that there needs to be an interplay between tax assistance and direct payments, asserting that the childcare and development block grant program needs increased funding. In general, Democrats touted the provisions outlined in the HEROES Act and called on the Senate to pass the bill.

General Taxation
Pomerleau responded to a variety of inquiries regarding the possibility of raising the tax rate. He outlined that there is no reason to raise taxes as increased burden on individuals and businesses will slow down any economic recovery. He continued that it would run contrary to the stated goal of the CARES Act of increasing liquidity of business, ensuring that employers keep people employed, and helping households maintain their budgets.

CARES Act Business Provisions

Reps. Tom Rice (R-S.C.), David Schweikert (R-Ariz.), Jodey Arrington (R-Texas), and Smith spoke in support of the PPP and emphasized the possible role of tax incentives in increasing hiring and ensuring employee safety. Smith spoke about the connection between business relief and individual relief, to which Pomerleau asserted that making a distinction between business and individual tax relief is not helpful as relief targeted at businesses, such as expanding payroll tax cuts or a deferred income tax cuts, is intended to make it easier for workers to stay connected to their jobs and keep employees hired.

Intellectual Property

Reps. Drew Ferguson (R-Ga.) and Thompson both spoke on the need to protect American intellectual property (IP) and encourage the repatriation of IP. In response, Pomerleau noted that work continues on certain provisions of the Tax Cuts and Jobs Act, specifically referencing GILTI and FDII as two items in need of addressing.

Miscellaneous

Rep. Darin LaHood (R-Ill.) spoke in favor of the Clean Start: Back to Work Tax Credit Act and the Small Business Tax Finance and Compliance Simplification Act, as did Kildee regarding the Working Families Tax Relief Act, DelBene concerning the American Family Act and Chu in addressing the Coronavirus Immigrant Families Protection Act.

Rep. Thomas Suozzi (D-N.Y.) called on Congress to provide additional direct financial aid to state and local governments while Rep. Don Beyer (D-Va.) outlined the need for expanded unemployment compensation.

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