Your Paycheck, Returned: How Working Families Tax Cuts Delivered for Americans

Morning everybody. Uh, this event was supposed to start at ten o'clock, but we're in Washington DC, clocks and calendars mean nothing to people anymore apparently. Not in the world I grew up in, but I got the hammer and I and we're ready to go. You've got the hammer. Thank you all for being here. Don't don't blame, don't blame us. I'm not blaming you, I'm not blaming you. I'm and I don't wanna let's and you know what, let's start with that idea, we're not gonna blame each other. and we're gonna stick to the topic today and we're not gonna let Trump derangement interfere with what we're trying to do. First of all, you folks gave up a day of your life to come here. Thank you for doing that. Uh, when I read your resumes, and I hope my colleagues did the same thing, we're talking about real people in real jobs in real life that understand how it works. Not an imaginary situation where, okay, this is the way it should work and everything else. And I'm always, I'm always fascinated by people who tell me how things should work. And I ask them, " That's interesting. So in your job or your company, you've been doing that, right?" And they look at you with a puzzled look. I said, " That's what I thought. That's what I thought." So to have you all here today is incredible. Uh, I have some prepared remarks. But first of all, and I mean this sincerely, each one of you, when I read your resume, thank you. Thank you. You are truly what America is made of. It is hard-working American people. So, thank you for being here. Um, we have an interesting, we have an interesting staff here, and I, uh, I always think that, you know, we take credit for success and blame staff when there, when there's a failure. Uh, staff on both sides of the aisle, thank you for what you do in putting this together. Members, thank you for being here. Uh, we know each other and, uh, and we know the people we represent. So, uh, witnesses, thank you for coming here. We appreciate it. We, and we look forward to your testimony. On July fourth, two thousand twenty-five, President Trump, Congress, and Republican members of Ways and Means Committee not only prevented a massive tax increase but delivered additional tax relief targeted directly to the hard-working Americans who keep this country running. Families across the country are seeing working family tax cuts where it matters most, in their paychecks and refunds. The working families' tax cuts built on the success of the Tax Cuts and Jobs Act by rewarding work supporting families and allowing Americans to keep more of what they earn. The latest tax filing season data proved that these policies are reaching tens of millions of families and workers, as it was intended to. This tax season, more than sixty million Americans, forty-two percent of all filers claimed at least one of the new working family tax relief provisions. More than seven million Americans claimed no tax on tips, with an average deduction exceeding seven thousand dollars. Nearly twenty-eight million Americans claim no tax on overtime with an average deduction of ru- roughly three thousand one hundred dollars. Let me make a comment on that. I own a business and I used to uh, we were really overloaded with work in the shop and I asked the guy who handles our fixed operations which means the parts department and the mechanic department, I said, " Thad, we're loaded in the back with used cars, we need to get them in and get them get them reconditioned, get them on the lot so that we can sell them." I said, " Tell the guys we'll go double time if they come in Saturday and I'll guys, I'll have guys in the parking room to take care of them." And he said, " Are you serious?" I said, " Yeah." He said, " No, are you serious about thinking they're gonna come in?" I said, " Why wouldn't they?" He goes, " Because they get taxed on the overtime. It's like they they go home with nothing. They put the time in, but they don't get paid for it. That's real life and real time and things that happen to real people." Um, more than thirty-four million seniors Claim the enhanced deduction tied to social security income, averaging approximately seven thousand five hundred dollars. More than one million Americans claim the deduction for auto loan interest averaging over one thousand eight hundred dollars. That is real tax uh relief tied directly to how Americans earn a living. It means workers keep more of the tips they earn. It means employees keep more of their overtime pay. It means seniors get tax relief after spending decades paying into the system. It means helping families manage the cost of purchasing an American vehicle. And those benefits translate into real savings. No tax on tips delivers an average tax cut of ra- of roughly one thousand three hundred dollars. No tax on overtime delivers an average tax cut of approximately one thousand four hundred dollars. Married seniors can now receive a twelve thousand dollar deduction ra- related to their social security benefits. The working families' tax cuts also strengthen supports for parents and children. More than thirty-four million families have claimed the enhanced and permanent child tax credit. The credit, the credit was permanently expanded to two thousand two hundred dollars, an index for inflation ensuring it never loses value over time. The law also perma- permanently doubled the standard deduction, increasing it to thirty-one thousand five hundred dollars for married households. That means ninety percent of tax filers benefited from the simpler filing process. The working family's tax cuts reduce tax liability across every income quantile. In fact, a family of four with two children earning seventy-three thousand dollars annually now has zero federal tax income liability. At the same time, the top one percent now pays nearly forty percent of all federal income taxes. A fa- a typical family with two children is expected to see approximately ten thousand nine hundred dollars more in annual take-home pay. Annual real wages are sp- are projected to rise by roughly seven thousand two hundred dollars per worker, from tip workers and overtime earners to parents, retirees, young families just getting started, this law is reaching Americans across every stage of life. These are people who are not asking for special treatment. They are asking to keep more of what they earn. The working families tax cut reflects that expectation. It aligned the tax code with how Americans actually work and earn a living. It prevented a tax increase. It delivered additional relief. And it gave American families the opportunity to keep more of what they own. Uh, and at this time, uh, I'm gonna recognize my colleague, uh, to the, uh, to the left of me, uh, Mister Thompson. We have a very good personal relationship. Politically we don't agree on everything, but personally we agree on, uh, the people that we represent, that we represent them the right way. Mister Thompson.

Thank you, uh, Mister Chairman. Um, Mister Chairman, I appreciate you having this hearing today, and thank you to all the witnesses for coming in. But we can't ignore what's become one of the most disturbing abuses of taxpayer dollars and public trust that we've seen in recent memory. Many of our witnesses are here today to talk about their paychecks and their pa- tax dollars. But on Monday, we learned that the President of the United States, President Trump, intends to take our tox- tax dollars, your tax dollars, and hand them to his political allies. including those who rioted in our capital on January sixth. One point eight billion dollars of the American people's tax dollars. That's right. While working families are struggling to pay their bills, powerful people connected with this administration appear poised to profit from taxpayer-backed settlements. That's outrageous and it's appalling. Americans are dealing with a real cost of living crisis. Families are paying more for groceries, more for rent, more for health care, more for child care, and more for basic necessities. At the same time, Republicans cut one trillion dollars in health care funding that will force rural hospitals to close, put seniors out of nursing homes, and kick working families off their health care. They say we have to make those cuts, because the country supposedly cannot afford health care for ordinary Americans. And at the same time, Republicans are telling the Americans, telling the American people, we can't afford Medicaid, food assistance, and health care for working families. Somehow they've found one point eight billion dollars for a political payout fund for Trump allies. This administration was elected on the promises to lower costs for the American people. Yet I don't recall any campaign promises to hand millions of dollars to people who beat the hell out of cops on January sixth. But that's what they're getting, a huge slush fund for Trump and his DOJ to hand out money to insurrectionists, rioters and white supremacists, including those who sought to overthrow our democracy. This is a DOJ that pardoned January six rioters, talk uh targets the um um administration's political opponents, led by the president's former personal attorney. And the silence from my friends on the other side of the dais is shocking. No, it's it's out it's an no outrage, no oversight, no concern about a break uh a breathtaking conflict of interest. involving our taxpayer dollars. Instead, I can tell you what we're going to hear from them. Anything that will distract you from the elephant in the room. And that is, the president is stealing your tax money. But the American people are watching. This should be, this should not be partisan. Taxpayer dollars should never be used to reward political allies, or personally benefit those in power. The American people are tired of watching politicians talk about fiscal responsibility and then sit by idly while ta- while taxpayer dollars are rated. That's why the Democrats on this committee are demanding transparency and accountability. Mr. Chairman, I ask unanimous consent to enter into the record the amicus brief submitted by Democrats on this committee and on the Judiciary Committee seeking to halt this settlement so that the Congress and the American people can see the ill- illegality uh of this outrage. I also ask unanimous consent to enter into the record the text of the Slush Fund Act, legislation introduced by ways and means Democrats that would impose a one hundred percent tax on any payments distributed from this fund and require Treasury to publicly disclose who receives the money. The American people deserve to know who is benefiting from this. And the American people should get every cent it's paid back to them. And I would ask my Republican colleagues, should our tax dollars go towards January six rioters and insurrectionists? If not, then why not uh mark up the slush fund bill in uh legislation tomorrow? Or at the very least, who on this committee would join us in Why not stand before the American people and defend these payments publicly? Okay. One hundred bucks. Okay. Taxpayer dollars should never become a political slush fund for the politically connected. Can I get unanimous consent to include those things in the record?

Yes, with

Thank you, Mr. Chairman, and I yield back.

without objection. Okay, well thank you. We're off to a really good start. Um This is not unexpected. So, um But we're in a unique situation because really what we wanted to talk today is about the working family's tax cuts and how it affected real people in real time with real issues so I was so impressed with with your resumes. Uh, Mister Saunders, you and your wife have two adopted children. Uh, in the family, my wife is one and nine, I'm one of five. We have probably a half dozen adopted children. I have absolutely no idea which ones are adopted uh because they're all part of the same family, so thank you so much for being here. Um Mister S- uh, to you know, uh, your story, coming from Iran, your family in two thousand eight. OK, OK. Well, no, what do you mean? OK, so I'll just recognize each one of them? Yeah, OK. So, I'm trying to leap ahead and I, I don't wanna do that. Mister Saunders, why don't you do your opening statement, then we'll go through each of you, OK? I'm just so impressed with your resumes and the fact that you took time out of your lives to come here. This is critical. Thank you. Mister Saunders, please.

Chairman, Ranking Member, members of the committee, thank you for the opportunity to share my family's story. My name is Clark Saunders, and I'm a high school business teacher in Texas. My wife Briana serves as a church children's director. Today I'm honored to speak as a husband, father, and adopted parent. Briana and I were married in twenty thirteen, and like many couples we dreamed about a future family. Adoption was something we talked about early in our marriage, but we first tried to grow our family biologically. What followed was a long and painful road. For about six years he went through fertility treatments, surgeries, multiple IUIs, medical procedures, and heartbreaking loss. During that season we prayed often about what God had planned for our family. Over time the Lord began leading our hearts toward adoption. After years of heartbreak we felt like God was opening the door that giving us peace to walk through it. In February of twenty-four we welcomed our first son, Lucas, home through adoption. After years of waiting and wondering if we had ever become parents, we were finally holding our son. All of the waiting, praying, and tears were worth it. We later adopted our second son, Levi, through New Life. Today, Lucas is two years old and Levi is ten months old. They are joyful, deeply loved boys, and the greatest blessings of our lives. Adoption is not just part of our story. It is how our family was built. But adoption is expensive. Families often face agency fees, legal fees, home study costs, counseling expenses, travel, medical related expenses, court costs, and many other costs along the way. For our first adoption through Gladney, we spent shy of sixty grand. For our second adoption through New Life, we spent close to thirty grand. In total, our family faced nearly ninety thousand dollars in adoption related costs. These fees are not just paperwork costs. They support a careful and ethical process, including counseling for expectant mothers, caseworkers, home studies, background checks, legal work, birth parent services, post-placement supervision, and court filings. Adoption involves many people working to protect the child. support support the birth mother and prepare the adoptive family. For a teacher and a church children's director, nearly ninety grand is not a small number. We're not wealthy. We had to save, sacrifice, fundraise, delay our financial goals, and trust that the Lord would provide. That is why the adoption tax credit matters so much. For our first adoption we finalized Lucas's in twenty twenty four, and our twenty four tax return we listed eighteen thousand nine hundred and eighty two in qualified adoption expenses, and claimed the maximum twenty twenty-four adoption tax credit of sixteen thousand eight hundred and ten. That credit helped reduce our tax liability after a year of significant adoption expenses. We also ado- uh benefited from the child tax credit for Lucas. Our return shows we received the full two thousand child tax benefit through the child tax credit and additional ta- child tax credit. We also claimed the child independent care credit which helped offset part of our child care expenses. These credits matter because adoption is not the end of the financial responsibility. It is the beginning of raising a child. Once Lucas came home, we had all the normal expenses of caring for a baby, child care, diapers, formula, doctor visits, clothes, and everything else that comes with becoming parents. For our second son, Levi, we finalized his adoption in January, so we're not able to claim the adoption tax credit on our twenty twenty-five return, but we hope to use the credit in the twenty-six tax return. Knowing that relief is available gives our family financial confidence as we recover from two adoptions in a short period of time. There's also an important public policy point here. When Congress supports adoption, it's not simply helping adopted parents. It is helping children move into permanent, stable, loving families. When children do not have permanency, long-term costs can fall on state and federal systems, through foster care, public assistance, Medicaid, housing support, or other safety net programs. By helping families adopt, the adoption tax credit is a modest investment compared to the potential long-term cost of a child growing up without permanent family support. Our sons are not a burden. They're blessings. Because they are adopted into our family, they now have two parents fully responsible for loving them, providing for them, educating them, feeding them, clothing them, and walking them through the rest of their lives. That is what adoption does. It does not just change a child's legal status, it changes a child's future. The adoption tax credit does not make adoption inexpensive, but it provides meaningful relief after families have made one of the largest financial commitments of their lives. It tells families like ours that the country recognizes the value of adoption and understand that cost should not keep a child from joining a permanent loving family. The child tax credit also matters because adoption is only the beginning. Child care, groceries, clothing, medical care, they add up quickly. These credits help provide stability as we plan for our children's future. For us, these credits are not abstract policies. They're connected to real decisions around the kitchen table. They affect how we budget, provide for our boys, and move forward after the financial sacrifice of adoption. When Congress strengthens the adoption tax credit and child tax credit, it helps make adoption possible. It helps children join permanent families. It helps parents recover from major financial sacrifice, and helps families like mine provide a stable living home. We're grateful for our boys, we're grateful for adoption, and we're grateful that this policy is in place to support families. Thank you for allowing me to share my story.

Thank you, Mister Saunders. Uh Now, Mister Stiefel, uh You're recognized, but I think it's really important. Your family came here in two thousand eight from Iran. Is that correct?

Uh, Iraq, sir.

Iraq. Uh, and you're a server now at Buck and Ryder Restaurant in Phoenix, Arizona?

That's right, sir.

And you're gonna become an attorney?

Uh, fingers crossed, sir.

OK, well listen. We're glad you're here today. Please, you have five minutes.

Thank you, Chairman Kelly. Uh, thank you, Ranking Member Thompson, and members of the committee. My journey in the restaurant industry began during my junior year of high school. Prom was approaching and I needed to figure out how I was gonna pay for dinner. I felt kinda weird having my parents pay for my date, so I got a job at a, as a busser at a restaurant down the road, and I immediately fell in love. I'd been in the industry for almost a decade now. You see, that job ended up paying for a lot more than just my prom date. It's paid for my education, it's paid for my rent, it's paid for my life. Everything that I have built today, I have built through tips. I put myself through college studying political science, and I am now preparing to apply to law school. You can imagine how incredible this moment is for me. See, I'm here today because the people who made my journey possible. Servers, bartenders, and bussers. My friends. Everyone deserves a voice in rooms of influence like this one. And I may not be, I may not work as a tip server forever, but I could not be where I am today without that opportunity. And that's why I'm here. I'm here today to advocate for those who make this a lifelong career. The hospitality industry is uniquely empowering. It offers unparalleled flexibility that allows single parents to control their schedules, pick up their kids from school, still make it to soccer practice on mornings, and still provide a strong living for their families. It's an entrepreneurial environment where your hustle directly dictates your success. You see, to understand the impact of no tax on tips, it's vital to understand the nature of tip income. It's highly variable. During a slow week, I might earn four hundred dollars in tips the whole week. On a busy night, I might earn that same four hundred dollars in a single shift. You see, that variability is the reality every tip professional embraces. We like to say, " We don't get salaries, we get Saturdays." Yeah, we succeed based on our drive, our expertise, and our delivery. We learned to manage the great weeks so that they carry us through the slower ones. This past tax season, because of no tax on tips deduction, I received approximately four thousand dollars back. That money for me went directly towards a budget for law school applications and campus visits. It became real savings that I would not have had otherwise. That refund kept the door to my future open, and I wouldn't have these opportunities without it. You see, I'm fortunate to work at a busy establishment where the tips are strong, but there are thousands of professionals working in areas where the margins are tighter. And for them, this relief is even more helpful. You see, my colleagues and I carry responsibilities that don't show up on a shift schedule. Change, that's the norm. But this time, it was different. When these refunds began reaching our mailboxes and our bank accounts, even the atmosphere on the server floor shifted. It was honestly pretty cool. There were times in the middle of a dinner rush, food needed to be ran, sorry to the managers watching this, where we started talking about Roth IRAs. Where we said, should we take a Vanguard and go Voo or what should we do to optimize our income? We were discussing the mechanics of Roth IRAs and exploring how to optimally invest. These conversations happened because my colleagues and I had the capital to look ahead. That is transformative. See, I've talked to my coworkers about how they use their refunds before coming here today. A mother, who's the sole provider for her family right now because her husband recently lost his job she told me that she didn't know how she would have stayed afloat without it. A bartender who was recovering from an autoimmune condition used hers to stay current on her medical bills and her car payment. A father used his to open a college fund for his six-year-old. You see, these aren't fairy tales. These are my coworkers. And they're your constituents. They are proof of a policy functioning exactly as it should. No tax on tips acknowledges the real circumstances of tip professionals. You see, every tip that we earn is a direct reflection of our effort and our connection with the people that we serve. Nothing could be more American. See, this policy, it allows the working families of the service industry to keep more of the money they have earned directly through their hard work. Members of the committee, if you would have told that sixteen year old busboy who got a job to pay for a dance, that he'd be sitting here before all of you today, he would have laughed. I wanna thank you all for this opportunity in your time today, and I wanna leave you all with this. A tip isn't a wage. No corporation sets that rate. There's no negotiation that determines that number. It's one human being looking at another one in the eye and saying thank you. You deserve this. No tax on tips honors that distinction. And when you honor the way that people earn, you change what they're able to build. Thank you.

Thank you, Mr. Thibault. Uh, Miss Mihalek, you're now recognized, I think it's important people know you're the owner of Garbo's Salon and Spa, and uh, and you have a number of Subway franchises in Omaha, Nebraska. We talked before this meeting started. I am so impressed with what you've been able to, you and your husband, it's incredible. Please.

Thank you so much for having me. My name is Darcy Mihalik, and together with my husband, I own and operate four Garbo salon and spa locations, twenty-one Subway franchises, one Taco John's location, and two Base Camp coffee and wine bars in Nebraska. Across our businesses we employ approximately two hundred and eighty-nine people, and more than ninety percent of our workforce earns tips as part of their income. I am proud to testify today on behalf of the National Retail Federation, which represents an industry that supports one in four American jobs. We are a family-owned business, and our salon business is majority woman-owned. Like many small business owners, we are deeply invested, not only in our companies, but in the people who make them successful every single day. I want to say thank you to this committee for the inclusion of the no tax on tips provision and the decision to preserve a competitive corporate tax rate, in the one big, beautiful bill. For our employees, tips are not extra income. Tips are part of how they pay rent, buy groceries, support children, care for aging parents, and build a future. In our salons and restaurants, every tip represents a customer choosing to say thank you for excellent service. These are not automatic service charges added to a bill. They are earned one interaction at a time through hard work professionalism and personal connection. The no tax on tips provision has made a real difference for many of our employees. One employee shared with me that the additional refunds she received allowed her to finally pay off more than four thousand dollars in high interest medical debt, that she had struggled with for over a year. Another employee told me this was the first year in a long time that she did not have to worry about how she would pay an unexpected tax bill while still caring for her children. One of our long-time employees, going through a difficult divorce, explained to me that the tax relief prevented what he described as a financial bloodbath after being forced to liquidate assets during a divorce settlement process. These are not abstract policy discussions for our workforce. These policies are affecting real people in meaningful ways. We saw a noticeable improvement in morale as employees began receiving larger tax refunds this year. Employees felt seen. They felt valued. And they felt like Washington understood the realities of working who rely on tips to support their families. Importantly, preserving a competitive business tax environment also matters. Small businesses need certainty. We need confidence that we can continue reinvesting in our operations, updating facilities, retaining workers, and serving our communities without facing unexpected tax increases that make growth more difficult. I also want members of Congress to understand the character and the work ethic of tipped workers. A hairstylist spends long hours on their feet while balancing technical precision, customer service and creativity. I often tell our salon team they have to be part artist, part chemist, and part counselor, while bringing their very best attitude whether it's at nine in the morning or late in the evening. Our restaurant employees are no different. Many of our Subway employees know customers by name and remember their regular orders even before they reach the counter. They go out of their way to brighten someone's day, the connection is why customers These workers earn those tips through effort, personality, consistency, and care. I believe the no tax on tips provision recognizes the dignity of that work. It is good policy because it rewards work, supports families, and strengthens local businesses and communities. I will close with something personal. Recently I read a devotional that said, "Let the daunting size of your task and the sheer weight of your responsibility keep you daily at the feet of God." My husband and I think about that often. We have nearly three hundred employees depending on us to navigate an increasingly difficult environment for small businesses. We take that responsibility seriously. That is why I agreed to testify today. When we see a policy directly helping hardworking Americans, not in theory but in real life, it's important to say so. The Working Families Tax Cut Act, especially the no tax on tips provision, is making a positive difference for our employees, our businesses and our communities. Thank you for the opportunity to testify today.

Thank you, Miss Malek. That's very impressive. Uh, Mr. Alexander, who, uh, lives in Texas but makes steel. Uh, in my hometown, the main employer is Cleveland Cliffs. They make steel. We make steel for, that goes inside the, uh, transformers. Um, and it's essential. Uh, so, Mister Alexander, thank you for being here today and please, your testimony.

Uh, good morning. Thank you for the opportunity to appear today. My name is Jason Alexander. I'm a millwright at Optimus Steel, small family-run steel mill in Beaumont, Texas. Uh, I feel blessed with the opportunities the steel industry has provided me and my wife. Uh, steel has built this country. Uh, the work we do every day continues to strengthen everything from our national defense to the next generation of manufacturing. Over the past year, actions taken by Congress and the administration have made a meaningful difference, strengthening both our industry and people who depend on it. Helping workers like me build a family and pursue the American dream. As a millwright, I inspect, repair, install, align, maintain the equipment that keeps our mill running. That means welding, brazing, cutting, precision assembly. Whatever it takes to keep production moving safely and efficiently. It's demanding work and the hours can be long, but it's work I'm proud of. Steel is essential and downtime is an option. when the country depends on a steady supply of American-made materials. That's why policies like the working families' tax cuts have mattered so much. When my wife and I filed our taxes this year, we saw the impact firsthand. The year before the working families' tax cuts, I actually had to write a check when I filed my taxes. This year, instead of owing money, we received an incredible refund of more than ten thousand dollars. This money I earned through hard work, often through long overtime hours, and for the first time it felt like the system recognized our effort, instead of punishing us for it. It's not a handout. That's our money, back in our pockets. My wife and I are planning to start a family, so this refund feels like a meaningful head start, a nest egg that will help us take the next step with more confidence. It's something that would have been harder for us to do before. We don't talk much about policy while I work, but we do talk about this. I've heard the same from my coworkers. Many of us say it feels like we got a raise with uh the no tax on overtime. And Washington policies can sometimes feel distant, but this one impacts all of us who work at the mill. At the same time, we need to make sure American companies can keep investing here at home. companies like mine grow and stay competitive. Full expensing of capital equipment, for example, has helped Optimist Guild expand and modernize. As a result, we've been able to install equipment that drives measurable gains in both quality and output, strengthening our ability to serve customers more efficiently. I would also like to take the opportunity to talk about another policy that has been crucial to I can't emphasize enough how important the two thirty-two steel tariffs are for us. Steel is foundational to any nation's economy and security, which is why countries like China continue to target our industry. American steel workers produce the world's cleanest steels, made to the highest quality standards in the most efficient way possible. The two thirty-two tariffs have revitalized our industry. and protected jobs in communities like Beaumont and across the country. Communities that have grown up around steel mills and they depend on them. I'm thankful to the Lord for putting me in a place to tell my story and the many blessings. And thank you again for the work that you do and for the opportunity to speak today. The policies you're shaping have real impacts on people like me. My wife and I are grateful. for the ways the working family's tax cuts have helped us build a better life. Still workers helped build this country, and we're ready to keep supplying the materials that will carry it forward. All we ask for is a chance to compete, and if we have that, I'm confident we will win every time. Thank you.

Thank you, Mr. Alexander. Uh, Mr. Schneider, Deputy Head of the US Policy for Piper-Standler, you are recognized for five minutes, sir, and thank you for being here today.

Thank you, Mr. Chairman. Um, So, Chairman Kelly, Ranking Member Thompson, and members of the Ways and Means Committee, thank you for the opportunity to testify on the Working Families Tax Cuts Act, also referred to as the One Big Beautiful Bill Act, or OBAA. It's an honor to be back before this committee, albeit in a different capacity, as I previously served on the staff of this committee under Chairman Ryan and Brady. In my current role, I'm Deputy Head of US Policy at Piper Sandler, an investment bank. My job is to conduct macroeconomic research to help our clients, institutional investors, to navigate how U. S. policy affects markets. It's important to note that I'm here today representing my own personal views, and the comments I expressed today and in my written testimony do not reflect the views of my employer. The OBAA contains sweeping tax reforms. First, it prevented an over four hundred billion dollar annual tax increase, which translates to over two thousand dollars per return, um, on individuals by permanently extending the reforms made in the Tax Cuts and Jobs Act. In addition, many provisions were created or reformed, including on a retroactive basis to provide tax relief to working families. These provisions are the subject of my testimony today. Specifically, the law built on TCJA by expanding the child tax credit to twenty-two hundred, indexed for inflation, increasing the standard deduction by seven hundred fifty dollars or fifteen hundred for joint filers, and expanding the SALT cap from ten thousand to forty thousand with a five hundred thousand income limitation. Several other new provisions were enacted retroactively as well, including deductions for up to twenty-five thousand of overtime income, twenty-five thousand for tipped income, a six thousand dollar deduction for senior citizens, an auto interest deduction of up to ten thousand, a one thousand dollar deposit for tax advantage savings accounts for newborns and much more. Using a range of estimates from JCT and other nonpartisan groups, I find tax relief was estimated to be between a hundred and twenty-four billion, and a hundred and fifty-six billion during this filing season. It's one thing to describe the estimates of tax relief. It's another to see the results in practice. Using data from the Treasury Department, we can track this relief as it is dispersed through a combination of tax refunds, as well as lower tax payments when filing. According to my analysis, the tax changes in OBAA provided over a hundred and forty-eight billion in tax relief to individuals during this filing season, right in the middle of the range predicted by revenue estimators. I find that OBAA increased tax refunds by forty-eight billion. and lowered tax payments by one hundred billion relative to what would have otherwise occurred to put these figures in context there have been a hundred and forty five million returns filed as of may one so this means oba provided about a thousand dollars in tax relief per return filed tax refunds increased from two hundred eighty two billion last year to three hundred thirty billion this year a forty eight billion or seventeen percent increase at the same time the average tax refund increased from about three thousand dollars thirty-three hundred dollars, an increase of eleven percent. The difference between these two numbers um tells you something very interesting. Consider the fact that last year sixty-three percent of people received a refund. This year about sixty-eight percent did, a f- a nearly five percent increase. That means that over six million households went from owing taxes when they filed to receiving a refund. The fact that so many households flipped from owing to getting a refund um not only increases the total amount of refunds paid, but reduces the average refund. Um, that's almost definitionally true as someone goes from owing to getting a below average refund. In other words, the average tax refund statistic, the eleven percent increase is a victim of its own success, as more people got refunds for the first time and lowered the average. As for the distributional implications of these retroactive provisions, the fairest way to look at it is looking at the percent change in after-tax income by income group. What we find is that there is modem modest relief for the bottom two income quintiles, robust relief for middle income groups, and virtually no benefits of the retroactive provisions at the very top. According to an analysis of the ta- by the Tax Policy Center, it um the law would boost after-tax incomes by about thirty-five basis points, in the bottom two quintiles, about ninety basis points on average between the fortieth percentile and the ninety-fifth percentile and virtually nothing in the top one percent. This pattern is understandable. First, very low income households typically do not pay income taxes so they do not benefit from deductions. At the high end, um, people do not tend to benefit from these provisions because they each have lin- income limitations ranging from seventy-five thousand to five hundred thousand. Thank you, and I look forward to your questions.

Thank you, Mr. Snyder. Uh, Dr. Edwards, you are now recognized.

Thank you, Chairman Kelly, and Ranking Member Thompson. The purpose of the US tax system is to raise revenue to fund government. National debt has surpassed one hundred percent of GDP and the deficit is one point seven trillion dollars clear indications that the tax system is categorically failing at its job. The solution is simple, you need to raise taxes. That simple solution is complicated by the concern that raising taxes hurts the economy, a concern born from the belief that lowering taxes helps the economy. In my testimony today, I offer my lens as an economist to explain why that belief in the economic power of tax cuts is misplaced and incomplete. I say misplaced because the ability of tax cuts to influence the economy is limited. Tax cuts are a margin off a margin of income. To be to be effective as a national economic policy, households must respond the exact right way, to spend when we want them to spend, to save when we want them to save, when the right way is determined, by broader conditions in the macroeconomy and not the needs of their own household. In this, the one big beautiful bill act was exemplar. I testified in front of this committee two years ago, and a primary topic of the day was the year twenty eighteen, a year in which the economy grew, unemployment fell, wages grew, and members were proud to attribute the strength of the economy in twenty eighteen to the tax cut the year before. Here we are in twenty twenty six, a year after a tax cut three times the size, and we have an economy that no one is taking credit for, unemployment is up, wage growth is down, and fifty-five percent of Americans said in a Gallup poll that their financial situation is actively getting worse. Before and after are not the same thing as cause and effect. Tax cuts didn't cause a windfall in twenty eighteen and similarly didn't create one in twenty twenty six because tax cuts are simply no match for broader headwinds and tailwinds in the e- in the economy. Now that's not to say that the one big beautiful act did not have an effect. but having an effect and being effective policy are not the same thing. Instead, the only thing ca- tax cuts are guaranteed to do is lower revenue, which is why I say tax policy as economic policy is incomplete without consideration of its cost. Debt financing, a permanent reduction in revenue, has growth consequences. The Penn Wharton budget model estimates that the one big beautiful bill act requires so much borrowing, the economy smaller. Four point five trillion dollars in tax cuts to boost the economy one percent in the first few years, decrease it within ten, and make it four to five percent smaller in the long run because of borrowing. Now I don't put weight or too much weight on these exact estimates but rather what they illustrate. That the growth that you have purchased through the one big beautiful bill act in the short term is lost and then some in the long term because of borrowing. Raising taxes will occur some pain, but I promise you the alternative is not pain-free. I I draw two conclusions from this. The first is the choice is not between raising taxes or lowering taxes, but between raising taxes and giving over our fiscal autonomy to debt servicing. As Moody's wrote last year when it downgraded U. S. credit, the third such downgrade in a decade, federal interest payments are likely to absorb thirty percent of revenue, by twenty thirty-four, our largest public program will be debt servicing. The second is giving up tax cuts doesn't sacrifice much for the economy or economic policy. Outside of recession response, the one big beautiful bill act was the ninth major tax action this century whose collective ten year budget costs are over twelve trillion dollars. If there were, if there were a problem in our economy, that tax cuts could solve, they would have solved it by now. If tax cuts were the key to job growth, if tax cuts were the key to wage growth, if tax cuts were the key to income growth, if tax cuts were the key to affordability, if tax cuts were the key to the linchpin of American's economic security, we would have that evidence in hand because we have been collecting it for twenty-five years, and we don't. Again, it is not that tax cuts can have no positive effect, but they have failed to grow the economy enough to justify their enormous cost. I I will end by noting that there is reason for optimism, because there is so much that we can do when we stop using revenue collection as economic policy and instead use revenue collection to fund economic policy policy that is a fraction of the cost, policy that has clear proven returns, policy that directly invest in families and workers rather than hope they'll respond the right way to a marginal change and tax liability. We are not out of options, but we are out of tax cuts. Thank you for your attention. I yield the remainder of my time.

Thank you, Doctor Edwards. So, um, and again, uh, w- a lot of us, uh, have come from the private sector that then ran for election, got, got elected, and are here. I, uh, I really place a lot of what I, I listen to and what I c- what I look at is uh being with people who do these things and so the overtime story is is always incredible to me whenever people don't wanna work overtime because it doesn't benefit them uh that's hard to sit and listen to somebody who is running a business Mr. Mihalik you have that Mr. Alexander you work with guys everyday Mr. Tiffo you do that Mr. Sanders everybody works their uh I I will I will use terms that are not that works their rear end off in order to just break even um So, Mr. Alexander, when you're making steel, and the people that are there with you making steel, how has this changed your attitude whenever managers come out and say, you know what guys, we're behind and we have an order we have to fill. Um, we're gonna do some overtime, but it's gonna benefit you. Now, in the past, before this bill, it really didn't benefit you that much to work overtime. Tell me now, the people that you work with every day, when they hear they have a chance to work overtime and make some

Yes, sir. Thank you, Mr. Kelly. Yeah, so my shift partner, uh, his nickname is Road Rage. He's a big car guy. And so, uh, we always say, hey, you get some overtime, man, that's car money, that's parts, man. So he's,

Mm. Oh, I I just you you have employees, uh, uh, Mister Stiefel, you talk about how you work, Mister Saunders, you because you go through the adoption process, um, tell just a little bit of the people that actually are out there and who this bill was designed to help this is the working families tax act so just tell me when it comes to down to working families what do these policies mean to them in real time, with real wages, that help them pay really big bills.

For our employees, um, we noticed a huge uptick in just employee morale in the first quarter. Um, typically our business is slower, first quarter, um, January, February and March, just in both of our industries, oddly enough, we're pretty weather driven. And, and when we were able to see those refunds coming back at that time, it really changed employee morale. Um, sometimes it's hard to keep people motivated, come when business is slow. And it made it easier to do that, honestly. It made it easier to look them in the eye when the books aren't as full as they need to be, or maybe when you have to send someone home a little bit early in order to make labor. It made it easier for everyone, and it changed the way they thought about work. And it, it was very, very helpful to owners. It was very, very helpful to our employees, and we're just grateful for it.

Everybody has this story. Mister Stiefel, if you'd share with us the people that you work with every day, and whenever we came up with this big beautiful bill, working family's tax, what was the feeling? I mean, the the the whole idea of when you go to work to work and you get paid for going to work. My son, by the way, is a is a laborer uh in construction, he mixes cement, he carries cement blocks, he builds scaffolding. Um, and he tells me that everybody he works with looks for overtime. They look for overtime and they really and they look at it and then and I think, I don't think everybody realized how the tax the positions change and they get to keep more. But I know when you guys talk about how you figure it out, if you could share that story with us, I gotta tell you what, it's so personal and it's what this bill was about.

For for server specifically, Chairman, thank you for the question. Uh, the tip part of it, the fact that we got to keep more of our tips Because when tips are meant to be a thank you, getting to keep a little more of that thank you, not having to be taxed on that was helpful. And no matter where you were down the diocese, it was a bipartisan approach, honestly. Everyone liked it, and they were very, very happy with it. So I I think on behalf of all the servers, thank you all, and we're very, very grateful to have that no tax on tips.

Well, thank you. And, Mr. Saunders, I, I, uh, I sit beside a gentleman who, uh, also is, has a family like your family, uh, the ability for people to actually adopt children. Uh, the the cost. You shared those early on in your testimony. I don't think, if you're having to do that process, you have no idea how much it costs to take on a child, to give a child a loving home, to give a child a future. How did it affect you? How does it affect the way you, when you and your wife, when you wake up in the morning and you look at those two children you have right now, the ability to do that, first of all, thank you for doing it, that's the most the most important part of our society is the twenty-five percent which a because it's a hundred percent of our future. Thank you to you and your wife for what you're doing. So if you could just share that feeling of saying, you know what, we can actually do this.

Absolutely, Chairman. Um, you know, even going through fertility and dealing, struggling with infertility issues is a very emotional process too. And IVF's expensive as well. Um It's hard to d- to look at your wife and not necessarily know if you can have a family. Right? And through support, through donations and and and grants and everything that we could find, we're able to adopt. And the costs matter. Um, like I said in the testimony, it's expensive to adopt, but the two agencies we worked with are amazing organizations, and they care about the birth families, they care about the children. Um, they counsel these people, the children for the rest of their life, the mothers for the rest of their life. These costs, that we incur as adoptive families are necessary, and and I understand that, but it's a really expensive process, and painstaking process, and a lengthy process, and just being able to see you know what, we're gonna get some money back through this whole process, like and be able to continue with our family and think about another one, you know, and adopting a second. Um when I look into Lucas and Levi's eyes I just I'd see pure joy. And we're s- just so blessed as a family to be able to call those our sons. And um, we're just extremely grateful, and any kind of financial benefit for families is is totally worth it.

Lucas and Levi are blessed to have parents that love them the way you and your wife do. I gotta tell you, they say sometimes these things are really emotional that we go through. Um, and when we talk about tax policy, I I I I wanna make sure that we concentrate on what it is that we're talking about. Your stories are all so significant. It it concerns me uh because we get too far away from policy and we get into politics. I and I gotta tell you because of my family I and I understand what it's what people go through to adopt, but I also understand the effect it has for a child. Your kids are very very fortunate. Your p you and your wife are very fortunate. Thank you for being here today. Uh, Mister Schneider, what does the distributional s data say and did we succeed in the goal we attempted to get to in in this working families tax cuts.

Uh, yes, as the the name of the bill, working families tax cuts act by the distributional tables focused on the retroactive individual income tax provisions, yes, you did succeed. There is about a thirty-five basis point increase in after-tax income for the bottom two quintiles from the fortieth percentile on through the ninety-fifth percentile, which is covering, you know, roughly forty thousand in income up to about five hundred thousand. percentage point boost in after-tax incomes and above that there's virtually no relief given that all of the income limitations in place are at five hundred thousand or less.

Oh. I wanna thank you all for sharing your s- your stories. Um. Mr. uh, Mr. Edwards, uh, uh, i- After what you've heard and what you looked at, Does it make any sense, uh, what have we t- tried to do? I know that we call it the one big ugly bill, the one big this, the one big that, but at the end of the day, did we actually do something, put something together that helps hard-working American families? And I know we're concerned about the debt. I'm very concerned about the debt. But what I'm concerned about more than anything else is that we forget who pays for all this spending that we have. We ca- we have an addiction to spending and it really causes a lot of pain. Uh, what w- i- can you add anything else in your testimony you talked about and And Mr. Schneider talked about it. The math is really difficult to look at right now and feel good. Anything else that you'd like to add?