The House Ways and Means Committee is one of the most important centers of decision-making in the entire federal government. It’s the House’s chief tax-writing committee, where members of Congress make calls about who gets taxed and how much and, in the process, decide how our economy should be structured.
With so much power over our tax code, the House Ways and Means Committee has the ability to do an incredible amount of good or bad. Unfortunately, given its new head in the 118th Congress, we’re likely to see much, much more of the latter.
Rep. Jason Smith (R-MO) was recently selected as the new Chairman of the Committee, so we’d like to focus this week’s Closer Look on him and how his record on taxes suggests he’ll act as Committee Chair.
Upon his election to the chairmanship of the Ways and Means Committee, Smith released a statement in which he claimed he would prioritize the interests of working Americans over the wealthy and corporations. This is a commendable attitude, as Americans certainly need the help under the weight of back-breaking inflation.
But while it might be commendable, that doesn’t mean it’s believable. As the old adage goes, the best predictor of future behavior is past behavior. And unfortunately, Smith doesn’t have the greatest track record when it comes to supporting tax policies that advance the interests of working Americans – in fact, he has one of the worst. We shouldn’t hold our breath and expect him to act differently now that he’s Chairman of the Ways and Means Committee.
For today’s Closer Look, we’d like to highlight three of the most egregious tax policy positions from Smith’s past: his support of the 2017 Tax Cuts and Jobs Act (TCJA), his opposition to the estate tax, and his support of the FairTax Act.
The Tax Cuts and Jobs Act
Smith co-sponsored the GOP’s infamous TCJA back in 2017 and, over the past six years, has never missed an opportunity to champion its tax cuts as a boon to the working class. Smith could not be further from the truth on this point: the TCJA unequivocally did more to help corporations and wealthy people like us than anyone else.
According to one analysis, in 2020, the richest 1% of Americans received an average annual tax break of $49,950 from the TCJA, while the poorest 20% of Americans received just $60. Smith might think that a $60 tax saving is something to be proud of – after all, it’s enough for a Costco membership! – but we disagree.
Smith’s involvement with the TCJA goes even further than this, however. In 2021, Smith introduced legislation to make the TCJA’s deduction for qualified business income permanent. The TCJA allowed owners of pass-through businesses – a category that includes an array of business types, which together comprise 95% of all businesses in America – to deduct 20% of their income from their tax bills. This deduction is set to expire in 2025, which Smith’s bill would circumvent.
Smith and other Republicans like to rave about how this deduction benefits small businesses and workers, but just like the rest of the TCJA, it does nothing of the sort. According to one estimate by the Joint Committee on Taxation, 61% of the benefits from this deduction flowed to the top 1% of earners, while just 4% went to the bottom 67%. It’s one of the most regressive pieces of a bill that is, even without it, overwhelmingly regressive. Yet it’s one of the only pieces that Smith chose to focus on preserving.
The Estate Tax
The estate tax (or the “Death Tax,” as the GOP likes to call it) has always been one of the Republican party’s favorite taxes to hate. Not coincidentally, it also is one of the few that exclusively taxes the ultra-rich.
The estate tax is a tax on assets transferred from deceased persons to their heirs, but it only applies to extremely wealthy families. The TCJA raised the exemption for this tax to $11.8 million for individuals and $22.36 million for couples, meaning that someone could pass on over $22 million without ever paying a cent in estate taxes.
But while the TCJA raised that number, it did so temporarily, with the higher threshold set to expire in 2025. Enter Jason Smith. In 2021, along with Senator John Thune (R-SD), Smith acted to sidestep this expiration by introducing legislation to repeal the estate tax entirely, claiming that it hurt economic growth and disproportionately impacted asset-rich, cash-poor small businesses like farmers and ranchers.
Once again, nothing could be further from the truth. The estate tax is the most progressive tax in the entire federal tax code, and research shows that taxes like it do more to help, not hurt, economic growth. Also, the hype over asset-rich, cash-poor farms is a clear farce intended to distract from the reality of who actually pays the estate tax. In 2017, only 80 small businesses and farms in the entire US faced any estate tax, and on average, those 80 estates owed less than 6% of their value in tax. That doesn’t seem to be cause for any serious concern, let alone a reason to repeal the entire tax.
The FairTax Act
Last but certainly not least, the FairTax Act we told you about last week has been re-introduced in Congress by a handful of far-right Republicans. This tax would eliminate income, payroll, estate, and gift taxes and replace them with a 30% national sales tax on everything – clothes, food, healthcare, rent, etc. And it has one big (former?) supporter – Jason Smith.
The FairTax is as extreme and regressive as tax policy can get. Back in 2004, the Institute on Taxation and Economic Policy estimated that, if it passed, the poorest 80% of Americans would face an average $3,200 tax hike while the richest 1% would receive an average $225,000 tax cut. If the estimates were that bad in 2004, we can only imagine how much worse they would be today.
To be “fair” – no pun intended! – Smith is not a co-sponsor of the latest version of the FairTax Act, but he did co-sponsor it back in 2013 and 2015. It’s certainly possible Smith may have had a change of heart and that he genuinely came to the conclusion that the FairTax Act was a bad idea. But given his horrible track record on all things tax policy, is that really the most likely explanation? Or is it more likely that as he began to move up the ranks in Washington he decided to keep his more radical views under wraps in an effort to distance himself from “fringe” members of his party and pave the way for his eventual Chairmanship of the Ways and Means Committee?
We’ll probably never know, but we’re not about to give him the benefit of the doubt. During his decade-long tenure in Congress, Smith has done more to hurt, rather than help, his constituents in Missouri’s 8th district – which, incidentally, is one of the poorest Congressional districts in the country. His constituents need a boost, and it’s a shame that Smith hasn’t delivered for them. If he says that he wants to help working Americans as Chairman of the Ways and Means Committee, he’s certainly had a weird way of showing it over the past ten years.
Yesterday, Smith held his first committee hearing at Allegheny Wood Products in Petersburg, West Virginia in a purported effort to hear from “real Americans.” But the truth is that Smith had ten years to hear from real Americans and change course on tax policy, and he showed no interest whatsoever in doing so. We’d love for Smith to prove us wrong and be a true champion of economic justice, but we’re bracing to spend the next two years fighting whatever regressive, extremist policies he decides to support next.