House Ways and Means Hearing Turns to Clash Over Tariffs and International Tax Policy
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Summary
At a House Ways and Means hearing, Republicans hailed the permanence of recent international tax reforms while Democrats and several academic witnesses warned that the Trump administrationtariffs are a regressive burden that could negate gains from the tax changes.
Chairman Kelly opened the subcommittee hearing by praising the 2017 Tax Cuts and Jobs Act and the recently enacted Working Families Tax Cuts Act, saying the reforms made the U.S. more competitive and helped keep corporate headquarters and jobs in the United States. "The Tax Cuts and Jobs Act made this nation the best place in the world to build, to invest in, and to create jobs," he said.
The hearing quickly turned to a partisan but substantive debate about the interaction of tax policy and trade measures. Ranking Member Thompson accused the administration of imposing "reckless and chaotic tariffs" that have harmed small businesses and farmers, and urged Congress to reclaim its Article I authority over tariffs. Professor Clausing, a witness called by Democrats, argued the tariffs are regressive, raise consumer prices, and have harmed U.S. exporters and producers. She testified that tariffs raise prices on many goods, estimating that the 2025 tariffs could amount to roughly $1,700 per household and might push an additional 650,000 to 800,000 people below the poverty line.
Republican members and witness Kevin Brady defended the TCJA and the permanence established by the Working Families Tax Cuts Act, crediting those measures with lowering the corporate rate, removing incentives for corporate inversions and encouraging repatriation and investment. Brady and other witnesses argued that changes to international provisions such as GILTI, FDII and expense-allocation rules strengthen U.S. competitiveness. "We set out to make America the premium destination in the world for investment and innovation," Brady said in his testimony.
Witnesses offered sharply different policy prescriptions. Professor Brett Wells urged technical legislative fixes to inbound and outbound tax rules to close earning-stripping loopholes and to simplify overlapping regimes; Professor Clausing urged congressional action to limit the reach and distributional harm of presidential tariff policies and to ensure refunds reach consumers and small businesses if courts require refunds. Members on both sides proposed follow-up legislation: Democrats sought mechanisms to automatically return tariff refunds to consumers and small firms; Republicans sought to preserve tax sovereignty and press for a favorable "side-by-side" OECD outcome that protects U.S. nonrefundable credits.
The hearing also included business testimony from Agnes Webb of Sylvamo, who said permanent expensing and other provisions made it feasible for her company to plan a multi-million-dollar investment in South Carolina, and multiple members raised both macroeconomic and distributional concerns in a lengthy Q&A. Members were explicit that further legislative refinements could be appropriate: suggestions ranged from revising the BEAT rules to encourage IP repatriation to tailoring investment incentives for distressed communities.
The subcommittee concluded with a procedural reminder that members have two weeks to submit written questions for the record. No formal votes or committee actions were taken during the hearing.
