Lawmakers and Experts Clash Over Who Benefits from "Working Families" Tax Cuts

Chairman Williams opened the House Small Business Committee hearing on April 15 by saying the Working Families Tax Cuts Act gives small businesses "certainty and predictability," citing permanent 100% expensing and relief such as no tax on tips and overtime that, he said, let firms invest and workers keep more pay. "This hearing is an important opportunity for the committee to deepen its understanding of how tax policy directly shapes the success and stability of small business," he said.

Ranking Member Nydia Velázquez offered a starkly different view, calling the law "a total disaster" and asserting that the pass-through (Section 199A) deduction largely flows to wealthy filers. "Costing nearly $736 billion over the next 10 years ... the top 1% captures 55 cents of every dollar under this provision," she said, and she argued that the law was offset by cuts to Medicaid and SNAP and the expiration of enhanced premium tax credits that raised premiums for many small-business owners.

Witnesses endorsed both perspectives. Garrett Watson, director of policy analysis at the Tax Foundation, told the committee permanence for bonus depreciation and R&D expensing reduces uncertainty and can boost long-run output and hiring, while acknowledging that complexity remains and that external forces—most notably recent tariffs—can blunt tax gains. "Even when tax policy moves in a positive direction, uncertainty in other areas can offset those gains," Watson said.

Small-business witnesses described concrete investments made possible by expensing. Tracy Tappany, co-president of Wyoming Machine, said immediate expensing enabled an urgent purchase of fiber laser welding equipment that cleared a months-long backlog. "Full expensing and the certainty that it will remain in place helped us make that investment faster," she said. Becky Renfro Barbola, senior vice president of Renfro Foods, cited a new production line bought under the law and said higher estate-tax thresholds eased succession planning for her family business.

Critics pressed on distribution and offsets: Michael Negron of the Center for American Progress said analyses show a disproportionate share of benefits go to wealthier filers and cited tariff and premium-cost increases that have raised operating costs for many small firms. He testified that typical small-business importers paid "$306,000 more in tariffs from March 2025 to February 2026 compared to the previous year," and that the expiration of enhanced premium tax credits raised health costs for millions.

Members and witnesses debated empirical findings and policy alternatives in a lengthy question-and-answer period, covering estate-tax effects, overtime and tip rules, the administrative complexity of Section 199A, and proposals for a more targeted "mom-and-pop" relief. The hearing concluded with members having five legislative days to submit additional materials and questions. The committee adjourned without any formal vote.

The hearing highlighted a central policy split: supporters emphasized planning certainty and investment incentives created by permanent provisions; critics stressed distributional outcomes and external cost pressures—tariffs, higher premiums, and cuts to assistance—that may erase or exceed the law's benefits for many small businesses.