Smith-Wyden is a Good Deal for Taxpayers and Businesses

The Tax Relief for American Families and Workers Act (TRA-FW), led by House Ways and Means Committee Chair Jason Smith (R-Mo.) and Senate Finance Committee Chair Ron Wyden (D-Ore.), is picking up steam and nearing vote on the House floor. This deal is an overwhelming win for taxpayers, consumers, and businesses.

The TRA-FW secures immediate expensing of research and development (R&D) costs for all businesses, instead of over five years. In the first two years after the Tax Cuts and Jobs Act (TCJA), the R&D provision alone accounted for a $2 trillion (18 percent) investment explosion. Passing the TRA-FW is projected to yield $70 billion in new R&D investment, 2 million direct R&D jobs and 21 million total jobs.

At a time when wages have not kept pace with inflation, these pro-growth policies for all businesses are more critical than ever. The Smith-Wyden deal allows small and medium sized businesses to deduct interest from their taxes. After 2017, this provision saw U.S. business debt levels fall by 35 percent. The TRA-FW’s interest deductibility piece would generate nearly 900,000 jobs and $58 billion in additional wage increases.

The bill does not stop at these major tax-policy extensions. It also increases small business expensing to $1.29 million ($290,000 above TCJA), adjusts subcontractor labor reporting thresholds for the first time since the 1950s, and provides disaster tax relief for suffering communities. The growth-oriented policies in the TRA-FW create $185 billion in tax incentives from 2023-2025 and would generate $600 billion if made permanent.

The TRA-FW addresses COVID-era waste, fraud, and abuse by ending the employee retention tax credit (ERTC). As of July 2023, the ERTC paid out $230 billion, with $120 billion in claims waiting to be filed, despite the program originally being budgeted at $55 billion. Ending the ERTC will save $80 billion, while protecting outstanding, legitimate claims.

As a bipartisan, pro-growth, offset package, the Tax Relief for Americans and Working Families Act represents the largest positive movement on U.S. tax policy since TCJA in 2017. All members should support this legislation when it comes before the chamber for a vote.