After only ten months as the Chairman of the House Ways and Means CommitteeThe Committee on Ways and Means, more commonly referred to as the House Ways and Means Committee, is one of 29 U.S. House of Representative committees and is the chief tax-writing committee in the U.S. The House Ways and Means Committee has jurisdiction over all bills relating to taxes and other revenue generation, as well as spending programs like Social Security, Medicare, and unemployment insurance, among others. , Congressman Paul Ryan is accepting a promotion. Yesterday, Congressman Ryan announced his candidacy for Speaker of the House, and he is all but certain to win next Thursday’s election.
While it is unclear exactly when Chairman Ryan will cede the gavel to his successor, he will have served one of the shortest terms as Ways and Means chairman in modern times. Since 1871, only two chairmen of the Ways and Means Committee have served less than a full year – Sam Gibbons and Sander Levin, both of whom were acting chairmen.
Nevertheless, during Chairman Ryan’s short term at the head of Ways and Means, he has taken part in several important developments in the world of taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. policy:
- At the very beginning of Chairman Ryan’s term, the House of Representatives adopted dynamic scoringDynamic scoring estimates the effect of tax changes on key economic factors, such as jobs, wages, investment, federal revenue, and GDP. It is a tool policymakers can use to differentiate between tax changes that look similar using conventional scoring but have vastly different effects on economic growth. – a rule that requires official budget estimates of legislation to take into account the law’s effects on the economy. Chairman Ryan played an important part in promoting this change, arguing that dynamic scoring is “reality-based.” We have argued the same case on multiple occasions.
- Chairman Ryan has been closely involved in efforts to continue funding the Highway Trust Fund. While he unfortunately ruled out the possibility of adjusting federal gas taxes to provide a long-term source of revenue for the fund, his efforts led to a three-month extension of highway funding.
- Under Chairman Ryan’s tenure, Congress renewed its focus on international tax reform. Ryan has advocated for a territorial tax systemA territorial tax system for corporations, as opposed to a worldwide tax system, excludes profits multinational companies earn in foreign countries from their domestic tax base. As part of the 2017 Tax Cuts and Jobs Act (TCJA), the United States shifted from worldwide taxation towards territorial taxation. , which would end the double taxationDouble taxation is when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income. of income earned abroad by U.S. companies.
- Finally, Chairman Ryan has continually pushed to make bonus depreciationBonus depreciation allows firms to deduct a larger portion of certain “short-lived” investments in new or improved technology, equipment, or buildings in the first year. Allowing businesses to write off more investments partially alleviates a bias in the tax code and incentivizes companies to invest more, which, in the long run, raises worker productivity, boosts wages, and creates more jobs. permanent. Bonus depreciationDepreciation is a measurement of the “useful life” of a business asset, such as machinery or a factory, to determine the multiyear period over which the cost of that asset can be deducted from taxable income. Instead of allowing businesses to deduct the cost of investments immediately (i.e., full expensing), depreciation requires deductions to be taken over time, reducing their value and discouraging investment. allows businesses to immediately deduct half of their investment expenses, which we estimate would lead to significant economic growth.
Under Chairman Ryan’s tenure, the Ways and Means Committee was one of the most productive in the House of Representatives. In the last 10 months, the Ways and Means Committee has brought 52 bills to the House floor, tied for most with the Energy and Commerce Committee. Out of these bills, 15 were passed into law, the most out of any committee.
Many analysts expect that, if he is elected as Speaker, Chairman Ryan will continue his focus on tax policy. If so, the prospects for sound, comprehensive tax reform are bright.
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