▶ 0:19:21There Chair Crapo: The hearing will come to order. Thank you to our nominees, Mr. kimmitt and Mr. kies, for being here today, and congratulations on your nominations. We thank you both for your willingness to serve. Today we will hear first from william kimmitt, who is nominated to serve as under secretary of commerce for international trade. If confirmed, Mr. kimmitt will oversee the department of commerce's international trade administration, or ida.
▶ 0:19:49There Chair Crapo: Importantly, the ica redresses -- ita redresses unfair trade practices. In terms of market access, american farmers and manufacturers win when they have a chance to compete. Ita helps facilitate those opportunities.
▶ 0:20:14There Chair Crapo: We need to make sure we have opportunities to fairly compete at home and abroad. Mr. kimmitt, given your background, I'm confident you will give and make important contributions to trade, and I look forward to working with you, if confirmed. Moving to our other nominee today, Mr.
▶ 0:20:32There Chair Crapo: Kies, who is nominated to serve as assistant secretary for tax policy at the treasury department is no stranger to us. The senior advisory to the secretary of treasury for looming tax policy and program. Mr.
▶ 0:20:53There Chair Crapo: Kies, if confirmed, will be a vital part to help enact efforts to advance progrowth tax policies and ensure it is proper ly implemented. My republican colleagues and are committed to implementing a 4 billion -- $4 trillion tax break to families and additional tax relief to workers, families, and others who have tried to keep up with the story of inflation over the last few years.
▶ 0:21:24There Chair Crapo: We are committed to making permanently prevent tax policy of the tax cuts and jobs act. Making this tax policy permit will provide the certainty that businesses need to make long-term investments that drive growth. It will also provide the stability that families need as they save and plan for the future. Fear mongering and mischaracterization aside, the generational reforms we made in 2017 strengthens investments, boosted economic growth, increased take-home pay, and reduce poverty.
▶ 0:21:57There Chair Crapo: The tcja made the tax code more progressive, helped all americans keep more of their hard-earned money, and fostered a growing economy that powered median household income to an all-time high. Permanently extending and building upon our current tax framework is the best way to restore economic prosperity and opportunity for working families. Mr.
▶ 0:22:20There Chair Crapo: Kies' wealth of experience in the world of tax policy make some eminently qualified to assist us in that effort. Mr. kies spent a total of 47 years as a tax attorney. His experience covers every aspect of the internal revenue code, and since 1981, he has been involved in every significant piece of federal tax legislation.
▶ 0:22:45There Chair Crapo: He has also had a first-hand understanding of the legislative process, having served as chief tax counsel on the house ways and means committee and as chief of staff joint committee on taxation. Mr. kies, if confirmed, I look forward to working with you to deliver on president trump's economic agenda. Thank you, again, Mr. kimmitt and Mr. kies for your time today could with that, I turned to ranking member wyden for his opening remarks.
▶ 0:23:11Sen. Wyden: Thank you very much, chairman. I just want to know, whoever is the parent of that little one in the front row, you have got a gorgeous child. During the finance committee this morning are william kimmitt, the nominee for commerce, undersecretary for international trade, Mr. kies, assistant secretary of treasury for tax policy.
▶ 0:23:34Sen. Wyden: They will make up part of donald trump's hand-picked team to run key portions of what I consider to be the most self-destructive, incompetent and I work for agenda in modern american history. Donald trump is raising inflation and causing chaos in the market. In significantly, he admits to be doing it on purpose.
▶ 0:23:59Sen. Wyden: The rest of the world is figuring out how to realign without us and leave our economy, workers, and businesses behind. What donald trump did yesterday has the look of some awfully sketchy market manipulation, and although he has clearly enjoyed basking in the headlines about a market balance, the celebration was premature. Here's the way I think you have to look at it.
▶ 0:24:28Sen. Wyden: If you want back a couple of months and handed donald trump a clean slate, and he announced 125% tariff on imports from china, a 25% tariff on canada and mexico, a 10% global tariff, and additional tariff on aluminum, steel, and cars, you would have some investors and financial people and quite a few typical citizens feeling like they ought to like their hair on fire.
▶ 0:24:58Sen. Wyden: Nothing donald trump did yesterday changes the fact that he has started a trade war on a scale we've never seen before, a trade war nobody can win. The guy calling the shots either does not care or does not understand that the tariffs in place today are still going to raise the cost of living for typical families by thousands of dollars a year.
▶ 0:25:18Sen. Wyden: Workers are terrified now about what is ahead, the possibility of a recession in front cabinet offers zero -- recession, and trump's cabinet offers zero compensation. The cabinet promises to bring back sweatshop labor. Agriculture secretary said families struggling to pay for food amid rising costs ought to return to subsistent farming.
▶ 0:25:46Sen. Wyden: Meanwhile, donald trump and republic as a working overtime to render the congress's tax bill that amounts to a multitrillion dollar bailout for billionaires and big corporations. That's where things stand today as the finance committee meets to discuss these nominations. Now, when you set aside the fancy job titles, donald trump has nominated Mr. kimmitt to serve as sort of a grim reaper for the middle class, and Mr.
▶ 0:26:15Sen. Wyden: Kies to turn the treasury department into an atm for the ultra-wealthy. Mr. kimmitt has been in the building working at the commerce department for a while. It means this committee has another opportunity to question a trump official on what I think the central issue is with respect to these tariffs. What is the plan? Donald trump has proven that no one, not the american people, not our trading partners, no one can trust what he said.
▶ 0:26:45Sen. Wyden: Everybody who works for them has got a different story. In fact, it is plain that all the chaos is supposed to accomplish. It is impossible -- it's possible that the reason they cannot get a straight answer is these tariffs are not designed to solve an actual trade or economic challenge. They are designed to have higher taxes on the lower income workers in order to hand money to upper portions of the top.
▶ 0:27:12Sen. Wyden: According to the nonpartisan joint committee on tax, the price tax of the trump republican tax agenda is now up to $7 trillion, and the biggest winners by far will be big corporations and the wealthy. Republicans have blocked our side of the aisle out of this debate. There is no discussion that the biggest economic challenges americans are facing today.
▶ 0:27:37Sen. Wyden: They're not talking about how to build more housing, which is what I hear about at all of my town meetings -- rent, mortgage, housing. We will talk about it here, -- no talk about it here, though. Not talking about how to help americans find affordable health care. They are not talking about helping parents with astronomical costs of child care.
▶ 0:28:02Sen. Wyden: But they are spending plenty of time on the agenda of multinational corporations and thinking a lot about how everybody else is going to be on the hook to pay for them. If confirmed, Mr. kies and Mr. kimmitt will immediately get busy, getting that harmful agenda signed into law. This is a very important hearing, I would say to my colleagues, and I have plenty of questions for our guest. Thank you.
▶ 0:28:27Chair Crapo: Thank you, senator wyden. Only in washington is stopping a $4.3 trillion tax increase considered to be an increase in the deficit. Today, we are honored to have our former colleagues, senator portman, and our current collie, senator mccormick, here to introduce our nominees. Welcome to the committee.
▶ 0:28:51Chair Crapo: Before turning it over to our guests, I have four obligatory questions we ask all nominees before this committee, if you could just please answer verbally. First, is there anything you are aware of in your background that might present a conflict of interest with the duties of the office of what you have been nominated?
▶ 0:29:09Mr. Kies: No, senator.
▶ 0:29:11Mr. Kimmitt: No.
▶ 0:29:16Chair Crapo: Second, do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated?
▶ 0:29:22Sen. Hassan: No --
▶ 0:29:24Mr. Kies: No.
▶ 0:29:25Mr. Kimmitt: No, senator.
▶ 0:29:27Chair Crapo: Third, do you agree without reservation to respond to any reasonable summons to appear and testify for any duly constituted committee of the congress if you are confirmed?
▶ 0:29:33Mr. Kies: Yes.
▶ 0:29:35Mr. Kimmitt: Yes.
▶ 0:29:37Chair Crapo: And finally, do you commit to provide a prompt response in writing to any question asked to you by any senator on this committee?
▶ 0:29:42Mr. Kimmitt: Yes.
▶ 0:29:43Mr. Kies: Yes.
▶ 0:29:45Chair Crapo: Thank you. We will begin with senator mccormick to introduce Mr. kimmitt before his opening statement.
▶ 0:29:54Sen. Mccormick: Thank you, Mr. chairman. Thank you, and welcome to both our nominees and to your families. Congratulations on your nomination. It's a great privilege for me to introduce my friend, william kimmitt. The man sitting next to me today is an experienced litigator, dedicated dedicated public servant, a father to four kids, and a husband to his beautiful wife heather.
▶ 0:30:23Sen. Mccormick: I see three of those kids here today and heather. Thank you for being here. I have known william, however, since well before these accolades, before he was a standout football player at duke. I had a great honor of serving as a of treasury with williams father, ambassador bob kimmitt, who was deputy secretary at the time, and bob's friendship and mentorship have been invaluable to me and my wife, dena.
▶ 0:30:48Sen. Mccormick: And bob's legacy of service, as a combat veteran, as a distinguished senior government official, for three republican presidents, well known by many here today at a real tribute. William carries that same proud family tradition of service. As a partner at kirkland and ellis, william previously served as counselor to U.S.
▶ 0:31:15Sen. Mccormick: Trade representative bob lighthizer during president trump of the first term. In that role, william played a key role of implementing the U.S.-mexico-canada trade agreement. He worked tirelessly to put interests of pennsylvanians and american workers and farmers first. Finally, and most important, william is not only the sun of a proud pittsburgh native commit is incredible wonderful mother holly, he's also married to a daughter of allentown.
▶ 0:31:45Sen. Mccormick: This is very impressive. William, you are an honorary pennsylvanian, at least for today's hearing. I have the utmost confidence that if you are confirmed, william will continue to serve his country honorably and with distinction as under secretary of commerce for international trade. Thank you, william, for your willingness to step into the arena at this uniquely consequential moment. I urge all of my colleagues to support this nomination. Thank you.
▶ 0:32:11Chair Crapo: Thank you, senator mccormick. Mr. kimmitt, before go to your testimony, we will have our other guests, former senator rob portman, introduce Mr. kies, and an as is our custom, we will excuse our introducers and go to the testimony. Senator portman.
▶ 0:32:30Sen. Portman: Thank you so much, Mr. chairman, ranking member whited, friends -- wyden, friends, and former colleagues. It is an honor to be before this committee this morning. Congratulations to both nominees. It is a privilege to introduce ken kies. He is a cum laude graduate at the ohio state university college of law.
▶ 0:32:58Sen. Portman: He still routes for ohio state football and basketball. It's good to see kathy here this morning him and his wife, who is also a buckeye, kathleen and kylie come and granddaughter, chloe, who was referenced earlier, with her baby doll, whose name is baby hope. It's -- baby doll. Good to have you here to support your father, husband, and grandfather. As a member of the U.S.
▶ 0:33:26Sen. Portman: House, I had the privilege of working very closely with ken over the years, when he was republican chief counsel at ways and means and chief on the joint committee on taxation. In both roles, he demonstrated intellect, some adjustment, and policy expertise, and may be one of the most respected voices on capitol hill on matters of taxation.
▶ 0:33:50Sen. Portman: In both roles, he was outstanding, and his understanding of the federal tax code is encyclopedic. Of the more than four decades, he had every aspect of our test system, from legislative graphing and also referencing, tax implementation, and even tax administration. In fact, a former member of this committee, then house member of ben cardin and I worked very closely on reform legislation back in the 1990's.
▶ 0:34:23Sen. Portman: He was of course deeply involved in the landmark 1986 tax reform effort and since then has played a significant role in shaping, advising on, or analyzing nearly every major piece of tax legislation that has come before this committee to his ability to dissect complex tax provision and explain that with clarity has made him an invaluable resource to policymakers, practitioners. There's no question he is qualified to serve as assistant secretary of tax policy.
▶ 0:34:54Sen. Portman: Thank you for being willing to serve. His expertise is needed at a time when congress is planning to revisit critical provisions of the tax cuts and jobs act of 2017. His influence will be indispensable. A deep respect to the institution of government, including this committee. Qualities that are essential for navigating the challenges ahead.
▶ 0:35:21Sen. Portman: It's true that ken is known for his candor and directness, and we did not always agree on every aspect of tax policy. But in my experience, he was always respectful of other points of view, and committed to get the policy right could I saw firsthand during our time working together at the house, the meeting staff discussions, advising members, or negotiating complex provisions, ken
▶ 0:35:53Sen. Portman: Consistently demonstrated experience, integrity, and intellect that this role demands. For all these reasons, I was very pleased, again, to hear that ken was going to step back and serve our country during a crucial time. When a good, smart people in government, with professionalism, experience, and sound judgment. I believe ken brings both expertise and skill, and, if confirmed, he will bring both. I'm proud to be here this morning to support this nomination.
▶ 0:36:19Chair Crapo: Thank you, senator portman. We appreciate you being here to introduce Mr. kies. You were a key part of this committee helping to craft the 2017 tax act, and we all wish you were here to help us extend it. With that, we will excuse senator mccormick and senator portman, and, again, thank you for being here. Mr. kimmitt, we will proceed to your introductory statement.
▶ 0:36:45Mr. Kimmitt: , chairman crapo ranking member wyden, and distinguished members of the finance committee, it is an honor to appear before you today as the nominee of under secretary of commerce for international trade.
▶ 0:37:06Mr. Kimmitt: I'm deeply grateful to president trump for nominating me, secretary letting for his belief in me, and I would like to extend sincere thanks and appreciation to senator mccormick for his willingness to introduce me today. It is my pleasure to introduce my wife heather, who is sitting behind me, and who I thanked dearly for her boundless love and support. My daughter caitlin and sons kevin and will are also here.
▶ 0:37:31Mr. Kimmitt: Our fourth child, caitlin's twin sister abby come is not present, as she has the leading role in a school play that is unfortunately scheduled for right now. Also here today are my parents, bob and holly commit, the two greatest role models anyone can have in life, and I cannot express my gratitude to them in this short statement.
▶ 0:37:52Mr. Kimmitt: I was raised in a family with two unquestioned tenants, one the dignity and response ability of public service and two, immense respect for the united states senate. My grandfather, stan kimmitt was a proud montana and who worked for senator mike mansfield incident, ultimately serving as secretary of the senate. He passed away 20 years ago, and I can only imagine what he would then, seeing his grandson here today before this body that he revered so highly.
▶ 0:38:24Mr. Kimmitt: My uncle jay kimmitt served as a professional staff member on the appropriations committee for three decades, and my aunts and godmother judy spent an entire career in the senate, working for six different senators. My senate employment is quite lacking in comparison and consist of one summer as a senate page a quarter century ago.
▶ 0:38:45Mr. Kimmitt: I'm proud to continue my family's condition to heed the call, and I am extremely appreciative of this committee for the consideration of my nomination. As counselor to the united states trade representative, I had the privilege of working directly on major trade negotiations and matters, advising on policy decisions that affected industries across the american economy.
▶ 0:39:08Mr. Kimmitt: I gained first-hand experience navigating the complex intersection of law, diplomacy, security, and comers, and work closely with interagency colleagues, partners, and congressional stakeholders to advance the initiation was trade priorities. I've also spent over a decade in private practice represent in U.S. companies in a broad way of litigation -- broad array of litigation matters.
▶ 0:39:36Mr. Kimmitt: I represented for the international trade commission and provide strategic advice to clients regarding complex trade and supply chain issues. This combination of public and private sector expense has given me a comprehensive understanding of how it trade policy affects rural workers, real businesses, and the long-term competitiveness of the united states.
▶ 0:39:56Mr. Kimmitt: If confirmed, I will bring this aspect of every aspect of the job, ensuring our rules are strategically, our laws are enforced vigorously, and we have the tools needed to succeed globally. President trump has ushered in a new era in U.S. trade policy, rooted in realism, strength, and the recognition that for too long the united states has accepted structurally imbalanced trade relationships. These imbalances resulted in U.S.
▶ 0:40:20Mr. Kimmitt: Factories closing by the thousands, vulnerabilities in supply chains and national security, and american workers under cut by unfair competition. President trump has sent a clear message to our trading partners, the united states will no longer tolerate economic arrangements that disadvantage americans, and our trading relationships must serve the interest of the united states, not abstract principles and certainly not america's adversaries.
▶ 0:40:45Mr. Kimmitt: In this moment of trade recalibration, I believe the role of the under secretary of commerce for international trade is more vital than ever. The international trade administration, which I would be honored to lead, plays a crucial role in enforcing our trade laws, ensuring a level playing field, and attracting foreign investment in the united states.
▶ 0:41:06Mr. Kimmitt: If confirmed, I will ensure that the id will be a champion for american workers and industries and that their interests are promoted and defended in a complex and competitive global marketplace. I believe our approach to trade must be pragmatic, working in american -- rooted in american values, and guided by strategic understanding of our national interests. I recognize the immense responsibilities that come with this nomination.
▶ 0:41:33Mr. Kimmitt: If confirmed, I will work every day to advance a trade policy that delivers results to the american people, and I will remain committed to the foundational truth that the united states succeeds and its citizens are empowered to innovate and drive. In closing, I want to reiterate my gratitude for this opportunity. I'm deeply honored by leaving the international trade and administration and contribute into this vital mission. Thank you again for the opportunity to appear before you today. I look forward to answering your questions.
▶ 0:41:55Chair Crapo: Thank you, Mr.
▶ 0:41:59Kies: Mr. kimmitt. Mr. kies. -- thank you, Mr. kimmitt. Mr. kies.
▶ 0:42:03Mr. Kies: Chairman crapo, ranking member wyden, and distinguished members of the finance committee, it is an honor to appear before you today. As the former chief of staff of the joint committee on taxation, I have deep respect both for this committee and the institution of the senate.
▶ 0:42:23Mr. Kies: I would like to thank my family who have been a constant source of inspiration and support for me throughout my career, my wife kathy, two children, and my granddaughter, chloe, who is apparently the star, and my other granddaughter natalie, who would be here except 9:00 until 10:30 us or naptime, and she would be cranky if she is here. My third grandchild will not be making his official appearance until may.
▶ 0:42:51Mr. Kies: I would like to express my thanks to members and staff who have been able to visit with over the last couple of weeks. I grew up the son of a career army officer, senator robert h kies, who did two tours in vietnam and was a prisoner of war in korea. His experience and career -- in korea is recounted in a book.
▶ 0:43:19Mr. Kies: He unfortunately died december 7, 2023, having lived a full 97 years. He truly existed inspired me to work hard on my career and education. His life is retired recounted in his own autobiography, "zero to 90.
▶ 0:43:34Mr. Kies: " I was born in georgia, lived in germany, santa barbara, california, alaska, virginia before going to college at ohio university in athens, ohio. I stepped down as managing director of the federal policy groups on march 14, 2025, a position I had held since 2002.
▶ 0:44:03Mr. Kies: I became partner of pricewaterhousecoopers. Prior to joining, I served as the chief of staff of the joint committee on taxation from 1995 until 1998. During my tenure of chief of staff, I oversaw development of major tax legislation, including the taxpayer relief act in 1997, the first tax break since 1981, the small business protection act of 1986, the health insurance availability act of 1996.
▶ 0:44:34Mr. Kies: I helped redesign the restructuring at with senator ben cardin, senator rob portman, and treasury of the secretary. In 1997, I issued a year-long project the potential to do macroeconomic estimates of major tax policy, which resulted in the joint unit on taxation modeling project in december 1997.
▶ 0:45:00Mr. Kies: At that time, it was the most significant project of its time and the beginning of the effort to bring this estimating capability to the joint committee that exists to this day. I was the cochair with michael bosc and former chair of the council of economic advisers for president george herbert walker bush.
▶ 0:45:25Mr. Kies: While I left the joint committee in 1998, I continue to serve at the request of speaker newt gingrich and the chairman in an effort to negotiate a permanent, long-term solution to the solvency of the social security administration with the clinton administration, particularly with larry summers.
▶ 0:45:46Mr. Kies: That effort culminated my participation in the december 1998 white house conference on social security, along with fellow panelists martin feldstein and robert. This is recounted in the book on the history of the social security system, entitled "the people's pension." this effort to partly restore the solvency after making significant progress floundered after political development.
▶ 0:46:19Mr. Kies: I was a chair from 1981 to 1987, I serve as the republican tax counsel to ways, where I worked on the 1981 act and the 1986 tax reform act. These opportunities have afforded me an opportunity to work with virtually every aspect of the tax code if confirmed, I would be honored to serve as the assistant secretary of the treasury for policy. Thank you.
▶ 0:46:44Chair Crapo: Thank you, Mr. kies. Mr. kimmitt, I will go to you first. As I mentioned in my opening statement, american farmers and manufacturers win when they have a chance to compete. Importantly, the global markets division of ita seeks to promote U.S. exports. If confirmed, how would you plan to support this important function, particularly at a time of increased retaliation against american companies and farmers?
▶ 0:47:08Mr. Kimmitt: Thank you for the question, senator. You are, of course, absolutely correct. The global market unit in the international trade administration plays a vital export promotion function, and key to that is providing market access to our farmers and our ranchers. In the global markets division has U.S.
▶ 0:47:33Mr. Kimmitt: Export assistance centers throughout the country, rural export centers to work with farmers and ranchers to identify market opportunities and market access. So, if confirmed, I absolutely would give a comprehensive look to those programs and figure out how they can blend and bring the greatest benefit to our farmers and ranchers.
▶ 0:47:55Chair Crapo: Thank you. Mr. kies, you are well aware of our efforts to preserve the expiring tax cuts and jobs act. It will protect everyday americans from a $4 trillion tax increase. The child tax credit would be cut in half if it expires, and the standard and actions, which about 90% of all taxpayers now utilize, would be significantly reduced.
▶ 0:48:21Chair Crapo: Lower and middle income earners who are already struggling with inflation would be hit particularly hard. Given the depth of experience of tax policy, could you please discuss your views on the importance of permanently extending the tcja and the potential benefits to our economy?
▶ 0:48:36Mr. Kies: Yes, senator. And let me start by focusing specifically on a standard deduction in child credit. Those provisions, the standard deduction in particular, was increased dramatically in the tcja. The revenue associated with that one change is 720 billion over 10 years.
▶ 0:49:03Mr. Kies: In terms of looking at it, the impacts specifically, a family of four, if that provision is allowed to expire, will have a standard deduction and child credit of $23,200. If the provision is extended, the combination of the standard deduction and the child credit will be 34,008 hundred $50. These are meaningful numbers for the average family of four.
▶ 0:49:27Mr. Kies: But I would go beyond that and point out that the tcja has proven to be a very successful piece of legislation, especially if you look at the revenue that has been generated from 2017 through 2024. In 20 were $3.16 trillion. That represents a 48.3% increase over that time period.
▶ 0:49:56Mr. Kies: In terms of the corporate income tax, revenues increased from 290 $7 billion in 2017 to $529 billion in 2024.
▶ 0:50:11Mr. Kies: And I would also point out that the cbo's 2017 projections of corporate revenue were woefully understated, specifically if you take 2024, the cbo forecast that the revenues would be $405 billion. They were actually 529 point $9 billion. 30% higher than what had been projected in 2017.
▶ 0:50:36Mr. Kies: So when you look at the specific provisions of tcja, it is hugely important. When you look at the overall impacts, it has proven to be a very effective piece of legislation, and making it permanent will lock in the benefits associated with those provisions.
▶ 0:50:55Chair Crapo: Thank you. I only have time for one more question. And it will be for you, Mr. kies. I'm sure you're familiar with the scoring process. If tax rates are scheduled to increase, like they are right now, if we don't act, preventing that tax hike is counted as a cost and collected future revenue, even though many spending programs are assumed to be expanded beyond their
▶ 0:51:27Chair Crapo: Expiration. Critics say there will be a deficit if we use the current policy baseline, saying that is hiding the cost and increasing, like I said, letting a tax increase happen is increasing the deficit did I think we should change the way we score and look at what is actually real, keeping the law the way it is. Can you just take a few minutes to discuss your views on this scoring aspect of tax policy and on the current policy baseline procedure in general?
▶ 0:51:53Mr. Kies: So, obviously this issue has attracted a lot of attention. The current policy baseline to achieving permanency in the tax code. Permanency is an important outcome for those individuals and businesses, and the current policy baseline is consistent with the way in which the budget act cbo has scored spending decisions. Having said that, the current policy baseline is a tool for members of congress to evaluate the merits of legislation.
▶ 0:52:25Mr. Kies: It will also be a current law baseline, and all of those are pieces of information that will help inform important decisions. What the current policy baseline does highlight is the fact that if you allow a current policy to expire, it does have the consequence of being equivalent of a tax increase. And based on the numbers, which senator wyden has cited, a sizable tax increase.
▶ 0:52:55Mr. Kies: So it is a tool to evaluate and make decisions, but ultimately, members of congress have to make adjustments to tax policy going forward. Thank you.
▶ 0:53:08Sen. Wyden: Thank you Mr. chairman to more trade chaos this morning, Mr. kimmitt. We've been looking at the financial indexes this morning, and it looks like the only one that is really up his volatility. And this lack of certainty and predictability has taken on numerous tour -- taken an enormous toll.
▶ 0:53:35Sen. Wyden: If you would go back a couple months, no one who would have thought a 125% import tariff on china, a 10% global tariff, and additional tariff on aluminum, steel, was somehow a good start on trade policy. What I would like to ask you to start with is, what is the plan to provide relief now to the small businesses who have to decide between paying tariffs and keeping staff?
▶ 0:54:05Sen. Wyden: Because that is what is going on right now. We want to know, what is being done to get them some relief now? And, certainly, there was a lot of fanfare yesterday. I told you how markets responded this morning. I looked at the chart, and it was a sea of red everywhere. So what is the plan?
▶ 0:54:23Mr. Kimmitt: Thank you for the question, ranking member wyden. I think it is important to understand where we were as a country when president trump took office, and we were faced with an unprecedented one point $2 trillion --
▶ 0:54:37Sen. Wyden: Respectfully, my time is short, and what I would like to do is get an answer to the question of what is being done to provide relief to people now?
▶ 0:54:48Mr. Kimmitt: Thank you. Respectfully, I think the relief is already on its way. If you look this morning, inflation was down, consumer price index is down, prices are coming down.
▶ 0:54:58Sen. Wyden: I can tell you what the chart looks like, and there is red ink everywhere. Are you saying that is not the case? Is not representative of what is going on?
▶ 0:55:09Mr. Kimmitt: I certainly am aware there has been some volatility in the markets, I just don't think it is a fair record by which to judge the president's trade agreement.
▶ 0:55:18Sen. Wyden: Let's look at the others, 25% tariff on canada and mexico, additional tariff on aluminum, steel, and cars. Are those good things to talk to the american people about? Because all I hear is that is generating more uncertainty, lack of predictability, and now, for the next 90 days, we got all these people basically hanging out there in suspended animation, when they want certainty and predictability and
▶ 0:55:48Sen. Wyden: Relief now. Tell me how you are going to do that.
▶ 0:55:50Mr. Kimmitt: Thank you, ranking member wyden. I think the president has been clear if you build in the united states, there are no tariffs, and if you source in the united states. If you look at the steps that have been taken, we as a country have been the victims of nonreciprocal trade balances for decades, and the president has taken strong and decisive action to address those issues.
▶ 0:56:16Mr. Kimmitt: And, as I said, the inflation this morning are down, prices are down, and I think it is too early to judge the effects.
▶ 0:56:25Sen. Wyden: I do not see anybody saying this is real relief, and that is what I hear my constituents -- I will be having town hall meetings, and I'm telling you, the question I'm asking you is what they are asking their elected officials, and I want the record to note that I did not get an answer. Let's move on to you then, Mr. kies, because you just heard your partner here talk about other ways to make relief for small businesses and individuals happen.
▶ 0:56:55Sen. Wyden: I went to ask you about taxes. I talk to you about the pfizer situation, where we have done an intensive review, and what we found is that pfizer recently was paying no taxes in the united states, no taxes at all, when they were making billions of dollars in revenue, and they do it through something called round-trip income and basically they can set up all their taxes overseas.
▶ 0:57:25Sen. Wyden: I have some constituents, and my constituents come all of these tariffs that raise these prices, not only make changes in the tax policy, make it more attractive to do business in the united states and not pursue a policy that hammers our constituency.
▶ 0:57:39Mr. Kies: Senator wyden, I would just point out, and you are well aware of this, that the tcja by removing the tax corporative 21%, made the united states the attractive place to do business, and we have not had --.
▶ 0:57:53Sen. Wyden: Are you kidding me? What we are seeing in studies like the one we did is just the opposite. Basically, is supercharged the ability to pay lower taxes overseas, and now we've got pharmacy companies, big chains, they are making tons of sales in the united state and paying no taxes.
▶ 0:58:13Mr. Kies: And, to respond, since the 2017 act was passed, we have not had a significant inversion transaction in any U.S. company leaving the country, which was happening at the rate of five per year in the prior period. So there's clear evidence that it has made the united states and attractive place to do business.
▶ 0:58:32Sen. Wyden: My time is up, Mr. chairman. The reality is, pfizer told the irs that it did not make any money in the united states. Every dollar of profit was earned offshore, and they are not paying taxes in the united states, and a better way to bring companies back from overseas is to change the tax law so it is more attracted to do business here.
▶ 0:58:57Sen. Wyden: I'm going to hold the record open, because I would like to hear about any changes that are being looked at in the tax bill that is coming up to fix the problem of 2017. Thank you, Mr. chair.
▶ 0:59:07Chair Crapo: Senator hassan.
▶ 0:59:11Sen. Hassan: Thank you, Mr. chair. Thank you, Mr. kies and Mr. kimmitt, for your record of serving, and congratulations to you and your families for your nominations. I will start with a simple question, if directed by the president to take action that would break the law, would you follow the law or follow the president's directive, Mr. kimmitt?
▶ 0:59:31Mr. Kimmitt: I don't see how that hypothetical would unfold, but I am absolutely committed to following the law.
▶ 0:59:41Sen. Hassan: Mr. kies?
▶ 0:59:43Mr. Kies: I would provide the same answer.
▶ 0:59:46Sen. Hassan: You are both talented people, and that is a really disappointing answer, because, of course, it is possible this president would do that. He has shown as example after example. I would say on a personal level, Mr. kimmitt, you talked about needed to be rooted in american values. The rule of law is absolutely essential, not only for who we are as a people and internationally and around the world before our economy and our business people.
▶ 1:00:16Sen. Hassan: And I want to know that any nominee on either side of the aisle, working for any president, will acknowledge reality and be willing to either quit or be fired if asked to break the law by their boss. So I hope you will consider that. It is a disappointing answer to me, because, of course, there is lots of evidence of this president crossing the line all over the place. Mr.
▶ 1:00:42Sen. Hassan: Kimmitt, when increasing taxes and tariffs threaten to the united states, he reversed course and pause some of his tariffs for now, but let's be clear, the president has proposed a 10% across-the-board national sales tax on americans, a 10% tariff on all imports. That failed tax system is still in effect. American families will pay more for groceries and other essentials due to the sales tax.
▶ 1:01:11Sen. Hassan: While wondering how much the president may increase their costs with more tariff in months. Mr. kimmitt, if confirmed, you would be the primary advisor and would lead the international trade administration. Experts consider the president was he tariffs the largest tax increase in over half a century, a tax increase that will increase costs for families by about 3000 $800 a year. So Mr. kimmitt, first question, are tariffs taxes?
▶ 1:01:40Mr. Kimmitt: Thank you for the question. Respectfully, I think that oversimplifies what a tariff accomplishes. Leveling the playing field against unfair trade policies, and that is what it does to offset -- .
▶ 1:02:05Sen. Hassan: I will cut you off because my time is limited. It's disappointing that you will not admit tariff increases our tax increases. Families expected to pay an additional $3800 a year for groceries and other essentials, that's disappointing. The international trade administration says on his website that tariffs are taxes .
▶ 1:02:36Sen. Hassan: So is that official definition no wrong just because president trump has decided to impose an across-the-board national sales tax?
▶ 1:02:42Mr. Kimmitt: Respectfully, senator, I have not seen the specific statement or the context of it.
▶ 1:02:48Sen. Hassan: Well, so, just to save us both time here, without objection, this is a hard copy of the website of the agency you are about to leave, and it is what I quoted from, and I would like this introduced into the record.
▶ 1:03:02Chair Crapo: So ordered.
▶ 1:03:03Sen. Hassan: Mr. kies, you are nominated to be the assistant treasury secretary for tax policy. Will giving tax breaks is to it -- tax breaks to billionaires increase or decrease the national debt?
▶ 1:03:17Mr. Kies: I'm not sure exactly what you are referring to, but if you are referring to existing tax provisions --.
▶ 1:03:31Sen. Hassan: I'm just asking a very simple question. If you give tax breaks to billionaires so they are not going to pay as much taxes now, does that increase or decrease the national debt?
▶ 1:03:41Mr. Kies: So, in order to be able to provide a sound answer to that, I really would need to understand the specifics of what proposal you are looking at.
▶ 1:03:50Sen. Hassan: I can tell you how the cbo would score it, right? The congressional budget office, our official nonpartisan scorekeeper, says the republican tax plan would add 37 devon -- $37 trillion to the national debt. That's the cbo, our nonpartisan scoring entity. That is more debt in the next 30 years than our country has taken on in the 249 years since its founding. So I'm disappointed in the answer.
▶ 1:04:21Sen. Hassan: Thank you, Mr. chair. >> thank you to my colleagues, the senators that are here from a goes white house, cassidy, lankford. Senator whitehouse.
▶ 1:04:37Sen. Whitehouse: Thank you very much. I don't have time this morning to get into your role with regard to the caterpillar company and the investigation into that, but, can I get your assurance that when I asked questions for the record regarding your role in that episode, you will provide truthful and complete answers?
▶ 1:05:01Mr. Kimmitt: Absolutely, senator.
▶ 1:05:03Sen. Whitehouse: Thank you. Let me give you an example, a hypothetical, if you don't mind. Company a and company b compete with each other in the marketplace.
▶ 1:05:22Sen. Whitehouse: Company a is an american corporation, with its offices in america, and it pays taxes in america, pursuant to american tax law.
▶ 1:05:36Sen. Whitehouse: Company b, its competitor, opens up an offshore affiliate, which may actually be a place where work is done, moving jobs to the offshore location, or it may be just a corporate shell to which profits are recorded, so that it appears that profits that come
▶ 1:06:08Sen. Whitehouse: From american consumers are actually overseas profits. And those overseas profits then get taxed at a lower rate. So, company b, by virtue of the off shoring scheme, is able to undercut company a, because it has a lower tax bill at the end of the day as a result of that offshore scheme.
▶ 1:06:35Sen. Whitehouse: Is that good tax policy, and is that good for america?
▶ 1:06:39Mr. Kies: So, senator, the hypothetical you described, that you cite is hypothetical --.
▶ 1:06:46Sen. Whitehouse: Is actually real. We are not making this up. It happens. Please proceed.
▶ 1:06:53Mr. Kies: The tax bill of 2017 eliminated the deferral, which is the offshore subsidiary, if it made income, the deferral was ended by the 2017 act. So the hypothetical that you are describing may be referring to this act, that when the U.S.
▶ 1:07:16Mr. Kies: Does currently tax income earned, offshore subsidiaries, there may be a lower tax rate because of provisions that were also included in the 2017 act, but the 2017 act actually made what you described less attractive --.
▶ 1:07:32Sen. Whitehouse: But it still happens, does it not? The ranking member's investigation has shown that pfizer, for instance, hiding potentially billions of dollars in overseas profits to reduce its tax burden by millions and providing them unfair advantage both against drug companies that do not take advantage of that offshore tax scheme, and small companies don't have the resources to set up complicated
▶ 1:08:07Sen. Whitehouse: Offshore tax avoidance schemes. How does that make sense? Isn't this something that is a matter of decency and proper economic policy we should try to eliminate?
▶ 1:08:18Mr. Kies: Well, again, senator whitehouse, you have described a rather, I don't want to say simple, tax situation.
▶ 1:08:28Sen. Whitehouse: It is cheating.
▶ 1:08:30Mr. Kies: It is actually very complicated situations, which requires significant analysis.
▶ 1:08:38Sen. Whitehouse: There are complicated machinations to get through to set up the offshore tax scheme, but at the end of the day, it is a simple proposition did you fake putting profits offshore, and you cheat both the american taxpayer and your competitors. Let me close with this quote, "the hedge fund guys did not know this country. These are guys that shift paper around, and they get lucky.
▶ 1:09:09Sen. Whitehouse: They make a fortune, they pay no tax, it is ridiculous. The hedge fund guys are getting away with murder. They are making a tremendous amount of money. They have to pay taxes. " this was a comment, getting rid of the weight carried interest exception. How do you respond to that?
▶ 1:09:21Mr. Kies: Well, I mean, it's a statement by someone, I'm not sure who.
▶ 1:09:29Sen. Whitehouse: I will tell you who. I will give you a hand. Donald trump.
▶ 1:09:33Mr. Kies: Ok, donald trump has raised the issue of whether or not they should revisit carried interest. My job, if confirmed, would be to carry out the policies of the president and secretary.
▶ 1:09:45Sen. Whitehouse: Are you sure about that? Not to be the voice for the
▶ 1:09:50Carried Income --Mr. Kies: I'm not just shirk my I'm 100% confident.
▶ 1:09:54Sen. Whitehouse: Ok. Events will prove it one way or the other. Thank you, chairman.
▶ 1:10:00Chair Crapo: Thank you. Senator cassidy.
▶ 1:10:03Sen. Cassidy: Mr. kies, knowing you are going to carry out but you will also have influence on practicality of carrying out his senator hassan and I have just introduced the red tape reduction act. What this addresses is that in 2020 one, with the passage of the american rescue plan, the threshold to receive information regarding a 1099 pay was reduced , $600 on a single transaction. Practically, that seems difficult -- and it has affected my constituents.
▶ 1:10:34Sen. Cassidy: It will affect everybody's constituents. So, when you are executing the law, would you agree as you speak to whomever you are speaking to that this is not very practical and perhaps they should increase that threshold?
▶ 1:10:49Mr. Kies: Clearly events have demonstrated that that particular change has been very difficult for people to handle, and is of questionable judgment, so it is definitely something that needs to be rethought. So I would commend both you and your colleagues for raising the issue and saying it is something we need to turn our attention to.
▶ 1:11:13Sen. Cassidy: Yes. Knowing, again, that you have strong input on policy and that ultimately you are the executioner, so to speak, the U.S. fiscal policy right now is estimated that we will get to 106% of debt to gdp ratio, which is historic high. We will get to that point in 2027.
▶ 1:11:38Sen. Cassidy: And if you just look at the $36 trillion in debt now, we will have another $21 trillion just on autopilot, and if we are not careful, we will add another $10 trillion on top of that. You thought a lot about this. Others say it is not sustainable. What are your thoughts on that?
▶ 1:11:55Mr. Kies: Clearly the level of debt we have is extremely troubling, and it raises significant questions about sustainability on a long-term basis, particularly when you look at the entitlement programs, which are facing significant challenges in the near future, both medicare and social security.
▶ 1:12:15Sen. Cassidy: By challenges, do you mean the trust funds, to elucidate, the trust funds are going and solving, at which point by law, those would be cut by 25%?
▶ 1:12:26Mr. Kies: In the case of the social security trust fund, I think the current projection is the trust fund goes insolvent in 2033, at which point income and taxes will be the only resources available to pay benefits, which will be roughly in the 70%, 75% range, yes. Yes. That is a significant concern.
▶ 1:12:49Sen. Cassidy: Your granddaughter is going to pay the bill. She should be complaining. So I'm not glad she is talking up.
▶ 1:12:59Mr. Kies: She seems to be ok with it right now but not later.
▶ 1:13:03Sen. Cassidy: I accept that use except that this is unsustainable and we need to do something about it sooner and not later. In your advisory can -- position on policy. Is that a fair summary of what you would say?
▶ 1:13:20Mr. Kies: It is perfectly ok. Yes. I think -- I am an advisor, not a policymaker. Clearly, I will be part of the process of advising on issues like this. And I do not think any person can look at the picture ahead and not see that there are significant challenges that need to be addressed sooner rather than later.
▶ 1:13:45Sen. Cassidy: We have some mutual friends. In any way, it will not influence my vote but it is already a yes because you came across well. When the president announces tariffs he spoke about other countries producing in a dirty fashion. Off shoring their pollution but on shoring the decreased manufacturing cost to our disadvantage.
▶ 1:14:09Sen. Cassidy: Now we have something we have a farm pollution fee which I will also point out that the american first policy institute now supports, in which we would put a fee on goods coming from other countries roughly equal to what they are not paying to control their air pollution. And this is a pro-manufacturing.
▶ 1:14:35Sen. Cassidy: We just updated the legislation assigning key roles to the departments under your jurisdiction, specifically enforcement compliance. Let me just ask and beg an answer. Do you support incorporating ine enforcement law as a tool to counter unfair trade practices.
▶ 1:14:57Sen. Cassidy: By nonmarket economies, particularly in high emission sent -- sectors like steel and aluminum where these polluters are using the lack of compliance with environmental laws to undercut clear U.S. producers?
▶ 1:15:10Mr. Kimmitt: Thank you. And I enjoyed our meeting as well and I enjoy discussing this with you. I believe certainly that the president has mentioned that low environmental markets are a nonf barrier and I see it as a trade issue and the role for which I have been nominated and leveling the playing field so other countries that do not meet the high standards of the united states do not get the advantage.
▶ 1:15:40Chair Crapo: We are going to have to move on to senator lankford.
▶ 1:15:44Sen. Lankford: I am pleased that you going through this process and you have an difficult tasks to do and great resumes and you have great backgrounds so I appreciate you stepping up. It is a tremendous sacrifice for your families to do this. From the people of oklahoma, thank you for going through the process. I want to make to -- two comments because it has been interesting to hear all of the conversation about tariffs.
▶ 1:16:14Sen. Lankford: I am not a big fan. They are not a good negotiating policy to get down nontariff barriers and other trade barriers out there. It is a great negotiating peace but I want to get them as low as we possibly can. It is interesting the number of my colleagues out of talked about tariffs when the tariffs that were put in place under the first trump administration, president biden kept all of them and thought they were a good idea and had lots of opportunity to change those but he agreed with them.
▶ 1:16:45Sen. Lankford: That has been an interesting rewrite of history of late. I am grateful that I got folks engaged in trying to negotiate. Now, I do have a question about how we will deal with some of the negotiations.
▶ 1:17:00Sen. Lankford: I have a lot of companies with oklahoma where you deal with chinese, turkish, indian or other challenges where they are producing the product, but other entities will dump product into the united states at a cheaper rate and often subsidized internationally. They dump it into our market and it drives down the benefit for american companies or drives them out of business entirely. The challenge is that if you are a big corporation you can fight that.
▶ 1:17:30Sen. Lankford: If you are a small to midsize company, do we have any foreign -- we do not have dumping laws that it cost them millions of dollars in litigation, years of time to be able to work through it, and they have to be able to get the documents from a foreign company to be able to prove that the foreign company is dumping in. There is a lot a and bureaucracy.
▶ 1:17:56Sen. Lankford: My question is when we can clearly see, and you can clearly see there is dumping, how do we decrease the bureaucracy and costs and speed up the process and hold foreign companies accountable and have american companies standing up for their rights.
▶ 1:18:14Mr. Kimmitt: Thank you for the question. I agree that if confirmed I would be honored to oversee the enforcement and compliance division at iata which plays a vital role in countering dumping in countervailing duties. It is important that that unit has the resources they need to process these matters quickly and bring meaningful relief and I am aware that there is legislation being contemplated.
▶ 1:18:46Mr. Kimmitt: Leveling the playing field act touches on this and I would welcome engagement with you and your team and this committee to bringing more efficiency to that process to bring quicker release -- relief.
▶ 1:18:57Sen. Cassidy: It would be helpful and I am glad to be able to partner with you with -- in this. Quite frankly, the giant corporations would love to do something about this as well so they can get their moment to actually be able to resolve it. This is a huge issue. The other issue is foreign entities deliberately mislabeling products coming in and using a different code and all of the different things that they are doing.
▶ 1:19:27Sen. Cassidy: Combining packaging to hide what they are doing so they are not paying duties. Once it is actually discovered, although it might have crushed an american company in the process because they have undercut them, the penalty seems to be back paying the duties but the american company is still crushed. All of those jobs are lost and all of the benefit to the united states was lost. If they win, the american taxpayer wins back the duties but the american worker does not.
▶ 1:19:58Sen. Cassidy: How do we fix that?
▶ 1:19:58Mr. Kimmitt: Thank you for the question. I think we certainly, if confirmed I would work with cdp to address the issue to bring stronger enforcement to prevent that from happening. But absolutely looking at circumvention authorities and the authorities to bring the relief needed into a damaged U.S. industry. And I would welcome the opportunity to work with you and your staff to think of creative solutions to the problem.
▶ 1:20:25Sen. Cassidy: I appreciate both of your help. There is a lot that needs to be done and there are 70 competent -- country saying we are ready to negotiate. My farmers, ranchers and manufacturers are eager because they have been blocked out of markets and they are eager to get a balance level playing field so they can compete and stop having countries blocking them out from selling their goods and products. We appreciate the work and we look forward.
▶ 1:20:53Chair Crapo: Just very quickly and then I will go to senator warren. All of the tariffs that I have talked about our new trump tariffs and in fact we just got something indicating that the white house is raising the china tariff to 145%. Senator warren.
▶ 1:21:11Sen. Warren: And 2017 donald trump gave $2 trillion in tax cuts mostly to billionaires and billionaire corporations. Now he has back for round two, this time a whopping $7 trillion in tax breaks for rich donors. You have been a corporate lobbyist for nearly 30 years, successfully arranging tax breaks for wall street, big tech, big oil and big pharma.
▶ 1:21:40Sen. Warren: And if confirmed, as the top tax official of the treasury department, you will play a big role in handing out more tax cuts including tax cuts to your former clients. So, I just want to run through how this would work. You have lobbied for microsoft for years. Microsoft and other big tech companies are now demanding tax breaks to incentivize research that they would do anyway.
▶ 1:22:07Sen. Warren: The real kicker is they want those tax breaks called rns the expensing to be retroactive, incentivizing them to make research decisions they made years ago. And republicans have said why not? Do you know how much your client, microsoft, stands to gain from just this one tax break?
▶ 1:22:32Mr. Kies: No.
▶ 1:22:34Sen. Warren: Well, if the trump administration delivers what the tech lobbyists are clamoring for, microsoft would get $11 billion to incentivize investments that it made years ago. That is from microsoft's own annual reports. That is nearly as much as the federal government spends in an entire year on childcare for all of our babies.
▶ 1:23:02Sen. Warren: One company, your client, $11 billion. Let us try another one. You have also lobbied on behalf of pfizer, one of the biggest drug companies out there. President trump has proposed slashing the tax rate from corporations from 21% to 15%. Do you know how much pfizer stands to gain from cutting the corporate tax rate to 15%?
▶ 1:23:29Mr. Kies: Ok. Pfizer is not my client. I closed my business on march 14. None of those companies are my client.
▶ 1:23:38Sen. Warren: Your former client. The one you lobbied for.
▶ 1:23:42Mr. Kies: Pfizer was a client over 10 years ago.
▶ 1:23:46Sen. Warren: Do you know how much they stand to make?
▶ 1:23:49Mr. Kies: $4 billion from the trump corporate tax cut. There is more. The republicans in congress will set out the general rules for the tax giveaway. But your office at the treasury department will write the rules to implement the laws.
▶ 1:24:08Mr. Kies: Lobbyists will line up around the block to ask you for even more tax loopholes, which you know about firsthand because you did exactly that after the first trump tax giveaway. You have committed not to work on matters involving your clients, or former clients, for only one year.
▶ 1:24:30Mr. Kies: That means on day 366, while you are still in your job, you can go right back to handing out loopholes that could boost the bottom lines of microsoft, pfizer or any other of your former and future clients. The american people would like to know that when you draw a government paycheck, that you will be working just for them, not for your past and future clients.
▶ 1:25:00Mr. Kies: So, will you commit to recusing yourself from matters that would affect the financial interests of your former clients for the entire time that you are in office?
▶ 1:25:09Mr. Kies: Senator. You and I had a polite discussion about this when we met. And I advise you at that time and I will say I will comply with the terms of the ethics letter written by career experts on ethics. I would also reference you to the louisburg article today in which the general counsel of the project of government oversight said the following. "this is someone who is taking government ethics very seriously."
▶ 1:25:39Sen. Warren: I appreciate that and I am running out of time.
▶ 1:25:42Mr. Kies: I would ask you to read the article.
▶ 1:25:45Sen. Warren: The fact that you would say it is ok with the trump administration that on day 366 you will be handing out tax loopholes to clients that you took in millions of dollars from and you have made no pledge not to go back and make them your clients in the future. That might be ok with the trump administration and I do not think it is ok with the american people.
▶ 1:26:13Sen. Warren: Donald trump cares about one group of people and one group only. Himself and his billionaire friends. It is no surprise that he has nominated a highly paid corporate tax lobbyist to run tax policy for the american people. We need a government that works for working people, not just massive corporations, ceo's and their lobbyists and that is what will happen. Thank you.
▶ 1:26:38Chair Crapo: Senator barrasso.
▶ 1:26:42Sen. Barrasso: It was good to visit with both of you earlier. I was on the floor noting that headlines and inflation is down. The lowest from the time of covid. So we are very encouraged by the treasury department and the work you are going to do. I would talk about restoring tax fairness for wyoming businesses.
▶ 1:27:03Sen. Barrasso: You see in wisconsin and idaho we are concerned about small family business as and president trump is bringing back tax fairness for american job creators. We believe that. He was elected for that purpose. His administration has stopped the weaponize asian of agencies at bat -- against american businesses. This change cannot come soon enough. Our small businesses were plagued by reckless attacks from the treasury department and the irs.
▶ 1:27:32Sen. Barrasso: Last year the treasury department launched a new audit initiative explicitly targeted family businesses and partnerships. They said they were closing loopholes. We view it as a direct attack of small businesses. They really meant squeezing billions from law-abiding taxpayers. They wanted to hire new irs mage -- agents and they would make money. The only way to do that is to shake people obeying the law.
▶ 1:28:00Sen. Barrasso: They buried wyoming businesses and red tape or regulations. And all without congressional approval. Secretary ellen claimed that y --ellen said that businesses were engaged in high end tax abuse. She came out with that phrase and probablyoll tested it. Main street businesses across my home state were caught in the crosshairs. They found themselves facing complex audits meant for multinational corporations.
▶ 1:28:31Sen. Barrasso: The small businesses could not afford expensive lawyers to fight these attacks. I will start with you, if confirmed, how are you going to prevent the treasury department from targeting family businesses with burdensome regulations that go beyond congressional intent?
▶ 1:28:46Mr. Kimmitt: Thank you for the question. I think, with respect to my role in trade, I certainly support a tariff strategy that allies with lower taxes and regulation and unleashing american energy to bring relief. And absolutely working with treasury colleagues.
▶ 1:29:11Sen. Barrasso: Anything you would like to add?
▶ 1:29:14Mr. Kies: Absolutely. Individual taxpayers are the backbone of the federal revenue base. Total revenues were 4.9 trillion. Individuals and payroll taxes which are paid by individuals. They represented 4.1 trillion of that.
▶ 1:29:37Mr. Kies: It is absolutely essential that we treat individual taxpayers fairly and provide them sound guidance and follow the recent decision that directs all federal agencies to put out the best interpretation, not just a reasonable interpretation of a statute. The treasury department, assuming I am confirmed in my role of implementing tax provisions will follow that religiously.
▶ 1:30:03Sen. Barrasso: I will asked to follow-up with you what to ask about the retirement security policy. Americans deserve security and dignity. If confirmed he will oversee the treasury office that develops and implements tax policies related to retirement plans. You are well experienced in the area. In wyoming you have two thirds of the workforce spending their careers with more than 70,000 small businesses in the state.
▶ 1:30:32Sen. Barrasso: Our small businesses are the backbone of our economy and the national economy. They face unique challenges in providing retirement benefits to their employees. The burdens and the costs of offering retirement plans sometimes happen obstacles for job creators in wyoming and across the country. Recent bipartisan legislation have made strides in addressing these challenges.
▶ 1:30:58Sen. Barrasso: And we must do more to ensure that the employees of our small businesses can build the savings they will need for secure retirement. If returned -- if confirmed, how will you reduce the burdens on small businesses that want to help their employees.
▶ 1:31:16Mr. Kies: Since the very first time I served in government. I worked in numerous provisions in the benefit and contribution plans. I am aware there that these could be unduly, -- compromised and our role is to make them as smoothly and efficiently run as possible.
▶ 1:31:37Chair Crapo: Senator smith.
▶ 1:31:45Sen. Smith: . Thank you and welcome. I want to follow up a line of questioning from senator lankford. You referred to the leveling the playing field act of -- 2.0 which senator young is leading and I am the democratic lead and I am sorry that he has left the room because we would welcome him to join the bill. We will submit a question to the record about the bill and your interest in working with us on that. Mr.
▶ 1:32:14Sen. Smith: Kies, I want to ask you about childcare. The cost of childcare is crushing working families in this country. In minnesota at the average cost of care for one infant is nearly $2000 a month, as much as I mortgage payment. This is a problem all over the country. According to the economic policy institute, in 17 states and the district of columbia the cost of infant care exceeds rent.
▶ 1:32:44Sen. Smith: My question is related to the trump tax law of 2017. Is there anything in extending that law that would do anything to help families offset the cost of childcare or other expenses? I do not see anything new.
▶ 1:33:00Mr. Kies: Not necessarily anything new, but allowing provisions to expire that currently benefit middle income families would make it more difficult for them to pay childcare expenses. One of the things we discussed earlier was the importance of the standard deduction which will reduce the benefits of the standard deduction from 34,000 for a family of four to 23,000.
▶ 1:33:29Sen. Smith: I am in favor of tax cuts for middle-class people, but the reality is that the bill, most of the benefits would go to the wealthiest folks and big corporations. My question is, could there be room in this bill to help cover some of the costs of childcare? Obviously if there were things in the bill that would help to lower childcare costs, they would be lower.
▶ 1:33:58Sen. Smith: The environment as it exists under the tax law of the trump administration is where those childcare costs are so expensive.
▶ 1:34:10Mr. Kies: Just to be clear, the standard deduction which benefits, 90% goes to middle income families so it is quite important.
▶ 1:34:20Sen. Smith: I am not saying it is not important. I am saying is, does the administration to your knowledge have any plan to lower childcare costs for american families?
▶ 1:34:32Mr. Kies: Senator smith, I have not been part of the treasury department and I am not a consultant and I have no role in tax consultant strategies and will not unless I am confirmed. I am not privy to any information that could answer it.
▶ 1:34:48Sen. Smith: I am not aware of anything that the administration is planning to lower costs for families. It is a significant drag on the economy and estimates that it is $122 billion a year in lost earnings and revenue. And this is a big gap in the work that we have to do. I am going to skip to another topic, if I can, having to do with the cost of housing.
▶ 1:35:16Sen. Smith: We have a big problem in minnesota with the proliferation of private equity and housing. Here is what has happened in north minneapolis. One firm scoop -- swooped in and took up hundreds of single-family homes and bought them off the market, turning them into permanent rentals meaning that families with roots in the community dating back generations have found it impossible to buy a home. These big investors are absentee landlords.
▶ 1:35:43Sen. Smith: And of course they are rewarded with generous tax breaks for this. So, I have a bill with senator warnock that would be the stop predatory investing act preventing these big investors in single-family rental homes from deducting interest or depreciation. There is no reason to give big investors taxpayer subsidies for doing something that is clearly hurting the challenges that we have with the severe housing shortage.
▶ 1:36:14Sen. Smith: Why should the federal government be boosting private equity prop -- profits in this way I giving them this tax break?
▶ 1:36:20Mr. Kies: As soon as I am confirmed I would be happy to examine your legislation and provide any input that might be useful to you. It is obviously a decision that this committee and the ways and means committee and congress will have to make judgments about. So, I would be happy to look at it, if I'm confirmed.
▶ 1:36:41Sen. Smith: I think that this tax break to private equity is an opportunity to do something about wasteful spending and maybe something positive to lower housing costs for americans when private equity forms -- firms are able to exploit a market cap and artificially inflate his -- inflate prices. I believe this is an opportunity for us to do something to lower cost of housing for americans. Thank you.
▶ 1:37:11Chair Crapo: Before I go to senator cantwell, I want to say desta state once again that the t cga -- the t cja, $2.6 trillion up from $4.3 trillion is going to be a tax hike on people making less than $204,000 and 700 billion will be a tax hike on the pass-through entities. So, with that, we will go on to senator cantwell.
▶ 1:37:41Sen. Cantwell: Thank you, Mr. chairman. You have been nominated to be the under secretary of commerce for international trade. I am a big supporter of the united states having an aggressive export strategy. I think the state of washington, you could say, might be our geography.
▶ 1:38:06Sen. Cantwell: But we just learned a long time ago that being exporters was a really important concept. So you will be working with the nominee at the state, who would be in charge of economic energy and environment. The two of you would be in charge of an export strategy for the united states. For me, it is hard to have an export strategy in the middle of a trade war.
▶ 1:38:36Sen. Cantwell: I think the obama administration had a goal of doubling exports in two years. They got 80% there and I told them just claim victory and double down for the next four years. Because that, to me is one of the biggest gdp growth opportunities when 95% of consumers look outside of the united states.
▶ 1:38:59Sen. Cantwell: Focusing on exports as a big economic strategy, I think that is just exactly what our nation should be doing, getting those markets open. Do you think that is a good goal to try and double exports and a four year or five year period of time? And what would you do to make that strategy effective?
▶ 1:39:23Mr. Kimmitt: Thank you for the question. Absolutely increasing exports to the maximum extent possible would be something that I am committed to working towards it confirmed. I think the global market's unit at ita plays an accrued -- a crucial role in the export promotion with the U.S. field helping students small and medium-sized businesses and exports abroad.
▶ 1:39:50Mr. Kimmitt: The foreign commercial service in various markets around the world. Absolutely, I am committed to working every day to promoting exports abroad and promoting access to all industries.
▶ 1:40:04Sen. Cantwell: What about alliance building? I have been a big supporter of the technado? The technado. Why not going get the biggest democracies and those in tech and basically just say that these are the rules of the road?
▶ 1:40:22Sen. Cantwell: These are who you should buy from, people who do not have a government backdoor, people with these kind of solutions and, maybe even in sent the rest of the world -- incent the rest of the world. Do you think that kind of alliance building would be a priority?
▶ 1:40:40Mr. Kimmitt: Thank you. I think certainly as countries come to work with us, the ones who have chosen to work with president trump to fix global trade, certainly technology coordination with those countries is on the table and would be a vital goal of the discussions. Whether it is an alliance or on a bilateral basis, certainly creating tech arrangements.
▶ 1:41:07Sen. Cantwell: You said when countries come to work with us. I am trying to get a sense in whether you believe in alliance building for a key strategy of countering people. That the alliance building is a way to strengthen our hand. Do you agree with that?
▶ 1:41:24Mr. Kimmitt: Yes. I agree with that. Working with and calling it an alliance, working with a group of countries that are aligned in efforts to resist the chinese infiltration of the tech space.
▶ 1:41:37Sen. Cantwell: I am saying, set the stage and more countries will join us. What do you think the biggest region should we focus on? Do you think the chinese are having too much affect and we can work on something that will open up more U.S. doors in south america, for example?
▶ 1:41:58Mr. Kimmitt: Every region of the world is important. South america is important. I think looking at southeast asia, also with the countries that move out of china. And then moved to local and regional partners with china as a backdoor into the united states is certainly something that demands abrupt attention.
▶ 1:42:20Sen. Cantwell: Thank you. Thank you Mr. chairman.
▶ 1:42:24Chair Crapo: Thank you. Senator welch.
▶ 1:42:29Sen. Welch: Thank you very much. I want to ask -- first of all it was very nice to meet you in my office and I really appreciate your history of public service and private sector involvement and willingness to come back to the public sector. Thank you and to your family as well. You know, one of the things that is a big issue here are the tariffs. We have had a lot of activity on that in the last couple of days.
▶ 1:43:00Sen. Welch: One of the stated purpose is of the tariffs is to raise money that would then be offset to finance tax cuts that the president is pursuing. And, your office would be publishing estimates, as I understand on tax revenue. Is that correct?
▶ 1:43:17Mr. Kies: Certainly the treasury department does the joint committee on taxation, which provides the data that the cbo uses.
▶ 1:43:27Sen. Welch: Let me just ask and I think it is obvious. We have no to -- no clue what the tariff policy will be at this point. Is that a fair statement?
▶ 1:43:37Mr. Kies: My office or if I am confirmed has no responsibility. It is not an area I have any expertise.
▶ 1:43:44Sen. Welch: I understand so I should not probably put it that way. As a pay for, for anything, whether it is for the tax cuts are health care, and less there is real clarity -- unless there is real clarity about what revenue will come in, which would require real clarity as to what the tariffs were and the duration of the tariffs would be
▶ 1:44:14Sen. Welch: , would you agree with me that it would be impossible to provide a revenue estimate upon which congress could rely that this revenue could be used as an offset for a tax cut or any other program?
▶ 1:44:32Mr. Kies: I appreciate meeting you and I complemented your office on having the best coffee on capitol hill. Which it does. So, the role of the treasury department is in estimating tax provisions. So, it is really not an area that is -- the expected revenues from tariffs is not our responsibility. You have incredible experience in joint committee.
▶ 1:45:05Mr. Kies: You lead the joint committee on taxation. You know how these revenue estimates are incredibly important in terms of policymakers. And you cannot cook the books weither it was deming -- wheter it was democrats or republicans pushing you.
▶ 1:45:26Mr. Kies: I guess I am maybe making a point that if we do not know what the tariff policy is, then we cannot look to the so-called revenues to be an offset for the program of any member's choice.
▶ 1:45:40Mr. Kies: I will just comment on your observation. As head of the joint committee on taxation, I was an equal opportunity person to be criticized by both democrats and republicans.
▶ 1:45:54Sen. Welch: Really quickly, this debate about the current baseline and the current law. All of the time you are joint tax, how -- which approach did you use?
▶ 1:46:07Mr. Kies: This is a very useful way that the current head of the joint committee sent to a number of senators and you might be one of them. Who lays out how the joint committee approach is revenue estimating based on the directions of the 74 budget act. And the traditional scoring of the joint committee from the 74 budget act I the current law baseline.
▶ 1:46:33Mr. Kies: But the letter from tom points out that on multiple occasions, members of congress have addressed -- have asked for current policy.
▶ 1:46:42Sen. Welch: That decision is consequential in terms of the deficit. I want to ask you about vietnam. You know, we have really done great things in having a good positive relationship with vietnam. And it was announced that it was going to be a 46% tariff. I guess that was paused for 90 days. So we want fair trade with vietnam, obviously.
▶ 1:47:14Sen. Welch: But, isn't there a lot more at stake than just what the tariffs and the revenue would be in terms of our policy towards vietnam and whether we maintain the positive trajectory that we are on?
▶ 1:47:28Mr. Kimmitt: Thank you for the question. I think that vietnam is a good example of sort of the situation we face where I believe they exported $135 billion to the united states and we export $13 billion. We have in over $100 billion trade deficit.
▶ 1:47:49Sen. Welch: A lot of that is textiles, right? A serious question, do we seriously think that we will be able to reassure the textile industry -- reshore the textile industry within time to provide the shirts and the clothing that we need next year?
▶ 1:48:09Mr. Kimmitt: The point is -- that I am making more broadly that vietnam run a budget deficit with china and so around $80 billion. So the point with vietnam is we have a nonreciprocal arrangement with them. And so tariffs are one part. Certainly the nonreciprocal aspects also incorporates trade barriers.
▶ 1:48:33Sen. Welch: My time is up. Thank you.
▶ 1:48:36Chair Crapo: Senator warnock.
▶ 1:48:40Sen. Warnock: . Thank you very much. As president trump increases taxes, and increases prices by thousands of dollars on american families, and potentially leads us into a recession, congressional republicans are currently trying to ram through a tax cut for millionaires and billionaires.
▶ 1:49:04Sen. Warnock: According to the treasury department the entire bottom half of working families will see less than 8% of the benefits . We are all entitled to our own opinion and facts. The entire bottom half will see less than 8% of the benefits. Meanwhile the trade war is estimated to cost families nearly $4000 per year with costs rising on everything from strollers to clothing to groceries.
▶ 1:49:33Sen. Warnock: Yet another way of raising taxes. Instead of raising costs for families we should give families a tax cut. One of the best ways to do that is to increase the child tax credit. You are nominated to oversee tax policy for the treasury department. What will happen if congress allows provisions regarding the child tax credit to just expire this year?
▶ 1:49:57Mr. Kies: Senator, a great question. And one of the points that I made earlier, which is that allowing the 2017 act provisions to expire at the end of 2025 would cause not only the standard deduction but the child credit to go down in value.
▶ 1:50:21Mr. Kies: For a family and -- for a family of four is the difference of deducting 34,000 versus 23,000. It is one of the reasons that the president has adamantly proposed extending and making permanent.
▶ 1:50:37Sen. Warnock: So it needs to be extended because it will be catastrophic for families. You agree?
▶ 1:50:43Mr. Kies: It would be a terrible outcome.
▶ 1:50:46Sen. Warnock: Right now the credit is only $2000 per child. And some working families receiving less. If congress does not act it will be reduced to $1000. I am a filer with two young children and I am proud of my eight-year-old daughter and six-year-old son. They know everything already. I know the cdc does not go far enough. Do you know how much child care costs these days?
▶ 1:51:14Mr. Kies: Senator, I have two daughters here that have my grandchildren. And so, I am where what -- well aware.
▶ 1:51:23Sen. Warnock: Is expensive. In georgia it is almost $12,000 per child for an infant. It is unaffordable. That is unaffordable for many families. According to the metro atlanta chamber of commerce one and reach families have had to leave and change jobs because of childcare challenges. We are stressing out not only the families and the economy by not providing a path for people to pay for child care.
▶ 1:51:51Sen. Warnock: Would you agree that by cutting middle-class taxes and helping cover the cost of raising a child we could help more parents stay in the workforce?
▶ 1:51:59Mr. Kies: And I think that is clearly part of the thinking of the president and extending the provisions which will otherwise expire.
▶ 1:52:07Sen. Warnock: So if parents could work it would help the economy, right?
▶ 1:52:12Mr. Kies: Would you -- correct.
▶ 1:52:14Sen. Warnock: Would you agree with folks like chairman crapo and vice president that congress should extent -- extend the child tax credit?
▶ 1:52:24Mr. Kies: I have not been part of the treasury department in any way. So I have not had any policy discussions. But if I am confirmed, those are things.
▶ 1:52:35Sen. Warnock: I thought I heard you agree that we should expand the child tax credit.
▶ 1:52:39Mr. Kies: What I said is it is clearly the position of the president to extend and secretary to extend the provisions that would otherwise expire.
▶ 1:52:51Sen. Warnock: I think we should expand the child tax credit. I am proud of the fact that when we did it in 2021 we cut poverty almost 50%. We listed 106 he 5000 children -- 165 children out of georgia poverty. We have one in four children, 685 children too poor to get the tax credit.
▶ 1:53:19Sen. Warnock: Meanwhile my colleagues are focused on getting a tax cut to millionaires and billionaires. I have one in four children in georgia who are too poor to get the child tax credit. And we are taxing families that are just at the threshold into poverty while giving millionaires and billionaires a tax cut. Here is an idea. Tax cuts for people making over $400,000 a year will cost americans $1.6 trillion, adding to the debt.
▶ 1:53:51Sen. Warnock: Instead of cutting taxes for the wealthy, how about we invest that money into cutting taxes for working families struggling with high tariff costs instead. Would you support a bipartisan effort to expand support to working families by allowing a tax cut for the wealthiest people to expire, and instead using that money to cut taxes for working families making under $400,000.
▶ 1:54:16Sen. Warnock: Why don't we let the tax cuts for the wealthiest expire and make sure we give working families a tax cut? Is that a good idea yes or no?
▶ 1:54:24Mr. Kies: If I am confirmed, in my role I do not make policy, I provide advice and analysis to the secretary and president. So my support and not support is irrelevant.
▶ 1:54:38Sen. Warnock: I hope as a grandfather you will give them advice to expand the tax credit so every child can have a chance.
▶ 1:54:45Chair Crapo: Senator blackburn.
▶ 1:54:48Sen. Blackburn: And we will give our colleagues across the aisle to -- the opportunity to soon vote to make the 2017 tax cuts permanent. And that is to every family in this country, about $2500. We hope that they will join us in that permanence. Let me come to you first.
▶ 1:55:09Sen. Blackburn: When I am around and about tennessee, a lot of what I hear about from small businesses, and we have many, they are really concerned about china and how china is now trying to circumvent U.S. tariffs and do transshipment of goods. Much of this through vietnam. And they know that they are competing against cheap, chinese goods.
▶ 1:55:39Sen. Blackburn: And, I want to know in your role , when you are confirmed, what you are going to do to look at these unfair practices coming out of china and the adverse impact that it has on many of our businesses, because it makes a difference. And the price points and how they are able to grow and expand their business.
▶ 1:56:05Mr. Kimmitt: Thank you for the question. Absolutely, I agree that if confirmed, looking at this issue will require careful attention, whether it is looking at circumvention petitions or also, there is an industry and analysis unit. If confirmed it will be important in this moment of trade recalibration to have them focused on how looking at trade flows are evolving.
▶ 1:56:34Mr. Kimmitt: And I think the example I used with our colleague on vietnam in particular is that vietnam has a persistent trade deficit with china and a persistent trade surplus with us that is over $100 billion. As we have discussed with vietnam the root causes of the nonreciprocal trade arrangement recognizing that the diversion of chinese products through vietnam will be a part of that discussion.
▶ 1:57:00Sen. Blackburn: Very good. Mr. kies to you, these businesses in tennessee. 75% are small businesses. And when I talk about jobs in tennessee, there is a formula that I use. Less litigation, less -- plus less taxation plus less regulation equals more innovation and job creation.
▶ 1:57:31Sen. Blackburn: What we have found is that most of the small businesses are pass-through entities. That is how they choose to organize themselves. We know that these family-owned, mom-and-pop small businesses, working people, this is what has truly built this country.
▶ 1:57:53Sen. Blackburn: And what we have seen through the biden years is just a slew of regulations, and litigation taxes that have hurt them. And really has increased irs. Just meddling. And it has really funded a lot of leftist priority is.
▶ 1:58:14Sen. Blackburn: Talk about what treasury can do to reduce red tape and reduce this burden on our main street small business is instead of constantly giving them a roadblock.
▶ 1:58:30Mr. Kies: Great question. And a point that I made earlier and it is worth emphasizing. Unincorporated taxpayers, your small business is, and individuals are the backbone of the federal tax system.
▶ 1:58:50Mr. Kies: Of the 4.9 trillion that we collected in 2024, four point $1 trillion came from individual businesses and payroll taxes which is an important part of the tax burden on small businesses. It is absolutely clear at the treasury and the rs and if I am confirmed that it would be my view that we need to strive to make dealing with the tax system as simple and efficient as possible.
▶ 1:59:18Mr. Kies: And the treasury will carefully follow the recent supreme court decision which directed all regulatory agencies to not just put out a regional -- a reasonable interpretation but the best interpretation based on what the statute says. Certainly, a keen focus of the treasury if I am confirmed would be to how to address that impacts individual taxpayers.
▶ 1:59:42Mr. Kies: And you raised pass-through businesses expending the expire -- extending the expiring provisions includes an important provision which is the so far are so-called 199 cap a. Absolutely critical and a huge impact on the small businesses.
▶ 2:00:02Sen. Blackburn: And I hope that you will, when confirmed, also look very closely at the oecd pillar two. U.S. companies are paying nearly 40% of this gmt. And it is not fair to U.S. businesses. The dst's coming from some of these foreign governments are not fair to our businesses.
▶ 2:00:31Sen. Blackburn: This is something the prior administration got us into. It is something we need this administration to get us out of.
▶ 2:00:38Mr. Kies: As I am sure that you are aware. One of the first executive orders that the president signed was a commitment to follow the sovereignty of the U.S. tax system, to not be dictated to by foreign entities. That is an issue that senator crapo has been outspoken about. The administration's view is very consistent with the views expressed by your colleagues and yourself.
▶ 2:01:06Sen. Blackburn: Thank you. Mr. chairman we should deem that the kids get ice cream as soon as this is over with because they have been awesome.
▶ 2:01:15Chair Crapo: Duly noted. Senator lujan.
▶ 2:01:19Sen. Lujan: On tuesday when trade representative greer was before this committee, he told me he was not worried about the recent market crashes. I would argue that means you are not worried about the hard-working folks losing thousands from their retirement.
▶ 2:01:39Sen. Lujan: These are teachers, and firefighters and other public servants that are seeing significant portions of their life savings wiped out due to what would I would -- what I would describe as a thoughtless and chaotic trade war. I remain concerned with the uncertainty that these actions have injected into the market and their impact on families and small businesses across the country. The trade representative during this hearing said that he wanted to focus on main street.
▶ 2:02:09Sen. Lujan: So let us talk about main street. Yes or no, do you think a chaotic and confusing trade war is good for main street?
▶ 2:02:18Mr. Kimmitt: Respectfully, senator, to the extent that christian presupposes a reckless tray pollard -- that question presupposes a reckless trade policy. The president has been clear on the direction that the country will take.
▶ 2:02:36Sen. Lujan: Do you think what he is doing right now with the trade policies however he would describe them and we can use the your words, are they good for main street?
▶ 2:02:47Mr. Kimmitt: If you look at his entire economic recovery -- recovery strategy.
▶ 2:02:53Sen. Lujan: I am asking that if you think the trade policy, are you comfortable calling it that? Can I call it trade policy and you will not push back? What do you want to call it?
▶ 2:03:04Mr. Kimmitt: Trade policy.
▶ 2:03:05Sen. Lujan: Do you agree that it is good for main street, yes or no?
▶ 2:03:10Mr. Kimmitt: Long-term. Absolutely.
▶ 2:03:13Sen. Lujan: Yes?
▶ 2:03:14Mr. Kimmitt: Absolutely. Long-term.
▶ 2:03:17Sen. Lujan: I appreciate that. Do you think that main street businesses have been negatively impacted by the uncertainty created by the trade policy?
▶ 2:03:27Mr. Kimmitt: Again, I do not think it is a simple -- a point I was making is that the tariff and trade strategy as part of a broader strategy that involves lower taxes, lower regulation and it is part of a comprehensive economic recovery.
▶ 2:03:47Mr. Kimmitt: Inflation is down and prices are down and certainly I think that the president has put us on a direction that the long-term benefit is part of that strategy.
▶ 2:03:58Sen. Lujan: Would you agree with president trump's assessment as he spoke to the american people during the joint session that the american people are going to feel a little bit pain and that is ok through all of this? Do you agree or disagree for the american people to feel some pain?
▶ 2:04:14Mr. Kimmitt: I am not familiar with that statement.
▶ 2:04:17Sen. Lujan: Did you watch the joint address?
▶ 2:04:20Mr. Kimmitt: The state of the union?
▶ 2:04:22Sen. Lujan: Its only been 10 weeks, did you watch it?
▶ 2:04:26Mr. Kimmitt: I did and I do not recall that specific statement.
▶ 2:04:30Sen. Lujan: You might want to go back and read it. He is the guy that picked you to do the job, I think. The president might be offended that he did not -- that you did not remember what he said during his joint address. Will you stand up tohe president if these economic premises that -- policies negatively impact main street businesses?
▶ 2:04:50Mr. Kimmitt: If confirmed I commit to advising to the extent that it is appropriate on those issues.
▶ 2:04:57Sen. Lujan: To ensure that economic policy does not negatively impact small business?
▶ 2:05:03Mr. Kimmitt: If confirmed I will work every day in my role to support small businesses to the fullest extent possible.
▶ 2:05:10Sen. Lujan: I am not hearing a direct agreement with that line of questioning but every time I have heard one of the president's nominees for us I have asked simple questions like if the policies have a negative impact on whatever that policy is in that space if they will stand up and speak up to the president. I certainly hope that we would. I think we are on the same page. There is a difference between right and wrong. Predominantly we have the same values and we just have a different way of getting there.
▶ 2:05:42Sen. Lujan: I hope there isn't -- that is an area we can work on together. I just wanted to follow-up to the question that Mr. warnock asked. Your responsibility will be to advise the secretary of the president in matters of tax policies in that space. Is that correct?
▶ 2:05:57Mr. Kies: That is correct.
▶ 2:05:59Sen. Lujan: Would you advise for increasing middle-class tax cuts?
▶ 2:06:04Mr. Kies: So, what I would strongly encourage president trump to do is to work as hard as possible with congress to extend the two sat -- the 2017 provisions which contain significant tax benefits for middle income taxpayers. Not to be repetitive, but the importance of expanding the standard deduction in the child credit which largely benefit middle income taxpayers is absolutely essential.
▶ 2:06:33Sen. Lujan: When confirmed based on the two sat -- 2017 levels of the president's tax policy, would you advise to increase the middle cut -- a middle-class tax cuts go to people making $400,000 or yet -- or less in that provision?
▶ 2:06:50Mr. Kies: My responsibility is to callout the policy of the administration and it is dependent on what their views are with respect to those issues.
▶ 2:07:01Sen. Lujan: You just testified to Mr. warnock that is your responsibility to advise.
▶ 2:07:06Mr. Kies: And advise is a very general term.
▶ 2:07:09Sen. Lujan: Is advising only telling him what he is doing when he is good? Or giving him options. Through your expertise, going back to the 86 policy and the work that you have done. And the reputable career that you have had. I do not agree with all of it. But, nonetheless, my colleagues do.
▶ 2:07:33Sen. Lujan: You have given presidents good advice and you do not always tell them what they are doing is teaching key -- peachy keen. You give them balls and strikes and that is all I am asking.
▶ 2:07:45Mr. Kies: I understand that.
▶ 2:07:47Sen. Lujan: Would you advise the president to increase middle-class tax cuts?
▶ 2:07:53Mr. Kies: I have not been part of the treasury department so I am not part of that.
▶ 2:08:00Chair Crapo: Senator tillis.
▶ 2:08:03Sen. Tillis: I thank the senator for new mexico for going over a little bit because I might have not had a chance to speak. Thank you.
▶ 2:08:11Chair Crapo: You got in under the wire.
▶ 2:08:13Sen. Tillis: I will be quick. Congratulations to both of you. You and I have known each other for a long time and we grew up at the same firm and you have a great resume and I want to get to a few questions for you. And I congratulate you on going to do. It is a shame you did not have the grades to go to chapel hill. Maybe your children will.
▶ 2:08:40Sen. Tillis: In all seriousness you guys have extraordinary resumes and I look forward to supporting the both of you. Let us start with you. Just one thing, quickly. We are going through now the priorities for tc ja. What I hope is a preop with not a whole lot more minute -- reop, with not a whole much more in it.
▶ 2:09:08Sen. Tillis: One provision is the foreign derived intangible income. Is that something worth maintaining?
▶ 2:09:14Mr. Kies: Absolutely. Both foreign derived intangible income provision along with the lowering of the top corporate rate to 21% were specifically designed to encourage U.S. companies to stay in the united states and to bring their ip to the united states.
▶ 2:09:31Sen. Tillis: We saw a significant and immediate reaction?
▶ 2:09:36Mr. Kies: And it completely terminated inversion transactions with you are familiar with when U.S. companies became foreign companies. We have not had a single inversion transactions since 2017 and the fbi was a -- fdii provision was a part of that.
▶ 2:09:56Sen. Tillis: Here's a question that is less likely to be comfortable. I do not know why we are killing ourselves to find half $1 trillion for tax policy. I am not debating the validity of no tax on tips or social security or no tax on overtime.
▶ 2:10:15Sen. Tillis: What am I a debate -- what I am debating is why we need to make the task of reauthorizing so much more difficult by discussions related to the half $1 trillion estimated pay for. And, one of those, essentially being the corporate tax reduction.
▶ 2:10:44Sen. Tillis: In a perfect world, if I were advising a client as you and I have and you specifically on tax matters and beyond business matters. What is the case other than fulfilling a political promise for including all that non-progrowth tax policy while we are trying to get the economy moving to create a revenue that allows us to do a lot of tax reform like we did in north carolina after we got businesses?
▶ 2:11:12Mr. Kies: As I have pointed out other questioners on both sides of the aisle. I have not had any role at the treasury department.
▶ 2:11:21Sen. Tillis: It is a tough question to ask an old friend. You and I have known each other a long time. I believe this is an area where we should advise the president and clearly we all stand here to support the fulfillment of his campaign promises.
▶ 2:11:39Sen. Tillis: It seems to me that if we settle down some of the uncertainty in trade and made it very clear that a substantially similar version of tcja would pass and we would see an economic response that would make the pay for for these non-progrowth policies better, and then may a fair implementation. You might benefit from not even me asking you a question on tariffs. I went into that yesterday. I will leave you with this over three years.
▶ 2:12:10Sen. Tillis: This is why I think we should look at more tax relief for people who are struggling the most. Over a three year period, there was thom tillis the waiter that lived in the same trailer park that worked at a restaurant that was like a danny's. It was 1977. And I made a lot of tips. I could remember $80 or $90 shifts which was a lot of money back then.
▶ 2:12:40Sen. Tillis: That thom tillis went from being a waiter three years later being a warehouse worker. And under the president's proposal, thom tillis the waiter will get tax relief but thom tillis the warehouse worker will not. It seems to me that there should be a way to kind of come up with a fair tax relief strategy that is not progrowth, but the right thing to do for struggling people.
▶ 2:13:08Sen. Tillis: And I just feel like we do that when we get the uncertainty out of the markets with the work that I expect you to do with advising on trade and you will do advising on trade and progrowth policies. I leave that for your consideration and I do not expect a response. I will just say in closing, since I'm the last to speak. I am glad to see the president do this, it makes sense.
▶ 2:13:35Sen. Tillis: It does not matter whether it was part of the strategy or a reaction to some unexpected outcomes over the past week or two. What is relevant is getting an order or deal flow going quickly with the most important trading partners, particularly those that we have relationships that go beyond trade.
▶ 2:13:57Sen. Tillis: Get that in and prove to the american business and the american economy that after 90 days, if you start building that pipeline out and thinking about vietnam as an example. We know we have 200 boeing jets and $500 in lng and they want to go to zero tariffs. We need more of those stories happening sooner and we have to get that going.
▶ 2:14:25Sen. Tillis: Both of you guys will be in critically important positions to make what the president doing what I am behind in enormously successful in getting this economy back on track.
▶ 2:14:37Chair Crapo: We have concluded the first round. Senator wyden would like to ask one more question and then we will go to our wrapup.
▶ 2:14:46Sen. Wyden: I have a bluebird article, price hikes are already rolling in from the tariff it businesses. He has repeatedly said somehow that there is this dramatic sense of price reductions. I will hold the record open and I am very interested in anything that you have that would speak to specific industries that are seeing price relief. The last question I am asking Mr.
▶ 2:15:13Sen. Wyden: Chairman, reflects the fact that it is very hard to sort out who in the trump administration makes these crucial decisions with respect to trade and tariffs. I want to ask a question because it relates to what happens if he is confirmed. As I understand it. If confirmed, you would report directly to the commerce secretary Mr. let that. Is that correct? -- Mr.lutnick.
▶ 2:15:44Sen. Wyden: Is that correct?
▶ 2:15:45Mr. Kimmitt: In defending this set of tax heights. The pain is worth it to bring back manufacturing jobs. That is what was said. The senator -- the person you would be reporting to if confirmed seems to have another view. He said and I quote "the army of millions and millions of human beings, screwing in little screws to make iphones, that kind of thing will come back to america.
▶ 2:16:17Mr. Kimmitt: " that struck me as baffling he continued. And he said "it is going to be automated." now you just told me that you would be reporting to Mr. lutnick's office next door. Why is it in your view the goal of the trump massive import taxes to have robots building iphones in the united states? Where does such a thing fit in?
▶ 2:16:49Mr. Kimmitt: Because it leaves me gob smacked.
▶ 2:16:52Mr. Kimmitt: Thank you for the question. I believe that, as I think about this issue, certainly the investment in the united states will be modern investment and modern manufacturing and automation will be a part of that. I cannot speak of course for secretary let nick of course -- lutnick, but he might be referring to the service -- Sen.
▶ 2:17:18Tillis: Do you agree with --
▶ 2:17:20Sen. Wyden: Do you agree with what he said, we would have massive import taxes that would have robots building iphones in america and is that why we are taking pain and that is what I will hear how everybody's 401(k) is hurting. What is the point?
▶ 2:17:49Mr. Kimmitt: I think it would be about the impressive investment. I am not familiar with the specific quote you read. But, I think a modern manufacturing will include significant automation which will of course require a skilled workforce to help implement that.
▶ 2:18:10Sen. Wyden: What you are telling my constituents is that we should take a big hit now. They will get hit with more taxes to have robots building iphones. They do not want to take that hit because they do not want -- they do not want that uncertainty so that they can make investments in america that are going to be winners for them and their workers for the long-term.
▶ 2:18:37Sen. Wyden: I do not see this policy being anything that is going to provide real opportunities to the people who will come to my town hall meetings and say to me, we have something that we want you to do about these tariffs and I will give them a chance to say what they want and they will say get rid of them. And that is what I am going to try to do when I get back because we showed progress with respect to canada and we are looking at 180 other of these and I do not think this is the interest of american people.
▶ 2:19:06Chair Crapo: Thank you, I want to thank you again for appearing before us today. That will conclude the questioning. You are both clearly qualified to serve in the respective positions for which you have been nominated. I look forward to voting in favor of both of your nominations. I urge all of my colleagues to do the same. With that I remind my colleagues that the deadline for submitting questions is 5:00 p.m. On april 15, tuesday, april 15.
▶ 2:19:38Chair Crapo: And the finance committee stands adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]