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Memorial Day 2016 Congressional Recess Packet

Led by Chairman Charles Boustany (R-LA), the Ways and Means Subcommittee on Tax Policy has already held four hearings on tax reform this spring. These hearings have provided a much needed platform for experts and policy makers to examine the harmful effects of America’s uncompetitive and overly complex tax code. A common theme throughout each hearing was the urgent recommendation to set the U.S. corporate tax rate at a globally competitive 25% or less.

May 25 – Perspectives on the Need for Tax Reform (click for transcript)Witness List: Dr. Douglas Holtz-Eakin; President, American Action Forum | Dr. J.D. Foster; Vice President, Economic Policy Division, and Deputy Chief Economist, U.S. Chamber of Commerce; Mr. Scott Hodge; President, Tax Foundation; Dr. Martin Sullivan; Chief Economist, Tax Analysts

May 12 – Member Day Hearing on Tax Legislation (click for transcript)Witness List: Rep. Sam Johnson; Rep. Peter Roskam; Rep. Lynn Jenkins; Rep. Danny Davis; Rep. Vern Buchanan; Rep. Tom Rice; Rep. Xavier Becerra; Rep. David Rouzer; Rep. Pat Meehan; Rep. Bob Dold; Rep. Ted Poe; Rep. Anna Eshoo; Rep. Ken Buck; Rep. Andy Harris; Rep. Mark Meadows; Rep. Matt Cartwright; Rep. Rodney Davis; Rep. Scott Peters; Rep. Rob Bishop; Rep. Dana Rohrabacher; Rep. Keith Ellison; Rep. Dave Brat; Rep. Scott Desjarlais; Rep. Randy Hultgren; Rep. John Fleming; Rep. Peter Defazio; Rep. Steve Scalise; Rep. Kevin Cramer; Rep. Andy Barr; Rep. Matt Salmon; Rep. Terri Sewell; Rep. Tom Emmer; Rep. Mike Coffman; Rep. Janice Schakowsky; Rep. Erik Paulsen

April 13 – Member Day Hearing on Fundamental Tax Reform Proposals (click for transcript)Rep. Bob Goodlatte; Rep. Roger Williams; Mr. Thomas Barthold, Chief of Staff, Joint Committee on Taxation

March 22 – Member Day Hearing on Fundamental Tax Reform Proposals (click for transcript)Rep. Devin Nunes; Rep. Michael C. Burgess; Rep. Robert Woodall

Series of Spring Tax Reform Hearings Demonstrate: America’s Corporate Tax Rate is Way Too High

The corporate tax rate for American companies stands at 39% if you include taxes at the state level. Which means we have the dubious distinction of leading the world when it comes to the highest business tax rates. The RATE Coalition has a plan to fix the tax code: set the corporate tax rate at a globally competitive 25% or less, close tax loopholes, keep American companies in America. This will enable the U.S. economy to grow resulting in a better standard of living for American workers. Lean more at WhatsYourTaxPlan.com

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TheHighCostofInac1ononCorporateTaxReformWhataretheconsequencesoftheU.S.havingthehighestcorporatetaxrateintheindustrializedworld?Studya=erstudyshowsthatour39.2%combinedcorporatetaxrate–afull15percentagepointshigherthantheOECDaverage–iscosKngtheU.S.economyasseenthroughslowergrowth,lessinvestmentandfewerjobs.

BelowaresomeexamplesofjusthowinacKononcorporatetaxreformisimpacKngtheU.S.andwhatmightberealizedoncemeaningfultaxreformisaccomplished.

A2013studybyE&YexaminedtheimpactthatahighU.S.corporateincometaxrate,inthefaceofdecliningratesabroad,hadontheoveralleconomyandonanindividual’sstandardofliving.

Inthelongrun,theU.S.economy,asmeasuredbyU.S.GDP,wouldbesmallerbybetween1.5%and2.6%ifthecurrentcorporateincometaxratesremaininplace.Intoday’snearly$16trillionglobaleconomy,thislongtermimpactontheU.S.economyisequivalenttoareduc1oninU.S.GDP

ofroughly$235billionto$345billioneachyear.U.S.livingstandards,asmeasuredbyrealwages,alsosuffer.Realwagesarefoundtobeabout1.0%to1.2%lowerthantheywouldhavebeenotherwiseoverthelongrun.

(MacroeconomicEffectsofLowerCorporateIncomeTaxRatesRecentlyEnactedAbroad.PreparedfortheReformingAmerica’sTaxesEquitably(RATE)CoaliKon,Drs.JohnDiamondandGeorgeZodrowTaxPolicyAdvisersLLCandDr.RobertCarrollErnst&YoungLLP.March2013-hcp://ratecoaliKon.com/wp-content/uploads/2013/04/EY_TPA_RATE_CoaliKon_Macroanalysis_2013_03_04_FINAL.pdf)

ArecentanalysisconductedbyE&Yfindsthateveryoneloseswithoutcorporatetaxreform.TheUnitedStatesisatacompeKKvedisadvantagebecausewehavethehighestcorporatetaxrateintheworld.AmericanbusinessesaremovinginvestmentoverseasandforeigncompaniesareinvesKnglesshereintheUnitedStates.Butit'sbiggerthanbusinesses:failuretoreducetheU.S.corporatetaxratecostsU.S.families$3,000ayearinspendingpower.

(ReviewoftheEconomicImpactofTaxReformonConsumers.RobertCarrollandBrandonPizzolaoftheQuanKtaKveEconomics&StaKsKcs(QUEST)groupwithinErnst&YoungLLP.November2015-hcps://nrf.com/sites/default/files/Documents/retail%20library/NRF-2015-TaxReform-report_r3.pdf)

TheUnitedStatesistheonlydevelopedcountrywithaworldwidesystemandacorporateincometaxrateabove30%.Consequently,foreigncompaniescanaffordtobidmoreforacquisitionsintheUnitedStatesandabroadascomparedtoU.S.companies.

Witha25%taxrate,U.S.companieswouldhaveacquired$590billionincross-borderassetsoverthepast10yearsinsteadoflosing$179billioninassets(anet

shiftof$769billioninassetsfromforeigncountriestotheUnitedStates).Thereportalsoestimatesthata25%taxrate(theOECDaverage)wouldhavekept1,300companiesintheU.S.overthelast10years.

(Buying&Selling:Cross-BorderMergersandAcquisiHonsandtheU.S.CorporateIncomeTax.Ernst&Young,LLP.Mar10,2015-hcp://businessroundtable.org/sites/default/files/reports/EY%20BRT%20Cross-border%20MA%20report%202015%2003%2010.pdf)

TheNAM’sJanuary2015studyconcludedthatthatthelackofacKononpro-growthtaxreformiscosKngtheU.S.economyintermsofslowergrowthinGDP,investmentandemployment.Thestudyfoundthatovera10-yearperiod,apro-growthtaxreformplanwouldincreaseGDPbymorethan$12trillionrela1vetoCongressionalBudgetOffice(CBO)projec1ons,increaseinvestmentbymorethan$3.3trillionandaddmorethan6.5millionjobstotheU.S.economy.

(AMissedOpportunity-TheEconomicCostofDelayingPro-GrowthTaxReform.DonaldBruce,Ph.D.TheUniversityofTennessee,Knoxville,TamiGurley-Calvez,Ph.D.TheUniversityofKansasMedicalCenter,MachewMurray,Ph.D.TheUniversityofTennessee,

Knoxville.January2015-hcp://www.nam.org/Data-and-Reports/Reports/A-Missed-Opportunity/A-Missed-Opportunity--The-Economic-Cost-of-Delaying-Pro-Growth-Tax-Reform-Full-Study.pdf)

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RATE is a coalition of 33 companies and organizations advocating for sensible corporate tax reform. Making the tax code fairer and simpler will help spur job growth and stimulate the U.S. economy, and make us more competitive globally. RATE members currently include: Aetna, AT&T, Altria Client Services Inc., Association of American Railroads, Boeing, Brown Forman, Capital One, Cox Enterprises, CVS Caremark, Edison Electric Institute, FedEx, Ford, General Dynamics, Intel, Kimberly-Clark, Liberty Media, Lockheed Martin, Macy’s, S&P Global, National Retail Federation, Nike, Northrup Grumman, Raytheon, Reynolds American, Southern Company, Time Warner Cable, T-Mobile, UPS, Verizon, Viacom, Walmart, and Walt Disney. RATE members and affiliated companies represent over 30 million employees in all 50 states and support innumerable numbers of suppliers and small businesses. More information about the coalition is available at www.RATEcoalition.com.

WHAT THEY’RE SAYING

“We need a tax code that is built boldly for economic growth. I’m convinced tax reform that merely aims to place America in the middle of the path won’t cut it. Only by aiming high and taking a very ambitious approach to pro-growth tax reform will we be successful in the long term.”

Rep. Kevin Brady (R-Texas) Chairman, House Committee on Ways and Means

“[O]ur corporate tax rate must become competitive again.”

Sen. Ron Wyden (D-Ore.) Ranking Member, Senate Finance Committee

“Study after study tells us that the corporate tax at 35 percent is a loser. The American Enterprise Institute has found that wages rise much slower, if at all, in nations with high corporate tax rates. This happens because of less investment in the high tax nations, which means lower paying jobs. In other words, it’s not rich fat cat shareholders, but working class Americans who suffer the most.”

Stephen Moore The Heritage Foundation

“First step is lower the domestic U.S. corporate tax rate, if you think that people in your various districts are over burdened by taxes, first step is to lower the domestic corporate tax rate, we all

agree on that. The second step is to protect the corporate tax base so that foreign companies can’t strip income out and enjoy a low-tax paradise inside the United States available only to them.”

Edward D. Kleinbard Professor, USC Gould School of Law & Former Chief of Staff, Joint Committee on Taxation,

in response to a question by Rep. Danny Davis (D-IL) at a February 2016 Committee on Ways & Means hearing entitled, “The Global Tax Environment in 2016 and Implications for International Tax Reform.”

With the presidential election season in full swing, many in Washington are resolved to wait another year to achieve the major objectives at hand. But tax reform, on-going process that it is, won’t happen overnight. Congressional committees and tax policy experts have been hard at work

demonstrating the need for tax reform and delineating various policy priorities.