Speakers will include public figures, musicians, poets, and artists. Life coverage at 10 00 a. M. Eastern on cspan. The seasick buses traveling across the country on a 50 capital stewart. We recently stopped in dover delaware asking folks what was the most important issue in their state. Hello, and james in dover. Is the most important issues in delaware is the casinos. Left him a check to have a 43 and half text officials from the casinos are lobbying to lower that tax or that provide employment for hundreds of people great source of revenue. Maybe the tax burden could be lowered a little bit. My name is maria, im a freshman envious you. Im majoring in nursing i think deliver is the dreamers i think its important for us to let Congress Know that this time they need to look at motivation that we are students and americans and we are here to stay. Im a junior at taylor state university. Think the leaders in washington, d. C. Should focus on issues like drug abuse. Delaware has issues with drug abuse and narcotics. Pharmaceutical companies could do better to help people in situations like that. Its something thats really taken over. I work in a rehab home and i see a lot of it firsthand. Hello, im emily clark and junior, 20 or so. My majors math communication with the concentration tv, radio and film. Something representatives in d. C. Could help out with my state is about College Funds a little bit more. Not just for sports but for other areas within the College University like art, music, or sciences. That help further education so we could go to the world and help make that a better place in the long run pgh so, math communications major. I think the most important thing the government can do to improve dollars state is remarkably the involvement good energy. The more you bring to youth the more will have a better positive life and state future. Smacked next, hearing on potential changes to the u. S. Business tax code. The Senate Finance committee is hoping to come up with legislation that would spur Economic Growth while still generating revenue for the federal government. This hearing is just over two hours. [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] to will discuss ways to improve the business provisions of the u. S. Tax code with and i toward creating jobs and boosting wages for American Workers and approving her countrys overall business climate. The hearing is part of the ongoing effort following years of tax hearings in last weeks hearing on individual reform to draft and report comprehensive tax reform legislation later this year. Members of both parties recognize the need to reform the way we tax businesses in the United States. As former president , obama noted that the Current System quote does too little to encourage job creation and the investment in the United States while allowing firms to benefit for incentives to shift profits overseas. As we know many elements of a business tax burden depend on the companys organizational form. For example C Corporations or text of the Corporate Tax rate. According to a recent report the top federal statutory Corporate Tax rate is 35 since 1993. Estate taxes added the average state corporate rate is the highest in the industrialized world. Also noted not all corporations pay the full rate the average effective tax rate is among g20 countries. According to an analysis when you integrate corporate level taxes such as those in dividends and Capital Gains u. S. Tax rates are the secondhighest. The last one is important given the United States taxes most corporate earnings that are distributed to shareholders twice both at the corporate and shareholder levels. For the past two years ive been working on a corporate integration proposal that will allow businesses to deduct their dividends to help alleviate the double taxation problem. I view this as a complement to corporate statutes that a statue. We had hearings last year so too deeply at this time. For now hell just say continue to believe the idea whether it applies fully or in some limited way that it can help and address the problems are trying to solve. I look forward to continuing the conversation as the process moves forward. Its important to note that while the tax rate has remained unchanged for decades the term among our foreign competitors has been to lower corporate rates making american businesses less competitive. Its not just a republican talking point, widely acknowledged on both sides of the aisle. Even former president bill clinton signed into law the rate increase of 35 argued the rate should not be lowered. I agree. Current business tax system in disparity with the u. S. Corporate rate that are for competitor corporate rates has created problems and distortions. For example, the Current System slows economically by impeding capital formation, hindering wage growth reducing productive capacity lowering the standard of living in the United States. Full of which directly harm middleclass families and individuals. Current system lowers returns on investment creating a bias against savings and investment. Centers the creation of welfare including the middle class. The Current System encourageS Corporations operations using debt rather than acuity. That increases risk particularly in times of economic weakness. The Current System giveS Corporations incentives to shifts assets begin like show property to the u. S. To lower tax jurisdictions. Contacts reform we need to address all of these problems and distortions and any others as well. We need to lower the Corporate Tax rate to relieve the burden of tax imposes on American Workers who according to many is a significant part of the Corporate Tax. We need to reduce the burden on those that are taxed those are limited liability companies, partnerships and escort corporations. We need to Fix International tax system so businesses can compete in the global marketplace without facing disadvantages. Each of these propositions is supported by people in both parties. Politics enter the equation the story sounds different. According to some, all republicans want to do is give tax breaks to the super rich. And have cushy portfolios for wall street bankers all at the expense of middleclass workers and families. Those do not align with reality. As noted in our hearing virtually all of the current tax reform ideas are helping the middleclass and lowincome families. Her chief goals and Business Tax Reform or to increase Economic Growth, create new jobs grow wages for employees of both large and Small Businesses, expand for all americans and improve standards of living for everyone in the United States. The proof is in the pudding as the Committee Works through the process with those goals in mind will be able to demonstrate why those in the middleclass should feel as though they have a stake in the discussion and how the ideas to reform the Current System will help. Lets keep in mind the status quo, establish Economic Growth and decrease workforce participation hasnt been doing the middleclass favors. The case for tax reform should be easy to make. I want to reiterate that this committee will be the starting point for any tax reform legislation considered in the senate. Continue to hear arguments about secret plans behind closed doo doors, this committee will consider tax reform through regular order. That applies to the drafting the reporting of any tax reform bills. I hope this process is bipartisan. As with individual tax reform theres areas of Business Tax Reform for thoughts and interest of both republicans and democrats overlap. There is Fertile Ground for bipartisan agreement and i hope we can take advantage of this opportunity together. I know my Ranking Member has broad objectives. I appreciate that. The fact that he fortis on tax reform proposals in the past with the singles amount that at the end of the day we should at least agree that the current tax system is broken and the current state of our economy should not be accepted as the new normal. I look forward to a discussion of these issues today as well as the acknowledgments and bipartisan agreement that it is from these matters. Now turn to senator for his opening remarks think mr. Chairman. Have to do a Little Committee happy so ill be brief. Before i get to todays hearing need to talk briefly about whats coming down the pike for this committee both here and on the floor. As i told you remarks im going to make now do not in any way reflect my admiration for you, our friendship, the fact that we just moved ahead on a very important chip bill. The Children Health insurance bill and i want to set up my comments about what happened last night. Last night the majority announced without consulting the minority to finance will hold a hearing on the Catholic Health care bill. I want to make clear this is an abomination of the process and abomination of the substance and and abomination of the history of this story committee. First rule, this bill is a prescription for suffering and disastrous consequences for millions of people. Second, the Budget Office has informed us that it will be several weeks at the very least before it can provide real estimates for the bill. This means the majority is going to charge ahead with the radical destruction transformation of American Healthcare with the American People in the dark. This bill will be a few [roll call] votes away from the president s desk it republicans in the senate do not have answers to the key got questions of whats going to happen to the premiums paid by the American People. Whats going to happen to the coverage. The proposition that a bill this destructive and farreaching can swing through the finance committee on a monday morning hit the senate for a day or two later makes a mockery of the legislative process that senator mccain so eloquently urged us to return to. This abomination stands in sharp contrast to what we been able to achieve with respect to the childrens Health Insurance program. What a sad commentary that when the committee are to be celebrating a big victory for millions of kids the Cassie Graham heller brill threatens the health care of millions of children and families. Second point reconciliation relies on secrecy, brute power and speed to have run purely partisan bills to the senate. Its a train wreck to do it on healthcare. We need to notice we start this hearing that leader mcconnell is committed to reconciliation round two on tax reform. When we went on the side of the area for colleagues working together in a bipartisan way as the chairman noted, ive written to full bipartisan bills. Leader mcconnell says will have another partisan bill. Another completely partisan bill with respect to tax reform. That too is a prescription for trouble the details that leak out of the big six meetings in my view suggests that what is underway is a nonprofit protestant and tax giveaway. The centerpiece could be a 2 trilliondollar loophole dealing with something called passthrough. Pastor status is supposed to be all about Small Businesses. The person who is running a cleaner or a restaurant, theres no question those Small Businesses fuel local economy, they need a boost in tax reform. But any tax chain that allows tax chiefs to abuse passengers by self declaring to avoid paying their fair sharesocial security taxes could be worse than whats on the tax today the data task through loophole bill becomes law would be Christmas Morning in america for the tax. It would make a mockery of the trunk that the rich are not going to gain at all with this plan. Is just one element of whats on offer. Bottom line for me is limited to this crucial discussion, its time for congress to take the lives out of the Corporate Tax rate in america. Many of the biggest corporations in the country employ armies of lawyers and accountants who know every single one of the tax tricks. They use them all to little down there tax rates to the low teens and single digits, even zero. That congress cannot. Big corporate rate cut with a plan to enshrine loopholes that letS Corporations off the hook for paying their fair share. That is in my view a surefire way to have a heavier burden on the middle class. I look forward to discussing this issues. As i indicate i need to be out for a few minutes. I look for to the discussion. Thank you. Some Committee Members have requested a public care to discuss details of the Graham Cassidy healthcare proposal. A hearing will allow members on both sides to get deeper into the policy and gain a better understanding of what the proposal is. So well have a hearing next week on this matter. I believe members will benefit from a public discussion and examination of these issues. Even the request that has been heard some members are still unsatisfied. Im not sure what else i can do to address every complaint. For today hearing is on the Business Tax Reform. And i hope we can focus the proceedings on that issue. Having said that, i like to welcome each of our witnesses to her hearing today. We all appreciate your willingness to testify and answer questions today. Hearing each of your perspectives on tax reform will be critical to our process. First will hear from the president of the Tax Foundation in d. C. For his worked for the past 25 years. Before joining the Tax Foundation you is director of tax and budget policy for a sound economy. He spent ten years at the Heritage Foundation is a fellow analyzing budget and tax policy. For that he started his career in chicago where he helped in the Harvard Institute in 84. He holds a degree in political science. Second, will hear from an Institute Fellow and director of Economic Policy initiatives. In 2010 and 2013 he led the urban brookings tax policy center. Prior to joining urban he served as a member of the president s council of economic advisers and acting director of the congressional Budget Office. He is taught at the Georgetown Public Policy Institute and the university of chicagos graduate school of business. He said his mathematics at Harvard College and received his phd. Next will hear from troy lewis, the immediate past chair of the Tax Executive Committee mr. Lewis currently teaches at Brigham Young university in utah. He is in practice as that manager member of lewis and associates cpa, llc a new talk. Is his masters in accounting bachelors in science. As a Certified Public Accountant and a chartered local management psychologists. Last but not least will hear from the founding president and ceo of the real estate roundtable he served since 1987. He also serves as chairman of the Real Estate Industry and information sharing and analysis a. He also served as cochairman of the Advisory Board of the Rand Corporation center for terrorism, Risk Management policy and was a Founding Member of the Steering Committee of the coalition to ensure against terrorism. He holds degrees from washington and Lee University school of law is a member of the Virginia Bar Association and the american bar association. I think each and all of you again for coming today. I look forward to hearing your remarks. Thank you mr. Chairman and Ranking Member, good to see. All members of the committee i commend you for taking on the challenge of reforming marcus business tax code. Especially the overhauling our Corporate Tax system. Most important thing you can do to boost Economic Growth, lift wages, create jobs and make the u. S. Economy more competitive Global Police overhaul the tax system. This suggests that the committee should have four priorities, when reforming the Corporate Tax system. We call these the four pillars of Corporate Tax reform. First, provide full expensing for capital investments. Cut the Corporate Tax rate to a globally competitive level such as 20 . There, moved to a competitive territorial system for, make these priorities permanent. On many of you amending the Business Community may see some of the policies conflict are competing for space, we see them as complementary and essential. Interview cut in the Corporate Tax rate of into a territorial system are essential for restoring u. S. Competitiveness and reducing the incentives for corporate aversions. There are also important for defining reclaiming the u. S. Tax base. Right now the European Union are proposing policies such as the new turnover tax on Digital Companies that are aimed at raising taxes on u. S. Multinationals. Expensing is key to reducing the cost of capital which in turn will burst of activity and wages. A good tax plan should include all three policies. Will not only boost Economic Growth but do so way that leads to higher wages. These gains are not possible if the policies are made temporary. Separate tax cuts delivered temporary results. Its hard to generate public support for Corporate Tax reform because most people dont see how it benefits them. Corporate tax reform might not put cash in some peoples pockets lead tax credit might but it can have a powerful effect on spring Economic Growth will lifting aftertax incomes and Living Standards. We used our taxes and growth dynamic tax model to simulate the longterm economic effects of cutting the Corporate Tax rate to 20 . Model indicates these two policies combined would increase the level of gdp by 3. 4 . Lift wages by 3. 8 and create more than 860,000 new jobs. Only account for economic factors we find a lower Corporate Tax rate would boost the aftertax incomes by 5. 2 . And one more thing to consider, expensing do something no break i can come and eliminates pages and sections from the tax code saving businesses within 448 million hours of compliance and Compliance Costs each year. The great economist once said theres no solutions, only tradeoffs. Sure youre discovering that now and looking at Corporate Tax reform. The math is hard, contrary to what people believe is that many loopholes in the tax code. So youll likely have to think outside the box if you Corporate Tax reform to be revenue neutral. The economics us. The forefront of your decisionmaking. If you make the wrong choice and the base that you choose you can neutralize all the benefits youre trying to achieve to the reforms. These are challenges and there will be her choices. But done right it is key to growing the economy, boosting family incomes and making the u. S. A better place to do business and in front. So remember the four pillars of tax reform. Expensing, lower tax rate a territorial system, and permanence. Those are the right policies to make this tax reform effort a lasting success. Thank you for the opportunity to share these ideas, i look forward to any questions you may have. Thank you. Chairman hatch and Ranking Members, thank you for inviting me to discuss Business Tax Reform. Americas business tax system is complex and economically harmful. Thoughtful reform can make it simpler, can this boost american competitiveness, create better jobs and pleasure prosperity. Tax reform is hard, meaningful reforms create winners and losers and youll hear more complaints from the letter the praise from the forward. I feel your pain but at the risk of adding to it my testimony makes a point about Business Tax Reform. First, thoughtful reform can promote Economic Growth but we should be realistic about how much. More and better investment boost Economic Activity over time. The largest effects will occur beyond the ten year budget window. If reform terms into tax cut, deficits may credit a private investment. Either way the boost may be modest. Dynamic scoring will play a small role in paying for tax reform. Second, the Corporate Income tax make it more progressive. It falls and shareholders investors and workers. Economists debate how much each group bears. Includes highly paid executives, professionals a man managers. The bulk of the tax burden falls in people with high incomes even if workers bear a substantial portion. Third, workers would benefit from reforms that encourage more and better investment in the United States. Wages, salaries and benefits depend on productivity. It would do more to help workers than those that merely increase shareholder profits. Taxing pastor business what is inspired to tax when they can switch from a high tax rate to a low lower one they often do so. Professionals use S Corporations to avoid payroll corporate. Congress and the irs can try to limit tax avoidance but the cost will be new complexities, a new administrative burdens. Fifth, capping the tax rate would benefit only high income people. To benefit tax they must be on the high tax bracket. Creating a complete schedule could resist reduces inequity. Six, taxing pastor business income at the corporate rate would not create a level playing field. Corporate income faces two, at the cant company and with the holders. Taxing them at the same rate would favor pastors over corporations. To get to true tax burden you could do a higher rate of business income. You can levy a new tax or you could get rid of shareholder taxes. Seven, its difficult for large tax cuts and business tax rates. Eliminating all Corporate Tax expenditures except for the for the people get you a corporate rate down to 46 . You could try to go lower budget reductions lose their value as tax rates fall. To pay for large rate reductions youll need to raise options include great on shareholders or carbon tax. Finally, making business tax cut retroactive to january 1, 2017 would not promote growth. We give a windfall to profitable businesses. Does little or nothing to encourage production. Another downside is the benefits would go to shareholders, not workers. Thank you and i look forward to your questions. Thank you. Well go to the next next one. Thank you for the opportunity to speak. As the community tackles the opportunity we urge congress to take a holistic to provide tax reform to all of his current a credible tax reform will drive Economic Growth and enhance the competitiveness of all types of businesses. Not only in the u. S. But also abroad. The longtime advocate for efficient progrowth tax system based on principles of good tax policy. The new system that is fair, stimulates growth has minimal compliance cost and allow taxpayers to do their tax obligations. This is achievable if good tax policy is use. First, were concerned with and oppose any new limitations on the use of the cash method of accounting. It simpler an application, has fewer compliance cost and doesnt require text appears to pay tax before receiving their income. Forcing them unnecessarily discourages business growth. It imposes Financial Hardship on cashstrapped businesses. Tax relief should not mean a rate reduction from a C Corporations. Congress should encourage or at least not discourage passthrough entities. Inequities would rise for having this based on having an overly some to stick approach. For example, excluding professional Service Firms from the benefit of the lord business or reflect the view of the Service Industry that doesnt represent the current local environment. Basic professional service sensors competing on International Local businesses organizeS Corporations. They require significant investment to rely on employees to generate a portion of the revenue. Artificially revenue regardless of the industry will penalize the business operating in the passthrough entity. Without the benefit of a fair and consistent rate reduction for all businesses including passthrough entities, incentive to start or grow businesses diminished. The corresponding loss of job reduction in wages. We recognize that reducing this rate will place additional pressure on the distinction between profits of the business and compensation of the owner operators. We recommend codifying the definitions and providing Additional Guidance from treasury and the irs. If Congress Moves forward with the fixed percentage split such as trading 70 of passthrough income is income and 30 is return of capital we recommend making a proposal a safe harbor rather than a hard and fast rule. That would promote simplicity for businesses without sacrificing fairness for others. You provide a uniform treatment among closely held business types. Another issue is the ability to deduct interest expense. Business owners barter fund and have equipment and even to build credit for future loans. They rely on financing to survive. Equity financing is simply not available. At a minimum, we should not take away her limit this deduction for small and midsize businesses who work with little or no access to ruppercaseletter relying on debt financing. The burden of tracking and complying with a different state payroll tax Office Complex and costly particularly with small employers. The mobile workforce legislation like uniform this is a nonresident state tax withholding and an exemption from state income tax for nonresident employees. Thank you for the opportunity to testify. Thank you, were grateful for your testimony. Well go to our final witness. A morning. Tax reforms impact on the commercial Real Estate Industry will have wideranging effects on the economy and job creation and the all overall gdp. Im honored to be here today to talk about the issue. Its not the first time or industry has been before this committee and talked about tax reform. Understood the industry with aggressive tax incentives. These on the robust shelter industry resulted in the development of buildings that had no tenants. In 1986 congress rightly eliminated these provisions. Despite our industries relative positive health and of the underlying economy can and should grow more rapidly as tax reform encourages more robust Business Expansion to improve the standard of living for all americans with a sustainable gdp increase. The first should have all jobcreating businesses of limited to Corporate Income and want to have a pledge better industry in the Organization Works very hard for that progrowth tax reform should encourage and reward with risk for capital gain. Some concepts mail have unintended consequences they are the envy of though world to provide businesses with flexibility to build and operate and grow and not end the deduction for business expense. That is troubling because it applies to the structures. Obviously that encourages a lot of development we are concerned it would not be supported by underlying demands with the Economic Development with economic strength and badly destroyed the markets. May think it should be shortened and theyre finding suggested the proper Economic Life is 20 years. To end with the continuation of the interest section to supper expansion. And it should continue to the future and if we do that to create productivity. And i submitted a detailed statement. With that effort in with your statements but i might add today is senator scotts birthday. And that makes the rest of us look pretty old. Were grateful to have you on that committee. And to be important to sit with integration . Of course it is an idea that i along with my staff and reducing the Corporate Tax sorry rate by 61 . In doing one in the full times. And increasing Economic Growth by 3 . But these projections are impressive. And with that Tax Foundation. And with that economic and job projections occurred. Allowing them to deduct the dividends that acceptation estimated lost 3 in the long run. After those equivalent jobs and to bring that closer into alignment. With the Tax Foundations views with as the approach in particular. Looking to the Tax Foundation archives i found a 1977 publication by marty feldstein. With those integration and proposals. With an issue of day long standing steady in what is necessary to move at double taxation and Corporate Income. To make that taxation more equitable. Business in town should be taxed only once and as you noted on our analysis with the effective Corporate Tax rate of longterm Economic Growth but it equalizes the treatment of financing as a result to make that much more a efficient. Is a thoughtful way to approach ted. Why shouldnt they . It is an approach that deserves consideration it on fundamental tax reform to that broader Corporate Tax reform efforts. Included in your written statement with the deductibility of interest expense. What is your concern for Small Businesses . With that industry of such a limitation. And limit the deductibility. I would like your thoughts . I will take a crack first. Equity financing said to start with that notion with what you just made but that combination to take away the interest expense deduction and thats with those Capital Markets dont. To the entrepreneurial business. That should not discourage the formation of businesses. With that Economic System and should continue. The issue of over leverage should be examined on a individual basis. If there is over leg over leverage that is if they have too much and we prefer that issue be dealt with their. And that is here important for all businesses and to have that flexibility that allows entrepreneurs to retake more control over their Business Operation with those Business Operations historically has bed recognized as say cost to do business and we have no reason to adjust the through the tax code. And there should be governors of bad end with bad Real Estate Industry from a natural point of view it is no leverage that 60 percent. And with those problems of over leveraged it is a problem whether the borrower itself with a low amount of leverage. Survey figure for the question it is very important for the economy to continue to grow to have access to that. With day debate over what is more important could you elaborate on how you have seen the trade off of depreciation do you view that as acceptable. We see expense thing as the most powerful policy change on the of apples to apples basis that it delivers twice the economic rate cut. Whereas that corporate rate cut affects new and old capital investment. The benefits are distributed more broadly. With that tax reform proposal that link then depreciated lives to offset that revenue loss. And with that joint model shows that depreciation lifted the cost of capital to such an extent it would offset the benefits of the Corporate Tax rate and ended up as the economic. You need to be extremely careful to look at your offsets with the corporate rate cut. And those for a new investment broke and also to be most beneficial for workers. If you focus on reductions that encourage investment you get more benefits flowing and less focused on shareholders. With the 35 top rate will affect competitiveness of the tax system. And then to reduce that rate and the the of macro models. And will last the same to people that senator hatch discussed with the others with consideration of restrictions and then to go to full expensing on Capital Assets . The with the deductibility of interest for faster depreciation . So the incometax and consumption tax. With incometax you should deduct interest and depreciation should fall that the of assets over time but with consumption you should expense everything we believe with no right off for Interest Deductibility. We have a system bin between with accelerated depreciation but we allow interest and the challenge is you can overcome encourage investment create negative tax rates with the of problems that happened in the 80s if you go too far. And with that investment so i am very open to reducing the fittest pared to make depreciation and more favorable. I would echo. So if youll eliminate Interest Deductibility it sets up a less harmful way. To get that maximum amount of benefits. And also to Interest Deductibility to reducing for the of multinationals and then stripped didnt come out of the u. S. Tax base so talk about over leverage each there are bridges that we do with their stand that some of the industrys are over reliant and it could be disruptive but it is a tradeoff in order to get Economic Growth of the other side of the equation. Birthday wishes due to of scott. Youre too young to remember a song by conway 20. Its only make believe. I was trying to think when he was singing about it was a relationship with another person but it could easily be dynamic scoring. [laughter] will the senator yield . Are you sure it was conway 20 . 20. [laughter] we have been down this road before with tax cuts for the hired tom did not work. And then we end up with more debt and then going down this road . And that a large deficit finance cut. If you look based of the forecast we are on track over the next decade to bring in tax revenue around 40 million. So that will build the debt of around 75 percent of gdp. That is problematic in its own way. And then depending on that scenario so adding 12 trillion and of ideas thing has to come from somewhere. And therefore that would be given the growth from tax reform. And any effect of the budget balance. And there is an offset. So you end up losing that grossi facts. And as a private investment that the u. S. Economy is more productive. What is that evidence that shows with the cost of Corporate Tax that would help workers . Over recent decades with that tax analysis into faded Corporate Income tax. And those that have more less capital to work with but the main street estimates are around 20 percent with that Corporate Tax system as a whole and my colleagues of the size depending where you look and then to focus directly on the investment. In the Corporate Tax system as though whole. Reducing that Corporate Tax rate in to address that concern. And is it fair . And foster Economic Growth . Does it make the tax code more or less complex . We are seven years into the economic expansion and then to address that problem but this years deficit will exceed 700 billion. And to stimulate the economy added to that economic expansion to increase that deficit. To follow up briefly from the senator from delaware but is there anybody that believes economic output that is affected by all the incentives and penalties said the tax code that it was of an influence . By good or bad . Anybody hold that view . So it doesnt follow logically if you have a better incentive to that incentives with the tax code that creates the right incentive. If we achieve that it isnt a question whether or not it grows more but how much . And we all agree with a bigger economy than what we would otherwise have more activity to a tax so that logic behind that tax policy is only a question of the extent not whether or not but if that is counterproductive to growth and that should be scored accordingly. With that fundamental unavoidable logic if you get that right you have more growth to generate more revenue. What we try to tell people about dynamic scoring is by and large they dont pay for themselves but it could have Macro Economic effect on revenue and longterm policy for row your point you seem to be skeptical but i did not hear that applied to vehicles or equipment or machinery in view of knowledge the expensing of those types of things could be beneficial for Economic Growth . I dont necessarily disagree with that but the facts are under the current lot of depreciation i believe roughly 60 percent of all business investments. I have limited time. I appreciate that. They give very much. It would be nice if we could move on per mr. Lewis you made a point about the accrual method versus the cash but said. With that Tax Liability exceeds the cash flow . And mulally them to take a the cash but said and then to a wind of a cash flow. And to put more money in to do when i do the us which is growing the business. Would you be supportive and then for the cash basis of tax purpose . It has supported the invest act there was a provision to make more available to smaller businesses. But dollar for dollar expensing on growth or marginal rates. He briefly explain how that benefit workers average workers or wages . Getting tools make workers more productive. End as a result into incentivize new investment with productivity that makes everyone a better off in the long run. With a panel discussing dynamic scoring. That definiteldefinitel why leads to a dramatic growth. And then launching into a the discussion of the tax code and what are the means and opportunity and that was missing in this equation today could you comment on that . Most people or Business People that operated the urban areas with that shortage of a work force housing. As citizens in the price died of the nations cities to focus on ways to incentivize Affordable Housing. Not just low Income Housing which is needed but Workforce Housing as well. It was a growing and troubling problem. And then in Economic Growth civic you just think cutting the Corporate Tax rates fixes Affordable Housing . No it has nothing to do with Affordable Housing. And then perhaps it would have more money to buy workhouse housing and to stimulate. Is that a crisis in america . Get out of it is a crisis but there is a lot of multifamily housing constructed today but it is a meeting that segment of the economy but it will cost the same thin and the Construction Cost seven day construct assets with Office Buildings they are paying those more abruptly. To provide low Income Housing that there has to be assistance. What about the housing tax credit . Or keep in mind as tax reform goes forward i am not suggesting we dont want lower rates but it was more robust because of the rates as those go down there less valuable. I said something very important. Ag said that tactic the contract but the translation is basically those who invested in Affordable Housing and we have given them that investment as they wait to see what will happen with the Corporate Tax rate answer press saying that available investment. And as that relates to a dynamic scoring if you will get Dynamic Growth from it. Does everybody clearly to understand housing has lost its way. And then to stimulate the economy. It to focus of the fact Affordable Housing is a crisis in my state and in seattle we need to make sure that this is just as important. Referencing how long we are into economic recovery so is this software typically it would be at this point in the recovery. And only where it should normally historically bddp would be 1. Higher. Now i call that growth. I have to go vote i was a Small Business owner about 50 years and i will tell you the question that seems to be unanswered did a good job to delineate our competitive perspective lower rates a better Competitive Position and also encourages Economic Activity in the way that cannot be scored dynamically the kid we score accurately . Because that impact will be measurable another very important factor is the amount of time smallBusiness Owners prepare for the of march 15 or august 15 can you speak for a few minutes under the current code . And what that means longterm with future investments . En to spend 9 billion hours and with the most complex of the most costly with the depreciation schedule and with 23 billion per year of cost for pro so instead of writing tax cut wasted energy and had wasted time and resources to comply with the irs rather than try to build the business. To have those 12 died being principals but you hit on a couple of them that our important in fairness on the of one side one principle has to be compromised at the expense of another so that is a tradeoff you are debating now where the rubber hits the road. To reconcile that interest canby difficult but code will never be simple but it will be complex so anything along those lines to make it less complex for all businesses in the country. Some time back i realize twothirds of the audience doesnt even know what i am talking about. She never came back but chairman hatch will. [laughter] i remember 1986 the last time we did tax reform and when i reviewed that tax proposal in my district was not a member of the house they said this and this really is a well we think is appropriate and the s l business and that went out of business. So i voted no. That was one of the several state area but the most important thing in that regard that i a did a. [inaudible] bob doles for six months which was not all bad. With wrap around the axle with regards to revenue talking about experiencing depreciation with that deduction of interest with that Health Insurance but when you do that every time you touch something in the tax code even though it is 9foot tall we have to do something. But i would prefer to see is to the big things not worry about the dynamic scoring but from my personal preference and a the business rate going up between seven and three i would do something with the state tax there is another one i am missing with repatriation but if you lower that rate supposedly that takes care of that. I know some members of the house but it sure would save a lot of time. And all the other thing is that i mentioned with that theory based on experience with the senator from kansas tried to give a speech when standing on the hill did not work out very well. How you feel about that with the 1986 example . And the chairman is back i will yield but i will listen but not for very long. It has a lot of mythology we went back to model the effects of the 86 act that erased a the cost of capital by shifting the tax burden and as a consequence to have a modest effect not boosting growth. To simply raise taxes . Items see the need to do that. And though that distinguished chairman is back. Mr. Chairman thing stews of witnesses talking about Energy Efficiency to make sure we can preserve those issues. What is a fair way to handle this . But if you look at local competition they still pay a higher rate today of the of global competitors in the overwhelming majority of businesses now that c. Bates is about 5 somewhere at that level. So to make that business tax structure more competitive we need to make sure we dont have those unintended consequences of those companies to have that current status how do we protect them if the rates dont change . How you deal with that issue . We appreciate your work on Energy Efficiency. And hopefully it is included but for our industry very few real estate businesses are operated in corporate format. Almost all are l. Elsie privately traded or partnerships and real estate consist of almost all of what half of all partnerships refocused on how we can achieve a lower tax rate for those entities. There was a 5 spread and recede no reason did is coming down that spread should not be the result of tax reform that would drive the economy. With that disadvantage. In so we went to work. We share the concern of potential shifting of Service Related did come of a pass through into the lower pocket. Thank you for that response so keep your eyes on the issue it could get lost with those proposals made and i agree with that point that it is critically important senator crupper talks about what we could do is add to the deficit as that would be an anchor Economic Growth data and we talk about how we score but i raise another issue of another proposal talks about i mean of the 401k that is a revenue gainer over the long term is neutral to be very careful as a look at these issues there is the Retirement Security issue that strengthens those needs. A fundamental point if that is your issue i thinking it is impossible to do unless you bring other revenues into the equation. And with consumption and revenue how do we expect that competitive business rate as a source of revenue. I have been introducing progressive consumption tax with the objectives that the tax code is at least has the relates to middle income families. How do you get to a competitive rates globally if we continue to be stubborn to the exclusive club the rest of the world is doing it . But i end up mentally in the same place said you need to go shopping for a new Revenue Source with that species of consumption tax that seems to have gone by the wayside i personally m a fan to have significant revenue and that is a strategy also to look to shareholders to reduce Corporate Taxes to keep in mind one of the beneficiaries are shareholders to think of ways of increasing taxes. I will give you credit for that tax reform plan to be exceptionally pro growth. So it is possible and to lower those tax rates that is a powerful effect on boosting Economic Growth. I appreciate that. That is near a the bottom we should have a competitive a vantage. Thanks to all four witnesses we heard a lot of talk what is good for large u. S. Companies and frankly far too much talk what is good for corporations are best for American Workers who have been hurt by trade policy in the last 20 years to encourage companies with the American Worker to introduce the employer tax credit act with wages of 15 an hour to provide benefits and dont outsource that those companies would get a tax cut and when they pay Poverty Level wages somebody has to pick up the tab with the food stamps or housing vouchers to pay for medicaid or the earned income tax credit. If you are a Huge Corporation and choose to pay your workers so little they are disproportionately forced on government assistance you need to reimburse taxpayers that is the corporate freeloader act it is a chance to reconsider the you dont build the economy by doing a tax cut for corporations hoping bad it trickles down me know by comparison that simply does not work you build the economy out word so offer a suggestion for other ways to safeguard against Corporate Tax reform bill overwhelmingly is that the expense of American Workers workers . You want to look through the lens with business tax cuts this is the one channel primarily with significant benefits of workers it with that sort of competitive advantage with worker credits and things like that to provide support and encouragement to make them more attractive to employers with that tax reform package. And to the of a Ranking Member also to take time to be with us today. For too Long Companies have been at a competitive disadvantage a Business Owner told me that tax system makes it difficult for him to compete another said we need to fix the tax code to attract business for American Workers the current tax code tracks down the economy to prevent hiring at home last month at the tax reform roundtable meeting with the job creators time and time again with those lower tax rates for businesses they need that faster growing economy and also mean more jobs san and higher wages and just last week it was announced the private sector job growth at 3. 6 so imagine what the state or the country so after eight years of historically low growth under the Previous Administration it is time to get back on track on the international playing field. As we move forward on business and individual tax relief. Also briefly on Corporate Tax rate i missed your opening testimony but that empirical evidence has a sizable percentage is that an accurate comment . Having a paper coming out in the next week to a survey that literature that shows the substantial portion of the Corporate Tax does fall of workers of some fashion and as much as 100 percent read the of factory and work for moose from dublin ohio to ireland to take a vintage of that 12. 5 so with that differential in that Corporate Taxation can have that overwhelming influence on hiring and wages and it shows that pretty clearly. A 20 Corporate Tax rate. The model shows that the combination of the Economic Growth. Day estimate the combination bin full expense thing by an average of 5. 2 5. 2 . Can you expand on any of this . How can we boost the takehome in, income for all americans with these that you showed the model . If you have not had a raise of more than a decade that tax cut does not benefit you with the policies with productivity with the aftertax incomes with standards and with that Corporate Tax rate will do that. So the stock is to approach is to make People Better off. With the average household her offer . Tax cuts over a raisin in come . People want the tax cut biddle see the connection with their daily lives we need to convince them ultimately that will boost their standard of living longterm it is just a hard sell. Thanks to each of our witnesses to reform that antiquated tax code as i continue the here last week we had the opportunity to facts focus on tax reform to make sure to provide tax relief today we have an opportunity to look at those business aspects which is a critical component of this as well there is significant overlap to streamline and modernize to enable those to reinvest and expand that is a real benefit from middle income families across the country through the businesses that employ them this is a strong panel so with your testimony make the important point it may not put cashes in peoples pockets the same way as the individual rate by half a powerful effect of lifting Living Standards so could you elaborate between Business Tax Reform for middleclass workers and families of reassume that reduction is accompanied by the individual tax rates that affect working individuals . Which were most harmful it is the most harmful tax for Economic Growth the most mobile factor in the economy will lower the tax is much more productive and the standard of living will rise and should be a primary goal to lift their standard of living you can try to do it but the right kind of tax reform does the most and ultimately their standard of living. You make the case against the immediate expensing of realestate also of the recent m. I. T. Study is out of sync so to try to build say tax code to shorten the Recovery Period to be a reasonable alternative . Yes. We strongly believe that and i dont disagree at all what has been said about the power of expensing im simply saying sustainability in our industry we see no benefit of building buildings to put stress job local markets and the lenders Balance Sheets did ultimately it isnt good for the longterm growth of the economy were more interested in assets with the proper Economic Life