Without further ado in honor of the time id like to welcome bill to the stage. [applause] thank you very much. Really appreciate everyone coming this morning, especialy for such a dull topic. I was very surprised by country and he it didnt see the linest the front door. My name is bill. I had the federal Government Affairs team here at chevron and its great pleasure to welcome you all here today and thank the great sponsors at real clear politics are putting on this panel. I think its obviously particularly hi millie. Chevron, we believe these dialogues are important to improve the policy debate. Today we really have a couple of great panels and a great opportunity to learn and listen to whats going on in tax reform. Im not sure that theres an issue thats more important to us today to improve the competitiveness of the u. S. Businesses. So without further ado let me just say thank you to the folks at real clear politics come to congresswoman dell bnai and opposite to chairman brady for participating in the panels at which i was talking to the chair United States told me hes been working on tax reform so long that when he started he had hair, and i told him that well, my case case that wouldve been at least 20 years. Thank you very much and without further ado lets get started. [applause] ill make a brief introduction. You know who kevin brady is. You know them as the chairman of the house ways and Means Committee, a panel so important then when i arrived in washington i thought the word powerful was part of the title. In the black hills of south dakota, kevin brady is to remember as the slugging outfielder who played football, ran track, residents of glasgow, play for legendary david pollutes who died earlier this year, American Legion coach who won 34 state championships, two of which when you were there. His early 60s, chairman brady still plays baseball. Hardball, fast pitch baseball and a talk about baseball, not politics now. Hes a twotime mvp for the republicans in the congressional give vicki played this last summer. You may have seen in. He was in the lineup at second base, he lost his job to a man ten years younger who beat him out, and it left the practice field before the game because he was asked by the skipper to take some grounders. He said no. Steve scalise one the jobs to let him be there. Look, im glad you you are herd im glad you are here. Thank you. And thank you for coming. As you all know hes trying to do something now the republicans that is enacting tax of four. Are you ready for some hardball questions . Yes, sir. As long as we can start with i wore my astros tied todays of fuel way to cheer whenever you want. World series tonight. Lets start with an easy one for is the house going to pass the Senate Version of the budget on thursday . The answer is yes. When in a good position. I think the work the senate did ought to be applauded, and chairman black which is our budget committee, worked with the senate on incorporating some of our ideas. I feel real good about where we are headed on this. This week. Which accelerates forest tax reform by several weeks by getting this budget done because that is, once it is signed, sealed and delivered we will announce the date of the market and the date the Tax Reform Tax bill will be released once its done were going to move. I shouldve introduced myself to im carl cannon, washington cochief of real clear politics. If you know real clear politics you know that we are nonpartisan so let me ask a question that s sort of in our wheelhouse. The budget, you know, passing the budget first season due to tax reform is so you can use the reconciliation process of a way to filibuster this. But reconciliation is a washington word. The process doesnt come in normal english reconciliation is not what it is what it is is one party rule, and the budgets have been passed this way since 1993 here and im asking you a sort of a Good Government question. Is that the weight . Should they be both parties . Theres no moral equation if the tax would 38 or 37 so why shouldnt both parties participate in it . Moving to reconciliation does preclude democrats for engagement in this process. It just ensures no one party and senate can block us this from getting this to the president s desk. Im hopeful that we can, i know on the house side we spent the last year reaching out and listening to her senses democrats but what whats impot to them. In taxable because i think theyre saying the same thing we are, which is a a lot of young people come out of school, cant find good paying jobs, they are seeing the same companies we see moving their jobs and headquarters and research overseas pics i think we share a lot of the goals of getting this economy moving again. I dont want to predict that we will attract democratic votes in the end, but i think the time were spending with Suzan Delbene and others who are bringing i think terrifically good ideas to discussion i i tk it is time well spent. Right now the white house has endorsed a plan with these three tax brackets. I guess 12 , 25, 35 . On friday your predecessor of the powerful house ways and Means Committee paul ryan throw out the idea that we fourth bracket. This is something thats been floated. I guess we call it that george soros, or the donald trump family bracket. But my question, why does it start . 1 million, 2 million, what are we talking about . I dont want to get ahead of our committees were i want you to. I know you do. [laughing] so does everyone in this room. I dont want to get ahead of them. We are considering it as the framework with the president and the senate that tax writers laid up in were looking at three brackets. Our focus is on delivering a very progrowth middleclass taxcut, and i designed of the code that grows the economy in paychecks in a major way. So were looking at it from that perspective, could a fourth rate help us deliver that growth in that middleclass taxcut, and we are still in the work and still picking through the design. Paul ryan hinted that the rate would be 39. 6 for for the fourth bracket which is the top bracket. Does that number sound about right to use . So no decisions have been made on that. Well, you have declined, politely as you are doing here, to say what is brackets start exactly. I guess one question i have, is that because you dont know and youre still working at the numbers to make the numbers come out, or is it because you dont want people taking potshots at your plan . Its because unlike the reagan style reforms, which we model a lot of this after, the rates alone dont tell the whole story. Because we are eliminating amt, because we are eliminating the estate tax and because we are making sure our Small Businesses, our past dues on the left behind, those interact with those higher rates give only than just a rate cut. We want to make sure that were delivering top to bottom relief so the americans keep more of what they earn. We want to make sure we know the interaction of all that. So its just a case of being thoughtful and vacation we know the real impacts before we set the levels in with the brackets begin. When democrats talk about this they talk about fairness, and that something that i think most people care about. But it gets, gator as you point out. If you make 400,000 a year in rapid city, south dakota, where you grew up thats more money than if you made 400,000 in new york city. So how are you going, how are you going to finesse this . Unthinking out course of several things but one of them is the deduction for state its a terrific question. So there is, if were focused on growth of paychecks and jobs and leapfrogging america into the late back worldwide and us a bear, surprisingly fairness plays a big role in that growth. Because you just imagine the tax code, nine out of ten americans could file using a postcard style system. There is a fairness to knowing what everyones deductions are because we have, use exactly the same ones. Another reason we havent set those brackets yet and the rates are that. We are working with lawmakers from the high tax states to ensure that their taxpayers are better off in tax reform than before. And so, because where a a limitd number of those deductions that, too, place into what will the final rates and the brackets be. Its just a matter of making sure we have, were hitting our goals, including fairness and growth, before we set them. Lets take, if you live in west virginia, in harpers ferry, and your coworker, you work at a plant. Your coworker in Loudoun County lives right across river, lives in maryland. It to get rid of the state and local tax break if then that come one person has got a tax cut and the other has a tax increase. These two people work sidebyside. One pays a higher federal rate. That just doesnt seem fair. You are describing the current taxcut. No. If you eliminated it is actually i think you are. So depend on whether you are itemizing or not, so this is a really good question for tax reform. We can stick with the status quo where we keep the federal tax rates artificially high for all americans so some can use their itemized deductions, including state and locally. While we do that we just subsidized each other. Rural communities, taxpayers subsidize cities that middleclass tend to subsidize higher earners. Low tax state subsidize higher tax states. Thats the status quo. Or we can do Something Different. We can lower the taxes for all americans and we just pay our own. So for the first time washington doesnt punish or reward you based on where you choose to live and work. It is a big change from where we are at today, and the reason why, i think its critical we find Good Solutions for lawmakers in the high tax states. We want their families to be better off due to tax reform. Let me ask a philosophical question. After were done Suzan Delbene who is on your committee, a democrat, collector and shes from a blue state, Washington State on the panel after that steve morrow is on the panel, a fiscal conservative. So were going to ask them but there seems to be, using the coverage coverage of it. Are we punishing blue state voters . Are the tax can argue sure theres nothing in this tax code that politics are completely eliminated, that were not rewarding states that supported the republican ticket and conversely punishing, using an incentive to get state and local taxes to come down because those will no longer be a deduction, is that a fair question . Well, i think this is a political temp so people go to political motives. I think in this case they are wrong. Because from a fairness standpoint, construction worker toiling away on the first floor of the building who doesnt itemize, has a pretty modest income, is paying a higher tax rate from the investment banker renting the highest floor who can get a tax break. Why dont we stop doing that . Why dont we treat them equally in the tax code . Why dont we lower those rights for everybody . It is in my view sorely not from our viewpoint ways and Means Committee or in the house conference we put the tax plan in the beginning to go read a blue state. We want to dramatically grow jobs, paychecks and use economy, leapfrogged as to the lead back into in what people are better off. One of the ideas thats been floated in the last few days about trying to make the state and local income Tax Deduction more fair to try and raise the revenue but not have the effects were having up is to put a cap on it. 400,000 was a number i heard. Does that sound about right to you . 400,000 middleclass family . In new york city. Ill tell you, it stuns me how high property taxes and sales taxes, income taxes are in these high tax states. Im amazed, i dont know of families get by. And im always suspect on the same local politician who have been assessing these high taxes were suddenly now concerned about taxpayers. My belief is that for those families, when we lower the tax rates, when we increase the child tax credit, when you set those brackets, altogether, we can lower their overall burden. Without having that specific deduction in there. Were listening, carl, right near to lawmakers from the states on how best to do that. So im hopeful, no, im confident over the next ten days will find a good solution. So when republicans talk about tax reform, cutting corporate rate seems in one of the most animating issues. You know the arguments, youve heard them, youve made them, trillions of dollars because ceos dont want to pay, the companies dont want to pay 30 tax rate. Donald trump always reminds us that american corporations on the highest taxed in the world, and i check. Org and said yeah, thats pretty close to being right. Fact check. Org or whats the evidence cutting that rate will really bring all that money back that is overseas and it will convert to new productivity and it will increase what workers wages would . Thats a fair question. What we know is your tax rate varies depend on where your business is at. If your all american stager, so there you are paying full, about 35 if youre globally can vary dramatically in those rates. But in the day there all compared to europe, china, mexico. The Business Roundtable just released a study that shows that our tax rate had been 20 over the last decade we would have 4700 more businesses in America Today and we have because so many have been acquired or moved or shifted overseas in a major way. We know that we have to change what we are doing if we want paychecks to grow. They have essentially been stagnant for decades. Even this last round, carl, where it it maybe 2. 5, 3 growth in wages, and you think its coming back, look closely. Because what is sure people who work fulltime in america, their paycheck increased again was zero. So we know if we make businesses competitive, whether youre competing around the world or on main street, when you do full and unlimited expensing, so they can invest in the plants can equip, software and technology all that tries productivity, that tries wages in major ways. We are in each of these designs focus on that growth of paychecks and jobs, and im really optimistic that this design doesnt leapfrogged us back to that lead pack a mix of local companies so much more competitive. I have one more question and that i will open up to the audience. Are you worried if this doesnt work that its a gamble that the National Debt doubles and features of george bush, it doubled again under barack obama. If this doesnt spur the kind of product growth you talk about this tax income you could double the debt against. Im pretty sure the debt will double if we dont enact tax reform. I think if we stick with the slow growth economy were not going to generate the revenues and growth that we need for the country. Weve got to make the entitlement programs solve it for the long term. This is one key part of getting our financial house in order. But i know this, we get growth back on track to our traditional level or better, it generates significant revenues. Not just at the federal level, carl, what we know from the kennedy cuts, we know from the reagan cuts as well, the community that saw the greatest Revenue Growth by the state and local level. When people go back to work and when their wages are higher that with the growth, i know there are some states that wonder how that would be affected. What we know is growth gains at every level. All right. I promised chairman we would get them at a timely with the for a few questions. Youve got a mic, all right. This hand went up. Was there another one . And right here. Why dont we start right here. Hes close and then back there. He looks loaded and prepared. My name is peter sumner. Im with my question is capital intelligence. I just came back from puerto rico with the president. The question everyone in puerto rico has is whether you will come if we can bring back the 936 section of the Tax Exemption for puerto rico. That would be the biggest hell. Bill clinton killed and thats basically been like the root cause of all the problems. Said no decision of the midget we been visiting with the delicate, delicate pictures been visiting with us about the overall with the tax design should be for puerto rico from an economic standpoint. I think the hurricane which weve experienced in houston as well has made that situation even more tiresome so will continue to work with her aunt try to shape this any good, positive way on tax reform. Back here. Ben evans with the alliance to save energy. I know a lot of the talk is run supplying the tax code, but traditionally congress has done a lot in a very bipartisan way, particularly in energy space to encourage certain things that a tax cut to right now we dont have any incentive for Energy Efficiency in the tax code, and they expire at the end of the year. All the benefits that come with encouraging that activity in terms of its best solution we have for carbon, job creator in terms of trading weatherization work and all the Energy Efficiency work there is, saving consumers and businesses money when they become more efficient. How do we ensure that the tax code continue to support those things and isnt and this is sg youre looking at . Yes. I think the best thing we can do, cut Business Rates by average of 40 , create an effect taxfree investment in the type of Energy Efficient technology that drives these gains. I think all of which by the way are part of our tax reform approach for. I think thats the very best thing we can do. I want to bypass many of our energy incentives, specific ones to the free market over time, and create a tax code that encourages new investments, new technologies. Not a single them out but encourages that in a broadway across the economy. Congressman, when, mr. Chairman, when word leaked out you look at the 401 k deduction, donald trump tweeted out no, that wont change. When he does things like that, does i complicate your life . Well [laughing] everything complicates my life these days, just say no. Look, i love working with him on this. He calls me regularly about taxes. We talk about specific areas of it, and so, and hes out selling this and not just a reagan style reform that it trump style salesmanship. I think is incredibly helpful. In the 401 k area look, we have a goal. We want americans to save more and save earlier. We think progrowth tax reform done right can achieve it. All rig