And for comparable reasons the inefficient ability of what they want. So what does not quadruple the tax capital and then to achieve a substantial movement went to the criteria what is the tax reform. And that is extremely positive step with us pace that has double or triple taxes for call that trump in new proposal makes very positive steps been. So i think we have the best opportunity and quite literally in two decades to have a positive progrowth tax reform done and it has the potential if the nba correctly to increase in gdp to lead to the extraordinarily positive economy with wages increase with opportunities once again are avail of all know i will turnover. Should be set to or stand . Okay we will stay here. Good morning thanks for coming. I am sure most one thought Hillary Clinton would win the election over the last eight years i have spent many vacation plans that i have to one canceled and now that is the chance to come up with a tax policy so with the tax proposal the next congress should address the of first of all the tax code distorts the allocation of resources in impedes both potential growth and revenue but make no mistake we must do this and the time is now. The plan to the depreciation altogether and the past few years theyve tried to figure out how to do the lower rate and that is not the way to go. Focusing on the right tax they tinker around the edges that will only exacerbate the problems that are already evident in the Corporate Tax code. There is an old saying is paved with good intentions. A charming brady made a good point you want to broaden the base and lower the rates. Then you have to raise the tax rate. That distorts the kind of behavior so we have tradeoffs to make its try to avoid the complexity and keep it simple. They tinker around the edges and exacerbate the problems and further the complexity and create the businesses by using the tax code to pick winners and losers. Before the outsourcing of the activity the american jobs, the u. S. Companies to form the multinationals are the further erosiothat the furthererosion ox base. It impedes the growth in the tax policy and we talked with the discussion on the brady and trump plans keep in mind that only people pay taxes. Corporations dont pay taxes. Its the legal responsibility of the burden of any tax falls on the capital and consumers. They say it is a cut out of business. Businesses are made up of people. The attacks has fallen. We are cutting business and thats important. We have been doing the opposite recently and now is the chance to do something more competitive beginning next year we will have them in serious abou is seriousm and thats why we are so excited. It proves the most basic affect the more you tax the capital labor the less you get. It makes clear that incentives matter. The tax reform with lower individual tax rate. One thing we shouldnt do we shouldnt raise tax rates. Its one of the highest in the industrialized world and increases the lower tax countries taking the jobs, and tax dollars with them. While its not going to solve all the problems one of the biggest we have is lowering the tax rate on the corporate side and individual. There are so many incentives we have right now for the businesses and jobs overseas. Its important the income be taxed once and only once and there is concern that they pay a lower tax rate than those with ordinary income but this fails to reflect the tax o at the corporate level and individual level. We will get into that specifically. Luckily policymakers find the principles and goals as the key to a successful revenue system. The successful revenue system should include the following it should be simple. I know its hard to understand that with a complex code it makes it difficult and costly to comply with and scam. They should make it as simple and transparent as possible. It should be equitable. They talked about the idea of it being fair. The benefit of the individuals and groups in the tax code that policies are resolved in an immeasurable consequence while fairness is subjective tax fairness would reduce the number of provisions that would have one over another. The tax code should be efficient because it alters market decisions and should such areas as impedes the growth and tax revenue. The tax system should provide revenue to fund essential serviceservices but little impan changing the behavior. It also should be predictable. A lot of questions of reconciliation to allow the ten year window. The effect is not just what it does today but also what it may do in the future. Such uncertainty deters the growth and requires the tax code near and longterm predictability so its in the tax code forever if you will. To conclude there is research as to which policies are most likely to provide the growth revenues and which ones will fail. The more you tax something the less you get. If you want more labor, work, savings, more job creation, unless. Broaden the base to make loopholes. One of the keys to mov is to moy from a spending system. Tathe tax reform should get over rates and the greater Economic Growth and increase revenues. There shouldnt be double taxation for the bad tax incentives. They follow many of these principles we will talk about with my two colleagues. Thank you. I was impressed with the remarks. What i would like to go through today is whats wrong in the Current System and then compare the Current System to an ideal system and then look at how it moves in that direction to a considerable extent. Many people say everything is treated evenly. The secret about the income taxes that it was set up to be bias and redistribute wealth. If you had a perfect income tax that wouldnt be neutral but for the treating most but it wouldnt be penalizing the savings for future consumption and that is the problem that we face. You can take to the supermarket and sit at home and we wont tax you again. Generally we dont tax aftertax income where you go out and consume but if you want to buy Interest Payments in the future we tax the interest and to get the dividend we packed it could tax the dividend and the earnings on the business even if it is aftertax money. The basic is against savings and the next step is the Corporate Tax for the games distribution even before you get them so thats the third layer of tax that is not imposed on consumption and then if you have enough money in the bank balance you set aside in case you need to go into a nursing home that would be an exempt amount and anything over that might be a an estate tax. The next problem is they dont measure income correctly. If you are a business and buy a 100dollar machine you spend 100 but we dont want you to write it off right away. If there is a nonzero cost of the time value of money which there is and there is inflation, that isnt worth the whole 100. You spend more than you right off in the present value and we are overstating the income the entire time. The tax rate is higher than it appears to be. And finally, we have the problem of trying to tax income when its already been taxed abroad and we have to have a complicated tax credit to try to avoid taxation which doesnt always work so we have a system that overstates the investment several times. Its because of these problems many people researched how to put together something called the personal expenditure tax. They can be progressive but it doesnt have this added bias against savings and investments. So what would that look like tax youd have to do something about the double taxation either the savings upfront and then not tax the return which we do with Municipal Bonds or you could tax on the Income Committee would not put the tax on income if you put them into savings and is regular and then tax it when you take it out. But not just limited amounts you have to take out and follow certain rules. The next step, the businesses and the corporate earnings this is the dividend or some other way of integrating the two systems, so either the business or the individual level. Then you would have to get rid of that estate tax because thats income thats already every income has been paid tax. When you first earned it and saved it or put it into an investment and it was taxed again even in an ira, we postponed the tax. So its either been taxed already sometimes more than once or its about to be taxed. The next step you need to get rid of that and create x. Printing so people can deduct the full value of what they actually spend not some reduced value. Finally, we should have a territorial tax system like most of the partners earned abroad where they provided the water and sewer and the police protection. They dont start getting into each other sandboxes to grab each others toys. That is in the wa isnt the ways system. So, we have all had in mind with all that in mind, lets take a look at how the blueprint stacks up. It reduces the tax rates for individuals and businesses in this reduces the tax of the business level and the added tax and Capital Gains. It doesnt eliminate one or the other. But the rates on both of them are lower so there is less of a double tax system. In the process they do eliminate the deductible interest while continuing to tax it at the recipients bible. The right way is either to deduct the interest and tax the recipient. They are eliminating the deduction but continuing to tax the recipient, which is a mistake. There is a problem with that. The senate has an interesting. You can do something similar for interest and solve the problem. I think it is something that can be worked out but both methods are a large amount for the of te deduction because many of the interest recipients. The plan that ends the death tax at least that is one of the key points of moving in the system and edit office expensing from the other key point on the business side for moving towards the neutral tax system and adopts the territorial structure that is would have and in the selling abroad. These are big improvements. Four out of five stars and i have to tell you it is much better than was done in 1986. In 1986, we did a lot. 86 move towards this income tax with longer assets and got rid of the investment tax credit, made it harder to use the pensions, damaged the real estate and addictive over the corporate rate fo but the other features were so great relative to the consumption that when you lower the rate you didnt speak up for it. That wa was back to the pure income. This is in the general direction of the tax where savings and investments are treated on par with the consumption and that is largely eliminated and why you want to do it because as much as the old people back there wanted to restrict wealth and thought they were helping the poor, what happens if there are zero machines bought, there ar bob, r farms operating in fewer mines operating and theres older machinemachinesmachines into ths less productivwork force islesss depressed. This sort of plan moving in mr. Action raises the pretax wages and thats where the big games come from. When we ru run to the model and calculate how much would be formed and how much would go up we get some very dramatic results. This plan even to the doesnt go towards the neutral base is so far along that line th but it gs about a 9 boost in gdp. It would be almost 30 larger, wages almost 8 larger and there werwould be a couple percentages more of people working, the total increase would be split on the wag wage side and the higher wages per worker and more workers working. A big improvement in the bill. The initial cost would be offset in a large measure by the growth effect of the plan and we figured out over the decade it would be about 190 billion then further out you get even more revenue coming. Vet to truly static loss should be looked at in that context. Theres almost no revenue over the tenyear window and theres improvements further out. If you look at the distribution table from this basis if you are lowering the tax rate from the corporate business and Capital Gains dividends a lot of it goes to the top but if you factor in the wage growth that looks like a much more even distribution. The total aftertax income of p. 8. 7 on average between 8. 429. 3 higher for the bottom 99 of the population and it would be about 13 higher that the benefits to the 99 are huge and the benefits to the labor force are huge, and thats why you want to do this kind of reform. Thank you. The first thing i want to say did you notice i dug out the tie from my closet i have to say its lost its power. I didnt want Big Government conservatism. What i want to do after we had to go to the presentations from jason and steve, i want to touch on a few additional issues so that we can wrap this up and i can figure out how to work the thing. We heard the tax policy so i dont need to reiterate that but i want to add one thing that i think jason and steve and david would agree with. You cant have good tax policy if you dont control the growth of Government Spending. I have a lot of faith in what the house has done for the last several years in the budget resolutions that the house is serious about controlling the Government Spending and therefore enabling and creating breathing room to do good tax policy. Im not quite sure what we are going to see out of the new president. Hes said things that make me worry he might not want to reform entitlement and then i worry we will never have the chance to have good sustainable longrun tax policies so even though it isnt a principle of the tax policy if we dont control Government Spending, we will never get good tax policy, we will never achieve those things all of the panelists have already talked about but in than terms of those things, let me just reinforce a couple points. Politicians understand tax rates matter when they want to. We need higher taxes. As a libertarian i dont think we should be trying to control peoples lives that i would give them an a for economics but then they turn around and say it doesnt matter if you have high tax rates on investors and things like that. Of course it matters people respond to incentives and we want to have the tax rate as low as possible. And i want to also emphasize with the other panelists us about the importance of the double taxation and this is where i thought he took the form are working to put together the tax reform plan and then in effect tried to break out the barriers for a plan that is even better. But the key thing to is reducing the double taxation and i want to say what gets this beyond the politicians i ask them if you had a borchard did you spend all those years planting the trees, keeping away pests and finally a what is the best way to harvest the apples . Do you pick them from the tree or to chop down the tree . Thats exactly what we do on the tax code. Technically we are sawing branches of the tree. In this example i have here it is the capital and the income. Do not fall off the branches of the tree. That is what steve was talking about when he was referencing the fact that we wouldve lower peoples income and there would be less in the future for ordinary workers if we destroy the capitol and th capital in th data tax policies. The good news is in general, trump is pushing in that direction. Theres no question brady is pushing in that direction and theres even some on the senate side people joke thats where good ideas go to die. I guess in my last couple of minutes i want to raise something we all need to think about as people who are friendly to the idea of tax reform and thats the sort of destinationbased part of the tax reform plan. But first here is the chart i put out is the sort of goal to stand standard then i compare it to however you want to call it and you can see both are moving significantly in the right direction. When i am giving them basically bees and b as committed as a move in the right direction but you will notice on the lower right i have these question marks under things like territoriality because what the house plan is doing is radically different. It might turn out to be acceptable that we are obligated to give some serious thought about what this means because you are exhibiting all income and youre not allowing any deduction for the inputs. Is that a protectionist . Is it going to be compliant . For those of us that have some gray hair we remember when it ruled against provisions of the tax code and eventually after years and years they were forced to change it. Though they do the same thing, is this an indirect tax structure lacks we have to think about those issues. But destinationbased plan is because the wages are deductible defendants by the time they get these cases and what happens if the politicians in the future that might not have the same interest in the government tax policy they get the decision and save a simple way to deal with this is to make the wages go to deductible even though it will be this, they will probably approve it and that of course i think you may as well. Fullstop shop because the chance would be very low. This is something i think we need to think about. Also, we have to think about the implications thats one of the few good things on our side in the degree to the political class. In some senses it is based on the plan published for American Progress which isnt an organization friendly to the limited government and tax rates and the first subtitle was avoiding the race to the bottom and that is a term the left uses because they dont like tax competition. Others are cutting taxes and other countries had to cut taxes. I think thats wonderful they use it as a race to the bottom. They want to avoid a race to the bottom by doing the destination tax that to me suggests we better be careful about doing this because people who dont like it wants that approach that worries me a lot and by the way, i dont want to get into the technical boring tax things that this is a system where the same thing that underlies the proposal and the sales tax cartel state governments want. The plan is create this is a new thing and i think we need to think about whether or not i tht would be good in the long run. Two final points that are political. When you do this system in effect, the goal is to maximize the taxes paid by americans and having no tax on the horrors. Politically that doesnt make sense. The other political thing i worry about, normally all the things that are being talked about in the various tax reform plans, double taxation, territoriality, these are things the Business Community can be united behind that when you do o the cash flow tax, you are in effect saying to every company that theres a lot of importing. Think about walmart or Something Like that. You will make them strong opponents of the plan. If republicans are doing something you have to go up against the left and the media and a