There is a chapter in here on federal tax reform and many others also covering the tax treatment of healthcare and global tax competition. I want to introduce Chris Edwards was editor of Debbie Debbie debbie that downsizing. Org. Before joining cato he is a senior columnist on the congressional joint Economic Committee. Thank you for coming here i think some of you may have had to be involved in the president ial motorcade. Im going to provide a brief overview of tax reform janie foster. President trump and republicans are pursuing tax reform. The basic idea is to cut individual and business tax rates to close the loophole and to improve the treatment of savings and investments. What we need tax or from . It can spread Economic Growth which will raise Living Standards for everybody. It can simplify the code and tax reform can also increase fairness by creating more equal treatment between taxpayers. The other reason we need tax reform is because we have not had major tax reform since 1986. The world has dramatically changed of the last three decades. International investment has exploded, entrepreneurs and wealthy people have far more choice of where to invest in the Global Economy these days. We want people to stay in america so we need a competitive tax code to make that happen. If you look at Corporate Taxes last time i cut the Corporate Tax rate was in 1986. Before that, combined federal and state Corporate Tax rate was 50 . Thousand that the average of the other industrial countries at the time. Then we the tax rate in 86. That launched a global revolution in Corporate Tax cutting. Rates have plummeted. The average oecd Corporate Tax rate has been slashed in half since the mid 80s from 40 down to 24 today. We have the highest rate in the world at 40 when you include state taxes. Many of you heard that island has a 12 and a half Corporate Tax rate that it attracts business. Hong kong has a 16 , taiwan and singapore just 17 . If youre building a Semiconductor Plant would you put it in the United States and pay 40 or taiwan and pay 17 . Even some European Countries have remarkably low over tax rates. Portugal, which is to be a leftist country these days has a 21 Corporate Tax rate. Sweden, which is the socialist country that a lot of american liberals admire has a 22 Corporate Tax rate. Ryan will discuss the u. K. That has a rate of just 19 . What are we doing here . A 40 tax rate makes no sense. Looking at the individual income tax, rates have fallen around the world over the last couple of decades. In the mideighties the average top oecd individual rate was 64 . Back then our top individual rate was 55 . We had an advantage on that for a while. We cut our individual rate in 86 but other country started cutting as well. We kept our advantage in individual income tax breaks for most of the past three decades up until 2013. The deal that in a part of the bush tax cut put our individual rates up again and are right now with state taxes is about 46 . Thats above the oecd average of 44 . We are not a low income tax country anymore. We are high income tax country. This is a problem. I rates at the top end matter because they punish the most productive people in the u. S. Economy. Entrepreneurs and brain surgeons, venture capitalists and people like that are very responsive to tax breaks. Also a large amount of business income flows through in the tax system. High tax rate means less investment and less work effort by the moscow people in our economy. Thats the overview today. Im going to introduce our three speakers and turn the podium over to jd foster. His chief economist at the u. S. Chamber of commerce. Before that he was senior fellow at Heritage Foundation and before that, a chief economist at the omb. Also an advisor at the u. S. Treasury. In the 19 90s he was head of the tax foundation, he was a very good boss and i learned a lot from him at the time. He also worked on capitol hill for a number of members. He received his phd in economics from georgetown. Next, well hear from jason who is a senior fellow at arcata. He focuses on tax and business policy. He was Deputy Commissioner and at the Social Security administration. He was senior economist at the joint Economic Committee where i was a coworker with him. His been is the author of the hidden cost of federal tax policy which looks like that. Thats the next one overview of our topic. It is free on the internet. Finally, well hear from ryan. He researches Economic Issues including tax policy. Before joining cato, he was head of Public Policy at the institute of Economic Affairs in london. Also the head of Economic Research at the study of Public Policy studies in london. He has written extensively on Economic Issues in the u. K. Newspapers and holds a masters degree in economics from the university of cambridge. Thank you chris. Hello everybody. About two weeks we will be celebrating memorial day. You may find yourself at some point over the weekend watching a ballgame. Maybe a golf match, maybe nascar, whatever your preference. In the course of watching that program theres a high likelihood youll see a beer commercial. There is also a high likelihood youll see car commercials. Those car commercials will be along the lines of somebody driving up along the why the road, out on the open road and will be advertising this is a great memorial day sale, low Interest Rates on loans, big slashing of prices. Why do they do that . Because people respond to prices. Prices align what happens in our economy. They align supply and demand. People and businesses respond to prices which eat you will not see that any car commercial say in my car is just as good as the car and cost 5000 more. You are not going to see a lot of advertisement that higher prices than somebody else. The u. S. Economy has for a great many years been ever sizing to the world, come to the United States, we have the highest tax burden. We have been advertising for years that we have an extraordinarily punitive tax system. Weve also been imposing regulations over the past eight years that has been telling the world, come to the United States because were making it a lousy place to do business. That is changing at the moment. Were trying to get it to change in tax policy. In 1986, the last great Tax Reform Act, we learned in the reminded the rest of the world, how important low tax rates are. Shortly after the 1986 Tax Reform Act, we forgot. It stayed in place from that time until today. Meanwhile, the rest of the world learned a lesson and they kept applying it. Reducing rates over and over, one country after another. In fact, recently in france the new president ran as a centrist. Previously he was in the socialist government and distinguished himself by calling himself a probusiness socialist. I guess thats how you do find it essentialist. Its france, what can i tell you. France understood and the president understood they have to lower the rates. Its already below ours. 3033. 3 . He ran to reduce the rate to 25 . Even the french get the fact that you have to lower your tax rate to be competitive. Bill clinton gave a speech and noted that when he was president he signed a bill raising the tax rate a Corporate Income but he did so to make that rate competitive with the rest of the world. We have pulled the rate down and the rest of the world had not completed the process of reducing their rates. So he said it was okay to raise the rate, but now it is not. Now we have on competitive tax rates on business income and bill clinton, during the campaign said, we need to reduce these rates. Thats a good observation on his point. Thats from a business standpoint what tax reform is about. It is not a complicated exercise. Straightforward. First thing you have to do is get significantly reduction. I will not say how far down. Its like youre going to buy a car, how much of a discount do you want, how far can i bring the rates down. For all business entities, pastors as well as corporations. If you want the u. S. Economy to start advertising to the rest of the world, this is where you want to do business. It starts with getting the rate down. Then we need a competitive capital consumption system. For far too long weve had a system of taking account of when a business buys a piece of equipment. [inaudible] this is a term you should be hearing a lot forward. It splits it into a summary statistic the sum total of all the effects of tax policy affecting an investment and says how much do these race policies raise the price that you have to pay that is the earnings you have to have on that piece of capital. Lets say you have a basic level of earnings, you have to have to make investment worthwhile as a business. They start figuring out this tax is going to raise it and this will reset more and more. The sum total of those affects is the cost of capital. What we want to see happen in tax reform is the cost of capital brought down as far as we can. Reducing the tax rates and expensive are the two key elements of bringing down the cost of capital. The third piece that is core to tax reform is fixing the way we Tax International income. Twenty years ago or so, the industrialized world was mix. About half the countries in the world did what we did today. Adopting a worldwide tax system and the other half was territorial. Back when i was with chris subleased right International Conferences over talk about the need for territorial system and half of the countries we visited would say yes and the other half would say its crazy. And the thought in the United States was it was crazy. It turns out we were right. Almost everybody in the world has some very ration on a territorial system. One way to think about it is like a las vegas commercial. What happens in vegas stays in vegas. The income that is earned where its earned his tax returns and only there. That is all territorial means. The Company Earns income in france, germany, japan, or wherever, it could be subject to whatever taxes are imposed in that jurisdiction. We are not going to tax it again in the United States. Simple as that. The much simpler system. You could think of it in terms of for Corporate Income, getting an exclusion for dividends paid. So foreign subsidiary would be excluded from tax because it was tax over there. If you had text to it, you are making that u. S. Operation abroad less competitive because operations are integrated internationally, that is usm operation works with the foreign operation. If you make the four and less competitive you make the u. S. Less competitive. Thats why socialist countries in europe adopted the territorial system. All of them. They know they need to compete on a global scale, on the global scene. The only way to do that is to have a competitive tax system. Those are the three key components. Other things can be done a part of tax reform dealing with the estate tax and other elements. Those are important. The core elements of tax reform, significant rate reduction, expensing, and a territorial system. Right now we talk about tax form weather salute blueprint or president trumps proposal they tend to evolve around those three pieces. Thats a big part of the reason why we have a chance of getting this done quickly. Depending on how you want to look at the calendar i argue that Tax Reform Act was the culmination of an eight year exercise. It began with a rate reduction that lloyd benson champion got through and got people thinking about how to redesign the tax system. And thats when bill roth and others ran with it and got us first 81 tax cuts and in the 86 Tax Reform Act. It was a long process. Part of the reason it was a long process was because the 86 tax reform bill was the public in a piece of legislation. They tried to solve every single tax problem they could that they had identified. This was a comprehensive in the broadest sense of the term tax reform. If we go down that road right now, we have a great chance of getting tax reform done sometime in 2019 or 2020. If you want to get it done soon, weve identified the key elements we need to keep it a focus package. What are the two or four major things we need to do to get the economy to be stronger. That brings up the next subject of tax reform. Were talking about the great things were gonna do on there could be revenue races. They will involve tradeoffs and will have to balance and think about if we want this enough to be worth this tradeoff. You cannot get a 28 or 25, 20 corporate rate and comparable passthrough rate by closing loopholes. You get two or three Percentage Points by closing loopholes. You can have to do something that can be pretty painful. That is where the tradeoffs commit. If you do it correctly the tradeoffs will still leave the overall plan very much pro growth. That will be our focus at the chamber. Therell be a lot of fights over the details of the rate reduction and how expensive it is and is are applied and designed. A lot of the details. The fundamentals will be, what does this do for the economy. Comprehensive tax refor reform s about taking us from an economy thats going too slowly to one thats going to grow to its potential. Thats what its about. As long as the tax package looks like it will do that the u. S. Chamber will support a push for it. Where can be made better will be working for that. The bottom line is we will not get caught up in the fighting over the details of the pay force. The chamber and Business Community will focus on does this work for the economy, is a going to make it stronger . In effect, when we are teleconference of tax reform only going to be advertising to the World Running our commercials on memorial day baseball games to the world, come to the United States, best year, move here. Companies are not to be looking to move overseas. This is the place they are going to want to be. Will be advertising to the world if we do comprehensive tax reform right. This is where you will want to invest. For those that dont heed the warning, look out. They will be competing against the country. Businesses and workers armed with the tax code allows them to compete effectively and we will take on the world and have a Strong Economy going forward. Thank you. [applause] it afternoon. My name is jason. I want to thank Chris Edwards and peter and the Cato Institute for having me speak with you today. Thank you for coming out. To divvied this up, im gonna do individual and ryan will talk about the u. K. Experience to tell you what has happened and lessons learned. I want to start my time with some general points on tax reform. Provide you some Guiding Principles and thinking about tax reform. In the discuss how the house blueprint and trumps proposals measure up. I will also echo a few things that jd said because its very important. First, its important to notice that the United States tax code currently severely distorts market decisions and the allocation of resources. Its impeding both potential economy growth and tax revenue. Its in need of reform. I dont think we can do this later. We have to do this now. Having discussions now whether we can hit 3 growth per year. I remember years ago discuss if we could do for, where doing three. And now weve lost that ability. Were getting lower and lower because of the tax system. Second, economists generally prefer broad tax base with lower marginal rates. As the tax rates that drive the decision of the margin of what to do next. More work, saving, investment in plant labor and intellectual property. A broader base is more efficient because you not treating some different than others. They generally prefer Broader Tax Base but it should be traded off for other that could raise the cost of capital and onto most or all the benefits of lower marginal tax rate. For example, you dont want to tradeoff lower marginal rates of increasing the depreciation schedule. We have to think about the holistic. My personal take, jd brought this up, think we should focus on revenue neutrality on the corporate side. Rather we should focus on what is the right tax policy for Economic Growth. The Corporate Income tax is bringing about 300 billion a year. It is diminishing total of our total revenue over time. Its getting smaller with total revenue because corporations are moving overseas. We know to bring competitiveness and to bring america to jobs here we need a lower rate and tax system. I know revenue is going down because attack system. We have to reform the Corporate Tax. Focusing on what the right tax policy is brings me to my third point. The provisions that just around the edges like an Anti Base Erosion will only exacerbate the existing problems we have in the current Corporate Tax