America and helps us set it aside in the Pacific Northwest as boeing and microsoft and those of us have graduate medical education and i hope the administration will treat it with the same regard as they do other initiatives that have been proposed, i think 16 billion in terms of the cuts are a bit over the top and i hope that you will have due consideration for the proposal that youre offering and to really set it aside to be the next few minutes to talk about the proposal as i had talked about. Let me talk about the tax credits and the bonds you have talked about, we have agreed very much that they have made a huge difference. And we are honestly considering new market tax credits, which is also a bipartisan administration, so we can do things together in a bipartisan basis to create real opportunity obviously the issues regarding this is always difficult in this includes proposals from past budgets were we have the savings in medicare and as always we look forward to working with congress to develop a path forward and its part of a comprehensive approach to deal with our fiscal challenges. And i think that it will deal with the entirety of the package and it is an issue that i know is a particular concern in boston and massachusetts and new york. Thank you. Sir . Thank you, mr. Chairman thank you for your time today. You are commenting on the president s budget and the agency that will collect the money to enact our next budget. It is the Internal Revenue service requesting over 3 trillion as you know. We made an argument that one of the things they needed was more resources and lets set that aside for a moment. The other thing that they need is a reputation as calling balls and strikes, and also as being a fair agency. So the resources and reputation are at the foundation for any tax collection that is going to have integrity. I thought it was interesting that in your written testimony even talk about the reputation of the Internal Revenue service and the damage that has happened in the past couple of years. Back in the summer of 2013 when you were asked on National Television, you dismissed it you were fairly dismissive and that you characterized it as a phony scandal. Now this committee made a referral to the attorney general last year and i assume you have read the referral letter and the supporting documents, having you remap and then lied about you would not characterize this as a phony scandal, would you to. Im happy to discuss the reputation of the irs on these issues. I believe that the rs is doing extraordinarily effective jobs and the difficult circumstances where they have been underfunded and not given the resources to do. And i have acknowledged from the beginning that the actions they took place have concerned me and they involve a small number of people at the irs and we took immediate action to discipline the people involved to make sure that the supervisors who are responsible are no longer there and we have i think, if you look at the way they have managed under very difficult circumstances, with less resources and we dont have people to answer the phones and we are answering this in a timely way. Dismissing this down, you know there were some bad actors and heres my question. What have you done to prevent a lois lerner 2. 0 situation. If you think about it, she was the person that put together a panel of three senior career employees it had to be the threshold before an audit could happen and she was the person that went around that very safeguard that she structured and she said in an email where she was really quite aggressive with one of her employees. This is after two times this threeperson panel said look we are not going to understand. So we are wondering why we havent done something with this. I dont think the your guys get it. Mr. Secretary, what is it that you have done other than calling this a phony scandal on National Television . What have you done to make sure that lois lerner 2. 0 is not possible . They said political employees were behind this and thats just handing the answer. One is a director. I think that if you look at the Inspector General report that came out we have made clear that the behavior was unacceptable. We have a new commission and senior officials who are very much aware of this. So we have been dismissed it. It is one thing to take action in response to what happens with a small number of people and a large agency and its another thing to condemn the agent we which is what i believe many are doing. I think that when the administration is essentially coming around us dont you understand how that is corrosive that his dismissal. There is nothing more dismissive. Thank you. The gentleman is recognized. Thank you, mr. Secretary thank you. Youve heard it already. The earned income tax credit, many of us do that. As the middle class continues to get squeezed, they see everything that has worked in the economy for worker profit and that wall street. But they havent seen their paychecks grow in the way that they would like. Thank you for speaking to those families who have been working hard. They have been more productive than American Workers in the past and they just want to see their paychecks grow. The earned income tax credit for those families is going to be for working families that have kids, who aspire to have them go to college, can i just applaud you and the president are focusing on child care. My daughters are there, but i know there are a lot of individuals back home who are wondering how theyre going to get there and they have to make sure that their kids are taking care of. And that includes those that are working. To thank you for what youre doing there in that regard. So how will the president talk about this with are we talking about thousands or millions . I dont have the exact number, but its many millions. Those millions who are striving to gain the middle class ultimately go beyond the middle class. Because you will get good childcare if the two of you were, you will have an opportunity if youre still doing it the way that we want people to do it. Just touching briefly on something in regards to security today there are about 160 million americans were paying Social Security and they have the deduction. The federal income contribution allocation that is deducted and its part of another act as well. Old age survivors and Disability Insurance. That is what this is. If you work in the retirement age, you get Social Security. He paid in. You get it even though you are disabled or your family does. If you die but you pay into Social Security, your survivors did Social Security. Its insurance to the family. I dont think anyone works and pays into this and says that i only want my money going to retirement or i know im in a risky job and i only want my money to go into disability. In fact, 11 times this congress, not this one today but over the years whatever administration we work to make sure that we always have the money allocated for the disability side of Social Security and the survivor side of Social Security or the retirement side of Social Security and none of it can be made available for those who have become disabled for their families. Eleven times over the Years Congress that the administration they have work to make sure that we always make sure that the money that is out there goes out to those americans who work and pay into this fund. And so i hope that we dont upset those 50 million americans were receiving Social Security. 11 million of them Disability Insurance under Social Security, for them to say that we cant make that available because some Technical Glitch here in washington is preventing us from moving forward to do what we have done in the past 11 times on a bipartisan basis where there is retirement Social Security, disability Social Security, or because you died and now you survivors need Social Security. I hope that we dont play that game. And finally i just want to mention that we dont leave out currency manipulation is something we attack. The last thing we need to do is send a signal that we are going to allow government this. The time of the dumb and has expired. A yield back. The job and is recognized. I want to thank the secretary for being here today. I mentioned to you earlier the number one issue in our district, and thats a lot in florida, is the idea of this functionality where we serve a lot of our constituents and that is the biggest thing that they are passionate about. So one of the things that i hope i am hopeful for in the next six months, that we can Work Together on a bipartisan basis for the importance of an American People. Im concerned were we are looking at raising taxes with more debt of another 8. 5 trillion and a budget that never balances. We are an aspirational society, anything is possible in america. I dont want to punish one group over another group. President kennedy mentioned that this when you talk to various experts they talk about if we could focus on growing the economy growing at four or 5 if we get back we can fix a lot of challenges that we got in america. Still any of these policies we are putting forward, does this grow the economy . How would you respond to matt. Congressman, on your point about working together in a bipartisan way, i could not agree more that would be a good thing for the country and we would feel this is it was working well. I saw in the 1990s when we had a divided government and you talk about the growth in the 1990s and we will make important policy decisions in a bipartisan way for much of that time. And ultimately our goal has to be growth because it becomes a question of how do we cut our way to prosperity. Theres no answer for any society. Let me ask and be clear that youre committed and the administration is committed to working with us this year to get tax and trade ideally done. That is correct. The second thing was in your comments that some people need to pay more their fair share in the taxes now for medium or Small Businesses when you add together its almost 50 . Suggesting that while tax havens had 5 of the worlds population that almost half of americans corporate earnings claim to have been heard offshore were from those five countries where in 2013 is suggested somewhere between 55 and 1,303,000,000,000 of profits surged in the United States were shifted abroad and over half of these profits were located in six tax savings isnt it true that a substantial amount of these alleged offshore earnings were actually from operations that occurred here within the United States . It is hard to comment on individual circumstances but to take it up one level the issue of legal tax avoidance has led to the erosion of the tax base and it is enormous concern worldwide. It is wrong for countries to have a race to the bottom with zero tax rates to be a magnet for these types of activities it is also wrong to have a tax system with the highest a tory rate in the world to drive businesses to look for these havens we need to reform the broken system and other countries need to change their system to raise their standards. It is hard for us for countries to do with they need to do if we dont do what we need to do. It will empower us to get other countries to do the right thing as well. If all elements are adopted and strong with any abuse provisions are included but i know that is considered onerous by some of those multinationals that need to pay the treasury than the lobbyists to have that they are that they dont have any responsibility from which they benefit so much. But it seems selling corporations to pay less than a nickel or a dime on a dollar of profits that were really earned in the United States is generous better than the nickel in 2004 all metal higher than the 0. 9 that was recommended last year but that should be the issue of looking at bill whole issue in all these corporations if they pay taxes a broad they are entitled to a credit for that. That has been hidden from taxes every where that is an example of Corporate Tax avoidance that we need to put a stop to and not reward i totally agree we need to make sure we end up with a toll charge that is set at a reasonable level. We propose 14 i know that is higher than others but i think the credit for taxes overseas brings effective rate down considerably. We propose a pullout opprobrious credit because it is so reduced so 40 percent of the taxes paid if a firm has a billion dollars of accumulated earnings paying 100 million then they would get a 40 million credit and would pay that 10 percent so even the 48th centuries the impact on most firms. Thank you for being with us today. Day believed the estate tax is double taxation . No. In april 2013 we had a thoughtful exchange on a comprehensive tax reform and at the time we went to Work Together on the individual side as well to make it simpler. We have universal agreement it is just too complicated. I certainly want to raise concerns from constituents of the estate tax. It is obviously no secret we have fundamental disagreement on the estate tax i believe it is double taxation. And i actually prefer a higher a states tax but while dealing with the estate tax is challenging it is nowhere near the administrative nightmare to remove the allowance on the steppedup basis. Sova in a family passing on to calculate capital games the face family faces multiple challenges finding that the purchase value from multiple tracks purchased at different times to determine if it is sold prior to inheritance so such a proposal is the opposite of tax reform and only because compliance more difficult. Has anyone looked at the compliance time and cost of this provision would be . I am happy to get back to with the estimates of compliance. But the design of the provision in our budget was to make it easier for taxpayers, not harder to comply. There are exemptions that are quite generous and 50 years to make the tax payments and we think for the vast majority which are subject to a stock stock databases is simpler to answer. With realestate we have a system you have to know the basis in realestate. I dont know why it is more complicated but i am happy to follow up with you. That was our in a at a the complexity. Have they studied the effects will let it have on the availability. We have looked at what it would mean as the very small fee with the total bases and it is to be complementary with reforms to make our system safer. Right now we have the system heavily weighted to leverage of exposure. It would make it more costly but not prohibitive and we think that will lead it to raise a for financial system. We also think looking at the context of overall of tax reform is a fair and good policy. Talking about the extenders and the temporary extenders two years at the time is that accurate . Often not. But i state did say good idea of a permanent basis would that be more intellectually honest to make them burgonet plan to permanently extend on a temporary basis . That is what we propose. With the tax policy in various ways for 35 for 40 years it is hard for those that have deadlines that past to make it hard for businesses to expect out to plan. That when mated a rational way. And that is the basis as part of the conversation. Mr. Secretary thank you for being here. I want to add my appreciation to you and the president for syndicating a budget that attempts to focus on the middleclass. Weld businesses across this great country are very important and do a Great Service with great products the truth is it is those consumers of the middleclass who are the job creators in this country if there is no middle class there is nobody to buy all the great things our businesses sell and manufacture. Then it all goes out the door. It is important to refocus on the middleclass. Gilmore better place is investment and infrastructure. So that means to investor Critical Infrastructure to keep everything going across the country. I have a couple of questions of with like to ask. One is on what has come to my attention which is the cash rich split off and your smile means you know, what i am talking about . A cable to light with the purchase of alibaba of. Mandate take the asset stock jewish stage for a line of business in cash to avoid any gain of appreciation. And that looks like that legal tax avoidance of the great big huge loophole. Does that new legislation to close that door is that something that can be done administratively . I cannot comment on what a specific company may or may not do much to split off on Component Parts there is an active business the beach party. But if there is a spinoff the firm would be liable for Capital Gains and i dont all of the top of my head if theres any administrative issue. That is something to look into to better understand a of how we close that loophole. Also i agree with my friend from massachusetts had to give it any thought of the status with those 2015 applications it is important to recognize it has been responsible for a lot of areas with severe economic downturn. With the Close Military bases added to positive Economic Growth. I would think the market would be a great place to go. I would have to go back to looking at it. With lasted, first out the proposal of the budget is a little disheartening. In which his theory disruptive in general but specifically we have a retroactive provision so if enacted it would go back decades it was generated through tax policy on the books it not only small Family Businesses that they employ today but this has shut businesses down. If you were very well aware of. Is there a reason for the retroactivity . For word ive understand by going back seems unfair and destructive.