The committee will come to order. Good morning and thank you all for joining us. And today our committees focus on the top priority for the American People. Progrowth tax reform that will create jobs, increase paychecks and strengthen our nations economy. America now has one of the most costly unfair and uncompetitive tax systems in the world. The need for progrowth tax reform is urgent. Todays high tax rates on americas businesses drive good paying jobs overseas. Makes it more difficult for our job creators and workers to succeed here at home. Americas burdensome International Tax discourages investment in our local communities. Scores of loopholes give favored treatment to Washington Special interests while millions of hardworking americans havent seen a real pay raise in years. Heres the good news. President trump is leading the charge for bold tax reform that will unleash the growth of jobs and paychecks nationwide. And hes calling on the house anthe senate to put forward or best ideas. Our committee is ready to answer that call. Over the past several years weve held roughly 40 subcommittee hearings on all aspects of tax reform. All of our members, no matter what side of the dice you sit on, know that tax reform is an economic imperative. Now is the time to go bold. Now is the time to live deliver real results for the American People. We welcome all Serious Solutions that will help achieve that goal. While theres no perfect way to tax, there are Proven Solutions to grow our economy and improve the lives of all americans, especially the middle class. Currently we have the highest Corporate Tax rate in the developed world at 35 . For Small Businesses the rates can be as high as 44. 6 . To increase middle class paychecks, we know these rates have to come down. Washington must take less from americas job creators so they can invest more in their businesses, workers and futures. We also know that bold policies such as bold and immediate expenses are progrowth for jobs, paychecks and our economy as a whole. According to estimates from the nonpartisan Tax Foundation, this provision alone, allowing businesses of awe size to immediately write off their Business Investment, buildings, equipment, software and technology, will grow americas economy by more than 5 over the next decade, create 1 million fulltime jobs and raise wages and paychecks significantly. Finally, the numbers show us the businesses of all sizes are eager for tax reform. Theyre ready for the opportunity to innovate, to grow and hire new workers. Recently the business roun table surveyed a group of more than 120 ceos about tax reform. 82 of them said that tax reform will prompt companies to increase Business Investment and three out of four said they will increase hiring. These responses made clear that tax reform will create jobs, create paychecks and grow or economy. But make no mistake, there are also consequences if we fail to act. 90 of the ceos said delaying tax reform will farm the u. S. Economy. Causing slower growth, hiring and slower Capital Investment. And more than that, delay would force all americans to continue to live with the tax code that works against them, not for them. Take it from roger enaand natal guess, own and operate a ro to rooter franchise, roger and his wife said as a Small Business owner im scared to death each year and how im going to have to pay into the government. Its like trying to operate your business with one hand tied behind your back. Sometimes you feel like both hands are tied behind your back. All Small Businesses know that feeling. Well hear from real live Business Leaders about what is needed to get jobs, paychecks and the economy moving again. Our witnesses are top level executives from American Companies of all size from 80 worker to 80,000 middle class workers. Their expertise will help us understand how different proposals will impact americas job creators, workers and our families. Since releasing our house blueprint for tax reform last june, weve received thousands of comments from businesses and thought leaders. Feedback we take very seriously. We look forward to the expert guidance our witnesses will provide today. We thank you all for being here to liend us your insight. Theres no perfect way to tax but there are proven way to grow our economy. With todays hearing well take a critical step towards putting their ideas into action for the American People. With that ill now recognize Ranking Member neil for his opening statement. Thank you for holding this important hearing. We all agree the tax code is broken. Its far too a complicated. Certainly in need of repair. Our current tax system isnt working for families and businesses alike and we agree that the rescissions should create jobs for working families. However, we should reject ideology and Work Together to reform the tax system for the 2 ist century. According to a recent pugh study based on fact, not opinion, the share of households fell. Aggregate Household Income has shifted middle to the upper income house holds. The Research Found that 49 of u. S. Aggregate and income went to the upper income households in 2014, up from 29 in 1970. And for middle income houses, the share of income was 43 in 2014, down from 62 in 1970. Wealth is now concentrated at the top and i assume theres broad agreement on that issue. We can disagree on how that happened but not to miss the point, greater concentrated health at the top is the reality. Income stagnation is a real challenge and one that needs to be addressed in tax reform. This is in part while working families sent a central signal to Congress Last november. They havent received a pay raise in years. Their bills are piling up and theyre concerned about on certain financial security. Put simply, too many feel forgotten and left out by their government. Tax reform should be about moving the dial to help middle class families prosper. That means focusing on job creation and helping families with day to day costs, housing costs, grocery bills and child care. It means helping working family to buy their first home, send their children to college and care for their elderly parents. And of course it means helping families save for retirement and that means protecting the tax incentives in the code for retirement savings. We should make sure that when your American Families sit down around the dinner table, they can look across at their spouse or their partner and their children and know that things are going to be all right. That is not the case in too many homes across the country today and that needs to be addressed. Thats why democrats are committing to ensuring that middle class tax reform is the true winner in any tax reform proposal. The American People dont believe that massive tax cuts for millionaires and billionaires grow the economy. The American Family knows that tax reform that provides mitd l class tax relief and ask corporations and the wealthiest americans to pay their share is what will grow our economy. We will oppose any tax plan that helps the rich get richer and does nothing for those that need our held. And all of us should oppose a tax reform that results in a greater burden on the middle class. I hope the administration will move back to the test that was sent out by secretary mnuchin for tax reform, he stated, quote, there will be no absolute tax cut for the upper class. Furth furth furthermore, it must be done in a responsible manner. Word are thrown around a lot these days but make no mistake, tax cuts do not pay for themselves and anything to the contrary is ooh nonstarter. However we consider tax policy and economy wide effects, i would argue the importance of considering the Macro Economic effects of other policy changes including acknowledgment that robust investment in our neighborhood structure would have Significant Growth effects throughout our economy. We should think about using the revenue from a repatriation to pay for infrastructure and productive investment purposes. In conclusion we have a unique opportunity to sit down and Work Together on tax reform. After all we all agree that the Current System is inefficient and underproductive. I stand ready to work in good faith tax reform with our republican allies and friends in congress and also the administration and only if we do and make the effort to assist the middle class. Thank you, mr. Chairman, for calling this hearing. We look forward to hearing from our witnesses as they join us today and we look forward to a continued and productive conversation. Thank you, mr. Neil. Todays Witness Panel includes five experts. John stephens is Senior ExecutiveVice President and ceo of at t. Zach mottl is the chief alignment officer at atlas tool works incorporated. David farr is ceo of emerson leg, Douglas Peterson is president and ceo of s p global and steven rat ner is chairman of will advisers llc. The committees have received your written statements and theyll be made part of the formal hearing record. Weve reserved five minutes to deliver your oral remarks. Mr. Stephens, well begin welcome. Thank you for being here. Thank you for members of the committee. I appreciate the opportunity to be in front of you today. Im the chief Financial Officer of at t and i sincerely appreciate this opportunity to discuss the importance of enacting comprehensive Corporate Tax reform with you today. At t is a company with a 140year heritage of research and innovation that includes 8 nobel prizes and more than 15,000 patents and pending pat tens worldwide. We employ more than 200,000 people here in the United States and over the past five years weve invested more in the u. S. Economy than any other public company, right at 135 billion. One of the biggest issues facing this country is how to unleash Economic Growth, which has under performed for the last decade. We can and should do better. A key driver of u. S. Economic growth is private Sector Investment. When investment increases, so does Economic Activity, hiring and wages. And when more people are working and making more money, they have more money to spend. However, private Sector Investment in the u. S. Measured as a percentage of gdp is at its lowest level in generations. It is not surprising that the u. S. Economy has been marred in sluggish growth for nearly a decade. If were serious about robust growth, then we must get serious about jump starting private Sector Investment. And the best way to do that is to fix our broken last century Corporate Tax code. Achieving competitive Corporate Tax rates is likely the most effective catalyst available for public policymakers to increase Capital Investment, create jobs and increase wages. Lowering the Corporate Tax rate will also make the United States more competitive globally. You can respond to Foreign Countries that are implemented modern tax policies to aggressively compete for our jobs and our investment. We have a once in a Generation Opportunity to comprehensively update the code for the 21st century and put the u. S. Back on top. First, we need to reduce the Corporate Tax rate. This is the quickest most straightforward way to jump start investment in our country. It will bring your taxes in line with other developed countries by reducing the rate, simple economics will drive companies to invest more in america rather than elsewhere. Second, policymakers should allow for the full expensing of Capital Investments. This is an effective way to quickly stimulate the economy. The Tax Foundation estimates this policy change would create the equivalent of 1 million fulltime jobs. 100 immediate expensing removes the negative effects of taxation on investment. And we know it works. Appreciation, provision with bipartisan support from this committee allow accelerated depreciation that positive tifftiff ly affected our decision in those years. Plain and simple, we had at t invested more under bonus depreciation than we would have otherwise done. The ability to fully expense investment would do even more to incentivize at t and companies throughout the United States to accelerate investment. And more investment directly means more jobs. We recognize that any comprehensive Corporate Tax reform will involve tradeoffs. Thats clear. But the key word is comprehensive. Any plan being considered should be judged in totality, not just by a single provision. For example, one area i know the committee has looked at is eliminating interest expense deductibility. Viewed in isolation that provision would be extremely problematic for me. But i understand that it may be necessary as part of a broader solution. If the Committee Plans to eliminate interest deductibility, i would encourage you to utilize reasonable transition rules that do not penalize past choices Companies Like ours have made under a vastly different tax system. This would not only give companies appropriate time to adjust their Capital Structures to the new system, but also allow them to immediately increase their investment in response to a lower overall tax rate. Mr. Stephens, thank you for your testimony. Five minutes always goes faster than it appears on paper. Well return during the question period for you. Thank you for being here. Mr. M. Ottl, youre up next. Thank you for being a witness. Im the chief alignment officer for atlas tool works, a family owned Small Manufacturer in illinois. Im here today representing not only my own company but also the 750 manufacturers who are members of the technology and Manufacturing Association tma in illinois. These manufacturers, many in the district are proud to provide goodpaying jobs and careers to 30,000 people in the schicago area. Most are like mine, survived nafta, weathered the china tide and managed through the rescission. Through innovation, modernization and cost control we produce more product than we did 20 years ago. And were poised to take advantage of the reshoring. Were successfully competing against the best the world has to offer and were proud to help manufacture the wealth of america. However, in order to continue our success and grow while creating more goodpaying jobs for americans. We need your help. Im here today to testify in support of your work to comprehensively reform the u. S. Tax code. I believe this is the best and fastest way to grow the u. S. Economy and create more jobs in america. I would like to highlight two things, the opportunity for trade competitiveness through tax reform and the unique pain felt by Small Manufacturers due to unfair treatment under the current code. Today the most difficulty barrier is the self inflicted tax code. Much of it written decades ago. I understand that many are going to argue for reducing the current rates. And this might be helpful in the short run but i believe our economy and citizens need and deserve permanent comprehensive reform that improves americas trade competitiveness. The manufacturers i represent are so pleased that this committee placed the border adjustability. In the form of good and services taxes. These average 17 globally and act as tariff and subsidy replaces. Most have rates between 17 and 22 and every american exporter into the eu has to pay those rates to sell their product there. Mexico raised the mexican vat to 15 , they built a new tax wall for american products. India is in the process of adopting a goods and services tax. Further more, any country that wants. I believe that tax policy and trade policy go hand in hands and tax policy has far greater effect on trade than any trade agreement could. Good tax policy, one that encourages domestic imports is good trade policy. Its unilateral. We dont need to negotiate with anyone. We dont need to ask permission from an International Body and we dont need to risk sparking a trade war. Every one of our trading partners have a vat system. We need to change the tax laws and immediately american producers regain their edge and the working men and women can get a tax break. I want to get back to a world where american producers compete and win on price, quality and service. The second point i want to highlight today is the importance of simplifying the tax code and reducing the overall rate. My company is like many manufacturers businesses in america. Were family owned, own our own real estate and we dont have a significant staff of tax experts. We work hard to be competitive, create jobs and pay our fair share. Consider th