Midway. The untold story of the battle of midway. And timothy orr coauthorer of never call me a hero. A dive bomber pilot remembers the battle of midway. Watch the battle of midways 75th anniversary live on friday beginning at 9 30 a. M. Eastern on American History tv on cspan 3. The house way and Means Committee recently held a hearing to changes to the tax code that could expand the u. S. Economy and create jobs. Executives with Manufacturing Companies were at the hearing. Which was chaired by kevin brady. The committee will come to order. Good morning, and thank you all for joining us. And today our committees focused on a top priority for the American People. Pro growth tax reform that will create jobs, increase paychecks, and strengthen our nations economy. America has one of the most costly unfair and uncompetitive tax systems in the world. The need for pro growth tax reform is urgent. Todays high tax rates on american businesses drive good paying jobs overseas and makes difficult for our job creators and workers to succeed here at home. Americas burdensome International Tax system destroys u. S. Competitiveness and discourages investment in our local communities. Scores of loopholes, give favored treatment to Washington Special interests, while millions of hard working 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 and the senate to put forward our best ideas. Our committee is ready to answer that call. Over the past several years, weve held roughly 40 full committee and subcommittee hearings on all aspects of tax reform. All of our members no matter what side of the dais you sit on know tax reform is imperative. Now is the time to go bold and 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. So lets take a look at the numbers. Currently we have the highest Corporate Tax rate in the developed world, at 35 . For Small Businesses, its worse. The rates can be as high as 44. 6 . To unleash job creation, increase middle class paychecks, we know these rates have to come down. Washington must take less from american job creators so they can invest more in their businesses, their workers, and their futures. In addition to lowering rates we also know that bold policies such as full and immediate expensing are incredibly pro growth for jobs, paychecks and our economy as a whole. According to estimates from the nonpartisan Tax Foundation, this provision alone, allowing businesses of all sizes to immediately write off their velts, buildings, equipment, so software and technology will grow 5 over the next decade. And raise wages significantly. Finally, the numbers shows businesses of all sizes are eager for tax reform. Theyre ready for the opportunity to innovate, to grow and to hire new workers. Recently the business round table surveyed a group of more than 120 ceos about tax reforms. 82 said tax reform will prompt companies to increase Business Investment and three out of four said theyll increase hiring. These responses made clear that tax reform will create jobs, create paychecks, and growth our economy. Make no mistake, there are also consequences if we fail to act. 90 of the ceos said that delaying tax reform will harm the u. S. Economy. Causing slower growth, slower hiring and slower Capital Investments. And more than that delay would force all americans, continuing to live with the tax code that works against them, not for them, like constituents of mine who operate a plumbing franchise in montgomery, county texas. Roger who is a friend, and his wife who are deeply involved in the community said, as a Small Business owner im scared to death each year and how im going to have to pay into the government. That uncertainty is devastating, he says. Kind of 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. And todays hearing, well hear from more Business Leaders, real live Business Leaders about exactly what is needed to get jobs, paycheck and the economy moving again. Our witnesses are top level executives from American Companies of all size. From 80 workers 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 lend us your insight. Again, there is no perfect way to tax. But there are proven ways to grow our economy. With todays hearing, we will take a critical step toward putting these ideas into action for the American People. With that ill now recognize Ranking Member neal for his opening statements. Mr. Neal . Thank you, mr. Chairman for holding this important hearing and highlighting the need for tax reform. We all agree the tax code is broken. Far too complicated and certainly in need of repair. Our current tax system isnt working for families and businesses alike and we all agree that any revisions to the code should promote Economic Growth and create jobs for working families. However, we should reject idealogy and Work Together to reform our tax system for the 21st century. According to a recent pugh study, based on fact, not opinion, the share of adults living in middle income households in the United States fell from 62 to 59 from 1991 to 2010. Aggregate Household Income has shifted middle to the upper income households. The Research Found that 49 of u. S. Aggregate income went to the upper income households in 2014, up from 29 in 1970. And for middle income households 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 misthe point, greater concentrated wealth at the top is a reality as we proceed to this discussion. Income tagination is a real challenge and one that needs to be addressed in tax reform. This is in part why working families sent a strong signal to Congress Last november. They havent received a pay raise in years. Their bills are piling up, and theyre concerned about uncertain 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 daytoday costs, like housing costs, grocery bills, and childcare. It also means helping working families to buy their first home, send their children to college and healthcare for their elderly parents. And of course, it also means helping families save for retirement and that means protecting the tax incentives in the code for Retirement Savings. Our focus should be on making sure that when our American Families sit down around the dinner table they can look across at their spouse or 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. 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 committed to ensuring middle class tax reform is the true winner in any income tax. Americans know tax reform that provides middle class tax relief and askS Corporations and 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 who really need our help. All of us should oppose any tax reform that results in a greater burden on the middle class. The trump tax plan currently fails to meet this standard and i hope the administration will move back to the test set out by secretary mnuchin for tax return which he stated, quote, there will be no absolute tax cut for the upper class. Furthermo furthermore, tax reform should be done in responsible manner, scoring and supplyside economics are thrown around a lot these days. But make no mistake, tax cuts do not pay for themselves and anything to the contrary is a nonstarter. As we consider tax policy and economywide effects i would argue importance of considering macroeconomic effects of other policy changes including acknowledgement that robust investment in nations infrastructure would have Significant Growth effects throughout our economy. I also think we should think about using the revenue from deemed repatriation, acts to pay for infrastructure and other 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 on tax reform with 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 our witnesses as they join today and look forward to a continued and productive conversation. Thank you, mr. Neal. Todays Witness Panel includes five experts. John stephens is Senior Executive and ceo, chief alignment officer at atlas tool works incorporated. David farr, ceo. David emerson, president and ceo. Stephen rattner chairman of will advisers llc. The economy received your written statements and they will all be made part of the formal hearing record. Five minutes for your oral remarks. Mr. Stephens well begin with you. Welcome and thank you for being here. Thank you, chairman brady, Ranking Member neal, members of the committee. I appreciate the opportunity to be with you today. John stephens, chief Financial Officer of at t. I since early appreciate this opportunity to discuss Corporate Tax reform today. At t is a company with 140 year heritage, of research and innovation that includes eight nobel prizes and more than 15,000 patents and pending patents worldwide. We ploy more than 200,000 people here in the United States. Over the past five years weve invested more in the u. S. Economy than any other Public Company by adding 135 billion. One of the biggest issues facing this country is how to unleash Economic Growth which has underperformed for the last decade. We can and should do better. The key driver of u. S. Economic growth is private Sector Investment. When investment increases, so does economic activity, hiring, and wages. 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 mired in sluggish growth for nearly a decade. If were serious about robust growth, we must get serious about jumpstarting private Sector Investment. 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. We can respond to Foreign Companies that implement modern policies that aggressively compete for our jobs and our investment. We have a once in a Generation Opportunity to comprehensively update the code of the 2 1st century and put the u. S. Back on top. First we need to reduce the top Corporate Tax rate. This the quickest, most straightforward way to jumpstart investment in our country. It will bring our 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 for the full expensing of Capital Investments. This is an effective way to quickly stimulate the economy. The Tax Foundation estimates that this policy change would create the equivalent of 1 million fulltime jobs. 100 immediate expensing removes the negative effects of taxation on investment. We know it works. Appreciation, participation from bipartisan support from this committee provide acceleration that positively affected our Investment Decisions in those yea years. Plain and simple, we at at t invested more under this than we would have otherwise done. The ability to fully expense investment would do even more to inve incentivize at t and companies throughout the United States with more investment. More investment maens more jobs. We recognize 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. 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 countries appropriate time to just 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. So we will return during the questioning period for you. Again, thank you for being here. Youre next up. Thank you again for being a witness. Mr. Chairman and members of the committee. Im chief officer for atlas tool works, fourth generation family manufacturer in alliance, illinois. Im here representing not only my own company but 750 manufacturers who are members of the technology and manufacturing association, tma, in illinois. These manufacturers, many in congressman roskams district. Most like mine small to mediumsized supply companies that survived nafta, managed the tide through innovation, modernization and cost control we now produce more product than we did 20 years ago. Plus were poised to take advantage of the well earned opportunity for reshoring. We are successfully competing against the best the world has to offer and proud to manufacturer and help america. In order, to continue our success and grow while creating good paying 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. Lied like to highlight two things opportunity through tax reform and unique pain felt by small manufacturers due to complexity under the current code. Today the most difficult barrier to growth american manufacturers face is our selfinflicted tax code. Much of it written decades ago fails to account for todays internationally competitive environment. I understand many will argue for reducing the current rates. This might be helpful in the short run but i believe our economy and our citizens need and deserve permanent comprehensive reform that improves americas trade competitiveness. Thats why the manufacturers i represent are pleased border responsibility is at the center of trade efforts. All use border adjustable consumption taxes. That in the form of value added taxes, vat or good and services taxes, gst. These average 17 global and act as tariff and subsidy replacement. Most european nations have vat rates between 17 and 22 and every american exporter into the eu has to pay those rates to sell their products there. When mexico agreed to nafta, they abolished most of their tariffs but raised mexican vat to 15 , built a new tax wall for american products. India now in the process of adopting