[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





 
        MEMBER PROPOSALS FOR IMPROVEMENTS TO THE U.S. TAX SYSTEM

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON TAX POLICY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 12, 2016

                               __________

                          Serial No. 114-TP07

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
         
         
         
         
         
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                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
DEVIN NUNES, California              CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio              JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana  RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois            XAVIER BECERRA, California
TOM PRICE, Georgia                   LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida               MIKE THOMPSON, California
ADRIAN SMITH, Nebraska               JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas                 EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota              RON KIND, Wisconsin
KENNY MARCHANT, Texas                BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee               JOSEPH CROWLEY, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TODD YOUNG, Indiana                  LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
TOM RICE, South Carolina

                     David Stewart, Staff Director

         Janice Mays, Minority Chief Counsel and Staff Director

                                 ______

                       SUBCOMMITTEE ON TAX POLICY

             CHARLES W. BOUSTANY, JR., Louisiana, Chairman

DAVID G. REICHERT, Washington        RICHARD E. NEAL, Massachusetts
PATRICK J. TIBERI, Ohio              JOHN B. LARSON, Connecticut
TOM REED, New York                   LINDA SANCHEZ, California
TODD YOUNG, Indiana                  MIKE THOMPSON, California
MIKE KELLY, Pennsylvania             LLOYD DOGGETT, Texas
JIM RENACCI, Ohio
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of May 12, 2016 announcing the hearing..................     2

                               WITNESSES

Panel One

The Honorable Danny K. Davis, Member of Congress, Washington D.C.    24
The Honorable Lynn Jenkins, Member of Congress, Washington D.C...    23
The Honorable Sam Johnson, Member of Congress, Washington D.C....    19
The Honorable Peter J. Roskam, Member of Congress, Washington 
  D.C............................................................    22

Panel Two

The Honorable Vern Buchanan, Member of Congress, Washington D.C..    25
The Honorable Tom Rice, Member of Congress, Washington D.C.......    26
The Honorable David Rouzer, Member of Congress, Washington D.C...    27

Panel Three

The Honorable Robert J. Dold, Member of Congress, Washington D.C.    29
The Honorable Anna G. Eshoo, Member of Congress, Washington D.C..    32
The Honorable Patrick Meehan, Member of Congress, Washington D.C.    27
The Honorable Ted Poe, Member of Congress, Washington D.C........    31

Panel Four

The Honorable Ken Buck, Member of Congress, Washington D.C.......    33
The Honorable Matt Cartwright, Member of Congress, Washington 
  D.C............................................................    36
The Honorable Andy Harris, Member of Congress, Washington D.C....    34

Panel Five

The Honorable Rob Bishop, Member of Congress, Washington D.C.....    39
The Honorable Rodney Davis, Member of Congress, Washington D.C...    37
The Honorable Keith Ellison, Member of Congress, Washington D.C..    40
The Honorable Scott H. Peters, Member of Congress, Washington 
  D.C............................................................    38
The Honorable Dana Rohrabacher, Member of Congress, Washington 
  D.C............................................................    41

Panel Six

The Honorable Dave Brat, Member of Congress, Washington D.C......    42
The Honorable Peter A. DeFazio, Member of Congress, Washington 
  D.C............................................................    54
The Honorable Scott DesJarlais, Member of Congress, Washington 
  D.C............................................................    47
The Honorable John Fleming, Member of Congress, Washington D.C...    49
The Honorable Randy Hultgren, Member of Congress, Washington D.C.    47

Panel Seven

The Honorable Andy Barr, Member of Congress, Washington D.C......    58
The Honorable Kevin Cramer, Member of Congress, Washington D.C...    57
The Honorable Matt Salmon, Member of Congress, Washington D.C....    30
The Honorable Steve Scalise, Member of Congress, Washington D.C..    56
The Honorable Terri A. Sewell, Member of Congress, Washington 
  D.C............................................................    55

Panel Eight

The Honorable Mike Coffman, Member of Congress, Washington D.C...    60
The Honorable Tom Emmer, Member of Congress, Washington D.C......    59
The Honorable Janice D. Schakowsky, Member of Congress, 
  Washington D.C.................................................    62

Panel Nine

The Honorable Erik Paulsen, Member of Congress, Washington D.C...    63

                       SUBMISSIONS FOR THE RECORD

Coalition to Extend and Improve the 179D Tax Deduction for Energy 
  Efficient Buildings............................................    66
FAIRtax--Benefits of HR-25.......................................    70
ACRO, Association of Clinical Research Organizations.............    72
AimBank..........................................................    74
Alliance for Industrial Efficiency...............................    76
American Bankers Association.....................................    81
ATCWG, Adoption Tax Credit Working Group.........................    84
Alcoholic Beverage Industry......................................    91
ECG Engineering, PC..............................................    93
EcoTech Solutions................................................    96
AGA, American Gas Association, EEI, Edison Electric Institute, 
  NEI, Nuclear Energy Institute..................................    98
Encentive Energy.................................................   100
Energy Efficiency Pros LLC.......................................   103
Energy Harness Corporation.......................................   105
ESP, Energy Solutions Professionals, LLC.........................   107
EtaGen, Inc......................................................   109
Geothermal Energy Association....................................   112
Havtech Inc......................................................   115
Historic Tax Credit Coalition....................................   117
Small Businesses Healthcare......................................   123
International Association of Fire Chiefs.........................   126
IBAT, Independent Bankers Association of Texas...................   130
LabCorp, Laboratory Corporation of America.......................   132
Municipal Bonds for America......................................   134
NDC, National Development Council................................   137
Prosperity Through Preservation, Historic Tax Credit Coalition, 
  National Trust for Historic Preservation.......................   147
NVFC, National Volunteer Fire Council............................   155
NRDC, Natural Resources Defense Council..........................   158
NGVAmerica.......................................................   162
NSWA, National Stripper Well Association.........................   172
OSRAM Sylvania...................................................   177
Pennsylvania Bio.................................................   179
PEW Clean Energy Initiative......................................   181
PPD, Pharmaceutical Product Development..........................   185
R&D Credit Coalition.............................................   187
Ralph Abraham, M.D., Member of Congress..........................   193
Rob Bishop, Member of Congress...................................   195
Charles W. Boustany Jr., M.D., Member of Congress
  Statement on H.R. 4832.........................................   197
  Statement on H.R. 3846.........................................   199
  Statement on H.R. 928..........................................   201
  Statement on H.R. 1218.........................................   203
Dave Brat, Member of Congress....................................   204
Ken Buck, Member of Congress.....................................   210
Matt Cartwright, Member of Congress..............................   212
David N. Cicilline, Member of Congress...........................   213
Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation..   216
Mike Coffman, Member of Congress.................................   221
K. Michael Conaway, Member of Congress...........................   223
Joseph Crowley, Member of Congress...............................   224
Mike Doyle, Member of Congress...................................   230
Anna G. Eshoo, Member of Congress................................   232
John Fleming, Member of Congress.................................   233
AMAC, Association of Mature American Citizens....................   234
Americans For Tax Reform.........................................   235
NTU, National Taxpayers Union....................................   236
60 Plus Association..............................................   237
Bill Flores, Member of Congress..................................   238
Louie Gohmert, Member of Congress................................   240
French Hill, Member of Congress..................................   243
Randy Hultgren, Member of Congress...............................   246
Lynn Jenkins, Member of Congress.................................   275
Kenny E. Marchant, Member of Congress............................   276
Bill Pascrell, Jr., Member of Congress...........................   279
Erik Paulsen, Member of Congress.................................   282
Ted Poe, Member of Congress
  Statement on H.R. 2883.........................................   283
  Statement on H.R. 5185.........................................   285
Tom Price, Member of Congress....................................   286
Dave Reichert, Member of Congress................................   289
EEI, Edison Electric Institute, NEI, Nuclear Energy Institute, 
  NRECA, National Rural Electric Cooperative Association, APPA, 
  American Public Power Association & LPPC, Large Public Power 
  Council........................................................   290
Pete Domenici, U.S. Senator, Retired.............................   293
Tom Rice, Member of Congress.....................................   295
Mac Thornberry, Member of Congress...............................   300
Pat Tiberi, Member of Congress...................................   303
Michael R. Turner, Member of Congress
  Statement on the Brownfields Redevelopment Act of 2016.........   304
  Statement on H.R. 518, H.R. 519, H.R. 520......................   305
  Statement on H.R. 3846.........................................   307
Jared Huffman and Dana Rohrabacher, Members of Congress..........   309
John P. Capazzi, AIA.............................................   311
Subchapter S Bank Association....................................   313
SCAN, Save the Children Action Network...........................   317
Siluria Technologies.............................................   321
Tax Avoidance Research Center....................................   328
Tax Centric Lighting.............................................   330


        MEMBER PROPOSALS FOR IMPROVEMENTS TO THE U.S. TAX SYSTEM

                              ----------                              


                         THURSDAY, MAY 12, 2016

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                Subcommittee on Tax Policy,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:05 a.m., in 
Room 1100, Longworth House Office Building, the Honorable 
Charles W. Boustany, Jr. [Chairman of the Subcommittee] 
presiding.
    [The advisory announcing the hearing follows:]
    
    
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    Chairman BOUSTANY. The Subcommittee will come to order. And 
welcome to the Ways and Means Subcommittee on Tax Policy Member 
Day Hearing on Tax Legislation.
    Before I go forward with my statement, I want to, without 
objection, recognize our Ways and Means Committee chairman, 
Chairman Kevin Brady, for a statement.
    Mr. Chairman, thank you for joining us on this important 
hearing.
    Chairman BRADY. Well, thank you, Chairman Boustany, for 
holding this hearing, and for leadership of the newly-renamed 
and muscled-up Tax Policy Subcommittee.
    I am glad to welcome so many of you here today to share 
your ideas and participate in this process. After all, it is 
been years since we have been able to hold a Member Day hearing 
on Tax Code improvements like this one.
    As we all know too well, the annual chaotic process of 
extending temporary tax provisions was time consuming and, when 
extended retroactively, made no sense. Fortunately, with the 
permanent tax relief in the PATH Act, we were able to put to 
rest this decades-old problem. Now we are returning to a 
regular order process. We are deliberately and thoughtfully 
considering improvements to the Tax Code that will grow our 
economy and make our Tax Code fairer, flatter, and simpler.
    Our hearing today is an important step, Chairman, in 
fulfilling our commitment to creating opportunities for 
legislators to be legislators when it comes to tax ideas. 
Today's hearing demonstrates we are serious about considering 
tax legislation through an open and transparent process. We are 
committed to introducing bills, considering them, and moving 
them to the floor. The fact that over 30 Members or more are 
sharing their ideas today is a testament to the new process, 
and to our return after so many years to a regular legislative 
order.
    And our newly renamed and enlarged Tax Policy Subcommittee 
is a sign of our seriousness about good process for developing 
and enacting good tax policy. I look forward to listening to 
your bold, fresh ideas about the best way to fix America's 
broken Tax Code.
    Again, I want to thank you, Chairman Boustany, for your 
strong and your thoughtful leadership of the Subcommittee. I 
yield back.
    Chairman BOUSTANY. Thank you, Mr. Chairman. We appreciate 
you being here. And thank you for your leadership of the full 
Committee, and your commitment to getting tax reform done, and 
also to moving forward with these Member bills today, as we 
look at how we can improve our current Tax Code. So we thank 
you for your leadership.
    Today the Subcommittee will hold a hearing on Member 
proposals for improvements to U.S. tax system. We are honored 
to have a number of our esteemed colleagues join us today to 
present legislation that they have all invested a great deal of 
time and energy to develop. As Chairman Brady mentioned, it is 
encouraging that so many of our fellow Members of the House of 
Representatives have come here today to make a record of their 
priorities for making improvements to our current Tax Code.
    Members of the Subcommittee, followed by our full slate of 
Member witness panels, will have three minutes to discuss their 
current tax legislation priorities. Because of the numerous 
Member interest on this, we are going to stick very strictly to 
the three-minute rule on this. Keeping in mind that a large 
number of Members are testifying, I want the Members to be 
efficient with the testimony, and really focus on why these 
bills are important. What is the impact of these bills, and why 
should we be duly considering these bills?
    I would also like to remind Members of their ability to 
submit written testimony in support of their legislation. Thank 
you again to all the witnesses for taking time from busy 
schedules to be with us today. And we look forward to hearing 
from Committee members and other Member witnesses about these 
various proposals.
    Before I recognize my fellow Subcommittee members, I would 
like to take a moment to highlight a few pieces of legislation 
that I see as addressing critical areas of need in our current 
tax system.
    I would like to begin by talking about H.R. 4297, a bill I 
introduced that provides much-needed protections for U.S. 
companies adversely affected by the country-by-country 
reporting measures that were instigated by the OECD's BEPS 
Project. During our Tax Policy Subcommittee hearing on the BEPS 
Project in December, our witnesses impressed upon us the need 
for companies to be able to file country-by-country reports 
with the IRS for this year to ensure the confidentiality of the 
information that ultimately will be reported to foreign 
countries. They also shed light on the significant competitive 
risk to American companies of being required to provide master 
file reporting, as contemplated by the BEPS project.
    We have expressed these concerns to Robert Stack, Deputy 
Assistant Secretary for International Tax Affairs, stressing 
the need for Treasury to act to protect American company 
interests in the confidentiality of their tax return 
information. I welcome the comments from Treasury in recent 
weeks indicating that they recognize the need for the IRS to 
accept country-by-country reports for 2016. We will continue to 
monitor developments in this area to ensure American companies 
are protected.
    H.R. 4297 also provides a statutory framework to protect 
American companies against countries that may abuse the master 
file reporting requirements, and fail to safeguard the 
confidentiality of taxpayer information. And it requires an 
annual report to Congress on reported abuses of these 
disclosures by foreign countries, to ensure that such proper--
improper treatment of American job creators is taken seriously.
    Another important piece of legislation before this 
Committee this Congress is H.R. 2911, ``Small Business 
Healthcare Relief Act,'' which I introduced last year, along 
with my friend Mr. Thompson of California. H.R. 2911 is 
bipartisan legislation that will restore flexibility, choice, 
and certainty to small employers and their workers who use 
Health Reimbursement Arrangements. This legislation is 
necessary in the wake of confusing Treasury guidance that has 
subjected many employers to significant tax penalties that may 
not exist today.
    I would also like to briefly mention H.R. 3161, a bill I 
introduced last year that would permanently reform the tax 
treatment of timber.
    And finally, I want to mention a bill by my good friend, 
Mr. Kelly of Pennsylvania. His bill, H.R. 3846, the ``Historic 
Tax Credit Improvement Act,'' which I have co-sponsored would 
reform and enhance the rehabilitation of the historic tax 
credit. I applaud him for taking the lead on this issue.
    And now I would like to yield to the distinguished Ranking 
Member, Mr. Neal, for the purposes of an opening statement.
    Mr. NEAL. Thank you, Mr. Chairman, and thanks for calling 
this Member day hearing on tax reform proposals. This is the 
third Member day meeting that we have had on this precise 
topic. Today we will continue to hear from our colleagues on 
their tax proposals. The Ways and Means Committee has an 
important job to do and broad responsibilities.
    We must take our jurisdictional reach seriously. And as you 
know, historically our Committee has had jurisdiction over 
approximately a quarter of all legislation introduced in the 
House of Representatives. Of the bills referred to the Ways and 
Means Committee, more than half are tax bills.
    We remain the gatekeepers of this House. As such, we must 
make sure that we scrutinize every piece of legislation put 
forward to ensure that only the best ideas move forward. Today 
it is an excellent opportunity to hear from our colleagues and 
to start the process of making sure that only the best ideas 
rise to the top.
    Mr. Chairman, in your introductory remarks, you said that 
``Members have invested a great deal of time and energy to 
develop legislation that we can use to make our current Tax 
Code work better for all Americans.'' I certainly am in 
complete agreement with you. Many Members of this Committee 
have thoughtful pieces of legislation that have languished in 
legislative purgatory due to Committee inaction. It is time not 
only to have these thoughtful pieces of legislation granted a 
hearing, but to actually act upon them.
    I have a wide and well-known interest in a series of 
credits that have been proposed before the Committee. I, along 
with Speaker Ryan, in fact, have talked about the whole notion 
of what we might do to strengthen the earned income tax credit 
for childless workers. Everybody knows and has great regard for 
the EITC, but we also know that it reduces poverty. And for 
childless workers, they receive virtually no earned income tax 
credit. According to research, Federal income tax and payroll 
taxes pushed 1.2 million childless workers into poverty, and 
another 5.8 million deeper into poverty. There is consensus 
about strengthening the earned income tax credit, and I would 
hope that we would act upon it.
    I also have a broad belief in the whole notion of what we 
might do to give the economy a shot in the arm, investing in 
our community so that we can rebuild and grow economies at the 
same time. It is estimated that there were seven to nine 
million people who are working part-time that are desirous of 
full-time work. The new markets tax credit, the low-income 
housing tax credit, the historic tax credit, and an issue that 
I worked with Alan Krueger on a long time ago that was highly 
successful but left out of tax packages subsequently was the 
Build America Bonds campaign.
    We all know the work that these credits can do in our 
community. New markets helped rebuild and build, in fact, a 
Holyoke Health Center. Holyoke is a stressed city in my 
constituency in desperate need of health care. This new center 
will go a long way in the fight to lower the high mortality 
rate. Build America Bonds is a true success story. The program 
was over-subscribed and every Member of Congress during that 
period of time that had an airport expansion, you could almost 
conclude that it was due to the Build America Bonds campaign.
    Our infrastructure is crumbling, and we need to do 
something about it, and what we did last year is but a step in 
the right direction, and demonstrates how difficult it is in 
the modern Congress to accomplish anything that at one time we 
all broadly agreed upon.
    Finally, retirement security. Ten thousand Baby Boomers are 
retiring every single day. Half the people that get up and go 
to work in the morning every day in America are not in a 
qualified retirement plan. My proposals on the auto IRA and the 
saver's credit address this very issue. Chairman Tiberi was 
formerly the chairman of this Subcommittee. He pointed out to 
me, along with the former chairman, Dave Camp, that they were 
down to one issue and they were still trying to work that 
through.
    Social Security is a mandated savings program. I don't 
understand why we can't embrace the whole notion of mandated 
savings. The statistical data is very clear on that initiative, 
and the American people need a boost in savings and, in 
particular, retirement savings. So, the impending retirement 
crisis is in front of us. It is leveraged in some part by the 
Tax Code, and I hope that we can move forward on those 
proposals.
    The legislation that we have talked about in large measure, 
these are not controversial. And there was a time, again, when 
this Committee was able to move those sorts of initiatives 
forward. We need to build some good will. I think Kevin Brady 
has done a good job of hearing what we have to say on this side 
of the aisle. But removing many of the barriers to greater 
savings is something that we all ought to see as a priority, 
and I hope that we will continue to embrace some initiatives 
that might grow the middle class. So thank you, Mr. Chairman.
    Chairman BOUSTANY. I thank the gentleman.
    Mr. Tiberi.
    Mr. TIBERI. Thank you, Mr. Chairman. I am going to touch on 
three bills and submit written testimony on some others.
    H.R. 4770 would clarify rules relating to the Section 199 
deduction for domestic manufacturing. For years the IRS has not 
been clear about the manner in which they implement the 
domestic manufacturing deduction for companies that use 
contract manufacturing arrangements. Last summer the IRS issued 
regulations that further punished these companies by only 
allowing the contract manufacturer to take the deduction and 
not the principal company who often owns all factors of 
production. The bill I introduced with Mr. Neal would allow 
either the principal company or the contract manufacturer to 
take the deduction based on each party's substantial 
contribution to the manufacturing process.
    The goal of Congress passing the law to implement the 
Section 199 deduction in 2004 was to protect U.S. jobs and 
promote American manufacturing. Instead, the IRS regulations 
will do the opposite, and deter U.S. contract manufacturing. 
This bill will restore the job-creating incentive for companies 
to manufacture their products here in America.
    The second bill, H.R. 3608, would--right or wrong, has 
impacted over 750 businesses in the U.S., including my home 
state of Ohio for more than four years. The bipartisan bill 
simply clarifies that the tax on commercial air transportation, 
also called the ticket tax, does not apply to aircraft 
management services for general aviation flights that do not 
use tickets. The IRS can implement the tax laws, but it can't 
impose a new tax.
    However, in 2012 the IRS's chief counsel released a 
memorandum stating that services provided in support of 
aviation are taxable as if the services are transportation 
itself. The IRS said that the ticket tax applies to businesses 
that supply pilots, mechanics, maintenance, and scheduling in 
navigation, and the other services needed for general aviation 
flights, but don't supply the aircraft along with those 
services.
    For decades it has been clear, and Congress has 
specifically noted that commercial aviation is required to pay 
the ticket tax, while general aviation pays the fuel tax. 
However, the chief counsel of the IRS ignored this and seeks to 
impose a tax where Congress expressly chose not to apply one. 
My bill will restore congressional intent and right the wrong.
    H.R. 5187, the R&D ASC Tax Credit, is a bill that I 
introduced with Congressman Larson, that will go a long way to 
encourage additional investment here, in the U.S. We introduced 
the Research and Experimentation Advances Competitiveness at 
Home, or REACH Act, just this week. The bill builds on the work 
done in the PATH Act at the end of the year that makes the R&D 
tax credit permanent, by increasing the R&D alternative 
simplify credit from 14 to 20 percent [sic]. As the rest of the 
world keeps improving their Tax Code to entice companies to 
locate there, this will do more to encourage companies to 
locate their R&D here in the U.S., and incentivize businesses 
to invest in the U.S., creating jobs and spurring innovation 
here at home.
    Thank you, Mr. Chairman. I yield back my three seconds.
    [Laughter.]
    Chairman BOUSTANY. I thank the gentleman. He is quite 
amazing.
    Mr. Thompson.
    Mr. THOMPSON. Thank you, Mr. Chairman, and thank you and 
Ranking Member Neal for putting on today's hearing. I think it 
is important that our Committee have a forum to hear proposals 
from Members both on the Committee and off the committee.
    I want to use my time to discuss a couple of important 
issues, and I will submit written testimony on a couple of 
others.
    As part of what--the omnibus deal last year we made 
bipartisan progress when we extended the tax credits for wind 
and solar energy for five years. There were strong feelings on 
both sides, but we came together and we made a compromise, and 
we need to build on that foundation.
    I introduced a bill to extend the renewable investment tax 
credit for five years. Representative Reed and I just 
introduced another bill to extend remaining parts of the ITC 
and hope that we can all come together again to get this done 
by the end of the year. This extension would help bring 
renewable energy to the point where it is cost-competitive with 
other sources of energy.
    Another bipartisan bill that would level the playing field 
for renewable energy is the Master Limited Partnership Parity 
Act with cosponsors from both sides of the aisle in both the 
House and the Senate. MPLs are now available to fossil fuel 
projects, but not to renewable energy. This bill would bring 
needed parity.
    The New Markets Tax Credit is also a bipartisan effort to 
stimulate investment and economic growth in low-income urban 
neighborhoods and rural communities. The new market tax credit 
investment totaled over $5.7 billion in California, alone. I 
saw $11.5 million in my district, and I know for a fact that it 
works. This investment creates real jobs in communities that 
wouldn't otherwise have access to capital.
    Last year I worked with the Treasury Department to make it 
easier for BRAC sites such as one in my district, Merritt 
Island, that was closed, to more easily qualify for the new 
market tax credit investment. Expanding the new market tax 
credit creates jobs and economic growth in low-income 
communities, and that is a bipartisan goal.
    I have used my time to talk about bills and issues, but the 
point that I really want to make is that the Committee and this 
Congress should be focusing its intention on legislation that 
helps all of our constituents back home.
    The Chairman mentioned our HRA bill that we have been 
working on helps constituents, helps constituents and makes the 
promise of access to quality, affordable health care for people 
very real. So I hope we can work together and get some of these 
done. And thank you for the time.
    Chairman BOUSTANY. I thank the gentleman.
    Mr. Reed.
    Mr. REED. Well, thank you, Mr. Chairman, and thank you for 
holding this hearing and getting our input. And I know there 
has been a slew of bills that we have brought to your attention 
and will continue to bring to your attention, but I wanted to 
highlight some of the efforts, in particular.
    As I care deeply about our job creators in America and our 
manufacturers, and especially small businesses that are the 
backbone of our American economy, I want to make sure that we 
are promoting policy, tax policy, that provides them with an 
opportunity they need to succeed.
    One area that my colleague, Mr. Thompson, and I have just 
recently joined in, and he mentioned in his testimony, is the 
H.R. 5167, the Technologies for Energy Security Act. I think 
this is a common-sense proposal that should be taken into 
consideration as we go forward, making sure that our tax policy 
reflects a commitment to our energy sector that is not only a 
job creation component of our economy, but also brings national 
security concerns to light, as we deal with the issues around 
the world.
    I would also be remiss if I did not specifically target 
some areas that we are working on in the Tax Code that--to 
target relief for our vulnerable working families and 
vulnerable fellow citizens across the country. In particular, I 
would like to highlight to the chairman the bipartisan work we 
are doing on H.R. 2752. That is the work opportunity tax 
credit, trying to make that permanent as part of this 
discussion going forward, as well as H.R. 3110, our National 
Disaster Tax Relief Act of 2015. To me this sends a clear 
message to our fellow citizens that we want to stand with them 
and make sure that we have a Tax Code that is in the best 
position not only to be fair, but to recognize the difficulties 
that many of our fellow citizens face on a day-to-day basis.
    So I join with you, Mr. Chairman, to work together in order 
to fix our broken Tax Code, and these are but just a few of the 
examples that I would like to bring to your attention, as well 
as a slew of bills that we have submitted to you, and will 
continue to advocate with you and the entire Committee as we go 
forward with tax reform.
    And with that, I yield back.
    Chairman BOUSTANY. Thank you, Mr. Reed.
    Mr. Doggett.
    Mr. DOGGETT. I am going to yield to Ms. Sanchez or Mr. 
Larson.
    Chairman BOUSTANY. Okay.
    Mr. Larson.
    Mr. LARSON. Thank you, Mr. Chairman. And thank Ranking 
Member Neal and Chairman Brady for providing us the opportunity 
to have hearings like this.
    Like Mr. Tiberi, I intend to talk about three bills and 
then provide written testimony on others, including the bill 
that he mentioned, which includes extending the R&D tax 
credits, which has been received with overwhelming popularity 
across the nation, and clearly in my district.
    I have three bills that I would like to discuss. One of 
them this Committee has passed in the past. It is the Volunteer 
Responder Incentive and Protection Act, a bill that many in the 
Committee--many on this Committee support. Mr. Reichert and I 
have introduced the bill again. And, I think as everybody 
knows, especially when it comes to volunteer firefighters and 
EMT personnel, unfortunately, the IRS subjects them--we believe 
unfairly--to tax on incidentals that they receive.
    And if the tax wasn't bad enough for volunteering your 
services and putting yourself in harm's way, it also creates an 
incredible administrative nightmare for a number of these small 
rural agencies that depend so much on our volunteer 
firefighters. Volunteer firefighters comprise--and EMT--more 
than 70 percent of the firefighters that we have across the 
nation. So I hope and--that we can continue to work on this Act 
together.
    The other bill that I would like to talk about is the 
Promise Zone Job Creation Act. This is a bill that I 
introduced, along with Chairman Rogers. Chairman Rogers, in 
fact--and Mrs. Noem on our Committee, as well--have promise 
zones in their district. There are only a handful, but what Mr. 
Rogers has done is demonstrated what you can do on a volunteer 
basis with a promise zone, and expand and reach out to the 
rural poor, combining all segments of the society: the 
volunteer base and the academic base. He is not only fighting--
he is creating jobs, and he has done this--and the idea is for 
rural and urban areas that are depressed to create job 
incentives through the code with this. So I hope that we can 
continue to work together on the Committee with this.
    And lastly, Mr. Chairman, in my 23 seconds left, we also 
have a bill that would--we call the Philanthropic Enterprise 
Act and--again, that I have introduced with Mr. Reichert. And 
this is a targeted bill that would make a technical fix in the 
Tax Code to ensure that companies that devote all of their 
profits to charity through a foundation--in this case, in my 
home state, like Newman's Own, can continue, going forward. 
This is another bipartisan effort that I believe the Committee 
should take up before the end of the year.
    I associate myself with the remarks of Mr. Neal, and I 
thank Mr. Kelly and Mr. Renacci and Mr. Reichert, Mr. Tiberi, 
for working with us, and look forward to working with you, Mr. 
Chairman and Mrs. Noem, on other legislation that we have. 
Thank you so much.
    Chairman BOUSTANY. Thank you, Mr. Larson.
    Mr. Kelly.
    Mr. KELLY. I thank the Chairman and--for giving us the time 
to actually talk about some of these things. There are several 
pieces, and most of us are actually on these together. H.R. 
5002, the Steel Industry Preservation Act with Mike Doyle, we 
are in that together. We are in the Historic Tax Credit 
Improvement Act, which you highlighted; Preserving Access to 
Orphan Drugs Act with Mr. Neal; and then H.R. 1752, Health Care 
Sharing Ministries, with Danny Lipinski out of Illinois.
    What I want to talk about, and what I think is really 
critical--and this is in honor of Mother's Day and working 
parents--I worked with three working moms, right here, Ms. 
Sanchez, Senator Ayotte, and also Senator Capito, to come up 
with something called the Working Families Relief Act. This is 
H.R. 4867. And we worked with Save the Children to have this 
come into legislation. And I think one of the things we were 
looking at is it has become so difficult for working families 
to actually provide child care.
    So, here is what this Act does. H.R. 4867 expands the pre-
tax deduction as part of the dependent care assistance program 
to $10,500 a year for married couples and $5,000 for single 
filers. This increase in the tax deduction closely matches the 
average annual cost of child care. And this pre-tax deduction 
is indexed to inflation.
    The bill would also provide employers with a tax credit to 
help with the administrative costs of starting up such a 
program for their associates and it gives employers a $1,000 
tax credit for matching contributions of their associations. 
This is going to encourage more employers to offer this 
flexible spending account for all the folks they work with.
    Now, here are a few facts to consider. Six out of ten 
families with children, both parents are working. And that 
percentage is even higher for single moms, where 7 out of 10 
moms work outside the home to take care of their kids. Working 
moms are much less likely to be living in poverty than their 
counterparts that stay at home. The problem, however, is that 
child care costs have skyrocketed to over $10,500 a year. Child 
care costs have grown almost eight times the rate of family 
incomes, according to most news reports.
    And for example, in Pennsylvania a 2-parent household is 
spending 12 percent of their income on child care. And with the 
average cost of child care coming in at over $10,500 a year, it 
is no wonder families are struggling so hard to make ends meet. 
This is impacting the ability for families to buy a home and 
pay off their student debt.
    The American people feel too often that Washington is out 
of touch with economic realities our nation is facing, and it 
is time for us to get back home with the people that we 
represent, to actually feel what they are going through and 
then reacting to help them. So expanding the dependant care 
assistance program will help more working families participate 
in and afford quality child care without going broke.
    Everyone in America benefits when our children have a 
strong start in life through quality child care. And any 
investment in the next generation of Americans is just, quite 
simply, a very good investment.
    Therefore, it is my sincere hope that the Committee will 
mark up this legislation in the near future for our children's 
family--for our children and for our working families.
    Mr. Chairman, I appreciate it. Ms. Sanchez, thank you so 
much. And Save the Children were absolutely incredible in 
helping us to get to this. So thank you so much. I yield back.
    Chairman BOUSTANY. Thank you, Mr. Kelly.
    Mr. Renacci.
    Mr. RENACCI. Thank you, Mr. Chairman, for holding this 
hearing. I am grateful for many ideas that my colleagues have 
and will present today. Indeed, I am a proud cosponsor of many 
of these bills.
    The premise, though, behind many of these bills is rooted 
in the fact that we have an outdated and anti-competitive tax 
system. Because of that, we continue to try and make changes. 
But it is really time for an overhaul. By not overhauling our 
tax system, the U.S. has fallen drastically behind. Over the 
last three decades, the average marginal corporate income tax 
rate among OECD countries has fallen from 48 percent to under 
25 percent. In fact, since 2000, we are one of only three of 34 
OECD countries that have not cut their corporate tax rate.
    With the highest corporate tax rate in the industrialized 
world, it is no wonder U.S.-based businesses hold back on 
domestic investment and hiring plans, instead choosing to 
invest in other countries with what--much more pro-growth tax 
regimes. Corporate income taxes are the most harmful tax to 
economic growth. That is likely why every OECD member besides 
the U.S. relies more heavily on consumption tax measures which 
raise revenue with less economic damage than the corporate 
income tax.
    I am aware of arguments that--critical of the move to 
drastically reduce the corporate tax rate saying we shouldn't 
join the race to the bottom. Other critics say that 
corporations shouldn't have a lower tax rate than individuals. 
But framing this as a them-versus-us narrative completely 
ignores the incidence of corporate income tax.
    It is so important to understand who bears the burden of a 
high corporate tax rate. I said it before, I will say it again. 
The burden of corporate tax rate does not ultimately fall on 
corporations, it is born by people, customers, workers, and 
investors. Americans are angry with Washington, they want big 
change. I agree that we need big change. That is why I started 
working with my colleagues about a plan I am preparing that 
will make our business tax system the most competitive in the 
world. We can't settle for a corporate tax rate that is the 
middle of the path.
    This pro-growth plan will repeal the corporate income tax 
rate, replace it with a single-digit tax on business 
activities. This will provide a tax platform that fosters 
growth, encourages investment, and ensures a level playing 
field. My plan would also reform the individual tax system to 
ensure that low to middle-income households still see an 
increase in after-tax income, even taking an impact of a 
consumption tax, and as revenue growth on a dynamic basis.
    These are big, bold ideas. While some may say that such a 
plan is too far outside the mainstream of politically viable, 
we are at the point where we need an overhaul, not an oil 
change. Old plans may not be well received by some special 
interest folks, but I feel compelled to show the people of 
Northeast Ohio my commitment to both overhauling our business 
Tax Code to keep more companies' investment in jobs in America, 
and reforming our individual tax system to raise after-tax 
incomes across the board and reduce complexities. Your success 
should be up to you, not the Tax Code.
    I look forward to continuing to meet with Members on both 
sides of the aisle about this plan, and I hope to roll out more 
details in the coming weeks. Thank you again, Mr. Chairman, for 
holding this hearing. I yield back.
    Chairman BOUSTANY. Thank you, Mr. Renacci. Next we will go 
to Ms. Sanchez.
    Ms. SANCHEZ. Thank you, Mr. Chairman, for holding this 
hearing to allow Members to bring their unique perspectives on 
the tax reform debate.
    While it's impossible for me to highlight everything that I 
think should be a priority, I am going to try to mention just a 
few key ideas. The first point that I want to reiterate is a 
point that I have made so many times that I feel like I am back 
to teaching a first-grade classroom, because I have to repeat 
myself, repeat myself, repeat myself. But tax reform needs to 
be comprehensive, and not piecemeal. And so I very much 
appreciate my colleague Mr. Renacci's comments on that 
particular point.
    We can't fix the Tax Code for one group and leave others 
worse off. So my biggest fear in this process has always been a 
final package that would put American workers, the domestic 
businesses that employ them, on even more unequal footing in 
our Tax Code. So we have to be cognizant that we don't 
advantage one group at the peril of another.
    It is not a secret that our Federal Tax Code is woefully 
out of date. But how we get from here to there, I think, 
deserves a lot of thoughtful deliberation for us to really get 
into the nuts and bolts of it and roll up our sleeves.
    The process is also going to require very thoughtful 
feedback from those who are going to be affected by the changes 
that we will eventually make to the code. And equally important 
is the fact that each day we don't keep moving forward on tax 
reform we continue to fall further and further behind other 
jurisdictions.
    The Federal Tax Code needs to be reformed in a way that is 
fair, that is simple, and that provides certainty. Our Tax Code 
reflects our priorities as a country, and creating an 
environment for good-paying jobs to flourish, while allowing 
families to save should be a top priority as we move forward in 
talking about tax reform.
    Family responsibilities are often the greatest joy that 
people experience, but it is often one of the most stressful 
aspects of most people's lives. During my time on this 
Committee I have been proud to work on legislation to help ease 
the burden of child and elder care costs in a bipartisan 
fashion. And for that I am grateful to my colleague, Mr. Kelly, 
for mentioning H.R. 4867, which deals with child dependant 
care. And it is my hope that the Committee will keep these 
unique financial responsibilities in mind as we move forward on 
updating the code.
    Beyond that, I just want to mention that working families 
are only able to meet their needs at home when they are able to 
earn a decent wage at work. In Southern California we are lucky 
to be the home to many domestic industries that pay the types 
of wages that allow working families to thrive and to move up 
on the economic ladder. Our manufacturing sector, in 
particular, has been one of the brightest spots as our economy 
recovered from the Great Recession. So fostering an environment 
for good-paying jobs to flourish in this country should be of 
paramount importance for the Committee.
    A competitive manufacturing sector allows American 
businesses to export their goods all over the world, and will 
help hasten our recovery. So, Mr. Chairman, again, I look 
forward to continuing to work with my colleagues to make sure 
that we get tax reform right, as we move forward.
    And I want to thank you for the time, and I yield back.
    Chairman BOUSTANY. Thank you, Ms. Sanchez. Next we will go 
to Mr. Holding.
    Mr. HOLDING. Thank you, Chairman Boustany. You know, last 
year we took a meaningful step towards tax reform by passing 
the PATH Act. And today we have an opportunity to build on the 
success of that legislation.
    One meaningful provision made permanent last year was the 
IRA charitable rollover provision. In the current law, seniors 
can roll over up to $100,000 from their IRA to an eligible 
charitable organization, tax free. However, as it currently 
stands, this provision excludes contributions to donor-advised 
funds, even though these funds are considered to be qualified 
charitable organizations under the code.
    I have introduced legislation, H.R. 4907, the Grow 
Philanthropy Act, to eliminate this unnecessary exclusion and 
treat all qualified charities equally under the rollover 
provisions.
    Given their ease of use and ability to directly impact 
local communities, donor-advised funds have become one of the 
fastest-growing philanthropic vehicles, and in 2014 alone paid 
out more than $12 billion in grants to charities. Donor-advised 
funds allow individuals, regardless of their means, to set up a 
fund and give to their preferred charities and pass these 
benefits on for years to come. By allowing our seniors to roll 
over contributions from their IRA to a donor-advised fund, we 
not only increase seniors' choice with regard to charitable 
donations, but also encourage increased donations for years to 
come.
    The Grow Philanthropy Act is a simple and straightforward 
fix, and I encourage all my colleagues to join me in supporting 
this.
    In addition to the IRA charitable rollover provision, the 
PATH Act also made the R&D credit permanent. But unfortunately, 
this credit excludes a very important sector of innovative 
researchers. Under current law, Mr. Chairman, if a company 
conducts all of their research in-house, they are able to use 
100 percent of their eligible expenses. However, if they 
contract out their research to a clinical research 
organization, a practice which is extremely common in the life 
science industries, the sponsor of that research is only 
allowed to use 65 percent of their eligible expenses towards 
determining the credit, and the remaining 35 goes unused.
    Additionally, the clinical research organization that has 
contracted to conduct the research is unable to claim the R&D 
credit. This is in stark contrast to other countries. Mr. 
Meehan and I have been working on a bill, H.R. 2481, the 
Domestic Research Enhancement Act, which would fix this 
problem, and I would also encourage my colleagues to support 
this bill.
    Thank you, Chairman Boustany, for the opportunity to 
testify, and I yield back.
    Chairman BOUSTANY. Thank you, Mr. Holding. Next we will go 
to Mr. Reichert.
    Mr. REICHERT. Thank you, Chairman Boustany, for holding 
this important hearing. I want to talk about three bills rather 
quickly. Some have already been mentioned. Others have been 
mentioned that I will not talk about that I am supporting.
    First is the S Corp Modernization Act, includes common-
sense simplification proposals supported by Members of the 
House and Senate on both sides of the aisle. I would like to 
thank Mr. Kind, especially, for his work with me on this bill 
to encourage growth on Main Street by reforming and repealing 
unnecessary rules and limitations on S Corporations.
    Specifically, one provision in the bill allows non-resident 
foreign individuals to be eligible beneficiaries of an electing 
small business trust. So I have heard from a seventh generation 
family who owned a company and the struggles it has faced, 
based on the nationalities of the spouses of the family 
members, including family members who have had to sell their 
stock in the company because of current restrictions. With the 
number of burdens our business owners face, does it make sense 
to maintain yet another hurdle, simply based on who someone 
decides to marry?
    I am also proud to partner with Ron on the Promotion and 
Expansion of the Private Employee Ownership Act that encouraged 
the creation of employee-owned businesses through S Corporation 
employee stock ownership, known as ESOPs, allowing more hard-
working Americans to have a stake in their companies and hope 
for a secure future.
    Additionally, Mr. Larson and I, as he has mentioned, have 
been working on legislation near and dear to my heart to 
support the work of philanthropic enterprises that seek to be 
successful businesses and sources of change in communities. One 
such example is a brewer out of Minnesota called Finnegans, and 
then, of course, Newman's Own, mentioned by Mr. Larson. These 
companies donate all of their profits in a quest to eliminate 
hunger. Our bill will encourage the creation of these types of 
businesses committed to donating all the profits to charity, 
and making a difference in our communities across this country.
    So, in conclusion, Mr. Chairman, in Washington we know one 
or two things about beer and about brewing beer, spirits, and 
wine, the number of jobs these growing industries support, and 
I look forward to working with my colleagues on this Committee 
to update and reform our alcohol excise taxes.
    I yield back.
    Chairman BOUSTANY. Thank you, Mr. Reichert.
    Mrs. Noem.
    Mrs. NOEM. Thank you, Mr. Chairman, for holding the 
hearing. It is great that today we are opening up the Committee 
for different ideas on how to improve and simplify the Tax 
Code, something--that is a goal that we share with the American 
people.
    I want to discuss several bills I am working on that I 
believe are common-sense improvements to the Tax Code. And some 
of those bills I am working on have a lot of potential to fix 
some of the issues that we are dealing with in South Dakota. 
The first involves the Federal Government's trust 
responsibility to our native people.
    Native Americans and Alaskans are exempt from the 
individual mandate under the Affordable Care Act because of its 
obligation of the Federal Government to provide for their 
health care. In the haste in which the law was written, tribal 
governments that primarily employ Native Americans and Alaska 
Natives are not exempt from the employer mandate, meaning 
tribes will be forced to offer coverage or pay a tax penalty 
for individuals whose care is already the responsibility of and 
paid for by the Federal Government.
    To solve this problem, I have introduced H.R. 3080, the 
Tribal Employment and Jobs Protection Act, which would exempt 
tribal governments, businesses, and organizations from the 
employer mandate. Without action, tribes fear that they could 
be on the hook for millions of dollars of penalties under the 
mandate. This money will have to be diverted from other vital 
services in Indian Country.
    I would also like to enter into the record a letter from 
the Rosebud Sioux Tribe in support of my bill, Mr. Chairman.
    [No response.]
    Mrs. NOEM. Mr. Chairman, I would like to enter that letter.
    Chairman BOUSTANY. Without objection.
    [The information follows:]
    
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    Mrs. NOEM. Thank you. I am pleased to have bipartisan 
support for this legislation, and the support of many of my 
colleagues on this Committee.
    Second, I would like to talk about ways to improve the Tax 
Code to promote economic development in Indian Country. Many 
tribes seek to provide for their members through economic 
development. However, because of IRS rules, tribes are not 
eligible to be shareholders in S Corporations like other tax-
exempt entities. This can take potential economic development 
opportunities off the table for communities that need them 
most. The Tax Code should not hinder tribes working to improve 
the quality of life for their members. For this reason I am 
working to fix this and I am looking forward to working with my 
colleagues on this issue.
    Finally, I just wanted to mention updating the tax 
incentives for American alternative energy. I will again be 
introducing bipartisan legislation with my colleague from New 
Jersey, Mr. Pascrell, to extend and reform the biodiesel tax 
credit, and to ensure that it is properly focused on American 
production, similar to other energy and manufacturing 
provisions in the code.
    So thank you again, Mr. Chairman, for holding this 
important hearing, and I yield back.
    Chairman BOUSTANY. Thank you, Mrs. Noem. I should state 
also, without objection, all Members' opening statements, as 
well as their written statements will be made part of the 
record.
    I want to thank all the Subcommittee members for their 
participation in this hearing. And now we are going to move on 
to our panel, our first panel, which are members of the full 
Committee, Mr. Johnson of Texas, Mr. Roskam of Illinois, Ms. 
Jenkins of Kansas, and Mr. Davis, also of Illinois. We 
appreciate you being here, and I look forward to your 
testimony.
    Mr. Johnson, you may proceed.

  STATEMENT OF THE HONORABLE SAM JOHNSON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. JOHNSON. I appreciate you letting me testify in front 
of you today. I want to discuss my bill, which is H.R. 4381, 
the Service Member Retirement Improvement Act. By way of 
background, last year's defense authorization bill included 
significant retirement reforms. The reforms included a 
reduction in the military pension, but also included, for the 
first time ever, a match for servicemembers' retirement 
contribution to the TSP. This is a 401(k) plan for Federal 
workers and those in the military.
    Unfortunately, as it turns out, these reforms may 
inadvertently harm those guard and reserve forces who happen to 
also participate in the retirement plan in their civilian jobs. 
A problem is that those guard and reserve forces who contribute 
the maximum possible in their civilian jobs can't then 
participate in the TSP. As a result, they don't get the TSP 
match to help make up for the reduction in their pensions. And 
why is that? Because the IRS caps the amount an individual can 
save for their retirement through work. Generally speaking, 
that is $18,000 per year.
    So, what my common-sense bill would do is simply allow 
these servicemen to contribute the maximum to both their 
civilian and military TSP. I would note that the IRS already 
allows state and local workers, as well as teachers, to 
contribute the maximum amount to both the government and 
civilian retirement plans. So if that is the case, why 
shouldn't our brave men and women in uniform be allowed to do 
the same?
    Mr. Chairman, my bill is supported by over 10 major 
military and veterans groups. I would like to submit for the 
record a letter of support from some of those groups.
    Chairman BOUSTANY. Without objection.
    [The information follows:]
    
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    Mr. JOHNSON. As a member of this Committee who fought in 
two wars, I can tell you that those serving in our country 
deserve the best. And the bottom line is they should not be 
penalized when it comes to saving for retirement. Moreover, in 
our increasingly dangerous world we must ensure that our 
military can recruit and retain the best and the brightest. 
This bill would help ensure just that.
    Thank you again for the opportunity to speak in support of 
the bill, Mr. Chairman, and I yield back.
    Chairman BOUSTANY. Thank you, Mr. Johnson, and thank you 
for your service.
    Mr. Roskam.

 STATEMENT OF THE HONORABLE PETER ROSKAM, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. ROSKAM. Thank you, Chairman Boustany and Ranking Member 
Neal. Sitting on this side, it is a good thing we have all got 
good self-images. Because without eye contact, you get a little 
bit unsettled. But thank you very much, just for the chance to 
be before you today.
    I am here to present quickly three bills, and then just 
plant the seed on one concept. The first bill is called the 
Legacy IRS Act, and it was an initiative, actually, of 
Congressman Cramer of North Dakota. And here is what he is 
trying to do. And I am involved in this, along with Mr. 
Blumenauer, Paulsen, and Tiberi on the Committee.
    Currently, you can donate your IRA to a charity, tax-free. 
And you can leave money in your will, tax-free. But if you move 
your IRA into a charitable life income plan, that is taxed. So 
middle-class retirees can't afford the tax hit because they 
need that money to live off of, and what we are trying to do 
then with this bill is simply eliminate the taxation of that 
move from an IRA to a charitable life income plan.
    It is not controversial, I think it makes a lot of sense. 
It is not unlike Congressman Johnson's initiative a minute ago. 
That is the first bill.
    The second bill is this, to stop taxing death and 
disability. And this has been introduced today, along with 
Congressman Kind of the Committee. When a student passes away 
or becomes permanently disabled, their student loan debt is 
forgiven. That is great. The problem is there is a tax 
liability that is attached to that. That is not great. In fact, 
it is ridiculous, and it is absurd. And so, the bill would 
remove that tax liability. Again, very common sense, and it is 
consistent with the theme of removing that tax liability, or 
the underlying liability, itself.
    Third bill, quickly, is called the Free File Act. It makes 
permanent the free file program, 75 cosponsors in the House. 
This is a good public-private partnership to allow people 
access to sophisticated tax software at no cost to themselves.
    And then, finally, an idea--and this is just seed planting 
at this point, but it is a bill that I am working on and will 
intend to move forward, and it is based out of a hearing that 
the Oversight Subcommittee had. And it is this concept. There 
are elements of the Tax Code that relate to enterprises that 
choose to do business with state sponsors of terror. It has to 
do with Section 901(j) of the Internal Revenue Code. There are 
some provisions in place that make it very uncomfortable to do 
business with state sponsors of terror. But we need to make it 
more uncomfortable to do business with state sponsors of 
terror.
    You may have seen in the news Boeing Company is actively 
contemplating this exercise. That is, they are seriously 
thinking about selling planes, a fungible production, to the 
Iranians, when everybody admits that the Iranians are sponsors 
of terror. We need to do what we can, I would argue, in the Tax 
Code and within our jurisdiction. So I will be, at some point, 
presenting that.
    Thank you, and I yield back.
    Chairman BOUSTANY. Thank you, Mr. Roskam.
    Mrs. Jenkins.

 STATEMENT OF THE HONORABLE LYNN JENKINS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF KANSAS

    Ms. JENKINS. Chairman Boustany, Ranking Member Neal, thank 
you for holding this hearing. Distinguished Members of the 
Committee, thank you for affording me some of your time this 
morning.
    One of the bills I would like to discuss this morning is 
H.R. 5193. It is the 529 Enable Account Improvement Act of 
2016. As you recall, the President used his 2015 State of the 
Union Address to propose taxing 529 college savings 
distributions. In response, my colleague, Congressman Ron Kind, 
and I worked closely on legislation to protect 529 plans. And 
that became law at the end of last year.
    So, H.R. 5193 builds upon this success and further improves 
529 accounts in a variety of ways. First, it takes common-sense 
steps to encourage more employers to provide access to 529 Able 
plans by encouraging employer seed money and extending the 
current $500 tax credit for small employer retirement plan 
start-up costs to small employers establishing new employee 
payroll deduction programs for 529 or Able accounts.
    The legislation also removes barriers that discourage 529 
account savings. I have heard from many families that do not 
set up these accounts because of the 10 percent penalty tax 
that occurs when someone makes a non-qualified distribution. 
This bill addresses these concerns by extending the current 
exception from the 10 percent penalty tax to transfers made 
directly from 529 accounts into IRAs, transfers made from 529 
or Able accounts to charity, and withdrawals from 529 accounts 
to pay for student loans.
    Finally, the legislation would repeal the unnecessary IRS 
interpretation of the investment direction limitation on these 
accounts, as well as allow tax-free rollovers from 529 accounts 
to Able accounts. I encourage my colleagues to support this 
legislation. As a mom with a daughter who is graduating from 
grad school on Saturday and a son in undergrad, I understand 
the importance and urgency here.
    I would like to move on to another important bill, H.R. 
4626, the Building Rail Access for Customers and the Economy 
Act, known as the BRACE Act. Across Kansas, small, privately-
owned freight railroads move goods and raw materials for our 
constituents. Congressman Blumenauer and I introduced this bill 
to improve the private sector's ability to maintain services by 
permanently extending the Section 45(g) short-line tax 
maintenance tax credit.
    As of today, 260 rail customers with 880 locations and 47 
states have joined saving our service, and are calling on 
Congress to pass the BRACE Act. I highly encourage my 
colleagues to support that legislation.
    And finally, I would like to briefly mention H.R. 4672, 
which would restore and make permanent the suspension of the 
net income limit on percentage depletion for oil and natural 
gas produced from marginal properties. It is important relief, 
it is critical to preserving the production of oil and gas from 
America's smallest producers.
    And with that I yield back. Thank you.
    Chairman BOUSTANY. I thank you, Ms. Jenkins.
    Mr. Davis.

  STATEMENT OF THE HONORABLE DANNY DAVIS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. DANNY DAVIS OF ILLINOIS. Thank you for the opportunity 
to highlight a few of my priorities for improving our tax 
system.
    First, the Julia Carson Responsible Fatherhood and Healthy 
Families Act would help close the gap in the earned income tax 
credit by expanding it to childless workers and non-custodial 
parents, the only group that the Federal tax system taxes into 
poverty. The earned income tax credit is an amazing pro-work 
success story, and it currently excludes millions of low-income 
young men who face low and falling labor force participation. I 
am pleased that both Speaker Ryan and President Obama have 
supported this critical expansion to promote work and reduce 
poverty.
    In addition, the Fatherhood Act would lower the age of the 
earned income tax credit eligibility to 18 for foster youth. 
Currently, the earned income tax credit disadvantages former 
foster youth who enter the workforce earlier, experience higher 
rates of poverty, attend college less often, and receive less, 
if any, financial support from parents than their peers. 
Lowering the age of the earned income tax credit eligibility 
for former foster youth promises to promote economic well-
being, reduce poverty, and increase labor force participation 
for these vulnerable youth.
    Secondly, my VITA Act would permanently authorize the 
community volunteer income tax assistance matching grant 
program that funds critical tax preparation, taxpayer outreach, 
and related financial services for tens of thousands of low-
income families.
    Finally, I ask that the Subcommittee hold a hearing on the 
Adoption Tax Credit Refundability Act that I led with 
Representatives Black, McDermott, Franks, Marino, Langevin, and 
Bass. This bill would restore the refundable element of the 
credit, and help thousands of low-income families. Half of the 
youth adopted from foster care live in families at or below 200 
percent of the Federal poverty level who receive limited 
benefits from this credit. Our bill is supported by the 150 
member organizations of the adoption tax credit working group, 
and the hearing would provide an excellent legislative history 
to prepare this bill for consideration next year.
    I thank you for this opportunity and yield back the balance 
of my time.
    Chairman BOUSTANY. Thank you, Mr. Davis. I want to thank 
all four of you for bringing these important tax proposals 
before the Subcommittee. And they will be taken under 
consideration. Thank you so much.
    We will call our next panel up: Mr. Buchanan, Mr. Rice, and 
Mr. Rouzer. This panel will also include Mr. Meehan. So it is 
Mr. Vern Buchanan, Tom Rice, Mr. Rouzer, and Mr. Meehan.
    [Pause.]
    Chairman BOUSTANY. Mr. Buchanan, you may proceed.

 STATEMENT OF THE HONORABLE VERN BUCHANAN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. BUCHANAN. Thank you, Mr. Chairman. I also want to thank 
the Ranking Member and the Committee today. I have four bills 
that will help grow the economy and create jobs.
    My first bill is a pass-through bill that simply says small 
businesses shouldn't pay more than corporations, or big 
corporations. We need to lower the tax on corporations. There 
has been discussion about 35 to 25, 28 percent. I am supportive 
of that. But today the average business in Florida, a pass-
through, is 43 percent. Big corporations are at 35. Many places 
in the country, state and Federal, it is over 50 percent. My 
bill simply says lower those tax rates to the same--nothing 
higher than corporate rates, going forward. That is my pass-
through bill.
    My second bill is a start-up bill. Simply, we have got more 
businesses that are closing than opening for the first time in 
our history, and I want to take the write-off for a start-up 
from $5,000 to $20,000, which would be 4 times what it is 
today. It would encourage more start-ups. It is a bipartisan 
bill. There are many businesses I have seen over the years 
starting in their garage, and you end up with an Apple 
computer. We need to encourage more start-ups, this bill will 
do that.
    Also, I have a retirement bill. I read the other day, 62 
percent of Americans--I couldn't believe it when I read it. It 
is true, I guess, 62 percent of Americans don't have $1,000 in 
the bank. The idea is to let small businesses work together to 
lower your administrative costs to put retirement plans in 
place. That is what that bill will do.
    My last bill is a bill on--a citrus bill. In Florida we 
have been impacted. Ninety-nine percent of the trees have a 
disease called citrus greening. In Texas it is 50 percent. And 
what my bill will do will allow investors to get the same 
write-offs, working with farmers, to get those deductions that 
they need. We need to be replacing these trees. When you think 
of Florida you think of orange juice, and we are completely at 
risk in that industry.
    And again, I want to thank you and the panel for the 
opportunity today.
    Chairman BOUSTANY. Thank you, Mr. Buchanan.
    Mr. Rice, you may proceed.

   STATEMENT OF THE HONORABLE TOM RICE, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF SOUTH CAROLINA

    Mr. RICE. Thank you, Mr. Chairman. Chairman Boustany and 
Ranking Member Neal, thank you for hosting today's hearing to 
hear Members' tax proposals and priorities. I would like to 
discuss an issue that is of great importance to the Southeast: 
providing appropriate clarity for the nuclear production tax 
credit.
    Eleven years ago Congress included the nuclear production 
tax credit within the Energy Policy Act of 2005. As the last 
domestic nuclear power reactor was built decades ago, Congress 
designed the nuclear PTC to encourage investment in advanced 
nuclear energy projects.
    South Carolina and Georgia heard this call loud and clear. 
These states are building 4 new nuclear units, the first in 40 
years, in America. As the cost of construction for advanced 
passive nuclear power facilities is understandably expensive, 
both public and private entities were required for the 
facilities' development. In each unit one of the partners is a 
not-for-profit entity owning approximately 50 percent, both in 
South Carolina and in Georgia.
    According to the current Treasury Department guidance, the 
not-for-profit entities cannot efficiently utilize the credits, 
and therefore, cannot pass the savings on to their customers. 
As the guidance reads, the savings from the nuclear production 
tax credit will not be passed to ratepayers in South Carolina, 
Georgia, Florida, and Alabama who have helped shoulder the cost 
of the unit's construction.
    Interestingly, the ratepayers for the for-profit companies 
get the credit, but the not-for-profits, like the 
municipalities and the states, don't get the credit. The 
Treasury's interpretation creates inequities among the 
project's stakeholders that must be corrected for the program 
to work, as Congress originally intended. Other energy 
technologies are able to efficiently use their credits with 
public-private partnerships. Nuclear energy should have the 
same consideration.
    For the purpose of this hearing I will use an amendment I 
introduced last year. The amendment would allow all owners 
within an advanced nuclear public-private partnership to be 
eligible to efficiently capture the value of their allocated 
credits. The credit would be provided to private entities that 
own or assist the development of the project. The reallocation 
of the credit will be passed on to the ratepayers of these 
public entities. The Joint Committee on Taxation has stated 
this clarification offers minimal cost, $12 million--not 
billion, $12 million--over 10 years.
    In the last few months I have worked closely with Chairmen 
Brady and Boustany to share my continued interest in providing 
an appropriate fix for this oversight. I am grateful for the 
many hours the Ways and Means tax staff has dedicated to 
assisting me in finding a solution that works both for this 
body and the Senate. I will continue to work on this issue 
until we are able to pass these savings on to South 
Carolinians, Georgians, Floridians, and Alabamans.
    Thank you again for your time.
    Chairman BOUSTANY. Thank you, Mr. Rice.
    Mr. Rouzer, you may proceed.

 STATEMENT OF THE HONORABLE DAVID ROUZER, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. ROUZER. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here before the Committee to discuss H.R. 
5015, which is the Combat Injured Veterans Tax Fairness Act. At 
the outset I think it is important to note that there is a 
Senate companion of this bill that has been reported out of the 
Senate Finance Committee.
    On background, in 1991 a Federal district court case, St. 
Clair versus United States, determined that one-time lump sum 
disability severance payments received for injuries resulting 
from active service should be excluded from taxable income, 
similar to monthly disability payments. The only problem is 
that is not what has happened. Despite this court decision and 
the resulting regulatory guidance, taxes on combat-related 
disability severance payments have been withheld improperly for 
many years.
    Now, veterans are typically not even aware that their 
benefits were improperly reduced. Most have surpassed the 
three-year period in which a taxpayer can file an amended tax 
return with the Internal Revenue Service and, therefore, are 
unable to recover the improperly-withheld compensation. And 
that is what this bill, this legislation, aims to fix.
    The Combat Injured Veterans Tax Fairness Act of 2016 
directs the Department of Defense to identify veterans who, 
since January 1991, when the Gulf War began, have been 
separated from armed service for combat-related injuries, and 
who have received a severance payment; identify instances of 
improper withholding; and determine how much the combat wounded 
veterans are owed.
    Now, in terms of number of veterans this would affect, we 
are looking at approximately 14,000 from all 50 states, as well 
as the District of Columbia. The Joint Committee on Taxation 
has stated that the effect on receipts is less than 500,000 per 
year for Fiscal Year 2017 and 2018, as well as, in the 
aggregate, over the 2016 to 2026 budget window.
    I want to thank the National Veterans Legal Services 
Program for identifying this problem. And Mr. Chairman and 
Members of the Committee, I urge us to move forward on this. I 
think this is good common-sense legislation that would be one 
more win, one more thing that we can do to help our veterans 
who are in need.
    Thank you, Mr. Chairman, I yield back.
    Chairman BOUSTANY. Thank you, Mr. Rouzer.
    Mr. Meehan, you may proceed.

  STATEMENT OF THE HONORABLE PAT MEEHAN, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. MEEHAN. I want to thank the Chairman, and the Ranking 
Member and the full Subcommittee for this opportunity, and I am 
here to speak about three legislative priorities. These are 
going to create jobs, they are going to enhance the promotion 
of alternative energy and, most importantly, they are going to 
also help us promote better investment and health outcomes.
    First I would like to urge support of H.R. 5172, which 
amends the Tax Code to extend and phase out the energy tax 
credit for all Section 48 technologies. Congress acted in 
December 2015 to renew the phase-out--renew and phase out the 
investment tax credit for investment and manufacturing of solar 
energy technologies, but it left out the rest of the advanced 
energy technologies in Section 48, which include fuel cells, 
CHP, micro-turbines, geo-thermal heat pumps, and small wind.
    This was a drafting error. It has resulted in Congress 
inadvertently picking winners and losers, and the leadership in 
both chambers have acknowledged that fixing this oversight is a 
priority. My bill would extend the investment tax credit to all 
Section 48 technologies, and under a phase-out as soon as and 
as quickly as possible. We are just trying to give those other 
technologies the exact same treatment as we gave solar, and we 
are phasing out this credit at the end of 2021, just like we 
did with solar. It levels the playing field and prevents 
Congress from picking winners and losers.
    I would like to talk about 2841, the Domestic Research 
Enhancement Act of 2015. It is a piece that I have worked on 
with my colleague, George Holding. It ensures the United States 
remains a leader in medical innovation, and encourages 
employment in the high-wage research sector. Specifically, the 
bill would modernize the R&D tax credit to recognize the 
important role that research plays in the development of 
innovative new medical products.
    Currently, providers of what they call contract research 
services aren't eligible to receive any portion of the R&D tax 
credit. And also, when the sponsor of the research, generally a 
bio-pharma company, contracts with a clinical research 
organization, its eligible expenses for the credit are reduced 
from 100 percent to 65 percent. The remaining 35 percent just 
vanishes.
    Our bill would expand the R&D tax credit to enable the CROs 
to be eligible for the 35 percent of the credit that currently 
disappears when the work is contracted out. And by enabling 
contract research organizations to capture a portion of the 
research and development tax credit, it is currently--this 
legislation will promote better health outcomes and allow us to 
remain competitive, globally.
    Lastly, I am pleased to have bipartisan support for Mr. 
Kelly, Mr. Larson, Mr. Neal, and Mr. Kind on H.R. 2179, the 
PARTNER Act. It deals with early-stage research by 
incentivizing investment in R&D-focused small business. America 
and our life sciences workers lead the world in medical 
research. They are at the tip of the spear in their efforts to 
find new treatments and cures. But right now the Internal 
Revenue does not permit high-tech research pass-through 
exemptions from the definition of ``passive activity'' under 
the passive loss tax rules.
    The bipartisan bill permits an exemption for small 
businesses where more than half of its business is qualified 
research, and only those entities. The rules have the effect of 
blocking private investors from partnering with a merging pre-
revenue high technology small businesses [sic]. Our bipartisan 
bill lowers that bar and gives the research a chance.
    It is estimated that $10.3 billion a year would be invested 
and create about 156,000 additional jobs. I appreciate the time 
and consideration for each of these bills, and I thank you, Mr. 
Chairman.
    Chairman BOUSTANY. Thank you, Mr. Meehan, and I want to 
thank all four of you for your testimony and bringing these 
important tax propositions forward. And we look forward to 
examining them further.
    And with that, you can--we are done with you for now, and 
we will call up the next panel.
    We have Mr. Dold, Mr. Poe, Ms. Eshoo, and Mr. Salmon.
    [Pause.]
    Chairman BOUSTANY. I thank our colleagues for joining us 
today.
    Mr. Dold, you may proceed.

   STATEMENT OF THE HONORABLE BOB DOLD, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. DOLD. Thank you, Mr. Chairman. I certainly appreciate 
the opportunity to highlight a couple of important bills that I 
believe are worthy of the Committee's further consideration.
    H.R. 4165 is the Mechanical Installation Incentive Act of 
2015. It encourages facility and building owners to increase 
the use or maintenance of mechanical insulation by offering a 
30 percent tax credit in the fiscal year in which the 
mechanical insulation was put in service, or the maintenance 
completed. This bill will increase energy efficiency, while 
also creating thousands of good-paying jobs. This tax credit 
will be available for five years, giving ample time to 
implement the necessary installation or maintenance.
    My second piece of legislation, Mr. Chairman, is one that 
is near and dear, I think, to many of our hearts. As anybody 
that is talking to constituents lately, talks to students, one 
of the questions that comes out of their mouths is, ``How am I 
going to be able to afford to pay for college,'' or, ``How am I 
going to be able to afford the student loan debts that I 
have?''
    H.R. 5191, the Help for Students and Parents Act, will make 
paying for college much more accessible to students. Over the 
last three decades, the average tuition for a four-year college 
has more than tripled, while the typical family income has 
barely budged. The result is that college seniors, as they 
prepare to graduate this spring, will have an average debt of 
about $30,000.
    Whenever I talk with these students and the parents that I 
hear from they are saying, ``Paying for college is getting 
further and further out of reach.'' And we need to be able to 
do something if we want to enable them to be able to go to 
school or get another education, whether it be becoming a 
skilled welder, or whatever it may be. We want to make sure 
that they are actually getting the education they want.
    My legislation proposes an important yet common-sense shift 
in the way that our country approaches student loan debt.
    Under current law, if an employer pays an employee's 
student loan debt, the amount received by the employee is 
taxable income. The Help for Students and Parents Act would 
change this by excluding from the graduate's income the amount 
that an employer contributes towards the employee student's 
loan repayment, up to a cap of $250.00, which stands in current 
law today.
    The exclusion from income to the employee would greatly 
help with maximizing the dollars earned that go towards paying 
off one's student loans. To encourage employers to adopt this, 
the bill also provides a small tax credit to employers, based 
off the amount that they contribute to help with the employee's 
loan repayment.
    The second part of the bill increases our focus on parents 
who want to save for their children's education. On this front, 
the bill provides an exclusion from family's income for 
employer contributions to 529 plans. And a small tax credit is 
given to the employer to encourage the employer's contributions 
towards college savings accounts that an employee sets up for 
their children.
    This legislation will allow graduates to pay back their 
loans faster at a lower overall cost. Our bill aims to 
dramatically increase the uptake of employer-sponsored plans. 
For employers or employees, right now, they only participate 
about three percent of the time. And that becomes a--much more 
of a problem as we look at what students want to do. They are 
not saving for retirement and, therefore, we want them to get 
into the process of actually saving. The faster they pay on 
their student loans, the faster they can start saving for their 
own retirement.
    I recognize my time has expired, but I also want to commend 
Rodney Davis for his work on this particular issue. But I do 
believe this is an area that we can come together in a 
bipartisan way to really start tackling the student loan debt 
problem.
    I thank you and yield back.
    Chairman BOUSTANY. Thank you, Mr. Dold.
    Mr. Salmon, you may proceed.

  STATEMENT OF THE HONORABLE MATT SALMON, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ARIZONA

    Mr. SALMON. Thanks for holding this important hearing on 
tax legislation. As the Committee knows well, tax policy 
affects just about every part of American life.
    Of course we all want to ensure that the Tax Code is fair, 
it incentivizes beneficial behaviors that strengthen the nation 
and our economy. But we can always improve.
    When I returned to Congress I noticed part of the current 
Tax Code that is actually punishing those who wish to protect 
their hearing when hunting in the outdoors and while target 
shooting. Today a Depression-era antiquated and, frankly, 
oppressive tax provision instituted under FDR is restricting 
the ability of law-abiding Americans to access basic hearing 
protection equipment for firearms.
    In fact, not only is it part of the Tax Code, it is much 
more difficult for American sportsmen to protect their hearing 
while hunting, but it is also making it more difficult to 
purchase a suppressor--essentially, a muffler. In fact, I 
believe the same gentleman that invented the muffler invented 
the suppressor--than it is to buy an actual firearm--that is 
kind of ridiculous--such as an AR-15 or a semi-automatic 
shotgun. It doesn't make sense.
    As one who suffers from hearing loss myself, due in large 
part to my many years as an avid sportsman, I can tell you it 
is an important issue that we don't make it harder for folks to 
protect their hearing.
    As you may know, a suppressor is a common-sense piece of 
safety equipment which protects hearing of sportsmen and 
observers alike. While suppressors do not even come close to 
silencing the sound--in fact, Hollywood myth, I think, 
sometimes guides our policy. If you actually participate in 
shooting with a suppressor, you will find that it significantly 
reduces the sound, but you still know that a shot has been 
fired.
    Again, like I said, they don't even come close to 
silencing, they just reduce the sound to levels below just 140 
decibels. And 140 decibels is comparable to a thunder clap, a 
rock concert, a jack hammer, or a jet engine at about 100 feet, 
and is the maximum level permitted in the workplace by OSHA.
    By reducing the noise to more tolerable levels, we also 
reduce the disruptive effects that firearm noise has on wild 
game populations. In short, the use of suppressors makes things 
better and safer. In fact, Mr. Chairman, I think a lot of other 
nations are a little bit more progressive on this than we are. 
In fact, they require--countries that have very strict firearms 
laws require that you hunt with suppressers because of noise 
safety.
    And I am going to just wrap up, because I think it was 
included in the 1933 Act because a lot of the fish and game 
people felt that it would increase poaching. Well, 39 states 
have laws that allow hunting with suppressors, and there hasn't 
been a greater incidence of suppressors [sic]. And if using 
that logic makes a lot of sense, maybe we should make everybody 
go through the class three process with ATF when you buy a bow 
and arrow, because that makes no noise.
    And so, I think it is a ludicrous policy. We have close to 
70 cosponsors, bipartisan, and I think it is an idea whose time 
has come. The industry is doing very, very well. What is wrong 
with protecting your hearing if you are an avid sportsman? I 
think it is a common sense.
    Chairman BOUSTANY. Thank you, Mr. Salmon.
    Mr. Poe, Judge Poe.

    STATEMENT OF THE HONORABLE TED POE, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. POE. I want to thank the Chairman and the Ranking 
Member for allowing me to testify today. I am here to discuss 
H.R. 2883, the Master Limited Partnership Parity Act. This bill 
is a bipartisan bill. And I also want to thank Representative 
Thompson for being a coauthor of the bill, and Senator Coons 
and Senator Moran have the same bill over in the Senate.
    The bill will go a long way to encourage energy development 
domestically in the United States. This Master Limited 
Partnership Act is a simple bill that expands the MLP tax 
structure to include all forms of renewable, domestically-
produced energy.
    Right now, MLPs are a successful tax structure that is used 
by many oil and gas companies. The structure has been very 
successful for U.S. companies such as Enterprise, which is 
based in Houston, Texas, and other companies. The structure has 
allowed these capital-hungry companies to track investments 
they need to grow, investments that may otherwise not have 
gotten without the structure.
    So the bill would allow clean energy projects to utilize 
MLPs as a beneficial tax structure that taxes a project like a 
partnership, but that trades its interest like a corporate 
stock, a C Corp. This allows access to liquidity and equity 
markets, and prevents double taxation. For the last 30 years 
MLPs have given natural gas and coal industries access to 
private capital at lower cost. And so, this is not a subsidy or 
a tax credit, this is a corporate tax structure that treats all 
energy producers the same, and promotes domestic energy.
    I also want to discuss another piece of legislation. It is 
based on a hearing that I had in the Terrorism Subcommittee 
last month. We found out that many individuals who work for 
501(c)(3) organizations that funded Hamas now work for other 
U.S.-based organizations: American Muslims for Palestinians, or 
AMP. The Holy Land Foundation for Relief and Development, Kind 
Hearts for Charitable Humanitarian Development, and the Islamic 
Association for Palestine are all guilty of financing Hamas.
    And what has happened, people who work for those 
organizations have moved to another organization that is a 
501(c)(3). It is called AMP. And that organization is right now 
involved in trying to have--boycott investment and sanctions 
movement against the country of Israel.
    And so, workers associated with these organizations or 
implicated in terror finance are free to work wherever they 
want to in other charities. This bill, all it does is require 
charities to be more transparent and give information if any of 
these new people come to work for that organization, so that 
the public and the donors know, and the government knows that 
these people are just moving from charity to charity under--I 
mean, under the guise of a 501(c)(3) organization, but are 
involved in supporting terrorist organizations.
    Thank you, Mr. Chairman.
    Chairman BOUSTANY. Thank you, Judge Poe.
    Ms. Eshoo, you may proceed.

  STATEMENT OF THE HONORABLE ANNA ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. ESHOO. Thank you, Chairman Boustany and Ranking Member 
Neal and Mr. Larson, all the Members of the Committee. I really 
appreciate your opening up the Committee to have other Members 
that are not part of your committee to come in and share ideas 
with you. It is a very good idea, and I hope that what we bring 
forward will create some sparks and some benefits for our 
country.
    I am here to talk to you about a bill that I have 
introduced. It is a bipartisan bill, H.R. 4696, the Helping Our 
Middle-Income Earners Act, the HOME Act. It really is a simple 
piece of legislation. It would allow homeowners who live in a 
community association who make up to $115,000 in annual income 
to deduct up to $5,000 in community association assessments 
from their Federal tax liability.
    Community associations, which include condominium 
associations, homeowner associations, and housing cooperatives 
have grown substantially in recent decades, and offer 
affordable housing opportunities for our mutual constituents in 
countless communities across our country. Today over 65 million 
Americans reside in 27 million housing units within a community 
association.
    For example, in my Silicon Valley congressional district 
alone, 260,000 housing units are in a homeowner's association. 
We know that middle-class families are struggling to keep up 
with the rising cost of living. And the purpose of this 
legislation is to provide these homeowners with tax relief to 
help them stay ahead, financially.
    The HOME Act also recognizes the community association 
assessments and fund infrastructure and services that would 
traditionally be provided by the homeowner's local municipality 
and paid for through their property taxes. These services 
include street and sidewalk maintenance, trash and snow 
removal, storm--water management, among other services. Because 
these homeowners pay property taxes and community association 
assessments, they are effectively taxed twice for local 
service.
    This problem was recently highlighted in articles on May 
4th in the Washington Post and in the Chicago Tribune on my 
legislation.
    So I again thank and commend the Subcommittee for listening 
to the priorities of your colleagues who are not Members of the 
Committee. And I also hope that you will give this bill a fair 
consideration as you look to broader changes to our nation's 
Tax Code over the remainder of this Congress and continuing 
into the next one.
    Thank you.
    Chairman BOUSTANY. Thank you, Ms. Eshoo. I want to thank 
all four of our colleagues for bringing these important tax 
proposals forward, and we will certainly look at them. Thank 
you.
    Well, next call up our--one more panel of our colleagues: 
Mr. Buck, Mr. Harris, Mr. Meadows, and Mr. Cartwright.

   STATEMENT OF THE HONORABLE KEN BUCK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. BUCK. Thank you, Mr. Chairman, and thank you for 
holding this hearing and allowing us to give you some input in 
the Committee.
    Mr. Chairman, I want to thank you for the opportunity to 
speak on behalf of H.R. 4220, the Water and Agricultural Tax 
Reform Act. Throughout rural America, residents cite the rising 
cost of water as one of their greatest challenges. I see it 
happening in Colorado. When farmers can't afford water their 
crops lie withering in the fields, and the entire community 
suffers, from the farmer and his family to the towns and cities 
that rely on the agricultural industry for food and jobs.
    The Water Act empowers rural America. It keeps water 
affordable, while allowing farmers to have a stake in the 
resources they use every day. The Act specifically reforms the 
IRS rules applying to mutual irrigation reservoir and water 
companies. These entities are member-owned farmer cooperatives. 
They maintain water storage and delivery systems in much of 
rural America. The cooperatives can qualify as tax-exempt 
entities, provided that 85 percent of their income comes from 
member shareholders. These members include farmers, ranchers, 
and rural water users who purchase water from the cooperative.
    It has become increasingly difficult for mutual irrigation 
reservoir and water associations to stay in business because of 
costly water infrastructure maintenance. Under current law, if 
one of these cooperatives receives more than 15 percent of its 
income from non-member sources such as recreational leases or 
crossing fees, it will lose its tax-exempt status. This forces 
rural water users to bear the burden of operations and 
maintenance costs in the form of high water assessments, just 
to maintain their tax exemption.
    This common-sense legislation excludes certain revenue 
streams from the 85 percent member income test. By requiring 
the proceeds from the extra revenue to be used exclusively for 
the operations and maintenance of the water companies, we can 
assure that these funds are reinvested in rural water 
infrastructure. This will support local economies, promote more 
efficient use of water, and help agricultural workers across 
the country.
    This legislation is supported by the American Farm Bureau 
Federation, the Family Farm Alliance and rural water 
associations in many states. I urge the Committee to empower 
rural America by moving the Water and Agricultural Tax Reform 
Act forward.
    Another important tax priority for me is H.R. 2903, the 
Craft Beverage Modernization and Tax Reform Act. This bill 
modernizes excise tax rates for brewers and importers. Colorado 
is home to hundreds of brewers, from local micro-breweries to 
major Colorado employers like MillerCoors and Anheuser-Busch. 
This bill has brought together brewers of all sizes, and the 
tax relief afforded under this bill will provide the capital 
necessary for these businesses to grow. Thank you.
    Chairman BOUSTANY. Thank you, Mr. Buck.
    Dr. Harris, you may proceed.

  STATEMENT OF THE HONORABLE ANDY HARRIS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MARYLAND

    Mr. HARRIS. Thank you very much. What I am going to 
describe today is H.R. 5308, the Asset Act, which is another 
pathway to a state tax reform.
    You know, the bottom line is we pass the estate tax repeals 
through the House, nothing happens to it. So we really should 
begin to think if we can never pass estate tax repeal, of some 
way to mitigate the effect of estate tax.
    We all know what happens to a successful business or farmer 
or rancher, you know, they work hard, they accumulate things 
through their lifetime. The estate tax sits, and a lot of times 
they have to dissolve the business or the entity. If not, it is 
a tremendous inefficient allocation of capital during the 
course of doing business, because you are spending your time 
figuring out how to avoid the estate tax.
    So what this does, this bill, the Asset Act, permits 
individual taxpayers to opt in to a new system in which death 
would no longer be a taxable event. By taking the uncertainty 
of death out of the question of how and when assets should be 
liquidated, the Asset Act will contribute to economic growth 
and preserve the stability of these companies, which are 
frequently family-owned companies.
    Small business owners, farmers, ranchers, and others don't 
have to live their life fearing the tax liability imposed under 
the existing state tax, and won't have to dismantle profitable 
companies, sell farms and ranches, over-purchase life 
insurance, and waste their money on lawyers and accountants 
with sheltering strategies while they're alive.
    The key is that it gives the individual taxpayer the right 
to determine his or her destiny and to provide vital businesses 
and jobs at a time when we need them most.
    Under our proposal, individuals would essentially pay--have 
the ability to pay their estate taxes during--pre-pay them 
during their earnings years, and the government would then, on 
their death, would forego traditional Federal and estate tax 
and only collect capital gains taxes when those assets are sold 
at a time of the heir's choosing.
    The taxpayer would have to opt into the approach by 
agreeing to pay an additional tax on his or her adjusted gross 
income every year while they are earning money and accumulating 
the estate for the life of the taxpayer. The bill has it as one 
percent of adjusted, but we want to make it revenue neutral so 
that, in the end, it is a revenue neutral bill. No tax will be 
levied against the estate of a taxpayer on their death. Again, 
only the capital gains will be paid when the heirs to the 
decedent decide to sell the assets in the estate.
    The taxpayers would have to pay the fee for a minimum 
period of time. In the bill we have seven years but, again, it 
may need to be adjusted to make it revenue neutral. And the 
choice is irrevocable, once a taxpayer chooses this system.
    So what it would mean is that you give the business owner a 
second, predictable way to deal with estate taxes. Again, 
forgoing the need to liquidate estates at the time of death and 
spending inordinate amounts of money--and again, capital--
inefficient spending of--allocation of capital during the 
business's productive life. Thank you very much.
    Chairman BOUSTANY. Thank you, Dr. Harris.
    Mr. Meadows, you may proceed.

  STATEMENT OF THE MARK MEADOWS, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF NORTH CAROLINA

    Mr. MEADOWS. Thank you, Chairman Boustany and Members of 
the Subcommittee. It is refreshing to have this kind of open 
environment to discuss possible legislation, and so I want to 
applaud the Subcommittee on your willingness to entertain this 
type of dialogue.
    I want to encourage the Subcommittee to endorse and support 
H.R. 210, which is the Student Worker Exemption Act. The 
genesis of this particular piece of legislation actually came 
from a chancellor of a university in my district as I was 
meeting with him. Not wanting to be political, he said, ``there 
is one thing that would really help us out as it relates to the 
Affordable Care Act.''
    Knowing that the Affordable Care Act can conjure up all 
kinds of rhetoric on both sides of the aisle, he said that the 
particular provision in the Affordable Care Act that requires 
universities to cover their student workers under the employer 
mandate was having a chilling effect on the amount of hours 
that they could give people who were wanting to work their way 
through college. And indeed, what was happening is that if they 
work for more than 30 hours for 3 weeks--so that would include 
summer time--they were actually having to put forth the expense 
and cover them under the employer mandate when, indeed, the 
Affordable Care Act actually required those who are 25 years of 
age and younger to be covered under the parents' plan or other 
types of insurance.
    So this was essentially a double insurance plan that was 
defeating the purpose of student workers on college campuses. 
We introduced that particular piece of legislation, we offer it 
here for your consideration.
    I can tell you that it has been endorsed by a number of 
university associations that would normally not endorse a piece 
of legislation that comes from someone with conservative 
pedigrees, such as myself. And I say that it has had tremendous 
support by Democrats, those in higher institutions. I think it 
is something we can all get behind, and it is certainly a 
common-sense approach to addressing some of the unintended 
consequences of the Affordable Care Act, and I certainly offer 
it up for your consideration. Thank you so much.
    Chairman BOUSTANY. Thank you, Mr. Meadows.
    Mr. Cartwright, you may proceed.

STATEMENT OF THE HONORABLE MATT CARTWRIGHT, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. CARTWRIGHT. Thank you, Chairman Boustany and all 
Members of the Subcommittee for holding this Members Day. I 
join Representative Meadows in thanking you for doing this, and 
encourage you to continue this sort of dialogue. I am here 
talking about H.R. 1100, the Military Spouse Job Continuity 
Act, which I introduced along with Representative Rob Wittman.
    This bill represents a small tax credit that could have a 
big impact on American military families. Every year, over a 
million servicemembers, receive change of station orders often 
requiring moves across state lines. Military spouses move along 
with them, and many times put their careers on hold when 
relocating. H.R. 1100 simply seeks to alleviate that burden 
borne by military spouses who must re-license or re-certify in 
order to continue working in their chosen profession when they 
move with their servicemember spouse.
    Specifically, the bill provides for a tax credit of $500 
for the renewal or transfer of an active duty servicemember 
spouse's professional license. It applies only to the 
administrative fees owed to state licensing boards or 
certificate granting institutions. Currently there is no 
Federal program covering this.
    The numbers speak to the need of this tax credit. Nearly 35 
percent of military spouses in the labor force are in 
professions that do require licenses or certifications for 
employment. The top three occupations of military spouses all 
require licensing or certification. We are talking about 
teachers, child care workers, and registered nurses.
    A military spouse's ability to continue in his or her own 
chosen profession impacts the military's ability to do business 
and retain its servicemembers. Nearly 70 percent of married 
servicemembers reported that their decision to re-enlist was 
largely or moderately affected by their spouse's career 
prospects.
    This bill enjoys wide support from military organizations, 
including the National Military Family Association, the 
Military Officers Association of America, and the National 
Guard Association of the U.S. In fact, the Military Officers 
Association of America has included that in their voting score 
card for this Congress.
    H.R. 1100 has strong bicameral and bipartisan support with 
144 cosponsors in the House and 14 cosponsors in the Senate for 
Senate Bill 210, introduced by Senator Bob Casey from my state.
    These men and women uproot their families and relocate in 
order to meet the needs of our national defense, and the 
government should be doing everything possible to make that 
transition seamless.
    Thank you again, Mr. Chairman, and thank you, all the 
Members of the Subcommittee.
    Chairman BOUSTANY. Thank you, Mr. Cartwright. Well, I want 
to thank all four of you, our colleagues, for bringing these 
very important tax proposals forward. We will look at them, and 
we thank you for your testimony today.
    Let's call up our next panel: Mr. Rodney Davis, Mr. Scott 
Peters, Chairman Rob Bishop, Mr. Keith Ellison, and Mr. Dana 
Rohrabacher.
    [Pause.]
    Chairman BOUSTANY. Just take your time, Mr. Davis.
    [Laughter.]
    Chairman BOUSTANY. You may proceed with your testimony.

 STATEMENT OF THE HONORABLE RODNEY DAVIS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. RODNEY DAVIS OF ILLINOIS. Sorry, we go the other way in 
Ag, I apologize. Not used to sitting on this end of the witness 
table.
    Mr. Chairman, thank you for your time, and to the 
esteemed--our esteemed colleagues on this Committee. I 
appreciate the opportunity to talk about a very important 
issue: student loan debt.
    The average student graduates with nearly $30,000 in debt, 
and Americans owe more than $1.3 trillion in student loans. 
Student loan debt now represents the second-highest form of 
consumer debt, only behind mortgage debt. Not surprisingly, the 
student loan debt crisis has forced many recent college 
graduates to delay buying a home and saving for retirement.
    According to the Institute for College Access in Success in 
2012, 1.3 million students graduated with student loan debt; 
153,400 of those students have since defaulted on their loan, 
costing taxpayers $4.5 billion in default liabilities. And that 
is just one recent graduating class.
    Employers like PriceWaterhouse Coopers and others are 
looking at new ways to help solve the student loan crisis. But 
it is time Congress does its part. I propose legislation that 
would offer tax incentives to private businesses to help 
employees repay student loans, much in the same way it 
currently works when an employer provides tuition assistance.
    The Federal Government already does this, and I know many 
congressional staffers take advantage of the student loan 
repayment assistance program here on the Hill. But as of now, 
assistance an employee receives from their employer counts 
toward their gross income, and only three percent of American 
employers in the private sector provide some sort of student 
loan repayment benefit.
    We need the existing tax incentives employers receive for 
tuition assistance to be applied to student loan repayment, and 
not to be counted as gross income for employees. My bill, H.R. 
3861, the Employer Participation and Student Loan Assistance 
Act, would do just that, helping companies recruit and retain 
young talent.
    Although the cap of $5,250 per year would remain the same, 
I believe this is a clean and simple fix that has a lot of 
support from both students and employers. And it is important 
to keep in mind the tangible benefits helping to reduce default 
rates would have on our economy.
    Recently my colleague next to me, Scott Peters, who has a 
similar bill, and I agreed to work together on this issue to 
help reduce the burden of student loan debt. We look forward to 
continuing to work with our colleagues in Congress, educational 
institutions, the private sector, and, most importantly, 
students to push for common-sense solutions to the ever-growing 
problem of student loan debt.
    And I want to end, Mr. Chairman, by reminding this panel 
that in one graduating class alone--one graduating class, 
153,400 former students have defaulted on their loans, leaving 
a potential $4.5 billion hit to the Federal taxpayers. We need 
to act.
    Chairman BOUSTANY. Thank you, Mr. Davis.
    Mr. Peters, you may proceed.

 STATEMENT OF THE HONORABLE SCOTT PETERS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. PETERS. Thank you, Mr. Chairman, Mr. Neal, for 
convening this hearing and for giving me the opportunity to 
discuss an innovative, bipartisan proposal that would reduce 
the burden of student loan debt. And I thank Mr. Davis for his 
acknowledgment. We are trying to see if we can't combine these 
ideas, because they are pretty similar, as you will hear.
    Affordable higher education for hard-working Americans is 
central to future generations achieving the American Dream and 
to our nation's competitiveness. So we should be making it 
easier and more affordable for students to go to college, not 
keeping it financially out of reach for more and more families.
    Substantial student loan debt not only is a burden for 
graduates, but it is diminishing purchasing power and severely 
limiting lifetime earnings. The Wall Street Journal reported 
that the average debt for a 2015 graduate was just over 
$35,000. A study by DIMOS recently found the average student 
debt for a dual-headed household with bachelor's degrees leads 
to a lifetime loss of nearly $208,000 in income, and student 
loans, as Mr. Davis said, recently surpassed credit card debt 
to become the second-biggest source of personal debt in the 
United States.
    In our dynamic new economy, high-quality jobs now require 
far more formal education and mid-career learning than in the 
past, which can be expensive. Employers have an incentive to 
help their employees pay for education that adds value to their 
business.
    My bill, the Bipartisan Student Loan Repayment Assistance 
Act, would give borrowers relief from their student loan debt 
burden through incentivizing employers to offer student loan 
repayment assistance. It encourages employer-employee matching 
programs to repay student loans, similar to a matching 401(k) 
plan and the student loan assistance we offer to staffers and 
the House of Representatives. Employer and employee student 
loan contributions made through a repayment agreement would not 
be taxed as income, and the contributions wouldn't be sent 
directly to the lender.
    Students will be able to make investments that grow the 
economy, like buying a home, starting a family, and putting 
away money for retirement. Businesses will be able to attract 
and retain high-skilled employees and well-qualified graduates, 
and a more skilled workforce will allow America to compete 
better in the global economy.
    Congress must embrace the opportunities to invest in our 
nation's future as we work to reduce America's student loan 
debt and unleash our economic growth.
    I thank the Committee for its consideration, look forward 
to working with you and my colleagues to move this policy 
forward, and certainly welcome any of your questions. Would 
yield back the balance of my time.
    Chairman BOUSTANY. Thank you, Mr. Peters.
    Chairman Bishop, I assure you I'm not going to ask any 
questions about Puerto Rico. You may proceed.
    Mr. BISHOP. Yes, right, right, sure.

  STATEMENT OF THE HONORABLE ROB BISHOP, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. BISHOP. Gentlemen, it is good to be here. I have a 
statement for the record, if indeed you have a record. We can 
introduce that later.
    I have long been involved on the study group on Germany. I 
am past Chairman of it. And I remember one time I was over 
there talking with Senator Coats, who was then the ambassador 
to Germany, and we recognized that in western and southern 
Germany, where there is a great deal of interface with American 
military, positive attitude towards America was understandable.
    In East Germany, where that contact was less, so their 
attitude was less. And we agreed at that time that one of the 
best things we could do for foreign policy was to get more 
interaction between people knowing about America, having that 
personally there. And one of the best ways of doing that was 
with foreign exchange students.
    Look, when the Iraq War broke out, Chancellor Schroder 
decided to use that as part of his campaign attacking the 
United States. One of the members of his party that helped us 
the most was a gentleman in the Bundestag by the name of Hans-
Ulrich Klose, who was always stating that in 1957 he spent a 
year as a foreign exchange student in Clinton, Iowa. Those kind 
of friendships that we develop through foreign exchange 
programs have an amazing amount of help in our foreign policy 
on the grass roots level.
    In the 1960s a deduction was given to those who were 
hosting these students of $50. The bill that I have, which is 
4296, or something like that, would simply change that to $900, 
which is the rate of inflation since the 1960s. It hasn't 
happened since that time.
    Anything we could do to encourage this kind of student 
interchange has a long-term impact on the foreign policy. You 
could do something in this Committee that would have a great 
impact on a committee that is not part of your jurisdiction. I 
have hosted these kids. So, actually, if you wanted to pass 
this and make it retroactive, that would be cool, I could live 
with that.
    [Laughter.]
    Mr. BISHOP. But it has an impact, and it is a positive 
impact, and it is one of the things that we could do to try and 
express the idea of getting people over here so they understand 
America and they can go back home and they can promote and be 
friends of America in the future. I think it is a small step 
that could have enormous impact later on.
    Thanks.
    Chairman BOUSTANY. Thank you, Chairman Bishop.
    Mr. Ellison, you may proceed.

 STATEMENT OF THE HONORABLE KEITH ELLISON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MINNESOTA

    Mr. ELLISON. Thank you, Mr. Chairman and Ranking Member and 
all the Committee members.
    Last week I met with a formerly homeless veteran with a 
service-connected injury who now is living in Fort Snelling, 
which is a old fort in Minnesota which is now home to veterans 
housing. And he said this to me. He said, ``Congressman 
Ellison, you can't get clean on the street. You can't hold a 
job on the street. We need housing.''
    And, you know, I hear from young people every day who want 
to buy a home, but see most of their income disappear to cover 
rent. Crushing rent, college debt--as already been mentioned--
make it difficult that they will ever be able to establish a 
downpayment to afford to buy a home. They may, but it may be a 
long time.
    Yesterday nearly three dozen Realtors stopped by my office 
to urge me not to make any changes to the $70 billion mortgage 
interest deduction. And these are my friends, and I appreciate 
them a lot. But as much as I want to see things the way my 
friends do in this--in the Realtor community, I cannot ignore 
the pressing housing needs of Americans and the current 
problems that the current mortgage interest deduction causes.
    The status quo means giving significant tax breaks to 
families that earn more than $100,000 a year, while giving a 
little bit either in home ownership or rental housing to people 
with lesser income. That is why I introduced the Common Sense 
Housing Investment Act. This bill replaces the regressive and 
badly-targeted mortgage interest deduction with a 15 percent 
flat rate credit. The 15 percent credit my bill proposes would 
help more than 16 million current homeowners. And there are at 
least a third of these homeowners with a mortgage that don't 
even itemize their taxes.
    Future homeowners will also benefit. They will know what 
the future tax benefit would be. And by converting to a credit 
and lowering the cap on the amount of the mortgage interest 
from one million to 500,000, we raise $200 billion in 10 years. 
With that money we can provide tens of millions of affordable 
new homes, and can fund the National Housing Trust Fund, move 
families off decades-long waiting lists, expand the low-income 
housing tax credit, and Section 8, and upgrade our public 
housing.
    H.R. 1662 doesn't provide enough revenue to end our 
affordable housing crisis. My other bill, the Inclusive 
Prosperity Act, can kick in some additional funds. The 
Inclusive Prosperity Act enacts a wafer-thin tax on the sale of 
stocks, bonds, and derivatives. The revenue would support 
education, child care, and pollution cleanup and other 
investments. Financial transaction taxes are not a radical 
idea; 40 nations have or have had financial transactions tax. 
The financial transactions tax raises revenue for investment 
and curbs dangerous high-frequency trading.
    The Common Sense Housing Investment Act and the Inclusive 
Prosperity Act are examples of better choices for working 
families in our future, and I urge the Committee to support 
both. Thank you.
    Chairman BOUSTANY. Thank you, Mr. Ellison.
    Mr. Rohrabacher.

 STATEMENT OF THE HONORABLE DANA ROHRABACHER, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. ROHRABACHER. Well, thank you very much, Mr. Chairman 
and Ranking Member and Members of the Committee. I appreciate 
this opportunity to bring H.R. 4577 to your attention. That is 
the Expanding Employee Ownership Act of 2016, which I 
introduced with Rep. Collin Peterson as my cosponsor, as 
coauthor back in February 12th of this year.
    This bill, I believe, will be the most bipartisan-supported 
bill that ever has come to the floor of the House, if we permit 
it to come to the floor of the House for a vote. It is--
basically wants to expand the ownership of--by employees of 
stock in the companies in which they work.
    The proposal would be like ESOPs on steroids. This is where 
every time a company would give a distribution of stock to its 
employees--it has to be a general distribution--those 
employees, if they keep that stock for five years, do not have 
to pay income tax on the stock. So it is tax-free to them. If 
they hold it for 10 years, another provision kicks in where, 
after that 10-year period, a capital gains tax will begin to be 
eliminated, and that is phased in over a 10-year period. So 
after 20 years an employee will have no capital gains tax on 
the stock that he has been given, and no income tax, as well.
    I believe that would--what we are talking about would 
dramatically expand the employee ownership and--of their own 
stock and their own companies, which would bring about more 
cooperation between management and labor, a much longer view of 
decisions by labor--by the management, knowing that the 
employees had to be taken into consideration because, after 
all, they are owners of the company, as well.
    So I am--I would ask that this be made--would be brought to 
the floor, and I--as I say, I think this reflects a bipartisan 
commitment of both Republicans and Democrats not just to 
empower big businessmen, but let the average person in this 
country start to benefit from capital ownership. And the reason 
we have such a large dichotomy now, and wealth ownership in our 
country, is that so many people don't own any capital. And it 
is capital that actually creates wealth. And so we have cut 
them off.
    This would encourage that type of broad ownership, help 
working people, help our companies have stable employment with 
good employees. It is a win-win for everybody.
    Chairman BOUSTANY. Thank you, Mr. Rohrabacher. I want to 
thank our colleagues for bringing these very important tax 
proposals forward, and we will take them all into 
consideration. We thank you.
    Let's call up the next panel. Mr. Brat, Dr. DesJarlais, Mr. 
Hultgren, Dr. Fleming, and Mr. DeFazio.
    [Pause.]
    Chairman BOUSTANY. Ranking Member Neal has to chair a 
different event, he will be back shortly. I just want to have 
that recorded in the record.
    [Pause.]
    Chairman BOUSTANY. We thank our colleagues. And Mr. Brat, 
you may proceed.

   STATEMENT OF THE HONORABLE DAVE BRAT, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. BRAT. Thank you, Mr. Chairman. Encouraging personal 
savings is more important now than ever. We need to make it 
easier for the American people to work, save, invest, and live 
the lives they want. That is why Senator Jeff Flake and I 
introduced the Universal Savings Account Act.
    Universal savings accounts would be like Roth IRAs, but far 
more flexible. American adults could contribute post-tax income 
up to $5,500 per year. Savings could be invested like IRAs and 
earnings would grow tax-free. Withdrawals wouldn't be taxed at 
all. Anyone who doesn't contribute the full amount in a year or 
who makes withdrawals could backfill it later. These accounts 
would let people save for any of life's challenges and 
opportunities with the knowledge that their resources will be 
there when they need them.
    They could also supplement retirement savings, but they 
could also be used for a car, college, downpayment on a house, 
and much more.
    Other options already exist, but they have complicated 
rules and restrictions. Many Americans won't risk putting their 
hard-earned income into restricted accounts that penalize 
general withdrawals. Universal savings accounts are simple and 
easy to use. Canada and Great Britain have had something 
similar for years. Canada's accounts were established in 2009, 
and only 6 years later, 48 percent of Canadians had one, 
including many middle-income families. These accounts would 
create opportunity by reducing double taxation and expanding 
national savings.
    The U.S. personal savings rate is only 5.5 percent, 
currently, much lower than it should be, and much lower than it 
was in the 1970s or 1980s. In Macro Economics 101, which I used 
to teach for 20 years, students learn that savings equals 
investment at the macro level, and per capita income growth 
requires capital investment. With a growth rate of only 0.7 
percent in the fourth quarter of 2015, we clearly need to boost 
both savings and investment.
    These accounts would also help reform Federal and state 
programs, with minor changes that could be used for education 
savings accounts, Roth health savings accounts, cash-based 
income support programs, and more. Our proposal has been 
endorsed by Americans for Tax Reform, the National Taxpayers 
Union, and the Association of Mature American Citizens.
    My Virginia constituents like it, regardless of their 
political leanings. I hope we can all work together on ideas 
like this to help our constituents face life's challenges and 
opportunities.
    I ask unanimous consent to insert supplemental materials 
about the bill into the record.
    Chairman BOUSTANY. Without objection.
    [The information follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
   
    Mr. BRAT. Thank you, Mr. Chairman.
    Chairman BOUSTANY. I thank the gentleman.
    Mr.--Dr. DesJarlais, you may proceed.

 STATEMENT OF THE HONORABLE SCOTT DESJARLAIS, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF TENNESSEE

    Mr. DESJARLAIS. Thank you, Mr. Chairman and Members of the 
Committee. I want to thank you for inviting me to come before 
you today to discuss H.R. 2874, the Andrew P. Carpenter Tax 
Act. I am truly humbled to have had the honor of introducing 
this bill.
    On February 19, 2011, Marine Lance Corporal Andrew 
Carpenter passed away from fatal wounds sustained while on a 
combat mission in the Helmand Province of Afghanistan. A 
resident of Columbia, Tennessee, Andrew enlisted in the United 
States Marine Corps in 2007, and went--was on his second tour 
of duty in Afghanistan when he laid down his life for his 
country, leaving behind his wife, Chrissy and then soon-to-be-
born son, Landon.
    Three years prior to his tour of duty, Andrew had taken out 
a private student loan, which the loan company ultimately 
forgave following Andrew's death. However, as hard as it is to 
believe, the pain and anguish of his family was exacerbated 
upon learning that the amount of this discharged loan, by law, 
would be factored into their gross taxable income for that 
year, a nearly $1,800 tax bill.
    Having already sacrificed so much for our country, it is 
simply wrong to require our military families to pay taxes on 
loans already forgiven. This is why I have reintroduced this 
bill.
    Simply, this bill amends Section 108 of the Internal 
Revenue tax-exempt private student loan forgiveness from being 
categorized as gross taxable income for families of veterans 
who have lost their lives while serving on active duty in the 
United States armed forces. This legislation attempts to shield 
the families of American fallen soldiers from ever having the 
IRS add to their loss by callously presenting them with a tax 
bill. The only thing these parents should receive is a flag and 
the admiration of the American people.
    This bill, which passed unanimously in the House during the 
112th Congress, has received the support of the National Guard 
Association of the United States and the Veterans of Foreign 
Wars. I am truly humbled to have had the honor of introducing 
this bipartisan bill, and look forward to working with this 
Committee to fix this problem, and would humbly ask that you 
consider bringing this to the floor. And it would be an awful 
kind gesture to do it before Memorial Day--not that I am asking 
much.
    Chairman BOUSTANY. Thanks, Dr. DesJarlais.
    Mr. Hultgren, you may proceed.

STATEMENT OF THE HONORABLE RANDY HULTGREN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. HULTGREN. Thank you, Chairman, thank you Members of the 
Committee. I really appreciate this opportunity.
    As you all know better than most, our Tax Code reaches into 
every sector of our economy and every home across America. I 
support having a tax system that allows for everyone to keep as 
much of their hard-earned money as possible. Americans and 
their representatives in Congress agree it is time to simplify 
the Tax Code.
    It naturally follows that we should analyze how that 
simplification will affect the country. Here is one item that I 
think is working: the current tax-exempt status provided to 
municipal bonds. This is why I recently partnered with 
Congressman Ruppersberger to create the Municipal Finance 
Caucus.
    While serving in local government in Illinois I saw 
firsthand the benefits provided by this reliable option for 
financing community development. I am talking about the roads 
we drive on, schools for our children, affordable family 
housing, water systems that supply safe drinking water, 
hospitals and clinics to treat the sick, airports and ports 
that help move product domestically and overseas, and utility 
plants that power our homes, businesses, and factories.
    In 2013 a study by local government groups found that if 
the tax exemption is eliminated or capped, that it is more 
costly to issue the debt. These costs are real. Building the 
Red Gate Bridge over the Fox River in St. Charles in 2011 would 
have cost the City of St. Charles, Illinois an additional 
$619,000 in interest costs, without the exemption. Will County 
wants to build a new courthouse and law enforcement complex 
affordably.
    Washington disagrees on how to strengthen our 
infrastructure, but I believe decisions made by local 
communities handling local projects tend to be more efficient 
than one-size-fits-all policy from Washington, D.C. I like to 
think of this as fiscal Federalism, and our colleagues agree. 
Last year Congressman Ruppersberger and I were joined by 122 of 
our colleagues, Republicans and Democrats, in a letter to the 
House leadership, saying as much. And I plan to submit this for 
the record.
    Mr. Chairman, this impacts all of our districts, and I know 
even in your own district, the St. Martin Parish School 
District issued bonds last year to build new schools and 
improve existing ones. The issuance would have cost an 
additional $1.2 million if the tax exemption were capped, as 
called for in the President's budget. Ranking Member Neal, 
Springfield, Massachusetts, recently completed an issuance used 
to fund 22 separate projects, including school renovation, road 
improvement, HVAC work at City Hall, and would have cost the 
city and its taxpayers almost another $7 million.
    U.S. municipal securities market is now a robust $3.7 
trillion. Unfortunately, the media likes negative stories. It 
is frustrating to see breathless articles on the latest debt 
collapse. Certainly we need to make sure debt is being used and 
issued and managed responsibly, but there are also thousands of 
successful infrastructure projects across our great country. We 
must keep telling their stories.
    We should also be thinking of other ways that state and 
local government can partner with the private sector to support 
job growth.
    I would ask the opportunity to be able to submit the rest 
of my testimony.
    Chairman BOUSTANY. Without objection.
    Mr. HULTGREN. With that, I would yield back.
    Chairman BOUSTANY. Thank you, Mr. Hultgren.
    Dr. Fleming, you may proceed.

 STATEMENT OF THE HONORABLE JOHN FLEMING, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. FLEMING. Thank you, Mr. Chairman. Today I am here to 
testify on H.R. 1397, the Seniors Tax Simplification Act, which 
would save millions of taxpayers money, but not cost the 
revenue one cent.
    Every day and every day for the next 14 years, 10,000 
Americans will celebrate their 65th anniversary--excuse me, 
65th birthday. In 2010, about 13 percent of the national 
population was 65 years old or older. That percentage is 
expected to grow to 18 percent by 2030. Recent IRS statistics 
tell us that about 23 million seniors file taxes. That is 
nearly 16 percent of all tax filers. Millions of these senior 
filers claimed a pension or annuity and social security 
benefits. There is no doubt that the American senior population 
is increasing and, in all likelihood, the number of senior 
filers will increase, as well.
    What is concerning and unique to this segment of the 
population is the fact that seniors, by virtue of their age and 
type of income, are precluded from using Form 1040 EZ, the 
easiest and most basic individual income tax return form 
available.
    Earning social security retirement--excuse me, H.R. 1397, 
the Seniors Tax Simplification Act, remedies this dilemma by 
providing a brief, easy-to-read form called Form 1040SR, 
specifically designed for older American taxpayers earning 
social security retirement benefits, interest, and capital 
gains.
    The new Form 1040SR would not limit taxpayers by age or 
taxable income levels. H.R. 1397 would grant Americans over 65 
years old access to a straightforward tax form, and one that is 
tailored to their specific income needs.
    Under my legislation, seniors would no longer be 
categorically excluded from the option of easy filing. In 2015, 
income tax filers had a choice between three tax forms: Form 
1040EZ, Form 1040A, and Form 1040. All forms allow taxpayers to 
claim the earned income tax credit. Each form, however, becomes 
incrementally laborious, based on a taxpayer's age, taxable 
income, and tax deductions and credits. The new Form 1040SR 
would mirror Form 1040EZ, with the exception that anyone over 
65 could use the form, and tax filers would not be limited by a 
taxable income.
    Like Form 1040EZ, Form 1040SR would not allow taxpayers to 
itemize deductions or claim any tax credits, with the sole 
exception of the earned income tax credit. My legislation 
provides seniors with a choice. Like all tax filers, seniors 
will need to decide which form is best suited for their unique 
financial complexity. The easiest tax form is not always the 
best, but at least seniors will have the ability to decide that 
for themselves.
    I would note for the record that H.R. 1397 has received 
broad coalition support, and I ask unanimous consent to submit 
letters from AMAC, Americans for Tax Reform, National Taxpayers 
Union, and 60-plus associations as part of my testimony here 
today.
    Chairman BOUSTANY. Without objection.
    [The information follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    



                               
    Mr. FLEMING. Thank you. An enactment of H.R. 1397 is not 
expected to cost the taxpayers any money. It could actually 
save seniors time, energy, and resources. And thank you very 
much.
    Chairman BOUSTANY. Thank you, Dr. Fleming.
    Mr. DeFazio, you may proceed.

 STATEMENT OF THE HONORABLE PETER DEFAZIO, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. DEFAZIO. Thank you, Mr. Chairman. Thanks for this 
opportunity to be here today. Mr. Chairman, I am the co-chair 
of the House Small Brewers Caucus created in 2007. We now have 
207 Members representing 43 states.
    For the first time since Prohibition we have more breweries 
in the United States than at any time in our history, 4,300. 
These small businesses, for the most part, support nearly half-
a-million jobs. And yet they are one of the most highly 
regulated and taxed business sectors in the country. Craft 
brewers paid $307 million in Federal excise taxes last year. 
Small brewers who produce less than two million barrels a year 
pay $7 for the first 60,000. After that they pay $18 per 
barrel.
    Our colleague, Representative Paulsen, has introduced H.R. 
2903, the Craft Beverage Modernization Tax Reform Act, which 
would reduce the excise tax from $7 per barrel to $3.50 per 
barrel on the first 60,000 barrels brewed, and it would reduce 
the tax from $18 to $16 for all brewers, large and small, on 
the first 6 million barrels.
    This is a very modest proposal which would do a great deal 
to grow America's small businesses. It is very expensive to 
start and to expand a small brewery, and this reduction in 
excise taxes would be used to purchase equipment, much of which 
is manufactured in the United States, and produce more jobs 
here in the U.S. And ultimately, the craft breweries, 
obviously, are helping us with our trade deficit, since the two 
largest brewers in America are now foreign-owned. So there are 
many, many benefits to recommend it.
    This bill has more than 200 bipartisan cosponsors. It is 
supported by the Brewers Association, Beer Wholesalers 
Association, Wine Institute, many other organizations. You 
know, I will admit that there is some self-interest, since my 
state of Oregon will benefit greatly from the bill, we have 
nearly 1,000 craft breweries, wineries, and distilleries that 
contribute $6 billion to our economy.
    I think this is a very common-sense proposal that would 
stimulate a tremendous amount of growth in small businesses, 
and I recommend it to the Committee.
    Chairman BOUSTANY. Thank you, Mr. DeFazio. I want to thank 
all our colleagues for bringing these important tax provisions 
forward, and we will take them under consideration. Thank you 
very much.
    We will now move to our next panel: Majority Whip Steve 
Scalise, Mr. Cramer, Mr. Barr, and Ms. Sewell.
    [Pause.]
    Chairman BOUSTANY. We thank you for joining us today, and 
we will start with Ms. Sewell.

 STATEMENT OF THE HONORABLE TERRI SEWELL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ALABAMA

    Ms. SEWELL. Thanks, Mr. Chairman. Thank you for the 
opportunity to come before you today to present the Workforce 
Development Tax Credit Act, H.R. 1781, a bill designed to 
increase apprenticeships through a new Federal tax credit for 
employers. I introduced this bill in response to the feedback I 
received from employers who participated in our first job fair 
in Birmingham, Alabama.
    In a breakout session, employers expressed deep concern 
about the shortage of skill, talent, and its relationship to 
unemployment. They reported that positions remained unfilled, 
and they were unable to expand because they couldn't find 
employees with the skills needed to help their businesses 
remain competitive. These employers predicted, then, that these 
shortages will only grow worse if we do not better equip our 
young and unemployed people with the skills needed to succeed 
in the workforce.
    According to the Manufacturing Institute, the skills gap is 
expected to contribute to 2 million of the 3.5 million 
manufacturing jobs expected to open in the next decade. 
Apprenticeship programs, both domestically and internationally, 
have proven effective in combating the skills gap, while 
increasing middle-class wages, reducing income inequality, and 
expanding social mobility. There are--they are among the best 
pathways to provide American workers with the skills and 
knowledge needed to acquire good-paying jobs and to grow the 
economy.
    Studies suggest that for every dollar spent on 
apprenticeship programs, employers may get an average of $1.47 
back in increased productivity, reduced waste, and greater 
front line innovation.
    With the proven value of apprenticeship programs in mind, 
we crafted legislation modeled after a bill in the South 
Carolina legislature that created one of our country's most 
successful apprenticeship programs. It was called 
Apprenticeship Carolina. The funding provided by the state is 
modest, yet the incentives has increased apprenticeships in the 
state sixfold since it was first created in 2009.
    International companies often cite an inadequate number of 
skilled workers for intermediate technical occupations among 
reasons for not expanding operations in the United States. 
These companies from Germany and Switzerland among them have 
made skills training a top priority.
    In 2014 we worked with our governor's office in Alabama to 
attract an international copper company, Golden Dragon, to its 
first U.S. plant in the most economically depressed county in 
the State of Alabama in my district. Less than two years have 
passed, and the company is already experiencing concerns that 
local employees do not have the skills needed to achieve the 
productivity and quality required in today's global competitive 
marketplace. This is an indictment of our nation's 
disinvestment in skills training.
    If we fail to properly train our young people for jobs in 
the 21st century, we will put both them and our country at a 
disadvantage for generations to come. We can and must do better 
by investing in these training programs.
    I look forward to working with this Committee to advance 
this and other tax legislation that encourages companies to 
invest in America's workforce. In so doing, we can revitalize 
our manufacturing sector and increase our global 
competitiveness. Thank you.
    Chairman BOUSTANY. Thank you, Ms. Sewell. We will next go 
to our distinguished Majority Whip, Mr. Scalise.

 STATEMENT OF THE HONORABLE STEVE SCALISE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. SCALISE. Thank you, Mr. Chairman. I appreciate the 
opportunity to come and testify before the Committee. I want to 
also talk about H. Con. Res. 89, the resolution to oppose a 
carbon tax.
    As the Members of the Committee know, the two most 
important policy areas impacting our country are taxes and 
trade. And that is why I am here today to discuss a tax that 
will negatively impact American families and, by extension, 
trade and American competitiveness. My concurrent resolution 
expresses the sense of Congress that a carbon tax would be 
detrimental to American families and businesses, and is not in 
the best interest of the United States.
    In some ways, we have seen this before. I am humbled that 
in the 113th Congress, with over 150 cosponsors, the House 
passed a version of this concurrent resolution as an amendment 
to the REINS Act. Now, the REINS Act is another initiative that 
I believe we should continue to promote. It is the idea that 
unelected bureaucrats in Washington who want to come up with 
some crazy regulation that has negative impacts on the economy 
should not be able to move forward with those regulations 
unless they have come before the elected representatives of the 
people, where they ought to be able to state their case on 
CSPAN, in front of our elected representatives, and provide the 
data. And if it is a good idea, we will pass it, and if it is a 
bad idea, we defeat it. But we should be held accountable, not 
some unelected bureaucratic who is not held accountable for 
that. But, of course, that is a discussion for another day.
    Let's go back to H. Con. Res. 89. In July of 2013, the 
House passed the Anti-Carbon Tax Resolution as an amendment to 
the REINS Act by a 237 to 176 vote, which, by the way, was a 
bipartisan vote in support of the legislation.
    I hope that my testimony here today will lend additional 
support to revisiting this effort in the near future. I 
reintroduced this legislation in the 114th Congress because I 
believe it is critically important for the House of 
Representatives to be on record when it comes to a carbon tax. 
Here is why.
    A carbon tax, which is defined in the resolution as a 
Federal tax on carbon released from fossil fuels, is really an 
energy tax and an energy tax that includes taxing most means of 
electricity generation, gasoline, natural gas, and home heating 
oil that will negatively impact American families. With 
stagnant wages in the middle class over the last decade, 
increased electricity and transportation costs are not the 
right policy solution for hardworking Americans.
    The higher transportation and electricity costs will then 
lead to an increase in the cost of all goods and services, with 
the massive amount of regulations and red tape that has been 
proposed and finalized by this Administration--by the way, that 
will also raise the price of all goods--a carbon tax would 
further devastate our economic potential.
    I have said that a carbon tax will raise energy prices 
across the board, and it will. But what should also be noted is 
that it will disproportionately affect those at the lower end 
of the economic spectrum, and those on fixed incomes. The 
reason is that our lower income citizens spend a larger 
percentage of their household budget on energy costs. So a tax 
that targets low-income families and seniors is not one that I 
believe the American people support.
    So I want to thank the Chairman for the invitation today, 
and I also want to thank the several organizations that have 
sent letters of support for this concurrent resolution. As a 
side note, Chairman Brady, the full Committee Chairman, was the 
first cosponsor we picked up after introducing this 
legislation.
    I will continue to work with my colleagues to have this 
measure considered on the House floor because the American 
people deserve to know where everyone stands on a carbon tax.
    Thank you for consideration, Mr. Chairman. I yield back.
    Chairman BOUSTANY. I thank the distinguished majority whip.
    Mr. Cramer, you may proceed.

 STATEMENT OF THE HONORABLE KEVIN CRAMER, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF NORTH DAKOTA

    Mr. CRAMER. Thank you, Mr. Chairman, for the opportunity to 
present today H.R. 5171, the Legacy IRA, introduced by Ways and 
Means Oversight Committee Chairman, Mr. Roskam.
    You know, since its enactment in 2006, the charitable IRA 
rollover has helped thousands of donors--millions of donors, 
really--contribute millions of dollars to thousands of American 
charities as they feed the hungry, find housing for the 
homeless, provide all kinds of services for the American 
citizens, including caring for the sick.
    Under current law, as you know, the individuals aged 70-
and-a-half years or older are allowed to make direct 
contributions from an IRA of up to $100,000 per year to public 
charities, and to private operating and conduit foundations 
without having to report the IRA distributions as taxable 
income. And, you know, this used to be part of the extender 
package every couple of years or so. And, fortunately, we were 
able to make it permanent law last year in the PATH Act.
    In an effort to build on this momentum and really expand 
the opportunity both for donors and charities, as I said, 
Chairman Roskam, Representative Blumenauer, Paulsen, Tiberi, 
and I have recently introduced H.R. 5171. This bipartisan 
legislation expands the charitable IRA rollover to provide 
middle and lower-income individuals and families more 
opportunities to give to a charity or a cause that they 
support.
    Specifically, the bill authorizes tax-free IRA rollovers 
for gifts which benefit charities and provide taxable 
retirement income for donors called charitable life income 
plans--things like annuities. Many IRA owners want to make 
charitable gifts, but are also in need of the retirement 
income. And the life income IRA rollover is a way for donors of 
more modest resources to combine charitable gifts with 
retirement income.
    Let me just give an example. I mean if you were a middle-
income family, you reach, as the wage earner, the age of 65, 
you retire, and never in your wildest dreams did you think you 
could make a $100,000 contribution to your alma mater, but you 
have this IRA. At the age of 65, if this legislation becomes 
law, you can make that $100,000 contribution to your alma 
mater, they could put it into an annuity that pays you, say, 
$5,000 per year income that you need, which is obviously good 
for the charity, obviously good for the donor, who now has 
$5,000 a year they didn't have before, good for the economy 
because that income is now rolling around the economy. And, for 
those that care, it is also good for the government, because 
that $5,000 per year is now taxable, generating revenue.
    There are lots of good reasons to incent contributions in 
charity, not the least of which is charity actually replaces 
the need for government services, in many cases, and delivers 
those services in a much more compassionate way than the 
government ever can or ever would.
    Without going into the details, I think that the merits are 
obvious, and I look forward to working with Chairman Roskam and 
others on the Committee to bring this bill to the floor and 
hopefully pass it. Thank you, Mr. Chairman.
    Chairman BOUSTANY. Thank you, Mr. Cramer.
    Mr. Barr, you may proceed.

   STATEMENT OF THE HONORABLE ANDY BARR, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. BARR. Thank you, Chairman Boustany and Members of the 
Subcommittee, for hosting this listening session and providing 
me an opportunity to relay the tax priorities of my 
constituents before the Subcommittee on Tax Policy.
    Kentucky's sixth congressional district has the great 
fortune of having a very diverse economy, from manufacturing to 
agriculture, health care, education, and high-tech start-ups. 
With that said, let's be honest. People think of Kentucky, they 
think about our world-class horse racing and breeding industry 
and Kentucky bourbon. And that is what I would like to discuss 
with this Subcommittee today.
    First, horses. On the heels of last year's triple crown 
with American Pharaoh, and last Saturday's Kentucky Derby 
champion, Nyquist, there is much to celebrate about our sport. 
But this is more than just a sport. It is a dynamic, job-
producing industry with an annual economic impact on the United 
States of $39 billion. And so I would like to commend to your 
attention H.R. 3671, the Race Horse Cost Recovery Act. This 
would make the three-year depreciation for race horses 
permanent. We have been able to include this in the tax 
extenders package for a number of years. It is time to make 
this permanent. And it is not just a benefit to this industry. 
It is sound tax policy because the useful life of this asset is 
three years, once a race horse is put into service.
    Now, bourbon. Kentucky's distilling industry has been an 
economic driver for generations. This is true now more than 
ever, as Kentucky and many other states across the country have 
witnessed an explosive growth in craft-distilled spirits. One 
could argue bourbon has never been more popular. In fact, there 
are currently more barrels of bourbon aging in Kentucky than we 
have citizens in the entire commonwealth. American whiskey and 
bourbon also enjoy a growing share of the global liquor market, 
accounting for over $1 billion of the $1.5 billion in total 
exports of distilled spirits.
    That is why I want to bring to your attention legislation I 
have introduced. H.R. 867, the Aged Distilled Spirits 
Competitiveness Act of 2015. This bipartisan legislation would 
correct a provision in the Tax Code that leaves American 
bourbon and whiskey distillers at a competitive disadvantage 
against other sectors of the liquor industry, particularly 
foreign competitors.
    As you may know, Section 263(a) of the Internal Revenue 
Code requires bourbon producers to capital interest expenses 
incurred to finance the production of bourbon and whiskey 
during the long aging process, which can be anywhere from 2 to 
23 years. This interest expense is not deductible for tax 
purposes until the bourbon or whiskey is sold years later, 
after the aging process. Aging can be thought of as part of the 
manufacturing process. Bourbon that has not aged is not yet 
bourbon, and therefore should not be considered inventory under 
the Tax Code. This tax treatment is unique to the United 
States, as other countries allow for the immediate expensing of 
aging spirits, causing a competitive disadvantage to U.S. 
distillers.
    H.R. 867 would provide a level playing field for U.S. 
bourbon and whiskey producers by allowing immediate deduction 
of interest expenses related to aging bourbon and whiskey. This 
simple change would promote the bourbon industry that brings in 
billions of dollars in economic activity and supports over 
9,000 jobs, producing significantly more state and Federal 
revenue than foreign-produced competitors.
    I appreciate your consideration of these two important 
measures for a growing economy in both the horse and bourbon 
sectors. Thank you.
    Chairman BOUSTANY. Thank you, Mr. Barr. We appreciate you 
bringing your testimony forward. All of our colleagues, for 
that matter. And these tax proposals will be given 
consideration. Thank you.
    Let's call up our next panel. We have Mr. Emmer, Mr. 
Coffman, Ms. Schakowsky, and Mr. Woodall.
    [Pause.]
    Chairman BOUSTANY. We thank our colleagues. Mr. Emmer, you 
may proceed.

   STATEMENT OF THE HONORABLE TOM EMMER, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MINNESOTA

    Mr. EMMER. Thank you, Chairman Boustany. Thanks to you and 
the Members of the Subcommittee on Tax Policy for inviting us 
today.
    It is a privilege to represent the people of Minnesota, and 
I know they are pleased to see that Washington is working on 
comprehensive tax reform that will help lift Americans out of 
poverty, put more money back in the pockets of families, and 
enable businesses to flourish.
    At 39 percent, the United States has the highest corporate 
income tax rate in the developed world. This puts us, America, 
at a tremendous disadvantage, sending jobs, companies, and tax 
dollars overseas to countries which have far more business-
friendly rates.
    In my home state of Minnesota, we recently lost two 
companies to foreign countries. Sadly, as we all know, it isn't 
just Minnesotans who have been harmed by the developed world's 
most uncompetitive and dated corporate tax system. Since 2000 
there has been a 28 percent reduction in U.S.-headquartered 
companies in the global Fortune 500.
    Many countries have caught on to the negative effects of 
high corporate income tax rates. In fact, our neighbor to the 
north, Canada, our largest trading partner, recently reduced 
their rate to 15 percent. The United States's second, third, 
fourth, and fifth largest trading partners--China, Mexico, 
Japan, and Germany--have corporate tax rates of 25 percent, 30 
percent, 24 percent, and 15 percent.
    The Create Jobs Act, which we have introduced, will ensure 
the United States has a competitive corporate income tax rate 
by setting our rate five percentage points lower than the 
average corporate tax rate of the other Organization for 
Economic Cooperation and Development countries. These are 33 
free-market countries that American often trades with and, in 
fact, competes with.
    It also creates a mechanism for Congress to recalibrate the 
corporate tax in a timely manner. Under the Create Jobs Act, 
every five years, by November 1st, the U.S. Treasury will 
calculate the new corporate tax rate. If the formula suggests 
it should go up, then a majority of both the House and the 
Senate must approve the new rate by December 30th. If the 
formula calls for a decrease, that will occur automatically.
    If the Create Jobs Act was enacted today with the average 
OECD corporate tax rate at about 25 percent, the U.S. corporate 
income tax would be reduced to about 20 percent. According to 
the Tax Foundation, a 20 percent U.S. corporate income tax 
would create more than 640,000 jobs, increase GDP by 3.3 
percent, and increase wages by 2.8 percent over the next 10 
years. Clearly, this legislation would have a profoundly 
positive impact on the citizens of this great country. If 
signed into law, American corporations would have a predictable 
tax system to plan for the future, but also a system flexible 
enough to remain competitive in the 21st century.
    I want to thank you all again for this opportunity to 
present testimony to you about the Create Jobs Act. And it is 
my hope that it will be included in the Ways and Means's highly 
anticipated comprehensive tax reform package. Thank you.
    Chairman BOUSTANY. Thank you, Mr. Emmer.
    Mr. Coffman, you may proceed.

 STATEMENT OF THE HONORABLE MIKE COFFMAN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. COFFMAN. Thank you, Mr. Chairman and members of the 
Ways and Means Subcommittee. Today I want to talk about H.R. 
4969, the EARNIT Act, which is the Enhancing Advancement, 
Reducing Non-Compliance, and Improving Trust Act.
    What this is is it involves an expansion of the earned 
income tax credit and a way to pay for it. And in 2014 
President Obama talked about increasing the Federal minimum 
wage to $10.10 an hour, and the non-partisan Congressional 
Budget Office did an analysis of the economic impact of that. 
And they said, yes, you would lift 900,000 Americans out of the 
poverty line, as defined by the Federal guidelines. But you 
would also cost the economy 500,000 jobs.
    And so, what I--in looking at the earned income tax credit, 
it is heavily, heavily weighted towards individuals with 
children, as opposed to individuals without children. And so, 
what this legislation does is, number one, it lowers the 
eligibility for the earned income tax credit across the board, 
whether you have children or not, from age 25 to age 21. And 
then, secondly, it pluses up the EITC benefit for childless, 
low-wage, low-income workers. And so, I think this is very 
positive.
    So how it pays for this is that the IRS did an analysis in 
2003-2005 [sic] on the earned income tax credit and found that 
there was a lot of individuals that were receiving it that did 
not have their child living with them in their residence. And 
so, in a--so, what the--and they came up with a better 
verification process that has never been implemented, and that 
is--to have a third party, whether it be a social worker, a 
lawyer, employer, or other public official verify that there is 
a child living with that low-wage worker, in terms of their 
eligibility.
    And so, the--there was an analysis done by the--oh, the Tax 
Foundation, I believe, that is a part of the Congress--I am 
trying to get the specific name for it here. And so--oh, the 
Joint Committee on Taxation estimated that there would be a 
net--if you had that requirement, that there would be a net 
increase in Federal revenues--i.e. not paying out the tax 
credit to those who were not eligible--of $3.7 billion over a 
10-year period, which is more than enough to pay for the 
proposed expansion of the earned income tax credit under my 
proposal.
    And with that, Mr. Chairman, I am respectful of the time, 
and I yield back. Thank you.
    Chairman BOUSTANY. Thank you, Mr. Coffman.
    Mr. Woodall, you may proceed.

  STATEMENT OF THE HONORABLE ROB WOODALL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. WOODALL. Thank you, Mr. Chairman, and thank you for 
having us today. I have watched this Committee for most of my 
adult life, and I have never been more optimistic that we are 
going to get to actual fundamental tax reform with the hours 
that this Committee has invested and the seriousness with which 
it is taking it.
    But the truth is we have had hours of conversation today 
about fixes to the Tax Code. We could have hours more tomorrow 
and hours more the next day. At some point we have to confess 
this Tax Code cannot be fixed, and we have to throw it out, and 
start over again. There is not a member of this body, if they 
could write the right Tax Code to govern America, that they 
would write this one.
    We have got to start all over again from scratch. The power 
to tax is the power to destroy, and an income tax destroys 
productivity. I think we have won the debate that a consumption 
tax is the way to get the economic engine restarted here, in 
this country.
    A group of activists, a group of economists, folks in a 
group called Americans for Fair Taxation, said, ``If we started 
from scratch, what Tax Code would we write?'' And what they 
came up with was a plan called The Fair Tax. It is H.R. 25. It 
is the most widely cosponsored fundamental tax reform bill in 
this Congress. And it throws the Tax Code out. It begins with 
the point of view that businesses don't pay taxes, businesses 
just collect taxes. And I don't want to have a Tax Code for job 
creators in this country that is just a little bit worse than 
everybody else's. I don't want to have a Tax Code for job 
creators in this country that is on par with the rest of the 
world. I want to have a Tax Code in this country that leads the 
rest of the world.
    I want to take our corporate income Tax Code from worst in 
the world to first in the world. Fair Tax does that by 
admitting that businesses don't pay taxes, they simply collect 
taxes, abolishes the corporate income tax and requires that 
they collect a point of sale retail sales tax on all of the 
final consumer goods.
    I want to make sure that individuals don't have to fight 
with their government for the privilege of paying their taxes. 
There is absolutely no sense that every April 15th dread seeps 
in to every American family across this land. The Fair Tax 
recognizes that you shouldn't have to have a law degree or an 
accounting degree to pay your taxes. Simple point of sales 
retail sales tax, every American consumer would pay their taxes 
with every purchase that they make. The average American family 
would never see the IRS again.
    I don't want to make it easier to file your income tax 
statement; I want to get you out of the business of filing your 
income tax statement.
    Mr. Chairman, we have an opportunity here, because we all 
recognize a problem, because there is no Member defending the 
current code to do the big things. We have tried nibbling 
around the edges for years at the time. I applaud this 
Committee for the work to get to that next big idea, and I 
encourage you to take a look at H.R. 25, the Fair Tax.
    And with that, I would welcome any questions and yield 
back.
    Chairman BOUSTANY. Thank you, Mr. Woodall.
    Ms. Schakowsky, you may proceed.

STATEMENT OF THE HONORABLE JANICE SCHAKOWSKY, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. SCHAKOWSKY. Now for some different ideas. I thank you, 
Mr. Chairman, for allowing me to testify before this Committee 
on two pieces of legislation I have introduced to improve the 
fairness of our tax system: H.R. 389, the Fairness in Taxation 
Act; and H.R. 2619, the Patriot Employer Tax Credit Act.
    We are the richest country in the world at the richest 
moment in history, yet we operate here in an environment of 
austerity, unable to pay--to afford things like quality 
education and infrastructure investment and security in a 
social safety net that our country needs. Today we simply don't 
raise sufficient revenue to meet today's needs or invest in our 
future.
    My Fairness in Taxation Act would update tax brackets for 
the highest-income Americans. Right now, there are seven 
brackets that end at $450,000 of income, and absolutely none 
after that. So someone making $450 million pays the same as 
someone that makes $450,000. My bill would create new tax 
brackets, beginning at $1 million in income, ratcheting up to 
$1 billion in income--and, yes, there are Americans that make 
that.
    It would also stop special tax breaks for millionaires on 
their capital gains and dividends. These changes would raise 
$800 billion over the next decade, which would then be injected 
back into education and infrastructure, research and 
development, et cetera, and support a strong middle class.
    We also need to improve tax fairness for our businesses. 
Right now our Tax Code rewards the wrong behavior. In recent 
years we have seen a wave of U.S.-based companies move their 
headquarters overseas to dodge U.S. taxes through tax 
inversions. Meanwhile, too many workers struggle with low wages 
and retirement insecurity.
    My Patriot Employer Tax Credit Act would reward companies 
for doing the right thing. It would provide a tax credit for 
the first $15,000 on qualified wages for employers that invest 
in American jobs, avoid tax inversions, pay fair wages, provide 
quality health insurance, contribute to their workers' 
retirement, and support jobs for active duty military veterans 
and those with disabilities. And we would pay for these tax 
credits by closing an existing loophole that allows companies 
to deduct interest expenses used to invest overseas. I think 
that is a sensible idea. Stop tax provisions that encourage 
overseas investment to reward companies that invest in good 
jobs here at home.
    These bills are the type of tax reform that I believe we 
desperately need, reforms that raise revenue, increase 
fairness, and invest in quality American jobs. I urge you to 
advance this legislation, and thank you once again for the 
opportunity to testify.
    Chairman BOUSTANY. I thank our colleagues on this panel for 
bringing these important tax proposals forward, and we will 
take them under consideration. We thank you.
    And we will conclude now with our final panel, which will 
be Mr. Paulsen, a member of the Ways and Means Committee.
    [Pause.]
    Chairman BOUSTANY. I thank my colleagues. Mr. Paulsen, you 
may proceed.

 STATEMENT OF THE HONORABLE ERIK PAULSEN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MINNESOTA

    Mr. PAULSEN. Thank you, Mr. Chairman. I know we have heard 
a lot of great testimony today about important tax initiatives, 
many of which I support. And while Members of Congress do all 
that we can to represent our constituents and advocate on their 
behalf, we simply aren't qualified in the same way that they 
are to discuss issues important to them and to their 
businesses. And that is why I would like to yield some of my 
time today to Mr. Clint Roberts. He is the chief marketing 
officer of Surly Brewing Company in Minneapolis. And Clint will 
speak about his brewery and what passage of legislation that I 
have introduced, the Craft Beverage Modernization and Tax 
Reform Act, would do to help their ability to invest in Surly 
and hire more Minnesotans.
    Clint, if you would like to, come forward.
    Chairman BOUSTANY. Welcome, sir.
    Mr. ROBERTS. Thank you, Chairman. Thank you, Representative 
Paulsen and thank you to the Committee for the opportunity to 
testify today. My name is Clint Roberts. As Erik mentioned, I 
am the chief marketing officer at Surly Brewing Company in 
Minneapolis, Minnesota.
    For almost a decade, the Brewers Association and the 
brewing industry have been working with Congress to try and 
pass legislation that recalibrates the Federal excise tax to 
reflect the makeup of the craft brewing industry, and to spur 
additional growth. The Craft Beverage Modernization and Tax 
Reform Act, introduced this Congress by Representatives Paulsen 
and Kind, would lower the Federal excise tax for the brewing 
industry, as well as the wine and distilled spirits industries, 
and make the alcohol beverage excise tax system more 
progressive for smaller producers.
    It is legislation like this that would have a major impact 
on Surly, as well as other craft brewers. In Minnesota, we have 
seen firsthand how laws that are supportive of the craft 
brewing industry help foster growth.
    In 2011 we set out to tweak state legislation to allow 
production breweries to sell pints of their own beer, so we 
could build our destination brewery, complete with two 
restaurants, an event center, and a beer garden, in addition to 
the production facility. When we set to change the law, there 
were 35 breweries in the state. Now there are 105 breweries 
that employ more than 8,600 Minnesotans. The Craft Beverage 
Modernization and Tax Reform Act is the type of legislation 
that would have a similar impact on our community, as well as 
other members of the beverage alcohol industry.
    We have seen firsthand that legislative advancements like 
this can be incredibly important to the craft community and 
local economies. It has created a phenomenon of sorts that 
shows no sign of slowing.
    In December 2014 we opened our $34 million destination 
brewery. Last year we brewed almost 65,000 barrels of beer, and 
this year we hope to brew 80,000. We have the capacity to brew 
almost 100,000. Once we near capacity, we will have important 
decisions to make. The demand for our beer is there, but 
additional growth requires continued investment in our brewery.
    In total, our company employs almost 300 employees, a full-
time equivalent number of 159. We had lofty job creation 
numbers as we dug in on our destination brewery, but this 
number has exceeded those goals. It has been great for our 
local economy, and it has helped us to expand into other 
states. We opened in three new states just last week.
    We look to continue to invest in our operation, which will 
create a range of jobs and broad economic impact. If we are 
able to get our Federal tax liability reduced, we will put the 
money back into our company. We have to. The craft beer climate 
is unbelievably competitive, because of recent growth. Our 
consumers want more and expect more. We are ever evolving to 
meet the demands of our consumers.
    I can only speak to how this bill would impact the craft 
brewing industry. But if it has a similar impact on other 
alcohol producers, it is no surprise that this bill has had 
broad, widespread bipartisan support from not just the alcohol 
industry, but also agricultural and manufacturing associations. 
Passing the Craft Beverage Modernization and Tax Reform Act 
would be good for the brewers in Minnesota and the brewers 
located in your states and across the country.
    This is a big issue for our small business. We have seen 
firsthand the tangible success stories from enterprising 
legislation.
    Thank you again to the Committee for taking the time to 
learn about this important issue, and to Representative Paulsen 
for his support of the craft brewers in Minnesota and across 
the country.
    Chairman BOUSTANY. Thank you, Mr. Roberts.
    And Mr. Paulsen, thank you for bringing this testimony 
forward.
    Mr. PAULSEN. Thank you, Mr. Chairman, for your time and 
attention today, and I am happy to yield back.
    Chairman BOUSTANY. Thank you. I would like to thank all of 
our esteemed colleagues for appearing before us today. It is 
clear from the testimony that you all have put a great deal of 
time and consideration into these improvements to our current 
Tax Code. And I am pleased that we have had an opportunity to 
make a record of those priorities.
    Keep in mind that, while we are looking at these current--
these improvements to the current Tax Code, we are still 
committed to comprehensive, full tax reform, as a Committee.
    As we continue to formalize the record, we encourage you to 
have any stakeholders that also care about these issues to 
submit statements for the record. Please be advised that 
Members will have two weeks to submit written questions to be 
answered later in writing. Those questions and your answers 
will be made part of the formal hearing record.
    And with that, the Subcommittee stands adjourned.
    [Whereupon, at 12:42 p.m., the Subcommittee was adjourned.]

                       Submissions for the Record
                       
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