[Congressional Record Volume 157, Number 169 (Monday, November 7, 2011)]
[Senate]
[Pages S7147-S7149]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX REFORM
Mr. WYDEN. Mr. President, I come to the floor today to talk about
creating more good-paying jobs in America and how tax reform can play a
key role in job creation if it is done right. As we all know, no Member
of Congress has a piece of machinery on their desk that is a job
creation device. We cannot just start something like this, press a
button, and then after it whirs around a bunch of times it creates a
lot of new jobs. New jobs do not just come shooting out that way.
Nobody has a contraption like that in the Senate, and the reality is
the President does not have one nor does anybody else in America.
But there are policies that are relevant to how we create more good-
paying jobs, and those involve first looking at what has worked in the
past and, second, what hard, objective data is relevant to the future.
Nobody can know the ideal, sure-fire way to create jobs, but we can
document what has worked in the past.
In the case of comprehensive tax reform, what we know is that after
the 1986 Tax Reform Act where Democrats and Republicans cleaned out
scores of tax preferences to hold down marginal rates and keep
progressivity, our country created 6.3 million new jobs in those 2
years after that tax reform was enacted. I am not going to say on the
floor of the Senate that each and every one of those jobs was the
result of tax reform, but certainly independent authorities point to
that tax reform effort as a key factor in creating those jobs. With at
least 14 million Americans out of work in our country right now, it
would be legislative malpractice for Congress to ignore the facts that
document the results of the last tax reform effort in job creation.
When we look at the possibilities should we not pay special attention
to what has worked in the past? The reality is, as the Presiding
Officer knows, our country has tried just about every other tool in the
economic toolbox. We have seen the Recovery Act. We have seen that the
Fed is essentially all in with its program of quantitative easing. We
have had a whole host of other initiatives in the housing area and in
the automobile area and a whole host of other areas. The fact is, the
one tool in the economic toolshed that nobody has picked up is
fundamental tax reform. It is my view that it is time for the Congress,
working with the President, to pick up on a proven model that a host of
progressive Democrats and conservative Republicans, led by a
conservative Republican President, deployed 25 years ago to spur
economic growth and create millions of new jobs, which I think we all
understand our people in our economy need desperately.
Given that success, it is no wonder that Democrats and Republicans,
as well as economists and think-tanks and bipartisan commissions, are
again calling for the Congress to take up the cause of tax reform. We
are very hopeful the bipartisan Joint Committee on Deficit Reduction
can also bring together Democrats and Republicans as part of their work
to lay out the strategy for moving ahead on tax reform.
There is no shortage of good reasons for Congress to look at this
particular approach to job creation. It is bipartisan, it has been
proven before, and certainly the basic principles--simplifying the Tax
Code, cleaning out the clutter, and holding down rates across the
board--make just as much sense today as they did a quarter century ago.
It has been argued that since the last change in our tax law there
have been close to 15,000 tax changes--one for almost every working day
year in and year out. So what we have on our hands now is a
dysfunctional antigrowth mess. That is why I think it is particularly
important that we look at moving now rather than waiting until another
election or taking a detour to reform only the corporate Tax Code
while, for example, leaving small businesses and working families stuck
with the same broken Tax Code they have today.
Let me point out to those who say we cannot do tax reform in a
divisive climate, a divided Congress and White House, as we move into
an election, the fact is fundamental tax reform was passed on the eve
of an election a quarter century ago--passed on the eve of an election.
I say that because I know one of the fundamental architects of that tax
reform, Senator Packwood, whose seat I now hold in the Senate, was not
available for the bill signing because he had a community event back
home.
The fact is, there is an opportunity now to move ahead with
comprehensive tax reform. We have good people who have expertise in tax
law on the supercommittee--Chairman Baucus, Senator Kerry, Congressman
Camp, Senator Portman--Democrats and Republicans who have been involved
in budget and tax issues for years and years with great expertise on
these issues.
I want to take just a minute this afternoon to discuss some eye-
opening new information on an issue that I know is being debated in the
Congress, and my sense is the supercommittee is looking at it as well;
that is, the question of splitting tax reform into separate corporate
and individual pieces.
Last week, the Joint Committee on Taxation issued an important report
that all Members ought to pay close attention to as Congress looks at
tax reform as part of either a potential debt deal or other
legislation. The reason I want to discuss it this afternoon is we all
understand as part of the legislative process just about everything is
negotiable, but there is one thing that is not negotiable--that is the
accuracy of the numbers.
When the official number cruncher for taxes says they cannot make the
numbers add up, Members of the Senate and the Congress have to pay
attention. The new report by the Joint Committee on Taxation says--and,
of course, they are the official scorekeeper for tax policy--the
Congress essentially has a choice to make. We can either provide all
American companies significantly lower tax rates or we can allow
multinational companies to continue to avoid paying taxes on their
overseas income. But the Joint Committee on Taxation says it is really
not possible to do both. There is not enough money in the corporate Tax
Code to do both without further increasing the budget deficit.
The Joint Committee was asked to provide its estimate of the lowest
corporate rate that could be achieved by eliminating corporate tax
expenditures, the various credits, deductions, and exemptions that
lower the actual amount of taxes our businesses pay. In response, the
joint committee estimated that 28 percent is the lowest possible
corporate rate that could be achieved from eliminating corporate tax
breaks and still not increase the deficit--in effect, be revenue
neutral.
Mr. President, 28 percent is certainly lower than the current top
rate, but it is higher than what--certainly many in the business
community and the Congress have argued--is needed for U.S. companies to
be competitive in the global economy. Most in the business community
want to lower the top rate to 25 percent or even lower. The joint
committee has determined that 28 percent is the lowest the corporate
rate can be reduced to without adding to the deficit.
This new report by the Joint Committee on Taxation ought to be a real
wake-up call in Washington, DC. For
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example, many companies not only argue that Congress can get the
corporate rate down to 25 percent or even lower, but they also want to
keep many of the tax breaks they now get under the current Tax Code.
The joint committee's report makes clear that cannot be done without
increasing the Federal deficit. And even the Joint Committee's 28-
percent rate estimate was filled with all sorts of caveats, little
kinds of ``look out, there may be more to the story'' kinds of warnings
about the difficulty of limiting tax breaks now available to all
businesses so they can no longer be claimed by corporations.
If tax breaks are eliminated for corporations but not for other
businesses--remember, most businesses, as we know, are sole proprietors
or limited partnerships and LLCs and the like--corporations may end up
converting their businesses into other types of tax structures. If that
happens, the savings from eliminating corporate tax rates would be less
so that the corporate rate could end up even higher than 28 percent.
That is one example of how it is very hard to repeal tax breaks just
for corporations and not for other businesses.
In making their estimate, the Joint Committee looked at repealing
literally scores of corporate tax breaks--everything from research to
specific breaks for energy, housing, transportation, education,
training, and others. But there is one important tax break that was not
considered as part of the Joint Committee's analysis, and that is the
ability of U.S. multinationals to avoid paying taxes on their overseas
income as long as they keep that money overseas. This is the tax break
that is known as deferral. Significantly, the Joint Committee has done
a separate analysis of the amount of revenue that could be generated by
repealing deferral. If you repeal deferral and impose related limits on
foreign credits to prevent gaming, you take that step and the total
comes to an eye-popping $568 billion over 10 years. That comes from an
estimate the Joint Committee has done for a bipartisan group of us who
have been working on this issue for the last 5 years.
I initially started working on this with our former colleague from
New Hampshire, Senator Gregg, and most recently with Senator Coats and
Senator Begich. The four of us have worked very closely on this over
the last few years. If you make the changes we have made in deferral
and related foreign credits that you ought to change to prevent gaming,
it is possible to slash rates for all of our businesses so you can get
down to 24 percent, particularly for the corporate rate, and have
additional relief for small businesses. We have some ideas for how you
could drive the rate lower than 24 percent. That is something I think
could be a real shot in the arm to businesses in Connecticut, Oregon,
and across the country. It surely would do something about creating
red, white, and blue jobs so we would have more jobs here in the United
States so we could put our people back to work in the manufacturing
sector and the other parts of our economy that are so important. So
that is the choice.
According to the Joint Committee's estimate--these are the official
scorekeepers for taxes--there are two alternative ways to lower
corporate tax rates. One keeps deferral, this break for doing business
overseas, and then the lowest rate, according to the Joint Committee on
Taxation, would be 28 percent. The other takes away the tax breaks for
shipping jobs overseas, eliminates deferral, and dramatically drives
the rate for our businesses down 24 percent.
As I have indicated, our bipartisan coalition has some ideas for
getting it even lower. So it is important to point out that the lower
24-percent rate would apply to every U.S. company, whether it has
overseas operations or not. U.S. manufacturers and retailers and other
domestic businesses all would benefit from this kind of approach, lower
tax rates. All U.S. businesses would have more money to invest in new
equipment and hiring workers here in our country--in Connecticut, in
Oregon, and all of our States. By contrast, while all businesses would
get some help from a 28-percent rate, the biggest winners are those
with significant operations overseas, thousands and thousands of miles
from our shores. By continuing deferral, those businesses that operate
overseas, those companies pay a zero rate on their overseas income.
With that rate differential, there would still be a strong incentive
for some of those very large businesses to target their investments, to
lower tax overseas operations at the expense of investment and job
creation here at home. So it should be obvious that the last thing the
Congress ought to be doing in this current economic climate is to take
actions that will hurt job creation. With so many people out of work,
we obviously need to focus on steps to create jobs, not reward those
that, in effect, ship the jobs overseas, ship the investments overseas,
the investments in the jobs we need so much here at home.
We can do more for all U.S. businesses, workers, and their families
through comprehensive tax reform than just by going forward with
corporate-only reform. In fact, it is possible to do more for
businesses, get a lower rate--I want to emphasize this--for all our
businesses in America, significantly lower so they will be more
competitive in tough global markets. I am not saying that tax policy is
the only consideration in terms of creating jobs. I chair the
International Trade Subcommittee of the Senate Finance Committee, and I
have long taken as my major objective to do more to grow things here in
America, to make things here in America, to add value to them here, and
to ship them somewhere. There is a whole host of trade and regulatory
policies that factor into this. But certainly we ought to agree that at
a time when comprehensive tax reform is the one tool in the economic
toolshed that has not been used--and there is a chance to take away tax
breaks for shipping jobs overseas so we can get more tax relief for
Americans here at home--we ought to be picking up on that opportunity.
I hope all my colleagues who are going to be part of this tax reform
debate over the next few weeks--and I think it is inevitable because
more and more debate is focused on tax reform, whether it ought to be
corporate only--look at how you would go about pursuing it in a
bipartisan way. I hope those colleagues will take a look at the new
report done by the Joint Committee on Taxation. What they have made
clear is that there is not enough money in the corporate tax code to
get the lower rate companies want as long as some of these
multinationals can continue to keep the money overseas and avoid paying
U.S. taxes. Having worked on this issue with colleagues on both sides
of the aisle for about the last 5 years, and watching as the economic
debate goes forward, with our people hungry for new jobs, I hope
colleagues will see, No. 1, there is a real lesson to be learned from
what was done in 1986 where progressive Democrats and conservative
Republicans came together on the eve of an election--by the way, the
1986 election. I think it is also fair to say that after tax reform,
both sides did pretty well. Both sides did pretty well in the Congress
and in terms of controlling the White House.
The fact is this is a chance to take a big step to help our people
who are hurting now. There are 14 million people out of work. I hope
colleagues will look at that new report prepared by the Joint Committee
on Taxation and look at the history of how in 2 years a quarter century
ago we came together, Democrats and Republicans, and passed fundamental
tax reform based on the same kind of principles Senator Gregg, Senator
Coats, Senator Begich, and I have worked on for the last 5 years,
cleaning out special interest breaks, special interest preferences,
cleaning out scores of them and using that money to hold down marginal
rates and keeping progressivity so we have a sense of fairness.
Everybody wins.
Many of our colleagues feel passionately about economic fairness. I
certainly do. I know the President of the Senate does as well. Many of
our colleagues on the other side of the aisle have focused on economic
opportunity. With fundamental tax reform, we can have both and do it in
a bipartisan way. It means picking up on the one tool in the economic
toolshed that has not been used.
I will be back on the floor of this Senate to talk about this again.
It is one of the reasons why I wanted to serve on the Senate Finance
Committee, to tackle these fundamental
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issues of taxes and health care. We have had a very constructive set of
hearings on tax reform chaired by Chairman Baucus and ranking minority
member Senator Hatch. I am very hopeful that at a time when our people
are so hungry for new jobs, good jobs, high-paying jobs, that we will
pick up on this opportunity to bring Democrats and Republicans
together, as we were on this issue a quarter century ago in enacting
fundamental tax reform.
I yield the floor and note the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. SHELBY. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
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