[Congressional Record Volume 160, Number 72 (Tuesday, May 13, 2014)]
[Senate]
[Pages S2930-S2935]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CLOTURE MOTION
The PRESIDING OFFICER (Mr. Schatz). Pursuant to rule XXII, the Chair
lays before the Senate the pending cloture motion, which the clerk will
state.
The assistant legislative clerk read as follows:
Cloture Motion
We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
hereby move to bring to a close debate on the motion to
proceed to Calendar No. 332, H.R. 3474, an act to amend the
Internal Revenue Code of 1986 to allow employers to exempt
employees with health coverage under TRICARE or the Veterans
Administration from being taken into account for purposes of
the employer mandate under the Patient Protection and
Affordable Care Act.
Harry Reid, Ron Wyden, Robert Menendez, Patty Murray,
Barbara Boxer, Jon Tester, Debbie Stabenow, Maria
Cantwell, Bill Nelson, Thomas R. Carper, Patrick J.
Leahy, Brian Schatz, Mark R. Warner, Charles E.
Schumer, John D. Rockefeller IV, Benjamin L. Cardin,
Martin Heinrich.
The PRESIDING OFFICER. By unanimous consent the mandatory quorum call
has been waived.
The question is, Is it the sense of the Senate that debate on the
motion to proceed to H.R. 3474, an act to amend the Internal Revenue
Code of 1986 to allow employers to exempt employees with health
coverage under TRICARE or the Veterans Administration from being taken
into account for purposes of the employer mandate under the Patient
Protection and Affordable Care Act shall be brought to a close?
The yeas and nays are mandatory under the rule.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. CORNYN. The following Senator is necessarily absent: the Senator
from Arkansas (Mr. Boozman).
The yeas and nays resulted--yeas 96, nays 3, as follows:
[Rollcall Vote No. 143 Leg.]
YEAS--96
Alexander
Ayotte
Baldwin
Barrasso
Begich
Bennet
Blumenthal
Blunt
Booker
Boxer
Brown
Burr
Cantwell
Cardin
Carper
Casey
Chambliss
Coats
Cochran
Collins
Coons
Corker
Cornyn
Crapo
Cruz
Donnelly
Durbin
Enzi
Feinstein
Fischer
Franken
Gillibrand
Graham
Grassley
Hagan
Harkin
Hatch
Heinrich
Heitkamp
Heller
Hirono
Hoeven
Inhofe
Isakson
Johanns
Johnson (SD)
Johnson (WI)
Kaine
King
Kirk
Klobuchar
Landrieu
Leahy
Levin
Manchin
Markey
McCain
McCaskill
McConnell
Menendez
Merkley
Mikulski
Moran
Murkowski
Murphy
Murray
Nelson
Paul
Portman
Pryor
Reed
Reid
Risch
Roberts
Rockefeller
Rubio
Sanders
Schatz
Schumer
Scott
Sessions
Shaheen
Shelby
Stabenow
Tester
Thune
Toomey
Udall (CO)
Udall (NM)
Vitter
Walsh
Warner
Warren
Whitehouse
Wicker
Wyden
NAYS--3
Coburn
Flake
Lee
NOT VOTING--1
Boozman
The PRESIDING OFFICER. On this vote the yeas are 96, the nays are 3.
Three-fifths of the Senators duly chosen and sworn having voted in
the affirmative, the motion is agreed to.
The Senator from Tennessee.
Mr. ALEXANDER. Mr. President, does the Senator from Massachusetts
wish to address the Senate at this time?
Mr. MARKEY. Mr. President, I ask that the Chair recognize the Senator
from Tennessee.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. ALEXANDER. Mr. President, I thank the Senator from Massachusetts.
I ask unanimous consent that the junior Senator from Tennessee and I
be permitted to engage in a colloquy, and I ask for the attention of
the Senate.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senate will be in order. Senators will please take their
conversations out of the well.
Mr. ALEXANDER. Thank you, Mr. President.
Remembering Harlan Mathews
Mr. President, a few days ago we lost a prominent Tennessean, Harlan
Mathews. He was 87 years old, and he lived a long and distinguished
life.
Harlan Mathews served in the Senate seat in which I now have the
privilege of serving. When Senator Al Gore was elected Vice President
more than 20 years ago--Harlan Mathews took his seat and then retired
from the Senate after serving two years of his appointment.
But that was, by a long shot, not a description of his public
service. Yesterday Senator Corker and I were at his funeral and
memorial service in Nashville, which was a beautiful service, a simple
service, as he would have imagined. The theme that kept coming through
again and again was what a fine mentor and unselfish public servant
Harlan Mathews had been in our State for 60 years. He was a World War
II veteran, came to Vanderbilt University, and in 1950 met a young
Governor whose name was Frank Clement--a rising star in national
politics. He became his assistant and served in a variety of State
government positions with very
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little interruption until he was appointed by Governor McWherter to
serve for 2 years in Al Gore's seat. Twenty years ago Harlan Mathews
decided not to run for reelection and has lived the past 20 years in
Nashville. We were there with his wife Pat, his sons, and a host of
friends.
What I think about Harlan Mathews is that other than his great friend
former Governor Ned McWherter, no one had more friends around the State
capitol than Harlan Mathews did.
So today we pay tribute to him and to his family for a life well
lived, for his service to the State of Tennessee, and for being a man
who has mentored as many young public servants of our State as anyone I
can think of.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. CORKER. I too rise to talk about our friend and former colleague
to many in this body, Senator Harlan Mathews.
It was touching yesterday to be at a funeral service where so many
people he had mentored stood and talked in conversation around the
gathering we attended about the great mentorship he provided. There is
no greater legacy any of us can provide than to set an example for
other people and to create opportunities for other people coming along.
I want to join the senior Senator, who I know served with him while
he was Governor. I had the great opportunity to get to know him as a
new and young commissioner of finance in our State, an appointed job,
and no one--no one--was kinder to me than former Senator Harlan
Mathews, who has been involved in so many great things that have
happened in our State.
His wife Pat complimented him in an extraordinary way, saying I think
one of his greatest attributes was his constantly saying: You know, so
much can happen in this world if no one cares who takes the credit.
I think he was a quiet force for good in our State and a quiet force
for good in our country. So many of the things that caused him to be
the kind of person he was are things that many of us could emulate and
cause the Senate and our country to function much better than it does
now.
I join the senior Senator, for whom I have so much respect, in making
sure the Senate record records the great work of Harlan Mathews--
Senator, Deputy Governor, treasury leader in our State but also
commissioner of finance. He is someone who provided years of great
public service, years of great mentorship, and someone who has a legacy
of people who served with him and under him who have gone on to do
wonderful work for our State and country.
I yield the floor with great gratitude toward a wonderful public
servant, Harlan Mathews.
Mr. ALEXANDER. I thank the Senator from Tennessee. Harlan was known
for working quietly, and being modest. The service was only about 40 or
45 minutes to reflect that.
He would have been a terrific Senator if he had been here for 25
years because of what we know about him. He wasn't out front. He was
behind the scenes. He worked to get things done. He was always results-
oriented, and he didn't mind who got the credit. Sometimes there is a
shortage of that in the Senate--then and now today. He had those rare
skills of the public servant that are always valuable and always
needed.
I know his wife Pat, his sons Stan and Les, and his granddaughters
Katie and Emily miss him deeply. We do as well, and we join them in
admiring his life and his example.
I ask unanimous consent to have printed in the Record the obituary of
Harlan Mathews detailing his public service.
There being no objection, the material was ordered to be printed in
the Record, as follows:
obituary
Harlan Mathews, an accidental Tennessean born in Sumiton,
Alabama, who advised five Tennessee governors and served in
the U.S. Senate, died today at the age of 87, his family
confirmed.
Mathews, who recently was diagnosed with a brain tumor,
died peacefully at Alive Hospice today at 6 a.m. with his
wife Pat at his side.
Services honoring Mathews and celebrating his life are
being scheduled at this time.
After serving in the U.S. Navy in WWII, Mathews received
his B.A. degree from Jacksonville State University under the
G.I. Bill. He arrived in Nashville in 1949 to attended
Vanderbilt University. He would subsequently obtain a
master's degree in public administration. Shortly after
enrolling at Vanderbilt, Mathews took an entry level job with
the State Planning Office, not knowing that serving the
people of Tennessee would become his life's work.
In 1950, the 24 year-old Mathews met 30 year-old Frank
Clement. Two years later, Mathews was the top assistant to
the new Governor, a close friendship that continued until
Clement's death in 1969. In 1961 Mathews was appointed
Commissioner of Finance by Governor Buford Ellington. He held
the post for 10 years, one of the longest tenures in state
history.
In 1971, Mathews briefly left state government to work in
the private sector in Memphis, but returned in 1973 to serve
as the legislative assistant to longtime state comptroller
William Snodgrass. The Tennessee General Assembly elected
Mathews state treasurer in 1974 when his predecessor, Tom
Wiseman, opted to run for governor.
Mathews remained state treasurer until January 1987 when he
resigned to become deputy governor to Ned McWherter.
As deputy governor, Mathews was a low key yet forceful
advocate of McWherter's legislative agenda and continued, as
he had done as state treasurer and finance and administration
commissioner, to protect the state's sound financial footing.
Upon U.S. Senator Al Gore's election to the vice
presidency, McWherter appointed the most dedicated public
servant he knew to fill the vacancy. Harlan Mathews was sworn
in on Jan. 3, 1993, to represent Tennessee in the U.S.
Senate.
Mathews never sought election to political office,
preferring to serve the people of this state behind the
scenes as a frugal manager and mentor to dozens over the four
decades of his public career.
Upon leaving the U.S. Senate in December of 1994, Mathews
joined the Nashville office of the law firm of Farris,
Mathews, Bobango PLC. He remained active in the legislature
and politics, serving as an informal advisor and fundraiser
for Gov. Phil Bredesen.
Throughout Mathews' career, he never took for granted the
people he served and the responsibility he held. He was known
as a soft spoken but tough negotiator who made sure state
employees were paid good wages, and that the state's
retirement system was sound, the debt low and the bond rating
strong. He was a demanding boss who also made sure that his
employees had a warm coat in cold weather. He was a leader, a
statesman and a friend to all that knew him and to all of
Tennessee.
Mathews is survived by his wife Pat, sons Stan Mathews
(Sandy) and Les Mathews (Pam) and granddaughters Katie Zipper
and Emily Mathews. He was preceded in death by his son Rick
Mathews.
Honorary pallbearers include Steve Adams, Tom Benson, Carl
Brown, Tom Cone, Nancy-Ann DeParle, John Faber, Jim Hall, Don
Holt, Carl Johnson, Dr. Joe Johnson, Jeremy Kane, David
Lillard, JW Luna, David Manning, Raymond Marston, Mike
McWherter, Clayton McWhorter, John Morgan, William Nichols,
Roy Nix, Parker Sherrill, Arnold Tackett, Bo Roberts, Pete
Sain, Dale Sims, Captain Bobby Trotter, David Welles, Bill
Whitson, and ``Harlan's Girls''--Estie Harris, Adrienne
Knestrick, Katy Varney and Beth Winstead.
The family would like to give special thanks to his caring
doctors--Dr. Craig Weirum, Dr. Chris Hill, Dr. Rentz Dunn,
Dr. John Thompson and Dr. Robert Faber.
Mr. ALEXANDER. I thank the Senator from Massachusetts for his
courtesy.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. MARKEY. I seek recognition to speak for 5 minutes.
The PRESIDING OFFICER. Without objection.
Energy and Tax Extenders
Mr. MARKEY. Mr. President, two things happened yesterday:
First, the Shaheen-Portman energy efficiency bill collapsed--at least
for now. It would have created 190,000 new jobs. It would have cut
carbon pollution by 22 million automobiles on the roads of the United
States in equivalency. That is a big deal. It is something that was
agreed upon by Democrats and Republicans.
What happened? Well, too many Republicans wanted to vote on the
Keystone Pipeline issue. They knew the vote on the Keystone Pipeline
was going to fail because they don't have the votes in order to be
successful, so they took a bill that would cut carbon emissions and
said they wouldn't pass it unless they got a vote on three additional
amendments to increase global warming emissions:
No. 1. Stop EPA from cutting emissions on powerplants. They wanted to
vote to take away EPA authority on that.
No. 2. Allow massive export of natural gas that will actually
increase costs to consumers in the United States and move us back to
coal because the higher the price of natural
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gas, the more people are going to go back to burning goal. They all
understand that. That is what the game is all about.
No. 3. Prevent the Senate from considering global warming pollution
controls in the future. That is right--just have a vote that prohibits
the Senate from considering global warming pollution levels.
Obviously, this is a debate about pollution, not about energy
efficiency, from the perspective of the Republican Party--although I
give credit to the many Republicans who were working on a bipartisan
basis with Jeanne Shaheen in order to put together a bill that actually
accomplished something and showed this institution can work.
A second event actually happened yesterday as well. Two new climate
studies were released saying that the West Antarctic ice sheet is
collapsing and the melting of the West Antarctic is unstoppable. Twelve
feet of sea level rise is coming.
Did you hear that? The West Antarctic ice sheet is collapsing, the
melting is unstoppable, and 12 feet of sea level rise is coming.
What does that mean? That means Boston, underwater; South Florida,
underwater; New Orleans, underwater.
In the Senate, we are moving at a glacial pace on climate change. We
are frozen. But while we do nothing, the pace of glacial collapse is
accelerating. The world's ice is melting.
The Senate has been called the cooling saucer of democracy. But when
it comes to climate change, it is the warming plate, cooking the Earth
as we continue our slide into an ocean of dysfunction.
The next major piece of the West Antarctic glacier that breaks off
into the ocean should be reserved as an island for all of the climate
deniers. We will just call it the Island of Deniers. They can all live
there because there will be plenty of room on this huge, massive body
of ice that keeps breaking off and heading into the ocean.
Secondly, we are about to take up tax extenders, and we have a
fantastic chance to extend the production tax credit for wind in our
country. Unfortunately, because of the unpredictability of the tax
breaks for the wind industry, 30,000 people in the wind industry were
laid off last year. That is not because the wind industry didn't prove
it could increase the amount of electricity in our country generated
from wind; it is because--unlike the oil industry, unlike the gas
industry, unlike the nuclear industry, unlike the coal industry--the
wind industry has to come in, hat in hand, to beg to continue their tax
breaks year after year. There is no predictability for that
marketplace. This gives us a chance to extend those tax breaks.
So it is a big challenge, but ultimately if the oil and gas industry
is going to receive $7 billion in tax breaks per year, the wind
industry should receive the tax breaks it needs. We need a level
playing field. We need a way to ensure that there is, in fact, a
fighting chance for these new renewable energy industries. The existing
industries have received tax breaks going back 100 years. These newer
industries are there. They are creating jobs at a massive pace, but we
need to ensure that the tax breaks are there.
My hope is that we will be able to pass these tax extenders. Again,
there are extensions for tax breaks that are in there for many
industries across the board. It is the kind of bipartisan effort that
deserves support, like the Shaheen-Portman energy efficiency bill. My
hope is that the institution can work in order to accomplish that goal.
Civility on matters such as these should not melt away. We need to make
sure we are, in fact, protected for generations yet to come.
I yield the floor.
The PRESIDING OFFICER. The Senator from Utah.
National Police Week
Mr. HATCH. I wish to take a moment to say a few words in honor of
National Police Week. I would like to take this opportunity to honor
the brave men and women of law enforcement who made the ultimate
sacrifice and gave their lives in the line of duty while safeguarding
our communities.
Since the first recorded police death in 1791, there have been 21,742
law enforcement officers killed in the line of duty. This year 112
names will be added to the National Law Enforcement Officers Memorial
in Washington. We should remember that there are 112 families who
grieve the loss of a loved one who gave his or her life to protect
their community and to keep their fellow citizens safe.
Today I recognize two Utah law enforcement officers who recently gave
their lives in the line of duty.
Sergeant Derek Johnson
Sergeant Derek Johnson had served with the Draper Police Department
for 9 years when he was shot and killed while on uniformed patrol in
the early morning hours of September 1, 2013.
During his service, Sergeant Johnson was the recipient of many
awards, including a Life Saving Award and a Distinguished Service
Award. He was also honored as the 2012 Community Policing Officer of
the Year.
We take this time to think about the friends and family who mourn the
loss of Sergeant Johnson and keep his wife Shante and his 7-year-old
son Bensen Ray Johnson in our thoughts and prayers.
Sergeant Cory Wride
Another recent tragic loss to the Utah law enforcement community was
Utah County Sheriff's Office Sergeant Cory Wride.
Sergeant Wride was shot and killed while on duty on January 30, 2014,
as he was assisting a stranded motorist.
Sergeant Wride served with the Utah County Sheriff's Office for
nearly 20 years and served his community in various roles, including
patrol and as a member of the department's special operations teams, K-
9 and SWAT.
Sergeant Wride was married to Nanette, his wife of 18 years. He was
the father of four boys and one daughter: Nathan, Chance, Shea, Tyesun,
and KylieAnne. He also had eight grandchildren.
I wish to extend my sympathy to his family and recognize Sergeant
Wride for his service, selflessness, and his courage.
I urge my colleagues to take some time this week to think about these
men and pay respect to the numerous other fallen heroes who have served
our communities with professionalism, integrity, and compassion, as
well as all members of the law enforcement community who watch over and
guard our streets, protect us, our families, and our communities.
Tax Inversions
Last week I came to the floor to talk briefly about the news reports
we have all been seeing about the proposed merger between Pfizer and
AstraZeneca and the legislative proposals we are seeing from Members of
Congress in response to the merger.
As you know, one of the key details in this merger is that when
Pfizer--a large American company--acquires AstraZeneca--another large,
but somewhat smaller UK company--they plan to incorporate the new
merged company in the United Kingdom, not here in the United States.
As I said last week, I was as concerned to learn of these plans as
were many of us here in Congress. After all, Pfizer is an iconic
American company, with over 100,000 employees. It ranks in the top 200
of global companies by revenue, according to the Fortune Global 500
list. It would be a great loss to our country to see it incorporated
offshore.
Still, it is difficult to blame them for this decision. According to
sources, a desire to escape the high U.S. corporate tax is part of the
motivation for this merger. This type of transaction, where a U.S.
corporation merges with a foreign entity and incorporates elsewhere to
escape the U.S. tax net, is sometimes referred to as an inversion.
Inversions are a growing problem here in the United States. Indeed,
large companies are leaving our country at an alarming rate. If you
count the number of American corporations in the worldwide list of
Fortune 500 companies, you will see the number has declined
dramatically over the past decade, which is very unfortunate. This
decline means less capital and less investment in the United States. It
means a smaller U.S. tax base. Most importantly, it means more jobs
that could be created--that should be created--here in America are
being created elsewhere. So make no mistake. Inversions are a big
problem, and the problem seems to be growing every day.
As I mentioned on the floor last week, there are, broadly speaking,
two
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different ways Congress could act to address this problem. The first
way would be to make it more difficult for a U.S. corporation to
invert. That is the approach my friend the chairman of the Senate
Finance Committee endorsed a few days ago in an op-ed in the Wall
Street Journal.
As the chairman noted in his opinion piece, current law requires
companies moving overseas to have at least 20 percent new ownership to
avoid some very bad tax consequences. His proposal--the one he outlined
in this article--would be to increase that benchmark to 50 percent for
all inversions taking place after May 8 of this year. That means his
proposed restriction would be retroactive for all inversions that
happened between last Thursday and the date his proposal may be signed
into law.
Of course, this is hardly a new idea. President Obama included a
similar proposal in his budget. Given the amount of hand-wringing we
have seen over just the Pfizer-AstraZeneca merger and the subsequent
erosion of the U.S. tax base from my friends on the other side, you
would think a proposal like the one the chairman floated in his op-ed
would raise a significant amount of revenue. However, if you think
that, you would be wrong.
All told, his proposal would raise roughly $17 billion over 10 years.
That is about $1.7 billion a year. That is not really an insignificant
sum, but it does demonstrate the scope of the problem is hardly worth
the draconian solution some of my friends want to impose in order to
solve it.
Let me be clear. I share my colleagues' concerns about the number of
inversions that have taken place over the last few years. However, I do
not believe that imposing confusing and arbitrary retroactive
restrictions on U.S. companies is the answer. There is an alternative
approach which brings us to the second way Congress could act to
prevent more inversions.
The second way to address the problem of inversions is to make the
United States a more desirable location to headquarter businesses.
While it would require a lot of work and compromise, this is by far the
better approach.
This approach, of course, means lowering the corporate tax rate. It
also means replacing our antiquated worldwide taxation system. Under
current law, U.S. corporations are taxed on their worldwide income, but
foreign corporations are subject to tax only on income arising from the
United States. In other words, we subject our corporations to a
worldwide tax system, while subjecting foreign corporations to a
territorial tax system. On top of that, most of our major trading
partners tax companies domiciled in their own countries on a
territorial basis as well, unlike our country.
Long story short: Our system of worldwide taxation places us at a
competitive disadvantage and makes the United States a less than
optimal place for companies to locate their businesses. That being the
case, as important as it is to get the corporate tax rate down, no
matter how low we get that rate, we still need to scrap and replace our
outdated worldwide tax system.
That is why tax reform is so important. It is just one of the
reasons, of course, but it is a really important reason. Tax reform, if
it is done right, will get at the root problem rather than simply
dealing with symptoms.
I should note that inversions are only one symptom of our
dysfunctional international tax rules. Other types of transactions
further illustrate why the entire system we have is problematic.
For example, there are strong incentives currently for a U.S. parent
company to sell its foreign subsidiaries to foreign corporations in
order to escape the U.S. tax net. There are strong incentives to set up
a startup business as a foreign corporation. Neither of these
transactions are inversions, but they do show the point that it is, for
tax purposes, often better not to be a U.S. corporation or to be
controlled by one. While these other sorts of transactions don't grab
the headlines, as inversions do, they are nonetheless indicative of
real problems in our Tax Code.
That being the case, a proposal to restrict or eliminate inversions
would really only go after one particular type of problem, leaving the
rest of the fundamental flaws in our tax system firmly in place.
Proposals to restrict inversions or to impose some sort of management
and control test are like trying to plug the dyke with your finger to
keep capital and jobs from flowing overseas. These proposals are not
long-term solutions. They are not even good short-term fixes.
Another example of business activity flowing overseas that really
comes to mind is the problem we are facing with the medical device
industry. We are losing our innovative medical device companies because
of our stupid tax system and the 2.3 percent tax on sales or gross
income of our medical device companies--many of which haven't made a
profit yet. They would be taxed, even though they are not making
profits, but will make profits if they can keep going with their
innovative and good ideas.
We know, thanks to ObamaCare's medical device tax, that some of
America's most innovative companies in an industry that is vital to our
health care system are moving jobs overseas. Yet where is the call from
the leadership on the other side to do something about this? In fact,
there is nothing but stalling of legislation to solve this problem,
which I think almost any intelligent person would want to do.
As it stands, it appears not to alarm my friends on the other side
when business activity flees the country as a result of punitive taxes
under ObamaCare. Yet, if a company with a large revenue base takes
taxes into account when considering mergers and acquisitions, the alarm
bells sound and legislation is put forward in no time. I would say
there is a bit of inconsistency on the part of some of my colleagues
who claim they want to keep jobs and business in the United States. If
they do, why aren't they doing something about this stupid tax on
medical device companies?
We had a vote on this earlier in the year, on a bill that didn't go
through both Houses--and the leadership knew it wouldn't go through--
where we had 79 votes in favor of abolishing this tax. There is wide
bipartisan support to get rid of it. What is wrong with the other side
that we have to continue to fight to get rid of something that 79
people in the Senate voted to get rid of? And by the way, I believe if
we brought it up true blue, in and of itself, it would pass here with
probably 95 votes, if people give any consideration to American
business, American ingenuity, solving the problems of health care,
bringing health care costs down, which medical devices can do, and
saving lives. It is no small reason why some of these medical device
companies are moving overseas where they are treated far better than we
treat them here. We had 79 people who voted to get rid of that stupid
tax. Yet the leadership of this body won't allow it to be brought up
freestanding or on some bill that basically has a chance of passage
through both Houses of Congress.
Now, there is, of course, bipartisan legislation that would correct
the problems we face with the medical device tax; namely, a bill
introduced by Senator Klobuchar and myself. And I commend Senator
Klobuchar. She has had a lot of guts plus a lot of ability in working
on this bill. Sadly, the Senate Democratic leadership has thus far
refused to allow an up-or-down vote on the measure, even though we know
it has broad bipartisan support, as I have heretofore mentioned.
My hope is this will change with the upcoming debate over tax
extenders, but I am not holding my breath. Given our ongoing experience
with the medical device tax, I have to say I am a little skeptical when
my colleagues on the other side of the aisle say they are concerned
about American companies moving addresses and operations out of the
country. Indeed, if they were really so bothered by this, we would have
repealed this medical device tax a long time ago.
Finally, I would just like to give a brief aside on the topic of
retroactive changes to our tax laws. In my view, stability and
predictability are bedrock principles of the law. When it comes to our
tax code, we have gotten away from that over the years. Restoring these
principles to our tax system should be one of our main goals of tax
reform.
Put simply, retroactive changes to the law--the kind envisioned by my
colleague's op-ed--are the antithesis of stability and predictability
and will
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only make tax reform that much harder. No matter how well intentioned,
and no matter how large the short-run revenue gains are to be had from
retroactive changes, I believe the long-term affects are harmful and,
in my opinion, such proposals should be viewed with a healthy dose of
skepticism. I know my colleague is very sincere in making the points
that he has, but I have to rebut those points, and I believe I have
done so effectively.
Once again, the effort to prevent tax-motivated inversions can be
boiled down and separated into two basic camps: One side would have us
simply address the problem and impose arbitrary and perhaps costly
restrictions on American businesses to prevent them from leaving the
country.
The other side would make the United States a better place to do
business, preventing companies from wanting to leave in the first place
and inviting new ones to form and prosper here.
Only one of these approaches will actually fix the problem. Only one
of these approaches will help create jobs and grow the economy, and
only one of these approaches will put our Nation on a path to greater
prosperity. That approach is, of course, comprehensive tax reform. That
is what is needed, and that is where our focus should be.
As I said last week, as the ranking member of the Senate's tax-
writing committee, my focus, when it comes to the problem of
inversions, is to fix the underlying problems, not to tinker on the
edges, focusing on the symptoms. I hope eventually that is the approach
we take.
I thank the Chair, and I yield the floor.
The PRESIDING OFFICER (Ms. Heitkamp). The Senator from Maryland.
Mr. CARDIN. Madam President, first I want to thank Senator Hatch. I
deeply respect his views. He is one of the most effective Members of
the Senate. He has deep views and reaches across party lines to try to
get things done, which I think is very important, and I respect him
greatly.
I want to agree with the conclusion of Senator Hatch. The problem
with corporate inversion is best fixed if we do comprehensive tax
reform. I believe he is right. We have two paths we can take. One is to
try and reform our current tax structure, which I think will not work,
and I will give my reasons why; or we can look for a competitive tax
structure that is fairer to the American people and makes measures such
as corporate inversions something that would not be happening in our
communities.
Pfizer and AstraZeneca are looking at a merger. AstraZeneca is a
British company. They own major operations in my State of Maryland,
affecting thousands of workers. We would think a merger between a
British company and an American company would mean more jobs in
America, but we know Pfizer has made certain commitments to the British
Government about maintaining and expanding jobs in Great Britain, which
we worry is at the cost of American jobs and jobs in my home State of
Maryland.
We have heard one of the reasons for the merger is corporate
inversion. What do we mean by that? It means Pfizer, an American
company, will merge with a British company and then use that to
transfer its revenues, which are legitimately earned in America, many
as the result of intellectual property developed in America, and then
attribute that income to foreign sourced, rather than to domestic
sourced, trying to avoid U.S. taxes.
Our Tax Code should not encourage that action. Several Members of the
Senate and I are working within our current Tax Code to make sure that
doesn't happen here in America. Our Tax Code should not encourage
companies to take their income offshore. They should pay their fair
share of taxes in the United States.
But as Senator Hatch pointed out, and I agree, we need a more
competitive Tax Code. We need a Tax Code that would allow for better
competition for American companies, for our manufacturers, for our
producers, for our farmers, that will allow easier capital formations
so we could raise in America more of the capital we need and be less
dependent upon foreign-sourced investment, although foreign-sourced
investment is certainly helpful to our country and something we
encourage.
We need a Tax Code that is fair, that people believe they are being
treated fairly with their neighbor, which is not the current situation.
Most Americans cannot figure out the income tax code and don't know
whether they are being treated fairly with other taxpayers, and we need
a code that is much more efficient.
So one path we could pursue and that Senator Hatch was alluding to is
to try to reform our current income tax codes--our corporate income tax
code and our personal income tax code.
We have an example of that. Congressman Camp has come up with a
comprehensive proposal in the House of Representatives. I must say I
don't think Congressman Camp's proposal adds up from the point of view
of producing the revenue we produce today, let alone the revenue we
need in order to pay our bills and not be dependent upon borrowing
money from other countries. But putting that aside, I think we see the
difficulty in the Camp proposal, which causes major disruptions among
different industries, and we are hearing from those industries that it
would create major problems for competitiveness for the United States.
I think the most fundamental flaw with trying to reform our current
Tax Code is we tried that once before in 1986, and it was comprehensive
and it did spread the burden and it did reduce the rate. It lasted for
less than 1 year before Congress continued to change the Tax Code.
Today we have tens of thousands of changes since the 1986 tax reform
and we have many temporary provisions. That is why we have the bill
before us right now to deal with these expiring tax provisions. I don't
think there is any way of getting around these types of problems moving
forward under our current Tax Code.
I will point out a fact I don't think most Americans have understood.
If we look at all the OECD countries--the industrial countries of the
world, countries that we like to compare ourselves to, countries that
we want to be competitive with--of all the industrial nations of the
world, the United States is near the bottom in regard to their reliance
upon government services. In Europe they have much stronger government
services in health care and housing and income support-type programs
than we do in the United States.
If we rely less on governmental services, wouldn't that mean we
should have the lowest competitive tax rates among the industrial
nations? Instead, as Senator Hatch pointed out, we have the highest
marginal tax rates among the industrial nations, and the reason is
quite simple. Of all the industrial nations in the world, only the
United States does not have a national consumption tax. We rely on
income tax revenues. Why? Because we thought that was the right way to
go, and we didn't have to worry about international competition. After
all, we are America.
Guess what. We are in global competition today, and the tax rates of
this country matter in regard to our manufacturers being able to sell
products overseas.
One other fact about international competition. International
competition rules at the WTO were developed based upon consumption
taxes. So if a company manufactures an automobile in Germany and wants
to bring it into the United States, the taxes they pay--the consumption
taxes--are taken off of that product. So basically their autos sell in
America tax free; whereas, U.S. auto manufacturers that have to pay
taxes, those taxes still apply to the cost of the product because it is
not border adjusted.
Then, to make matters worse, if they manufacture a car in the United
States and try to sell it in Germany, they not only have to pay the
corporate taxes here, the income taxes--because they are not taken off
at the border, they are not border adjusted--when they go into Germany,
they have to pay the value-added tax, the consumption tax. How do we
compete under those circumstances? The answer is it is very difficult.
In global competition today, we have to be smart.
This is why we should have the lowest marginal tax rates in the
world. If we did, corporate inversion would not be an issue because we
wouldn't find a Pfizer trying to pay British taxes when the U.S. taxes
are the lowest taxes among the industrial nations of the world.
[[Page S2935]]
So I have a proposal called the progressive consumption tax.
``Progressive,'' what do I mean by that? It means the taxes paid at the
Federal level will be more reflective of a person's ability to pay than
our current income tax code is. We make it progressive so it is fair,
in that they pay according to their ability to pay a progressive
consumption tax. That consumption tax rate will be the lowest among the
industrial nations of the world.
I will give some examples. I will be the first to acknowledge we have
to get these scored and these numbers can change as we go along, but we
are looking at a consumption tax rate of about 10 percent. This would
put us at the bottom of the consumption taxes among industrial nations.
Individuals who earn under $25,000 and families up to $50,000 would pay
no consumption taxes. They would get a credit for the consumption taxes
they otherwise would pay.
Similar to the current income tax code where they do not pay income
taxes, they would not pay consumption taxes. It would be immediately
rebated to them. If they work, it would be rebated under the payroll
tax payments. If they don't work, they would get a debit card to get
instant rebates and use it as people use debit cards.
So we would make it progressive. We would then be able to start the
income tax rates at $100,000, approximately, of taxable income, and 90
percent of Americans would pay no income taxes. It would start at 15
percent. There would be an additional bracket of 25 percent, starting
at $40,000 of taxable income. So a progressive income tax, simplified,
with only four deductions, not this complexity today as we figure out
whether something is deductible and all the complications.
We would have four deductions for State and local--with respect to
federalism--State and local taxes: for charitable deductions because
our charities are critically important to carrying out the important
work of our country, for real estate and the needs for the real estate
to reflect--so we don't see destruction of the real estate market, and
we also allow deductions for employer-provided health benefits and
retirement benefits. It is simplified, it rewards simplicity, and
allows for the progressiveness of fairness in our Tax Code that does
not exist today.
The corporate tax rate would get down to 15 percent. That is what
corporate America tells us we need to be competitive in the industrial
world. This adds up.
Some say: Gee. Consumption taxes raise a lot of revenue. We put in
our proposal an automatic adjustment of the rate to make sure it
doesn't bring in more revenue than we say. So we are fair on the
progressive side to make sure it is fair from the point of view of the
ability of middle-class families to pay, and it is fair from the point
of view of those who are concerned about government growing, in that it
has a circuit break as to the rate based upon the revenue that you
need.
What have we accomplished by this? We have accomplished a much
simpler Tax Code that people can understand, a fairer Tax Code, one
that rewards savings. Savings are not taxed. There is a greater ability
to raise capital in the United States. It is border adjusted, which
means the taxes come off our exported products so we can compete
globally in a much easier way. This is what we accomplish.
So when people talk about fundamental reform, to me, this is what we
need to do.
I am going to move this proposal as quickly as I can, but obviously
it is going to take some discussion and debate. We are hopeful we will
be able to answer anyone's questions on it. We are very optimistic, but
in the meantime what do we do? We can't just stand by and allow Pfizer
to take American jobs overseas because of corporate inversion. So I
hope we will stand for what is right in our Tax Code, that we have the
capacity to improve our current Tax Code to avoid the loss of jobs and
shipping jobs overseas, as well as working to reform our Tax Code and
provide the type of structure so the country that relies the least on
government among the industrial nations has the lowest tax rate and has
a fairer system for all Americans.
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