Congressional Record, Volume 160 Issue 134 (Thursday, September 18, 2014)

[Congressional Record Volume 160, Number 134 (Thursday, September 18, 2014)]
[House]
[Pages H7874-H7877]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

UNITED STATES TAX CODE

The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2013, the Chair recognizes the gentleman from Georgia (Mr.
Woodall) for 30 minutes.

{time} 2100

Mr. WOODALL. Madam Speaker, I appreciate the recognition. I
appreciate you staying with me into the evening tonight.
I wish I could tell you I was bringing you good news, but I am
bringing you some bad news. It is bad news that you have already heard.
I have the most recent Tax Foundation rankings of international tax
competitiveness.
We talk so much about jobs and the economy. We talk about how to make
a difference in the lives of middle class families. We talk about jobs
that are moving overseas. We talk about whether or not we are going to
grow this economy. This is the ranking of the most competitive Tax
Codes in this country.
I want you to think about, Madam Speaker, what those things are that
we can do to be more competitive in this country.
We could lower everyone's wages. That would make it cheaper to build
things in this country. I think that is an awful idea.
We could ignore environmental regulations. That would make things
easier and cheaper to build in this country. That is an awful idea.
One of the things we could do, though, is deal with our tax system, a
tax system that, so says the Tax Foundation, is the 32nd worst tax
system of the 34 OECD countries--32nd worst in tax competitiveness.
Now, they are looking at everything. They are looking at individual
taxes. They are looking at corporate taxes. You go way over here on the
end, Madam Speaker, you get to the international tax rules rank. That
is how well we work with the rest of the world with our tax system.
America ranks dead last.
Why do I bring that up, Madam Speaker? I bring it up because I am
reading from our Treasury Secretary, Jack Lew, his comments at the
Urban Institute last week. He's talking about American corporations
moving their headquarters overseas. Not moving a factory overseas, but
moving their international headquarters overseas. And he says this:

This practice allows the corporation to avoid their civic
responsibilities while continuing to benefit from everything
that makes America the best place in the world to do
business.

Worst place in the world to do business, that is what the Tax
Foundation tells us.
I read on from Jack Lew's speech. He said:

The best place in the world to do business: our rule of
law, our intellectual property rights, our support for
research and development, our universities, our innovative
and entrepreneurial culture, our skilled workforce.

Again, speaking about the practice of moving your headquarters
overseas, he says:

This may be legal, but it is wrong, and our laws should
change. By effectively renouncing their citizenship, these
companies are eroding America's corporate tax base.

That means all other taxpayers will have to shoulder their
responsibility.
I go again to a Tax Foundation chart, Madam Speaker. It is a chart of
what the rate is. And you can't see what the individual corporate tax
rates are, but what you can see is the green lines here. That is the
average corporate tax rate. Around the world, it is 25 percent.
You see another green line, that is the weighted average by the size
of the economy. That of course gives more weight to the larger
economies on the planet. That goes up to 29 percent.
And at the bottom of this chart, Madam Speaker, you see in red the
United States of America, with the absolute highest corporate tax rate
in the world. By our own design--and I say ``our own.'' I have not
gotten to vote on a corporate Tax Code, Madam Speaker, since I have
been in this Chamber for 3\1/2\ years, but by our design as a nation we
have created the absolute worst place to do business on the entire
planet.
Our Treasury Secretary calls companies who observe that and make
changes because of that so that our grandmothers and our grandfathers
and our pension programs and everyone who relies on the success of
those companies in order to meet their fixed income demands so that
those companies can succeed, he calls that a shirking of civic
responsibility.
I am on the floor tonight, Madam Speaker, to suggest that it is not
those companies that observed that America is the worst on the planet
and move elsewhere that are shirking their responsibilities. It is
those of us in this Chamber, those of us on Capitol Hill, those of us
in Washington, D.C., who are responsible for this corporate tax road,
it is we who are shirking our civic responsibilities because we can do
better.
I know it is getting late, Madam Speaker, and I hate to take you

[[Page H7875]]

through the math, but when we talk about tax codes and why they are so
bad, it is the math that matters. This is the tax liability for a
corporation doing business in the United States of America.
Let's say you earned $1,000. You are going to pay a 35 percent rate.
You are going to add State taxes to that rate as well. It is going to
be about 39.1 percent, on average, about $391 out of every $1,000. So
at the end of the day, you are going to be able to take home $609 to
pay your salaries, to invest in your business, to grow your company--
$609. That is an American company doing business in America.
How about a Canadian company doing business in Canada? Same $1,000
worth of income. They are paying a 15 percent tax rate at the national
level. They are also having a provincial tax rate added to that, totals
to about 26.5 percent, $265. They are taking home $735.
You earn $1,000 worth of income as an American company doing business
in America, you take home $609. You earn $1,000 in income in a Canadian
company doing business in Canada, you take home $735.
I know what you are thinking, Madam Speaker. You are thinking that's
apples to oranges. One is doing business in America; one is doing
business in Canada. Let's look further.
Let's say we take those same two companies, that one American
company, that one Canadian company, and let's say they are both doing
business in the United States of America. They earn $1,000. They pay
$391 in taxes. They are at the highest corporate tax rate in the world.
That American company takes home $609.

Go to the Canadian company doing business in America. They earn that
same $1,000. They pay that same highest corporate tax rate that America
has, the highest in the world. They take home $609. Whether you are the
U.S. company or the Canadian company, you do business in America, you
pay the same tax.
I know what you are thinking, Madam Speaker. You are saying, Well,
what is the argument here? What is the issue that we have to come
together and solve? It is this issue right here, Madam Speaker.
Let's say you are not doing business in America. Let's say you are
doing business in Canada. We are going to take that same American
company, we are going to take that same Canadian company, and we are
going to look at what happens when they are doing business in Canada.
That American company earns $1,000. It pays the Canadian Government
$265. The Canadian company raises $1,000, and they pay the Canadian
Government $265. But it is what happens next that makes America one of
the worst tax codes in the world.
When you try to bring that $735 you have left over back to America,
you pay American taxes on top of what you have already paid Canada.
So the U.S. corporation doing business in Canada earns $1,000; they
end up with $650 at the end of the day. The Canadian company doing
$1,000 worth of business in Canada pays their taxes, ends up with $735
at the end of the day. That is why companies are moving overseas. They
do exactly the same business in exactly the same place as all of their
international competitors, but simply because their headquarters is
based in America, they pay more.
The power to tax is the power to destroy. And because of the way we
have chosen to tax our companies, a methodology that has been rejected
by most of the rest of the world, we punish every single company that
chooses to stay in America employing Americans.
We have been talking about it in terms of Burger King and Tim
Hortons. I don't know if you are a Burger King fan, Madam Speaker. I
don't know if you are a Tim Hortons fan. I love them both. I love them
both. And the suggestion has been made that when Burger King and Tim
Hortons are going to get together and the headquarters is going to be
located in Canada instead of America, that that is somehow an
unpatriotic decision being made by Burger King.
I want you to see the revenue by category that this new Burger King-
Tim Hortons merger is going to have. This acquisition by Burger King is
going to have about 20 percent of the revenue coming from America,
about 67 percent of the revenue coming from Canada, about 13 percent
coming internationally.
I go back to this chart, Madam Speaker, where I said, What if you are
doing business in Canada? If you are an American company, you take home
less, not a little less, but more than 10 percent less. If you are a
Canadian company, you take home more. Same amount of business, same
country of business location, but because your headquarters is
somewhere different, you take home less money.
Well, if you are Burger King and you are in this Tim Hortons
acquisition, you are making most of your money in Canada, so what are
you supposed to do?
If I ask the White House, they would tell me I am supposed to stay in
America and put up with the absolute worst Tax Code the country has
ever seen, this country has ever seen, but also the worst tax code
anywhere on the planet.
This is America for Pete's sakes. We can do better.
It is not that Burger King is choosing to leave America; it is that
America is running Burger King out. And that, that responsibility lies
with us here in this Chamber.
It is an arcane issue called a worldwide tax system versus a
territorial tax system. When you are in a worldwide tax system--and
there are only seven countries left in the world that do this--you
double-tax your companies. You charge them a tax based on the country
in which they earned the money, and then if they bring that money back
to America, you charge them another tax on top of that.
Most nations on this planet, most nations with First World economies,
they use what is called a territorial tax system. That means whatever
country you raise the money in, you pay the tax in; and when you bring
that money back to your home country, you are not double-taxed one more
time.
This is the issue we ought to be talking about. We shouldn't be
talking about patriotism. We should be talking about common sense as it
relates to having America compete in a global economy.
I ask you, Madam Speaker, if we have the absolute worst tax code in
the world, if we have the absolute highest corporate tax rate in the
would, if we have the least competitive international tax system in the
world, what do you think is going to happen to international businesses
when they make their decision about whether or not to locate in
America? They decide no. They decide no.
Madam Speaker, I want to talk just a little bit about what President
Obama has said. It is called corporate inversion. When you move your
headquarters from America, you acquire a different company overseas,
you make that your international headquarters, it is called a corporate
inversion. You may have seen that in the news. Here is what President
Obama's has had to say about it:

Even as corporate profits are higher than ever, there is a
small but growing rube of big corporations that are fleeing
the country to get out of paying taxes.

Fleeing the country to get out of paying taxes.

President Obama goes on. He says,

I say ``fleeing the country,'' but they are not actually
doing that. They are not going anywhere. They are keeping
their business here, but they are moving their headquarters.
They don't want to give up the best universities, the best
military, the advantages. They just don't want to pay for
it, so they are technically renouncing their U.S.
citizenship.

Well, that sounds very similar to what I read from Jack Lew a little
bit earlier. That is the party line coming out of the White House.
I go on. President Obama says:

These businesses are playing by the rules, but these
companies are cherry-picking the rules and it damages our
Nation's finances. It makes it harder to invest in things
like job training.

He says:

I am not interested in punishing these companies, but I am
interested in economic patriotism.

As a government, we have crafted the most punishing tax code on the
face of this Earth. We have created the longest list of disincentives
to locate your business in our country that is available anywhere on
the planet today. And the question the President is asking is: I don't
want to punish these companies, but where is their economic patriotism?

[[Page H7876]]

Madam Speaker, where is our economic patriotism? The Tax Code is
something we created. Do you believe for a moment if the 435 of us in
this Chamber got together to write the Tax Code today we would write
the absolute worst tax code available anywhere on planet Earth? I don't
think so. If we designed this Tax Code from scratch, we would have done
something very different, but this is where we would have ended up.
I will close with this from the President:

Now, the problem is this loophole. They are using it in our
tax laws, but it is actually legal. My attitude is I don't
care if it is legal; it is wrong.

I don't care if it's the law of the land, I don't care if it's the
law, they shouldn't do it anyway.

{time} 2115

When I think about the law, Madam Speaker, I don't know where you go,
but I go to the courts for answers. And it is interesting that this
idea of economic patriotism--this isn't the first time we have heard
it--it has been argued in court time and time again.
I quote from the Second Circuit, affirmed by the Supreme Court:

Anyone may so arrange his affairs that his taxes shall be
as low as possible; he is not bound to choose that pattern
which best pays the Treasury. There is not even a patriotic
duty to increase one's taxes.

We have had the suggestion: economic patriotism, you should pay more,
you should pay more. It is not our fault, it is the Congress; it is not
our fault, it is the government; it is your fault as the job creator
out in America, you should be doing something different.
We saw this again, another Second Circuit case:

Over and over again the courts have said that there is
nothing sinister in so arranging one's affairs as to keep
taxes as low as possible. Everybody does so, rich or poor
alike, and all do right. For nobody owes any public duty to
pay more than the law demands. Taxes are enforced
extractions, not voluntary contributions. To demand more in
the name of morals is mere cant. Taxes are extractions, not
voluntary contributions.

Madam Speaker, I want to say to all of my colleagues, everybody in
the administration: If you don't believe you are paying enough in
taxes, we can give you an address to the Treasury Department where you
can mail your check. Taxes are extractions. If you are interested in a
voluntary contribution, I can tell you where to mail your check.
Tax law exists to provide certainty, not just certainty to employers,
but also to investors, also to entrepreneurs, also to families, also to
employees, to those folks who show up to work day in and day out. The
law provides us with certainty.
We, as a government, have created the worst tax environment on the
planet in which to do business, and the leader of our government wants
to blame the companies that have stuck with us day in and day out for
the last 50 years. The wonder isn't that companies are leaving us
today, Madam Speaker; the wonder is that companies didn't leave us long
ago. It is a punishing environment to do business in America.
So what is the solution? Because, Madam Speaker, you know I am not
going to come down here and identify a problem and not talk to you
about how to solve it. But before I get to my solutions, I want to talk
to you about President Obama, whom I have quoted tonight; what
Secretary of Treasury Jack Lew, whom I quoted tonight, what they have
to say about the solution, and it is this: the best way to level the
playing field is through tax reform that lowers the corporate tax rate,
closes wasteful loopholes, and simplifies the Tax Code for everybody. I
am with him 100 percent--with him 100 percent. What the President has
said here, I support 100 percent.
That is not what he is saying on the campaign trail. On the campaign
trail he is saying: any business that tries to do what is best for its
employees, what is best for its shareholders, and what is best for its
customers is unpatriotic. If they choose to try to improve the lot of
their customers, their shareholders, and their employees that somehow
there is an obligation to subject yourself to what this Congress and
this White House, this country, has created, a monstrosity of a tax
code.
Maybe Jack Lew had a different idea as Treasury Secretary. He says:

Only tax reform can solve the problems in our Tax Code that
lead to inversions.

I know what you are thinking, Madam Speaker. You are wondering if I
brought the wrong slides to the floor tonight. You are wondering if I
made some sort of terrible mistake. Because I have been talking about
how President Obama said it was unpatriotic, how he said it was their
fault, how he said they ought to fix it, they ought to stay. And Jack
Lew said it is their fault, they have a duty, they ought to fix it, and
they ought to stay.
No. These are the very same men saying something entirely different.
Because they know, not on the campaign trail, but in the serious rooms
where they are talking about serious policy, that the only way to take
America into this next century, the only way to make us the most
competitive Nation on the planet, the only way to get those jobs back
in America, back from overseas, is fundamental Tax Code reform.
Burger King can't do fundamental Tax Code reform, only the Congress
can. Tim Hortons can't do fundamental Tax Code reform, only the
Congress can. Warren Buffett can't do fundamental tax reform, only this
Congress can. We can and we should. In fact, our Ways and Means
chairman, Dave Camp, Madam Speaker, has tried.
Let me go on and just get the other side of the issue from folks here
on Capitol Hill. I quoted folks in the White House and the
administration. House Speaker John Boehner says this, talking about all
these statements about unpatriotic behavior:

Instead of dividing people for political advantage, the
President can endorse our push for comprehensive tax reform
or convince Senate Democrats to act. Let's solve the real
problem here.

Because it is the real problem here: the worst tax code on the
planet. We have done this to ourselves.
House Ways and Means chairman, Dave Camp:

Everyone agrees that tax reform is the only solution that
will both keep companies from moving their headquarters out
of the United States and, more importantly, encourage more
businesses to grow, hire, and increase wages for American
workers.

Folks, that is what it is about: grow, hire, increase wages for
American workers. It is not about passing a mandatory minimum wage.
That is going to kill jobs. It is going to increase some people's
salaries at the expense of others. It is not about doing away with
environmental protections. We support environmental protections.
Obviously, there are some regulations that make no sense, but those
regulations that protect us, we need those. It is not going back to the
time when rivers were on fire and our environment was at risk. The
answer is in fundamental Tax Code reform so that we can grow, so that
we can hire, so that we can increase American wages.

And over on the Senate side, Chairman Ron Wyden, Democratic Senate
Finance Committee Chairman Ron Wyden, says this:

America should not be part of a race to the bottom. It is
clear that America must establish a more efficient and
competitive corporate tax rate.

People wonder why it is we can't get things done here, Madam Speaker.
You and I wonder why it is we can't get more done. It is because when
folks are on the campaign trail, they tell one story. They tell a story
that divides us. They tell a story that tells us who to blame. They
tell a story about the big corporations who happen to provide a lot of
jobs to a lot of American families. But that is not the story they
tell. They tell the story of greed and perversion in the Tax Code.
But when they get down to serious policy conversations, when they get
off the campaign trail and start talking about what really makes a
difference, they all agree fundamental tax reform makes the difference.
Now, how are we going to get there? We have seen the shenanigans that
go on that prevent us from going there, we have seen the desperate need
that requires that we get there. How are we going to get there?
Well, Madam Speaker, the President's Council on Jobs and
Competitiveness has been clear on this topic. This is President Obama's
Council on Jobs and Competitiveness:

We have to view our corporate tax rates as part of our
national package for attracting job-creating investment.

[[Page H7877]]

I will give you a hint, Madam Speaker. If you want your corporate tax
rates to be part of a package for attracting jobs in national
investment, you don't want them to be the worst in the world, you want
them to be the best in the world. The President's Council knows this.
Our system of corporate taxation hurts business competitiveness and
American workers and it cries out for reforms. The President's Council
says our corporate Tax Code hurts American workers and business
competitiveness. They don't conclude that businesses are evil and
greedy and out to stick it to American taxpayers. They conclude that
businesses are struggling and trying, but it is our Tax Code that is
the albatross around their neck:

A growing body of research also shows that in a world of
mobile capital, workers bear a rising share of the burden of
the corporate income tax in the form of reduced employment
opportunities and lower wages.

Madam Speaker, I am going to read that again, because we don't have
that conversation enough. These are not my words, these are the words
of the President's Council on Jobs and Competitiveness:

The United States of America, worst international competitiveness
anywhere on the planet, worst international tax code anywhere on the
planet. The United States of America, highest corporate tax rate
anywhere on the planet, largest disincentive to do business anywhere on
the planet.
The President's Council on Jobs and Competitiveness:

These giant corporate tax rates don't punish corporations,
they punish American workers.

My friends, Madam Speaker, we don't have corporations that pay taxes,
we have corporations that raise prices. We don't have corporations that
pay taxes, we have corporations that lower wages. We don't have
corporations that pay taxes, we have corporations that lower return on
capital. Corporations don't pay taxes, they collect taxes. They collect
them from the people who buy their products, they collect them from
their employees in those lower wages, they collect them in lower
returns to capital--their shareholders, our seniors on those fixed
incomes. High corporate tax rates don't punish corporations, they don't
punish employers, they punish employees, they punish middle class
American families.

Madam Speaker, the President's Council recommended a move to that
territorial tax system I talk about. They recommended eliminating this
vestige of an older time where capital was not so mobile, a vestige
only seven countries in the world still use. We are the largest economy
to still use it. It disadvantages us more than it does anybody else.
The President's Council recommends eliminating that territorial tax
system, not double-taxing. It says:

The current worldwide system makes investing . . . in the
United States more expensive from a tax point of view than
reinvesting them abroad, where they are not subject to
additional corporate income tax.
Think about the lunacy of that, Madam Speaker. In the name of so-
called ``helping the American economy'' by bringing in more revenue
through higher tax rates, what we do to American companies is
discourage them from bringing money home and investing it here, and
instead encourage them to keep the money overseas and invest there.
I don't know what you are thinking of when you are thinking of
investment. I am thinking of building a new factory, I am thinking of
expanding productivity of your workers, I am thinking of those things
that grow economies.
The President's Council says our Tax Code encourages those things to
happen for other people's citizens. I want to encourage those things to
happen for our citizens. Corporate tax reform is the answer.
Madam Speaker, I am going to close in a place that makes me happy. I
told you I had bad news when I got down here to start. I did have bad
news. The bad news is we have tied one arm of the American economy
behind America's back. We have burdened ourselves with the worst Tax
Code the world has ever seen, and we are demanding that American
companies follow our disastrous model or else face the accusation that
they are somehow unpatriotic. That has been the White House's solution
to a slow economy and rapid job deterioration.

Madam Speaker, what you can't see on this poster is Ronald Reagan's
solution to some of those very same challenges. Because when he was
elected in 1980, he faced some of those very same economic challenges
that we are facing here today. And Ronald Reagan came together with the
U.S. House of Representatives, led by Democrats, and passed fundamental
tax reform for the last time it was passed in this country--1986--last
large tax reform that we had in this country. They said he couldn't do
it. They said he couldn't do it, Madam Speaker. They said it was too
big.
He did two things that this White House, this administration, has not
done, and that I implore them to do, Madam Speaker--two things.
Number one, he didn't just talk about it, he released a proposal of
his own. He didn't just release one proposal, his Treasury Department
released two proposals. Our Treasury Department giving speeches on why
it is a corporation's fault, Ronald Reagan's Treasury Department
offering solutions; two entire fundamental tax reform proposals for the
Congress to examine, improve, and pass.
Ronald Reagan said this, Madam Speaker. He said:

Just as sure as Ruth could hit home runs and Rose can break
records, during this session of the Congress, America's tax
plan will become law. But it's going to take all of us and
all of you letting the folks in Washington know you that you
want this change made.

He led, Madam Speaker. I thank you for your leadership, I ask my
colleagues for their leadership, and, together, we can make sure that
American jobs come first and the American economy is first in the
world.
With that, Madam Speaker, I yield back the balance of my time.

____________________