[Congressional Record Volume 163, Number 130 (Tuesday, August 1, 2017)]
[Senate]
[Pages S4641-S4643]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                               Tax Reform

  Mr. THUNE. Mr. President, when polls ask Americans what issues are 
most important to them, one topic seems to score high every time: jobs 
and the economy. It is not surprising. The American people have had a 
rough time over the past few years.

[[Page S4642]]

  The Obama years were characterized by long-term economic stagnation. 
Jobs and opportunities were few and far between. Wage growth was almost 
nonexistent, and yearly economic growth alternated between weak and 
woeful.
  During the last year of the Obama administration--years, I might add, 
after the recession ended--economic growth averaged a dismal 1.5 
percent. That is barely half of the growth needed for a healthy 
economy.
  There have been some encouraging signs over the past few months. 
Economic growth for the second quarter of 2017 was stronger. We still 
have a way to go to get to where we need to be. Things still need to 
get better and better faster.
  Another thing is, we want things to get better for the long term. 
During the Obama administration, there were periods of reasonable 
economic growth, but they were quickly followed by weak periods. That 
is not good enough. We need to put our economy on a strong, healthy 
footing for the long term.
  How do we do this? How do we get back on the path to long-term 
economic health? One important thing we can do is reform our outdated, 
inefficient, and growth-stifling Tax Code.
  The Tax Code might not be the first thing people think of when they 
think of economic growth, but it actually plays a huge rule in every 
aspect of our economy. It helps determine how much money you have left 
over to save or invest or whether you can afford a car or a house. When 
it comes to businesses, it can be the key to determining whether a 
young business gets off the ground or an existing business has the 
money to grow and to hire new workers.
  Unfortunately, our current Tax Code is not helping our economy. Too 
often, American families find their opportunities limited by the size 
of the tax bill they owe to Uncle Sam. Large and small businesses alike 
find themselves struggling under heavy tax burdens that compromise 
their ability to grow and compete.
  What does tax reform need to look like? On the individual side, of 
course, we need to lower income tax rates to put more money in 
Americans' pockets. American families should be the ones deciding how 
to spend their earnings and not Washington bureaucrats.
  On the business side, there are two important things we can do that 
will have long-term benefits for economic growth: first, lower tax 
rates for all types of businesses--sole proprietorships, S 
corporations, limited liability companies, and corporations; and, 
second, accelerate the rate at which businesses can recover their 
investment costs to free up money for them to reinvest in their 
businesses, create new jobs, and increase wages.
  When it comes to lowering business tax rates, there are several 
things we need to do. For starters, we need to lower our Nation's 
corporate tax rate. The United States has the highest corporate tax 
rate in the developed world. That puts American businesses at a 
competitive disadvantage in the global economy.
  When American businesses are taxed at a far higher rate than their 
foreign competitors, it is likely to be the foreign, rather than the 
American, companies that expand and thrive.
  It is not just our high corporate tax rate that puts American 
businesses at a competitive disadvantage. It is also our outdated 
worldwide tax system. If we want American businesses to stay 
competitive in the global economy, we need to move from a worldwide tax 
system to a territorial tax system.
  The chairman of the Senate Finance Committee, Senator Orrin Hatch, 
delivered a speech the other day explaining exactly why we need to move 
to a territorial system. I highly recommend reading his full speech, 
but I am going to take just a moment to highlight some of the points he 
made in that speech.
  What does it mean to have a worldwide tax system? Under a worldwide 
tax system, American companies pay U.S. taxes on the profit they make 
here at home, as well as any profit they make abroad, once they bring 
that money back here home to the United States.
  The problem with this is twofold. First, these companies are already 
paying taxes to foreign governments on the money they make abroad. 
While the current Tax Code gives them some credit for those foreign tax 
payments, they can still end up paying some U.S. taxes when they bring 
that money home, meaning they are being taxed twice on those profits.
  This discourages companies from bringing their profits home to invest 
in their domestic operations in the United States. If the tax burden 
for bringing that money home is too great, they have a strong incentive 
to leave that money abroad and invest it in foreign workers and foreign 
economies.
  The other problem is, most other major world economies have shifted 
from a worldwide tax system to a territorial tax system. In a 
territorial tax system, you pay taxes on the money you earn where you 
make it and only there. You aren't taxed again when you bring money 
back to your home country.
  Most of American companies' foreign competitors have been operating 
under a territorial tax system for years so they are paying a lot less 
in taxes than American companies are. That leaves American companies at 
a competitive disadvantage.
  These foreign companies can underbid American companies for new 
business simply because they don't have to add as much in taxes into 
the price of their products or services. By moving to a territorial tax 
system in the United States--a move that is supported, by the way, by 
Members of both parties--we can put American companies on an even 
footing with their global competitors.
  With a territorial tax system and a lower corporate tax rate, we can 
provide a strong reason for companies to keep their operations in the 
United States and to bring their profits back home, instead of 
incentivizing companies to send their operations overseas the way they 
do now.
  Improving the competitiveness of American companies and giving them a 
reason to invest their profits back home will have huge economic 
benefits, not only for American companies who are competing in the 
global marketplace but also for all the small- and medium-sized 
companies that form the supply chain here in the United States.
  For every American company that operates in countries around the 
world, there are countless companies here at home that supply the raw 
material for the products that are sold abroad--businesses that handle 
the packaging and the shipping of those products and enterprises that 
supply support services like accounting and legal and payroll services.
  The list goes on. America's global companies rely on a web of 
supporting businesses that spans the entire United States. As a result, 
when American companies are successful, so is the American economy.
  Obviously, lowering corporate tax rates and moving to a territorial 
tax system will have the most impact on American companies with an 
international footprint. Tax reform also has to focus on that other 
engine of economic growth; that is, the American small business.
  Like bigger businesses, small businesses currently face high tax 
rates, at times even exceeding those paid by large corporations. 
Lowering tax rates for small businesses has to be a part of any tax 
reform bill.
  A dollar saved in lower tax rates is a dollar a small business owner 
can put back into the business to expand, to add another worker, or to 
give employees a raise. The other thing we can do for small businesses 
is to allow them to recover their investments in inventory, machinery, 
and the like faster.
  Under current law, small- and medium-sized corporations are often 
required to use a method of accounting known as accrual accounting. 
Basically, what that means is, a business has to pay tax on income 
before it receives the cash and cannot deduct all of its expenses when 
it pays the invoice.
  For investments in equipment and facilities, the delay in recovering 
the cost of the investment can be even longer. For instance, right now, 
the cost of a computer is recovered over 5 years; tractors, over 7 
years; and commercial buildings, over 39 years.
  For many businesses, this means it can be many years before that 
substantial investment can be fully deducted. That can leave a business 
extremely

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cash poor. Cash-poor businesses don't expand, they don't hire new 
workers, and they don't increase wages.
  Boosting small businesses' available cash by allowing them to recover 
their investments faster is one of the most important things we can do 
to help small businesses thrive.
  I have actually introduced legislation that would do just that. My 
bill, which is called the INVEST Act, focuses on allowing new 
businesses to recover their startup costs more quickly and allowing 
existing small- and medium-sized businesses and farms and ranches to 
recover their investments faster, and in some cases deducting the 
acquisition costs immediately.
  All of the tax reform priorities I have discussed today, and more, 
will be part of the final tax reform package that we develop in the 
U.S. Senate.
  Members of the tax-writing committees, in both the Senate and the 
House, have spent years working out the best approach to tax reform. 
Both committees have redoubled their efforts this year, even as the 
Senate and the House took up a variety of different priorities.
  Last week, leaders from the Senate, the House, and the administration 
announced that the Senate Finance Committee, of which I am a member, 
and the House Ways and Means Committee would begin putting together a 
final version of a tax reform package. Our goal is for the Senate and 
House to take up and pass the legislation sometime this fall.
  I am looking forward to working with Chairman Hatch and all of my 
colleagues in the Senate Finance Committee to put together that final 
bill, because American families and businesses are counting on us to 
enact a tax system that works for them and not against them. That is 
what we intend to give them.
  I yield the floor.
  Mr. President, I ask unanimous consent that quorum calls during 
consideration of the Wray nomination be charged equally to both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THUNE. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Ms. KLOBUCHAR. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Hoeven). Without objection, it is so 
ordered
  Ms. KLOBUCHAR. Mr. President, I rise today to recognize the 10th 
anniversary of the collapse of the I-35W bridge and to pay tribute to 
those who lost their lives on that tragic summer day, as well as all 
the first responders, healthcare workers, and ordinary citizens who did 
extraordinary things on this day 10 years ago.
  First, I want to acknowledge one other topic; that is, this evening 
we will be voting on the nomination of Christopher Wray to serve as the 
FBI Director. I was proud to join all of my colleagues on the Judiciary 
Committee--now, it is not an ordinary thing to have happen on its own 
that we all agree on something--from both sides of the aisle to support 
Mr. Wray's nomination in committee on July 20 with a unanimous vote of 
support.
  In his hearing, Mr. Wray showed that he has integrity, that he will 
follow the law, and that he believes in the importance of an 
independent FBI. Senators on both sides of the aisle asked him strong 
and tough questions. Given this important time in our Nation's history 
for law enforcement and for the FBI, I don't think you would expect 
anything less.
  Mr. Wray handled the questions well. He was knowledgeable, but most 
importantly for me, he showed respect for the agents, and he showed 
respect for his predecessors, both Mr. Mueller and Mr. Comey. He showed 
respect for the law, and he understood the somber time in which he 
comes in to take this job.
  In particular, Mr. Wray said that if he were asked to do something 
illegal or unethical, he would urge the President not to proceed with 
such a course of action, and he would resign if necessary. Mr. Wray 
also responded to Senator Graham that he did not consider Special 
Counsel Mueller to be on a witch hunt, and he agreed that anyone 
running for elected office should notify the FBI if a foreign 
government offers assistance on a political campaign.
  Mr. Wray also agreed with the concerns I raised that are posed by 
organized criminals, including those from foreign governments or who 
work for foreign governments, hiding their money in shell companies. He 
said that we had to ``follow the money.'' With news reports that the 
eighth person in the meeting with Donald Trump, Jr., Paul Manafort, and 
a lawyer connected to the Russian Government was a Russian who has been 
linked to money laundering, this issue is as important as ever.
  In addition, Mr. Wray pledged to continue the FBI's efforts to work 
with the Election Assistance Commission and to address cyber security 
threats to our election infrastructure, so it is not just investigating 
things backward. A lot of what fighting crime is about--and I certainly 
knew this in my time as county attorney in Hennepin County--is making 
sure you protect people going forward. The FBI has enormous 
responsibilities going forward with cyber security, not only for our 
elections but for our government and also for business and for 
individual citizens.
  Importantly, Mr. Wray promised to be responsive to requests from the 
Judiciary Committee as it carries out its oversight responsibilities. 
Those were questions posed to him by the committee's chairman, Senator 
Grassley.
  This is a tough time to take this tough job. The previous FBI 
Director, as we know, was fired because of the Russia investigation. 
The former Acting Attorney General was fired, and we have had a slew of 
other firings throughout the government over the last few months.
  Well, I believe Christopher Wray is someone who will come in there 
with the integrity that is needed to do the job for those brave agents 
who go to work every day, not wearing a political button. They just go 
to do their work to protect us. I also believe he is the right choice 
at this time for our country.
  I am very proud of the work the FBI in Minnesota has done, especially 
in the past year, with the stabbing we had at the shopping mall. The 
police chief there often talks about how there was so much going on at 
that moment, and the FBI was able to come in and help with that 
investigation in a significant way, so the police chief could not only 
work on the investigation with his officers but also calm the 
community, work with them, and do the other work that had to be done in 
the aftermath of that tragic stabbing.
  That is just one example of our FBI in Minnesota, but I think every 
Member in this Chamber has examples in their own communities, and that 
is why it is important to have someone of the caliber of Christopher 
Wray take charge. I look forward to voting for his confirmation this 
evening.