[Congressional Record Volume 163, Number 172 (Wednesday, October 25, 2017)]
[Senate]
[Pages S6789-S6792]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Tax Reform
Mr. President, I am here to talk about one of the most pressing
issues we have to deal with. Yesterday, we had lunch where the
President spoke about why tax reform was so critical for healing the
economy and really having our Nation rise to its full capabilities in
terms of economic performance and global competitiveness. You read the
headlines. The headlines read like: Republicans are for the big guy,
for the corporations, not for the little guy.
You will hear them talk about policies that will have us drowning in
red ink. You will hear them talk about unsustainable economic policies.
I saw all of those headlines before, about 6 years ago, in the North
Carolina statehouse when we inherited a disaster for an economy. It was
after the 2008 crisis. We had a State that was drowning in red ink,
with a $2.5 billion structural deficit. We had a tax code that was
absolutely out of sync with our competition, and we set about to fix
it.
This is what we ended up doing. All of the headlines looked exactly
the way the headlines looked today, but we had members on both sides of
the aisle, Democrats and Republicans, who recognized that North
Carolina should be one of the fastest growing, most competitive States
in the Nation. So we went about trying to figure out how to make that
happen. We determined, for one thing, that there was an undue burden on
individuals and working families. So we had to simplify the tax code,
and we had to reduce the tax burden on the individuals. We also
recognized that our corporate tax rate was preventing us from getting
the job expansion opportunities. The States like South Carolina,
Tennessee, Alabama, and Virginia were winning time after time after
time.
By the time I came in as the speaker of the house, there had been a
long time before we had any major economic development opportunity in
North Carolina. So we were able to put together a corporate tax cut, an
individual income tax cut, and, in our case, even a sales tax cut,
which all of the pundits said was going to be a disaster. It ended up
engineering and serving as the basis for one of the most significant
economic turnarounds of any State for over the past 30 or 40 years. It
went from a zero rainy day fund to a $2 billion rainy day fund, putting
more money into education, putting more money into Medicaid, and
creating the resources that would allow us to do the other things we
wanted to do.
When I was speaker, I had to go look to see what Texas was doing--I
see the Senator from Texas is here--and say: What could we do to be
more competitive with Texas? We looked at Iowa. What could we do as a
matter of tax policy that would make us more competitive with Iowa on,
let's say, agriculture? Those were our peer competitors. As a State
leader, I am looking at my peer competitors in their States.
For our corporate tax policy, we look at China, at Russia, at Europe,
and we look at our competitors and make it very clear that we are out
of step. As Senator Blunt said, years ago we weren't out of step, but
we are today. We are not competitive with people with whom we should be
cleaning their clock in terms of economic expansion. You only get that
done if you lower the corporate tax rate. If you actually get people
who will invest that capital and hire more people, provide more
opportunities for working families, and create more demand for jobs so
that wages go up, that is how you ultimately get this economy moving to
a point where we create the resources to also ultimately pay down the
debt. I still consider that to be the single greatest threat to our
national security.
Along the way, the reason I know our tax policy was about right where
it needed to be was that virtually every lobbyist in Raleigh was mad at
me--and I mean all of them.
If you look at 1986, the last time we did meaningful tax reform,
virtually every lobbyist on Capitol Hill was mad at the folks who voted
for the bill, and that was on a bipartisan basis. So we have to have
Members who are willing to go big, who are willing to actually reduce
the corporate tax rate, to work on the tax burden for working families,
and to recognize that it is on us.
We are in a historic opportunity to turn this economy around and to
take advantage of the fact that other countries are not heeding the
call. They are heaping more regulations on their businesses. They are
adding more taxes in some cases. This is a historic opportunity for us
to just blow past the competition and ultimately create the resources
to retire our debt and provide the critical resources we need for so
many other things that we need to get here, like strengthening our
international defense, making sure our homeland is safe, and securing
the border. All of these kinds of things can be done, but they can only
be done if we have the courage to move forward with tax cuts and tax
reform.
I hope that all of my Members, before Thanksgiving, are in this
Chamber and have an opportunity to vote for a bold reform package but,
more importantly, for the fulfillment of a promise that we made to the
American people if we had majorities in the Senate, in the House, and
in the White House. We have it, and it is time for us to act.
I don't care what the headlines read because I have seen those
headlines before. I don't care what the special interests want in terms
of exemptions and exceptions because I have had those meetings in my
office before. At the end of the day, every single one of those folks
who wanted to pick apart one exception or an exemption have come back
into my office and said: You know what; you have protected us from
ourselves, because if you had listened to us, you would have done far
less than you were capable of doing.
There is nobody who follows State politics that would question what
was done in North Carolina. It has been an extraordinary turnaround.
Now it is time to do the same thing for this great Nation.
I hope that all of my colleagues would set aside the distractions,
mute the voices of the special interests that will want their special
exemption or exception and fulfill the promise that we made to the
American people.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mr. CRUZ. Madam President, I rise today at a time of extraordinary
opportunity. The American people have entrusted us with something that,
historically, is quite rare: a Republican President, Republican control
of every executive agency, and Republican majorities in both Houses of
Congress. Now it is incumbent on us to stand up and lead, to deliver on
the promises we made to do what we told the American people we would
do.
We have before us right now an opportunity for historic tax cuts.
Just last week, this body voted out a budget resolution that is the
vehicle for adopting tax cuts. I urge every Member of this body to come
together in support of a strong, bold tax plan that cuts taxes on every
working man and women and that brings back jobs and economic growth.
Growth is really fundamental to every other challenge we have in this
country. If you look historically, since World War II, our economy has
grown on average about 3.3 percent a year. Yet, from 2008 to today, we
have grown only 1.2 percent a year--about a third of the historic rate
of growth.
If we don't turn that around, none of our other problems are
solvable. If you care about the national debt, if you care about the
deficit, if you care about rebuilding and strengthening our military,
if you care about strengthening and improving Social Security and
Medicare so that they are there for the next generations, we have to
have growth. With economic growth, every one of those is possible.
Without growth--if we stay mired in the stagnant Obama 1- and 2-percent
GDP growth, none of those problems are solvable.
Growth is foundational. I would like to lay out three principles and
then seven key elements that I think should guide this body in tax
reform. No. 1 is growth. When we are adopting tax cuts, we should focus
directly on jobs and economic growth and focus on the reforms that
produce jobs, that expand
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economic growth, that grow our economy, that create more opportunity,
and that raise wages.
Working men and women in this country are hurting. We need wages
going up. We need more jobs. We need young people coming out of school
with two, three, four, or five job opportunities. That is what tax cuts
are all about. No. 1, we start with growth.
I will point out that we can do this. From 2008 to 2012, the economy
grew 0.9 percent a year--less than 1 percent a year on average. If you
look back in history to the previous 4-year period when growth averaged
less than 1 percent a year, it was 1978 to 1982. It was coming out of
the Jimmy Carter administration. It was the same failed economic
policies--high taxes, high regulation, high spending, and high debt.
In 1981 Ronald Reagan came into the White House. The Reagan
Presidency focused front and center on tax cuts, with major tax cuts in
1981, and then following it up in 1986 with major tax reform.
And what happened? When Reagan came in 1981 with across-the-board tax
cuts and tax cuts for everybody, Democrats screamed, the media
screamed, and yet the economy took off.
The fourth year of the Reagan Presidency, GDP growth wasn't 3
percent. It wasn't 4 percent. It wasn't 5 percent. It wasn't even 6
percent. It was 7.2 percent in 1984--7.2 percent, those are numbers you
hear in the developing world. Those are numbers you hear in China and
India.
All of our learned economists who are so world weary and all of our
media reporters who are so world weary tell us: No, no, no, that kind
of growth is not possible in America anymore. Accept the new normal of
1 and 2 percent of stagnancy, of young people buried in student loans,
of people hurting. Accept that as the new normal.
That is nonsense. If we want to see Reagan-style growth, we need a
Reagan-style tax cut--an unapologetic, unabashed tax cut that focuses
on jobs.
The second big principle is simplicity. There is an old rule, KISS,
or ``keep it simple, stupid,'' which is particularly powerful when it
comes to tax reform. Bold simplicity has enormous power and, in
particular, allowing every American to fill out their taxes on a
postcard. I believe that should be an integral element of what we pass.
It is what I have been pressing for many years, and what I would
continue to urge my colleagues here in the Senate and in the House to
do, which is to simplify the Tax Code so that we don't spend millions
and millions of hours and paperwork wasted on compliance. Make it a
postcard. Make it simple.
Then the third objective is fairness. We want a tax system that is
fair, that isn't arbitrary, that isn't Washington picking winners and
losers and deciding: OK, this industry we like; so you can do OK. This
industry we don't like; so you are going to hurt. We are going to pick
between them.
We need to cut everybody's taxes.
Last week, I debated Bernie Sanders on CNN on tax reform. Bernie, to
his credit, was very candid. He said he wanted to raise your taxes. If
you are a taxpayer, your taxes are going up under Bernie and the
Democrats' vision.
My vision is every bit as simple on the other side. If you are a
taxpayer, I want to cut your taxes. That is what we need to do--to cut
taxes fairly, across the board for every American, to reduce the burden
from Washington, and to create jobs and economic opportunity.
I would note that, in that debate with Bernie, there was one exchange
that I thought was particularly notable. Bernie, as you know, when he
ran in Vermont did not run as a Democrat. Rather, he ran telling the
voters he was a socialist. I asked a simple question: What is the
difference between a socialist and a Democrat on taxes?
He sat there for several seconds in silence and said: I don't know
the answer to that.
My response was: Neither do I.
One side of this Chamber wants to raise your taxes if you are a
taxpayer. The other side of this Chamber wants to cut your taxes if you
are a taxpayer. That is a simple choice for the American people.
What are the elements that should reflect those principles? There are
seven critical elements: No. 1, I believe we should create a simple,
low, flat rate. Currently, there are seven individual rates with the
top rate at nearly 40 percent. Ideally, what I believe we should have
is one simple, low, flat tax.
When I was campaigning for President, I campaigned on a simple, flat
tax of 10 percent for every individual and every family in this
country, 16 percent as a business flat tax, and to abolish every other
Federal tax, to abolish the corporate income tax, to abolish the death
tax, to abolish the alternative minimum tax, and to abolish the payroll
tax. Everyone pays a simple, flat 10 percent for individuals and 16
percent for businesses. Simplicity has power.
It may be the case that we don't have the votes to go to a simple,
flat tax today. If that is where we are, if we don't have the votes to
do it today, then the closer we get to that the better. If we can't get
to a simple, flat tax, then going from seven brackets to three is an
improvement, and going from three to two is even better, and going from
two to one would be even better than that. We need to press
consistently for a low, simple, flat rate that is fair for everyone.
The second element, which we talked about just a minute ago, is
filing your taxes on a postcard. Let me tell you the most wonderful
aspect of that simplicity. It is not the billions of hours, it is not
the billions of dollars that are saved. The best aspects of filing your
taxes on a postcard are actually the physical dimensions of the
postcard. It means that Congress can't add a bunch of new things. Even
if we tried to put it in four-point font, eventually you will run out
of space on the postcard. The reason a postcard is so important is it
imposes a discipline on the Federal Government that it can't carve out
a special loophole for every favored or disfavored group because it is
simple and flat and fair for everybody.
No. 3, allow immediate expensing. What does expensing mean? It means
that if a business makes a capital expenditure, right now, they
physically have to amortize it over a number of years. Instead, what we
should do is allow full and immediate expensing.
If a farmer in the Presiding Officer's home State of Iowa buys a new
tractor, that farmer should be able to expense it immediately, that
year. If a steel factory buys new equipment and hires new workers to
operate that equipment, that steel factory should be able to expense
that new equipment immediately. If a diner buys new kitchen equipment
and hires new cooks and waiters and waitresses, the owner of that small
business should be able to expense that capital expenditure. And why is
that? The reason is the first principle I started with--growth.
If you care about jobs and economic growth, expensing is a powerful
engine for jobs and economic growth. It creates millions of new jobs
because that capital has to be spent in the United States. It has to be
spent here. That tractor is in the United States; that steel equipment
is in the United States; that diner with the cooking equipment is in
the United States, which means those jobs are in the United States.
I would note, by the way, the people who particularly benefit from
immediate expensing are the working men and women of this country--the
men and women with callouses on their hands, the men and women,
frankly, who gave Donald Trump the victory in November of 2016 or the
union workers whom, sadly, the Democratic Party has abandoned.
There was a time when the Democratic Party styled themselves as the
party of the working man and woman. That time has been long since
forgotten. The Democratic Party now listens to California
environmentalist billionaires and ignores the plight of steelworkers,
oilfield workers, farmers, ranchers, taxicab drivers, truckdrivers,
waiters, and waitresses--the men and women who are working hard for
their families. That is who the Republican Party should be fighting
for--the working men and women of this country. Immediate expensing
impacts working men and women, particularly in heavy manufacturing.
The fourth element is a lower corporate rate. We are seeing, and we
have seen over the last 8 years, companies leaving America and moving
their headquarters, moving their legal domicile to other countries. Why
is that? Because the United States has the
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highest corporate tax rate of any developed country in the world. We
have created a tax environment that tells American businesses: If you
simply get the heck out of Dodge, if you simply move somewhere other
than America, immediately your profitability will jump because our
corporate tax rate is higher and, in some instances, more than twice as
high as our competitors.
Look at Ireland. Ireland used to have high corporate taxes. They cut
their corporate tax rate. Then they cut it again, and they are seeing
businesses flood into Ireland because of the low corporate tax rate,
and they bring with them jobs.
Our focus should be jobs. If we cut the corporate rate so that it is
low--so that it is at least as low as our competitors and ideally even
lower--we will create an environment where more businesses want to do
business in America where there are more jobs.
I am reminded of Hillary Clinton, who said during the Presidential
campaign season: Don't let anybody tell you that corporations or
businesses create jobs. Even in the world of politics, that was a
particularly asinine statement. The last time I checked, you get a job
from going to work for a business--unless you start your own business.
You either start your own business or you go to work for another
business. That is what gives you jobs. We need to create that
environment.
In recent years, we have talked about corporate inversions, companies
fleeing America. Our friends on the Democratic side of the aisle have
all these ideas to punish the companies that flee America. Their
approach is: We are going to tax you so high that you can't do business
in this country, and then, when you try to survive, we are going to
punish you on top of that with fines and penalties. It is actually
reminiscent of their approach to ObamaCare, where they fine people who
can't afford insurance after driving premiums through the roof.
It is a much better idea to cut our corporate tax rate. Let's create
a tax and regulatory environment in America so that businesses want to
be here and create jobs. It is my hope that 3, 5, 10 years from now,
other countries--European countries and Asian countries--are
complaining about corporate inversions because their companies are
fleeing their countries and coming to American, because there is no
place on Earth better to do business than America, because we will have
honored our commitment on tax reform and cut taxes and created an
environment where businesses can thrive.
No. 5, encourage repatriation. Right now, Federal tax law subjects
American businesses to punitive double taxation at the highest rates in
the developed world if they bring capital back here from overseas. U.S.
companies have roughly $2.7 trillion in capital overseas, and our tax
system inextricably incentivizes them to keep the money overseas, which
means--what do they do with the money overseas? It means they build
factories in China, in Mexico, in India, and countries overseas that
aren't America, and then they hire people overseas. Why? Because if
they bring the capital back here and hire Americans, our tax punishes
them. That doesn't make any sense.
I want to see that $2.7 trillion come back to America. I want to see
that money back in this country. I want to see new factories, I want to
see new stores, I want to see new businesses, and I want to see new
jobs. We need to encourage repatriation, not put a punitive tax on the
money coming back. Do you want to talk about patriotism? There is a
reason it is called repatriation. It is patriotic to use that money to
hire Americans.
Our Democratic friends just want to yell and scream and insult them.
That is not the right answer. People are going to respond to rational
incentives. If you punish companies for bringing money back to America,
they are going to respond rationally by not doing that. Let's change
our tax system so we don't punish them for bringing jobs back to
America.
The sixth element, end the death tax. The death tax is one of the
most unfair aspects of the Federal tax system. The death tax also
happens to be the very favorite tax our friends on the Democratic side
of the aisle love to demagogue. I have heard over past weeks attack
after attack after attack on the death tax--that it is about the
superrich.
Here is a secret that the Democrats will never tell you. The
superrich don't pay the death tax. By and large, they manage to avoid
the tax with remarkable success rates. They hire armies of accountants
and lawyers. Do you think George Soros will pay the death tax? Hold
your breath, and let me know how that works out. It doesn't impact the
superrich.
The death tax actually generates very little revenue for the Federal
Government. Who gets hit by the death tax? It is the farmers, it is the
ranchers, and it is the small business owners. In the debate last week
with Bernie Sanders, Bernie said that this doesn't affect farmers at
all.
The Presiding Officer and I have both spoken with an awful lot of
farmers in Iowa and in Texas. I have heard farmer after farmer after
farmer lament the death tax because of what happens when the patriarch,
when the farmer, passes away and passes the farm on to the next
generation. Over and over again, the next generation is forced to sell
the farm just to pay Uncle Sam. They have already paid taxes once; they
pay taxes when they earn their money. The death tax says that for
having the temerity to die, we are going to tax you again at a punitive
rate. Death should not be a taxable event. That is not fair. It
shouldn't be the case that when you die, the two people you get to see
are the undertaker and the taxman.
We see farms that are sold, that are broken up; we see ranches that
are sold, that are broken up; we see small businesses that are sold,
that are broken up because the next generation that wants to run the
small business, wants to keep the jobs, suddenly has a massive Federal
tax bill. They don't have the fancy lawyers and accountants who, like
the superrich, help them avoid the tax. So they get hit with the full
force of the death tax.
If you care about jobs and economic growth, why do you want a small
business owner to be forced to sell the factory just to pay the tax
bill? This means the employees all get laid off; they lose their jobs.
It is much better to have those small businesses growing, to have those
farmers prospering, and to have those ranchers prospering.
The final element is that we need to end the alternative minimum tax.
The AMT is a totally second set of taxation. Every year, it is growing
the number of people who are hit by it, and it just adds complexity to
the code.
We should focus on growth, simplicity, and fairness. If we do that,
if we focus on bringing back jobs, we have the ability to have a
tremendous impact on our country.
Finally, I want to make a plea to the Members of our conference, to
the Republicans. We may get some Democrats to support us on tax reform.
It is possible. We may get one or two. Sadly, we are in a different
world than we used to be. In 1981 and 1986, Democrats actually used to
be willing to work with Republicans on taxes.
Tip O'Neill, a Democrat, was Speaker of the House when Reagan passed
massive tax cuts. Bill Bradley in this body, a liberal New Jersey
Democrat, helped lead the effort for tax reform. There are no Tip
O'Neills or Bill Bradleys left. There is not a single Democrat leading
the fight for tax reform--not a one.
You may get one or two Democrats at the end of the day who cast a
vote after everything is done because they are afraid of the electoral
consequences in November. But I will make a prediction right now that
if we don't have 50 votes on this side of the aisle, not a single
Democrat will provide the 50th vote. They might be the 52nd or 53rd
vote, but we ain't getting vote No. 50 from that side of the aisle,
which means that for tax reform to happen, our conference has to get
our act together. We have 52 Republicans, and we have to get 50 on the
same page.
Listen, we are at a time when we are seeing personality battles, and
we are seeing nastiness. This is a strange time in politics. Any three
Republicans can torpedo tax reform. I am making a plea to all 52: Don't
be selfish and petulant. Don't put personal animosities above the good
of the country.
We were elected by the voters to do a job. Let's do the job. Let's
honor the promises we made. Let's cut taxes, bring back jobs, bring
back economic growth, and demonstrate to the voters
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there is a reason they elected Republican majorities.
If we don't, if we can't get our act together, then I fear the
consequences will be catastrophic, both as a policy matter and a
political matter.
I urge my colleagues: Let's do what we said we would do. Let's cut
taxes. Let's bring back jobs.
I yield the floor.
The PRESIDING OFFICER. The Senator from Connecticut.