[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

[[Page S6790]]

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.