[Congressional Record Volume 163, Number 182 (Wednesday, November 8, 2017)]
[Senate]
[Pages S7094-S7097]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                               Tax Reform

  Mr. GARDNER. Mr. President, I rise today to talk about a historic 
opportunity that will soon be before this body. It is an opportunity to 
bring real relief to the American people. It is an opportunity to jolt 
our economy into a higher gear and bring real, tangible benefits to 
America's hard-working families.
  It has been over 30 years since this country last reformed its Tax 
Code. Over those 30 years, we have seen a lot of change. We have seen 
the country move from Ataris to smartphones and Wi-Fi. This photo shows 
a Ford LTD station wagon, which rolled off the assembly line 30 years 
ago. It is a car that any of us would have been excited to drive 30 
years ago. Today we have cars that drive themselves. Unfortunately, we 
still have a tax code that is made for this LTD.
  So while the world has changed around us and other countries have 
learned to craft tax codes to entice businesses to grow, our code has 
gotten more and more out of date and more and more laden with special-
interest giveaways. Our Tax Code has turned Main Street into a dead end 
and our overseas growth into a one-way street.
  Reforming the code is not only a way to give us an opportunity to end 
those giveaways, but it can also boost our economy. I applaud our 
colleagues in the House, who last week introduced and are working on a 
proposal to overhaul the tax system. In the coming days the Senate 
Finance Committee will introduce their own legislation.
  While I will mostly focus my comments today on one aspect of tax 
reform, I will note that on Friday the Tax Foundation released its 
analysis of the House tax proposal. This analysis concluded that the 
House proposal would create 975,000 full-time-equivalent jobs and push 
GDP 3.9 percent higher than it would otherwise be. Taking into account 
the economic feedback from the proposed reforms, this means taxpayers 
would end up with 4.4 percent higher income. In other words, they will 
make greater, higher income as a result of the bill that the House is 
working on today. Indeed, the Tax Foundation concluded that the total 
after-tax gain in income for a middle-class family would be nearly 
$2,600.
  Importantly, for my constituents in my home State of Colorado, the 
gain would be over $3,000. These are serious gains that will bring 
real, meaningful benefits to hard-working Americans. This is just the 
starting point for our reform. This number is over $3,000 of impact to 
the people of Colorado of additional income and tax relief. When a 
significant segment of Americans don't even have access within 24 hours 
to just a few hundred dollars, a $3,000 a year gain is a significant 
amount of money.
  Today I would like to focus on one part of the tax reform package, 
and that is the lowering of taxes on America's job creators. Because we 
have this clunky Atari-era Tax Code--this Ford LTD station wagon Tax 
Code, our tax rates are no longer competitive. They encourage companies 
to invest abroad rather than right here at home in the United States. 
Back in 1986, when this car rolled off the assembly line, our corporate 
rate was competitive. It didn't discourage companies from investing in 
the United States.
  Things have significantly changed since 1986. Foreign countries have 
figured it out. They lowered their tax rates, and now the United States 
has the highest corporate tax rate in the

[[Page S7095]]

developed world--indeed, one of the highest tax rates in the world, 
period. Consequently, businesses have moved abroad more and more. They 
invested more abroad, and in the United States they have invested less 
and less.
  It is not in the Republicans' view alone. I would draw your attention 
to this quote right here. President Obama noted this gradual 
deterioration of the corporate tax code in his 2011 State of the Union 
Address, saying:

       [O]ver the years, a parade of lobbyists has rigged the tax 
     code to benefit particular companies and industries. Those 
     with accountants or lawyers to work the system can end up 
     paying no taxes at all. But all the rest are hit with one 
     of the highest corporate tax rates in the world. It makes 
     no sense, and it has to change.

  Those are the words that President Barack Obama spoke to a joint 
session of Congress in 2011 in his State of the Union Address.
  The Council of Economic Advisers estimates that just moving the tax 
rates on corporations from the uncompetitive 35 percent to the middle-
of-the-pack 20 percent and adding permanent full expensing of capital 
investments would increase GDP from 3 percent to 5 percent above what 
is currently forecasted. That increase would not just happen in a 
decade or two, it would be front-loaded, meaning that we would see a 
fast response from this economy, with 2.4 percent to 3.2 percent higher 
GDP in the first 3 to 5 years under this proposal. That boost will not 
just be to the corporate bottom line. It will increase the average 
American household income by $4,000.
  Let me say that again. It will increase average household income in 
America by $4,000.
  Since these estimates were released, since those numbers, statistics, 
and analysis have been done, opponents of pro-growth tax reform have 
thrown everything they can at the proposals and estimates to see what 
will stick to try to bring it down. They said these numbers are too 
rosy. They said that we can't possibly get a $4,000 increase in average 
household income because that would mean more money would end up in 
bank accounts of American households than is raised in revenue by the 
corporate income tax.
  They said that corporations have been ``rolling in money'' for a long 
time. So if they wanted to invest in America they already would have. 
Some opponents say we should tax corporations more--take the profit 
that is sitting overseas and spend it as the government wishes. When 
opponents of tax relief see a company with money, their reaction is to 
take it--to take it like it is the Government's money. But we know that 
doesn't work. Even our European friends, whose residents tend to be far 
more open to socialist experiments, have rejected this notion. They 
know that tax reform is about creating the environment that will cause 
companies to invest in America, not attempting to seize profits from 
companies that can easily move elsewhere. That is why France, Germany, 
Spain, Italy, and Greece--not exactly bastions of open economic 
innovation--have lower corporate tax rates than we do.
  The chairman of the Council of Economic Advisers, Kevin Hassett, told 
the Joint Economic Committee recently:

       This is not about right wing parties throwing money at rich 
     corporations. It is about economically literate governments 
     understanding that if we want wages to be higher, than we 
     have to give workers capital to work with.

  Let me say that again. This effort for tax relief is about 
``economically literate governments understanding that if we want wages 
to be higher, then we have to give workers capital to work with.''
  Let's go back to the first response we heard from opponents of tax 
relief: It is ``absurd'' to think the average American household will 
get $4,000 more in income because that is more than the country raises 
in tax revenue.
  In other words, if we took every dollar raised from corporate tax and 
handed it over to American families, they wouldn't get $4,000. That is 
the argument opponents of tax reform are saying, but this response 
simply doesn't get it.
  What is the economically literate perspective?
  Recall that a lot has changed over the last 30 years, but one thing 
hasn't changed, and that is the U.S. corporate tax rate. As you can see 
on this chart, the average OECD tax rates have dropped over time. You 
see the blue OECD line, and the orange line on the chart is straight 
across. The average OECD tax rates have dropped over time, but the U.S. 
rate stayed right where it is. The U.S. advantages that made it the 
place to invest in 1986 have slowly faded away. Other countries have 
used their tax rates to become more competitive, and companies have 
responded.
  Business investment now is unfortunately low. Indeed, Chairman 
Hassett warned that there is a crisis in our country because of the 
lack of what is called capital deepening, which is just an economist's 
term for the impact of capital stock--things such as equipment, 
structures, and intellectual property--on worker productivity.
  Worker productivity is, in turn, what drives up wages. That is what 
makes wages increase. The more productive a worker is, the more the 
employer is willing to pay that worker to keep him or her in the job 
with rising wages.
  Going to another chart, we can see the effects of that. Prior to 
1990, when corporate profits were going up by 1 percent, workers' wages 
went up by more than 1 percent. Since that time in the 1990s, we have 
seen change. From 2008 to 2016, a 1-percent increase in business 
profits corresponded with only a 0.3 percent increase in workers' 
wages. One of the biggest culprits in this is the corporate tax rate. 
It is what causes that disconnect between corporate profits and 
workers' wages.
  When a company decides whether and where to invest in new buildings, 
equipment, and research, they look at the tax rate to know what return 
is needed to make that investment profitable. The higher the tax, the 
higher the needed return. So companies facing higher taxes either don't 
invest at all or they invest in another country. That is why experts 
say that workers bear 45 percent to 75 percent of the burden of 
corporate taxes, because businesses invest in them less and less, the 
higher the tax. It is as if the corporate tax rate casts a shadow on 
the entire economy.
  We can see that shadow here. This is the way economists model the 
market for capital--factories, equipment, buildings, IP. The higher the 
price, the less the companies demand. The lower the price, the more the 
companies demand. This is a simple concept.
  Suppliers of those things are the reverse. If they have to sell at a 
low price, they don't make very much, but if they can sell at a high 
price, they make more. These two should meet in the middle, but they 
don't meet in the middle today because the government has come in and 
imposed a corporate tax. So each unit of capital costs more than it 
should because of this tax system. That means businesses only want this 
much. The producers only get this much. The government takes the rest.
  What is left? We can see right here what the government is taking. We 
can see the effect that taxes have on the economy. What is left is this 
dark-shaded triangle. This is what economists call deadweight loss. 
That is the stuff that doesn't happen because of the tax. This is the 
tax shadow--the deadweight loss. It is deadweight in our economy. In 
that shadow, business activity just doesn't happen, and workers just 
don't get the capital they need to be more productive.
  Remember, businesses are deciding whether and where to invest that 
next dollar. If the cost is too high--reflected here--they won't 
invest, at least not here in the United States. They will decide not to 
expand at all, or they will expand in a country that has a lower tax 
rate, or they will simply shut down entirely.
  I don't think the American people would be surprised by this. This is 
not news to them. They lived this for a long time. They know it well. 
They know businesses are not expanding here. They have seen businesses 
close. They have seen a slowdown in the startup of new businesses. They 
know wages haven't gone up in many years.
  They understand this shadow. Businesses don't expand. Workers are 
laid off. Money moves abroad. It is because of this high tax that 
doesn't leave us with decreases in costs, creating a deadweight loss on 
our economy. They understand it, and they know that corporations pass 
that tax on to them in the form of lower wages.

[[Page S7096]]

  But here is the good news. Help is on the way. Lowering the corporate 
tax rate lowers the rate of return needed to make investments work. It 
removes the shadow that blocks the economic sunlight. Suddenly 
businesses are operating here in the green.
  More investment in factories, buildings, equipment, and IP means more 
Americans are more productive, and that makes total sense. You get more 
done when you have a new computer than when you have an old clunky one. 
You produce more when you have a new machine on the line. Workers 
become more productive, and the companies pay them more both because 
they are bringing in more and because they want to keep those workers 
to do more. That is what happens when you lift that economic shadow 
that we talked about that corporate taxes impose and cast on our 
economy. You create more jobs, and wage competition grows income.
  This isn't just economic theory. As you can see here on this chart, 
wage increases are significantly higher in countries with lower 
corporate tax rates. We don't need just simple economic theory; we need 
economic results, and that is what this chart shows us. High-tax 
countries like the United States have weak wage growth. The United 
States is down here on this chart representing the highest statutory 
corporate rate countries. High-tax countries like the United States 
have weak wage growth--less than 1 percent, even close to zero percent. 
You can see that here. Low-tax countries--these are the lowest 
statutory corporate rate countries. These are the bottom 10 lowest 
rates. Low-tax-rate countries see a wage growth of 1 percent, 1.5 
percent, 3.5 percent, even 4 percent, and that is because they don't 
live under that economic dead weight, that tax shadow, that deadweight 
loss zone of high corporate taxes.
  It also matches my experience in talking with companies in Colorado. 
U.S. multinational corporations doing business in Colorado have told me 
that they want to expand here, but they just can't justify it when they 
look at the tax rates we have here versus around the world, especially 
in Europe. I have even heard from some foreign-based companies that do 
business in Colorado that this sort of reform--I ask unanimous consent 
to complete my remarks.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. GARDNER. Mr. President, it would entice them to invest more in 
the United States. This is real, and the American people need it.
  It is good television to say that it is absurd to think that American 
families will get more money from lowering the corporate rate than the 
tax raised in revenue, but it is wrong. It is tempting to look at a 
stash of corporate profits and think that corporations just must not 
want to invest here or ``let's just take that money,'' but that is 
wrong too. The right move is to create the tax environment that tells 
businesses that they should invest here because they can make more 
money. That is why President Obama called for corporate tax reform. 
That is why former Treasury Secretary--and one of President Obama's 
economic advisers--Larry Summers said that reducing the corporate tax 
rate and lowering the competitive disadvantage faced by American 
multinationals is ``about as close to a free lunch as tax reformers 
will ever get.'' That is what we do by lowering the tax rate. That is 
how American families end up with $4,000 more in their pockets--and not 
just one time; once this fully takes effect, that increase is 
permanent.
  Mr. President, we have a historic opportunity. The American people 
need and deserve a new and better Tax Code, a modern one designed for 
today's world, not an Atari world or a Ford LTD world.
  I urge my colleagues on both sides of the aisle to join with us as we 
modernize our Tax Code and deliver real results for the American 
people.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. MERKLEY. Mr. President, a few moments from now, we are going to 
come to this Chamber to vote on the nomination of Peter Robb to serve 
as general counsel for the National Labor Relations Board.
  Quite frankly, if we allow this individual to be confirmed, it will 
be a severe slap in the face to American workers. This is an individual 
who has made a career out of attacking the ability of American workers 
to get a fair share of the wealth they create. Yet here is a proposal 
to put him in a leadership position at an agency whose purpose is to 
fight to make sure workers get fair treatment. How does it make sense 
to take someone who has fought to undermine the ability of workers his 
entire life and put that person in charge of making sure American 
workers are treated fairly? Certainly, it is exactly the opposite of 
the argument Candidate Trump made when he said he was going to stand up 
for American workers. When push comes to shove, the President wants to 
shove workers down into the ditch.
  It boils down to this: The National Labor Relations Board was 
established 82 years ago in the middle of the Great Depression to 
protect workers by encouraging and promoting their right to collective 
bargaining. Think of the power of association so that workers can have 
the opportunity to have a fair share, to have a basic foundation for 
their families to thrive. That ability of workers to organize has been 
behind every advancement we have made as a middle class in America. Be 
it the 40-hour workweek, safe working conditions, standard benefits, 
each and every advance was led by workers' ability to organize. Yet 
here the President wants to put in place an individual who has done 
everything possible to take away that right, that ability to weigh in 
for basic fundamental fairness for workers.
  The responsibility of the National Labor Relations Board is more 
important today than ever. We have seen the impact of policies on 
behalf of the privileged and the powerful--incomes stagnating while the 
wealthiest Americans see their riches grow right up to the skyline. We 
have seen that anti-worker forces throughout our country have led an 
assault in State after State after State against the right of workers 
to organize and to secure safe working conditions and fair wages.
  Here we are at a time when America's workers have seen four decades 
in which their wages have been flat or declining while the rich and 
powerful have stripped off the growing wealth of this Nation for 
themselves. Income inequality has soared, wealth inequality is massive, 
and here is one more person being nominated to accentuate that 
inequality in wealth and in income.
  Back in 1981, Mr. Robb was lead attorney on the case to decertify the 
Professional Air Traffic Controllers Organization. The union was 
striking, and Mr. Robb helped President Reagan break that strike, which 
resulted in the firing of 11,000 striking workers and, as a commentator 
at the time said, forever ``undermined the bargaining of American 
workers and their labor unions.''
  When he last worked on the team at NLRB, this nominee was present for 
decisions that--and this is recounted in a book called ``Right Turn''--
``[a]ltered long-standing policy . . . narrowing the scope of 
activities subject to traditional National Labor Relations Board 
protections; broadening the permissible range of employer conduct in 
union representation campaigns; lowering the costs to employers of 
unlawful activity; and otherwise narrowing or excusing the employer to 
make changes subject to bargaining without informing unions before the 
change was made, or by permitting employers wider latitude to end the 
bargaining process by declaring impasse.''
  More recently, Mr. Robb represented Dominion Energy and successfully 
defeated a union organizing drive at the Millstone Power Station, 
bragging on his firm's website that he was able to delay the election 
for ``more than two years after the day the petition was filed.''
  As many of you know, he does not want workers to have a fair chance 
to vote on organizing a union or to work to press for a first contract 
or to seek fair wages. He has spent his career fighting against workers 
having that fair shot and defending companies against allegations from 
union members regarding unfair labor practices--all kinds of unfair 
labor practices, including age and sex discrimination. Never once in 
this long career has he been on the side of the American worker--not 
once; therefore, he has no place

[[Page S7097]]

at the head of an organization intended to support the ability of 
workers to organize and to press for a fair share.
  It is unthinkable that this nominee would ever even come to this 
Chamber. It is certainly part of an endless stream of attacks by the 
rich and powerful on working Americans that have kept their wages flat 
and declining for four decades. When are we going to see an end to this 
sort of oppression by the powerful class against the workers of the 
United States of America?
  There is one act after another by this administration--President 
Trump and his team--undermining fair wages for workers in this Nation. 
It is outrageous. This nomination is outrageous, and I encourage my 
colleagues to vote no.
  The PRESIDING OFFICER. The Senator from Wyoming.