[Congressional Record Volume 166, Number 28 (Tuesday, February 11, 2020)]
[Senate]
[Pages S981-S982]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                               Tax Reform

  Mr. GRASSLEY. Madam President, since tax reform was enacted in 
December of 2017, our economy has grown and strengthened with American 
families' and businesses' seeing real benefits, and you just heard 
Senator Barrasso say some of the same things about how the economy is 
booming.
  Unemployment rates have dropped dramatically, with unemployment among 
Hispanic, Latino, and African-American workers at record lows. 
According to the Bureau of Labor Statistics, average hourly earnings 
have grown at a rate of 3 percent or higher for 16 consecutive months, 
with the largest wage gains being concentrated in the bottom quarter of 
the wage scale. We should duly note that production workers' wages are 
growing much faster than are the wages for the manager class. In short, 
lower income workers are seeing the highest wage growth.
  Yet, instead of looking at the positive economic effects of tax 
reform, our Democratic colleagues insist that large corporations have 
received a massive giveaway and that only the wealthy have benefited. 
That is simply not true. Tax reform has addressed a number of issues 
that have been frequently highlighted by both political parties. In 
particular, tax reform has made enormous progress toward creating a 
more competitive environment for American companies. Before tax reform, 
the combined U.S. Federal and State corporate tax rate was the highest 
in the developed world--15 percentage points higher than the average of 
the other 35 advanced economies that are members of the Organisation 
for Economic Co-operation and Development, which we commonly refer to 
around here as OECD.
  Over the last few years and before the tax bill, you heard of 
companies going overseas. We had inversions, foreign acquisitions of 
U.S. companies, and the erosion of the U.S. tax base. These were all 
very significant problems that we addressed in the Tax Cuts and Jobs 
Act of 2017. With our worldwide tax system, companies were actually 
incentivized to store corporate profits in low-tax jurisdictions 
overseas rather than to reinvest them back here in the United States.
  How can that help the U.S. economy?
  We had perverse incentives to keep wealth out of this country. 
Ironically, even the Democrats highlighted these same issues in the 
lead-up to tax reform--a bipartisan recognition that we shouldn't have 
a tax system that encourages the storing of money overseas but rather 
one that brings that money and capital back to the United States to 
create jobs here. They are only partisan issues now, as it turns out, 
because tax reform was a Republican effort, but both sides of the aisle 
knew that these issues had to be addressed in order for U.S. companies 
to remain competitive and for the U.S. economy to continue leading the 
world.
  Critics of tax reform complain that the 21-percent rate is too low, 
but with the average corporate tax rate of 21.7 percent among the OECD 
countries today, the United States is finally in line with its peers. 
In other words, we can be competitive.
  As a result, U.S. companies are competitive, and investments in the 
United States are more attractive not only to foreign companies but to 
U.S. companies that used to store money overseas. After tax reform 
legislation passed in 2017, business investment rose by 6.4 percent in 
2018.
  While a weaker global economy, tariffs, and other factors subdued 
growth last year in 2019, business investment in 2018 and 2019 combined 
was still $5.7 trillion, hitting record highs.
  Capital expenditures of S&P 500 companies have risen by 17 percent 
since tax reform, and research and development expenditures of S&P 500 
companies rose by 18 percent. All of this is showing that our law 
accomplished what we wanted it to accomplish. It is hardly, then, the 
anemic response to tax reform that the Democrat critics would have us 
believe.
  Tax reform has changed our international tax rules to remove barriers 
that previously prevented companies from bringing foreign earnings 
home. In the seven quarters since enactment of tax reform, U.S. 
companies have brought back to the United States more than $1 trillion 
of foreign earnings.
  Obviously, U.S. companies are using these earnings to finance new 
capital expenditures, increase research and development, increase 
payrolls, pay down debt, and return cash to shareholders and retirement 
accounts. Companies are putting those earnings to work in this country, 
not leaving them abroad. That economic gain and the jobs created as a 
result of it are because of the 2017 tax cut legislation.

[[Page S982]]

  But we also took care to ensure that companies wouldn't be able to 
take advantage of the new U.S. tax system. Tax reform made signature 
strides to address inversions, foreign takeovers of U.S. companies, and 
base erosion. You will remember the outrage we had before the tax bill 
when there were inversions and foreign takeovers of U.S. companies, and 
then the result of the erosion of our tax base.
  Together, the lower tax rate and new international rules have changed 
the way that companies structure their business operations. For 
example, Assurant, a global insurance company, changed its acquisition 
agreement so that its new parent company remains here in the United 
States.
  Broadcom, a technology firm, announced that it would return its 
headquarters to the United States, and this came after tax reform.
  Similarly, several energy and pharmaceutical companies that had 
previously moved out of the United States also made the decision to 
return, primarily because of tax reform.
  You know, the old, old saying can apply to this tax legislation. What 
we wanted to accomplish was accomplished, and that old saying is: The 
proof is in the pudding.
  So tax reform has leveled the playing field and made the United 
States a far more attractive place to do business--hardly the dire 
consequences that critics would have us believe. Now, you know critics 
never give up. Not to be deterred, the critics continue to look for 
misleading information to distort the picture.
  Most recently, they pointed to the Congressional Budget Office 
projections as evidence that tax reform and recently issued U.S. 
Treasury Department regulations have provided a windfall to 
corporations. I hate to see the Congressional Budget Office's 
professional work and nonpartisan work manipulated to say something it 
clearly does not--and I meant to use the word ``manipulated.''
  First and foremost, CBO's--that is the Congressional Budget Office--
downward adjustment of expected corporate tax receipts does not imply 
that CBO scores particular Treasury regulations or that a regulation 
departs from congressional intent. Rather, CBO's adjustments broadly 
reflect significant economic factors and changes in government data.
  In particular, CBO adjusted its projections because we now know that 
Bureau of Economic Analysis estimates of corporate receipts between 
2016 and 2018 were actually overstated. So you have to make adjustments 
for that. In short, even pretax reform projections of corporate profits 
were really too high. So when the estimate of corporate profits is 
corrected, it translates into lower tax receipts, but the other side 
doesn't seem to acknowledge this.
  CBO also took into account current economic factors, like recent 
trade actions and tariffs, strengthening of the U.S. dollar, and the 
softening of foreign economies, all of which affected expected 
corporate profits and ultimate tax receipts. But our critics don't seem 
to acknowledge that fact.
  In addition, the Congressional Budget Office revised its projections 
to reflect everything that we are learning about implementation of the 
new tax rules, including regulatory guidance, new forms and 
instructions that go with the tax forms, and modeling improvements to 
better reflect updated economic projections.
  CBO is only beginning to take into account how U.S. businesses are 
responding very positively to the new tax rules and Treasury guidance.
  As many regulations are still being finalized, businesses are only 
starting to have needed certainty to invest in new property and 
equipment, to engage in mergers and acquisitions, and to enter into new 
business transactions.
  The Congressional Budget Office's projections are also based upon 
preliminary data. Tax returns for the first year of the new law were 
filed less than 6 months ago, but the critics don't take that into 
consideration. The final data will not be available from the IRS until 
later this year, and, even then, it will still take time to fully 
analyze, but our critics don't recognize that.
  All of these factors go into CBO's revised projections of corporate 
tax receipts, and none of them support the claim that Treasury provided 
a windfall to corporations. I think the critics ought to go the extra 
mile to study and understand the impact of the tax cut law.
  There simply is no basis, then, for the critics' claim that the 
revision to CBO's estimate of corporate receipts means that Treasury 
has given away the store to big corporations through its regulations.
  Despite the critics' relentless attacks, the benefits of tax reform 
are, in fact, proving out. All you have to do is look at the good 
economy to know that that is the case.
  I am encouraged by the promising economic data that I just referred 
to that suggests that American workers, American families, and American 
businesses are seeing positive effects.
  Now, we must continue to promote policies that encourage U.S. 
businesses to keep operations on American soil--the 2017 bill does 
that--increase wages--the 2017 bill did that--and reinvest foreign 
earnings in the United States, instead of leaving them overseas--and 
the 2017 tax bill does that.
  I hope that my Democratic colleagues will stop criticizing the 
policies that have strengthened our economy and, in fact, consider how 
we can work together to make our tax laws work even better for American 
businesses and workers.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Cassidy). The clerk will call the roll.
  The senior assistant legislative clerk proceeded to call the roll.
  Mr. WHITEHOUSE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.