[Congressional Record (Bound Edition), Volume 157 (2011), Part 12]
[Senate]
[Pages 16827-16830]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               TAX REFORM

  Mr. WYDEN. Mr. President, I come to the floor today to talk about 
creating more good-paying jobs in America and how tax reform can play a 
key role in job creation if it is done right.

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As we all know, no Member of Congress has a piece of machinery on their 
desk that is a job creation device. We cannot just start something like 
this, press a button, and then after it whirs around a bunch of times 
it creates a lot of new jobs. New jobs do not just come shooting out 
that way. Nobody has a contraption like that in the Senate, and the 
reality is the President does not have one nor does anybody else in 
America.
  But there are policies that are relevant to how we create more good-
paying jobs, and those involve first looking at what has worked in the 
past and, second, what hard, objective data is relevant to the future. 
Nobody can know the ideal, sure-fire way to create jobs, but we can 
document what has worked in the past.
  In the case of comprehensive tax reform, what we know is that after 
the 1986 Tax Reform Act where Democrats and Republicans cleaned out 
scores of tax preferences to hold down marginal rates and keep 
progressivity, our country created 6.3 million new jobs in those 2 
years after that tax reform was enacted. I am not going to say on the 
floor of the Senate that each and every one of those jobs was the 
result of tax reform, but certainly independent authorities point to 
that tax reform effort as a key factor in creating those jobs. With at 
least 14 million Americans out of work in our country right now, it 
would be legislative malpractice for Congress to ignore the facts that 
document the results of the last tax reform effort in job creation.
  When we look at the possibilities should we not pay special attention 
to what has worked in the past? The reality is, as the Presiding 
Officer knows, our country has tried just about every other tool in the 
economic toolbox. We have seen the Recovery Act. We have seen that the 
Fed is essentially all in with its program of quantitative easing. We 
have had a whole host of other initiatives in the housing area and in 
the automobile area and a whole host of other areas. The fact is, the 
one tool in the economic toolshed that nobody has picked up is 
fundamental tax reform. It is my view that it is time for the Congress, 
working with the President, to pick up on a proven model that a host of 
progressive Democrats and conservative Republicans, led by a 
conservative Republican President, deployed 25 years ago to spur 
economic growth and create millions of new jobs, which I think we all 
understand our people in our economy need desperately.
  Given that success, it is no wonder that Democrats and Republicans, 
as well as economists and think-tanks and bipartisan commissions, are 
again calling for the Congress to take up the cause of tax reform. We 
are very hopeful the bipartisan Joint Committee on Deficit Reduction 
can also bring together Democrats and Republicans as part of their work 
to lay out the strategy for moving ahead on tax reform.
  There is no shortage of good reasons for Congress to look at this 
particular approach to job creation. It is bipartisan, it has been 
proven before, and certainly the basic principles--simplifying the Tax 
Code, cleaning out the clutter, and holding down rates across the 
board--make just as much sense today as they did a quarter century ago.
  It has been argued that since the last change in our tax law there 
have been close to 15,000 tax changes--one for almost every working day 
year in and year out. So what we have on our hands now is a 
dysfunctional antigrowth mess. That is why I think it is particularly 
important that we look at moving now rather than waiting until another 
election or taking a detour to reform only the corporate Tax Code 
while, for example, leaving small businesses and working families stuck 
with the same broken Tax Code they have today.
  Let me point out to those who say we cannot do tax reform in a 
divisive climate, a divided Congress and White House, as we move into 
an election, the fact is fundamental tax reform was passed on the eve 
of an election a quarter century ago--passed on the eve of an election. 
I say that because I know one of the fundamental architects of that tax 
reform, Senator Packwood, whose seat I now hold in the Senate, was not 
available for the bill signing because he had a community event back 
home.
  The fact is, there is an opportunity now to move ahead with 
comprehensive tax reform. We have good people who have expertise in tax 
law on the supercommittee--Chairman Baucus, Senator Kerry, Congressman 
Camp, Senator Portman--Democrats and Republicans who have been involved 
in budget and tax issues for years and years with great expertise on 
these issues.
  I want to take just a minute this afternoon to discuss some eye-
opening new information on an issue that I know is being debated in the 
Congress, and my sense is the supercommittee is looking at it as well; 
that is, the question of splitting tax reform into separate corporate 
and individual pieces.
  Last week, the Joint Committee on Taxation issued an important report 
that all Members ought to pay close attention to as Congress looks at 
tax reform as part of either a potential debt deal or other 
legislation. The reason I want to discuss it this afternoon is we all 
understand as part of the legislative process just about everything is 
negotiable, but there is one thing that is not negotiable--that is the 
accuracy of the numbers.
  When the official number cruncher for taxes says they cannot make the 
numbers add up, Members of the Senate and the Congress have to pay 
attention. The new report by the Joint Committee on Taxation says--and, 
of course, they are the official scorekeeper for tax policy--the 
Congress essentially has a choice to make. We can either provide all 
American companies significantly lower tax rates or we can allow 
multinational companies to continue to avoid paying taxes on their 
overseas income. But the Joint Committee on Taxation says it is really 
not possible to do both. There is not enough money in the corporate Tax 
Code to do both without further increasing the budget deficit.
  The Joint Committee was asked to provide its estimate of the lowest 
corporate rate that could be achieved by eliminating corporate tax 
expenditures, the various credits, deductions, and exemptions that 
lower the actual amount of taxes our businesses pay. In response, the 
joint committee estimated that 28 percent is the lowest possible 
corporate rate that could be achieved from eliminating corporate tax 
breaks and still not increase the deficit--in effect, be revenue 
neutral.
  Mr. President, 28 percent is certainly lower than the current top 
rate, but it is higher than what--certainly many in the business 
community and the Congress have argued--is needed for U.S. companies to 
be competitive in the global economy. Most in the business community 
want to lower the top rate to 25 percent or even lower. The joint 
committee has determined that 28 percent is the lowest the corporate 
rate can be reduced to without adding to the deficit.
  This new report by the Joint Committee on Taxation ought to be a real 
wake-up call in Washington, DC. For example, many companies not only 
argue that Congress can get the corporate rate down to 25 percent or 
even lower, but they also want to keep many of the tax breaks they now 
get under the current Tax Code. The joint committee's report makes 
clear that cannot be done without increasing the Federal deficit. And 
even the Joint Committee's 28-percent rate estimate was filled with all 
sorts of caveats, little kinds of ``look out, there may be more to the 
story'' kinds of warnings about the difficulty of limiting tax breaks 
now available to all businesses so they can no longer be claimed by 
corporations.
  If tax breaks are eliminated for corporations but not for other 
businesses--remember, most businesses, as we know, are sole proprietors 
or limited partnerships and LLCs and the like--corporations may end up 
converting their businesses into other types of tax structures. If that 
happens, the savings from eliminating corporate tax rates would be less 
so that the corporate rate could end up even higher than 28 percent. 
That is one example of how it is very hard to repeal

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tax breaks just for corporations and not for other businesses.
  In making their estimate, the Joint Committee looked at repealing 
literally scores of corporate tax breaks--everything from research to 
specific breaks for energy, housing, transportation, education, 
training, and others. But there is one important tax break that was not 
considered as part of the Joint Committee's analysis, and that is the 
ability of U.S. multinationals to avoid paying taxes on their overseas 
income as long as they keep that money overseas. This is the tax break 
that is known as deferral. Significantly, the Joint Committee has done 
a separate analysis of the amount of revenue that could be generated by 
repealing deferral. If you repeal deferral and impose related limits on 
foreign credits to prevent gaming, you take that step and the total 
comes to an eye-popping $568 billion over 10 years. That comes from an 
estimate the Joint Committee has done for a bipartisan group of us who 
have been working on this issue for the last 5 years.
  I initially started working on this with our former colleague from 
New Hampshire, Senator Gregg, and most recently with Senator Coats and 
Senator Begich. The four of us have worked very closely on this over 
the last few years. If you make the changes we have made in deferral 
and related foreign credits that you ought to change to prevent gaming, 
it is possible to slash rates for all of our businesses so you can get 
down to 24 percent, particularly for the corporate rate, and have 
additional relief for small businesses. We have some ideas for how you 
could drive the rate lower than 24 percent. That is something I think 
could be a real shot in the arm to businesses in Connecticut, Oregon, 
and across the country. It surely would do something about creating 
red, white, and blue jobs so we would have more jobs here in the United 
States so we could put our people back to work in the manufacturing 
sector and the other parts of our economy that are so important. So 
that is the choice.
  According to the Joint Committee's estimate--these are the official 
scorekeepers for taxes--there are two alternative ways to lower 
corporate tax rates. One keeps deferral, this break for doing business 
overseas, and then the lowest rate, according to the Joint Committee on 
Taxation, would be 28 percent. The other takes away the tax breaks for 
shipping jobs overseas, eliminates deferral, and dramatically drives 
the rate for our businesses down 24 percent.
  As I have indicated, our bipartisan coalition has some ideas for 
getting it even lower. So it is important to point out that the lower 
24-percent rate would apply to every U.S. company, whether it has 
overseas operations or not. U.S. manufacturers and retailers and other 
domestic businesses all would benefit from this kind of approach, lower 
tax rates. All U.S. businesses would have more money to invest in new 
equipment and hiring workers here in our country--in Connecticut, in 
Oregon, and all of our States. By contrast, while all businesses would 
get some help from a 28-percent rate, the biggest winners are those 
with significant operations overseas, thousands and thousands of miles 
from our shores. By continuing deferral, those businesses that operate 
overseas, those companies pay a zero rate on their overseas income. 
With that rate differential, there would still be a strong incentive 
for some of those very large businesses to target their investments, to 
lower tax overseas operations at the expense of investment and job 
creation here at home. So it should be obvious that the last thing the 
Congress ought to be doing in this current economic climate is to take 
actions that will hurt job creation. With so many people out of work, 
we obviously need to focus on steps to create jobs, not reward those 
that, in effect, ship the jobs overseas, ship the investments overseas, 
the investments in the jobs we need so much here at home.
  We can do more for all U.S. businesses, workers, and their families 
through comprehensive tax reform than just by going forward with 
corporate-only reform. In fact, it is possible to do more for 
businesses, get a lower rate--I want to emphasize this--for all our 
businesses in America, significantly lower so they will be more 
competitive in tough global markets. I am not saying that tax policy is 
the only consideration in terms of creating jobs. I chair the 
International Trade Subcommittee of the Senate Finance Committee, and I 
have long taken as my major objective to do more to grow things here in 
America, to make things here in America, to add value to them here, and 
to ship them somewhere. There is a whole host of trade and regulatory 
policies that factor into this. But certainly we ought to agree that at 
a time when comprehensive tax reform is the one tool in the economic 
toolshed that has not been used--and there is a chance to take away tax 
breaks for shipping jobs overseas so we can get more tax relief for 
Americans here at home--we ought to be picking up on that opportunity.
  I hope all my colleagues who are going to be part of this tax reform 
debate over the next few weeks--and I think it is inevitable because 
more and more debate is focused on tax reform, whether it ought to be 
corporate only--look at how you would go about pursuing it in a 
bipartisan way. I hope those colleagues will take a look at the new 
report done by the Joint Committee on Taxation. What they have made 
clear is that there is not enough money in the corporate tax code to 
get the lower rate companies want as long as some of these 
multinationals can continue to keep the money overseas and avoid paying 
U.S. taxes. Having worked on this issue with colleagues on both sides 
of the aisle for about the last 5 years, and watching as the economic 
debate goes forward, with our people hungry for new jobs, I hope 
colleagues will see, No. 1, there is a real lesson to be learned from 
what was done in 1986 where progressive Democrats and conservative 
Republicans came together on the eve of an election--by the way, the 
1986 election. I think it is also fair to say that after tax reform, 
both sides did pretty well. Both sides did pretty well in the Congress 
and in terms of controlling the White House.
  The fact is this is a chance to take a big step to help our people 
who are hurting now. There are 14 million people out of work. I hope 
colleagues will look at that new report prepared by the Joint Committee 
on Taxation and look at the history of how in 2 years a quarter century 
ago we came together, Democrats and Republicans, and passed fundamental 
tax reform based on the same kind of principles Senator Gregg, Senator 
Coats, Senator Begich, and I have worked on for the last 5 years, 
cleaning out special interest breaks, special interest preferences, 
cleaning out scores of them and using that money to hold down marginal 
rates and keeping progressivity so we have a sense of fairness. 
Everybody wins.
  Many of our colleagues feel passionately about economic fairness. I 
certainly do. I know the President of the Senate does as well. Many of 
our colleagues on the other side of the aisle have focused on economic 
opportunity. With fundamental tax reform, we can have both and do it in 
a bipartisan way. It means picking up on the one tool in the economic 
toolshed that has not been used.
  I will be back on the floor of this Senate to talk about this again. 
It is one of the reasons why I wanted to serve on the Senate Finance 
Committee, to tackle these fundamental issues of taxes and health care. 
We have had a very constructive set of hearings on tax reform chaired 
by Chairman Baucus and ranking minority member Senator Hatch. I am very 
hopeful that at a time when our people are so hungry for new jobs, good 
jobs, high-paying jobs, that we will pick up on this opportunity to 
bring Democrats and Republicans together, as we were on this issue a 
quarter century ago in enacting fundamental tax reform.
  I yield the floor and note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. SHELBY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.

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  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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