Good evening and thank you for that warm welcome.
Thanks to Chairman Bill Archer for that wonderful introduction.
Bill and I have known each other for many years, and I value both his friendship and the insight he provides from his time as Chairman of the Ways and Means Committee.
Bill was not my first Ways and Means Chairman – that was actually Dan Rostenkowski. And then my third chairman was Bill Thomas. So, I’ve obviously worked with a broad range of personalities.
Each of my predecessors, Republican and Democrat, has taught me a great deal – just as the Tax Foundation has. This organization consistently provides the resources, research and data that Congress needs to understand the impact of tax policies. Please join me in applauding the Tax Foundation’s work and congratulating them on this very special milestone – the 75th Anniversary of the Tax Foundation.
Lately, as I have thought about comprehensive tax reform – both the work that we have already done and the work that is ahead – the 1986 effort keeps creeping into my mind. Some things are different, and yet, some things haven’t changed at all.
There certainly weren’t any iPhones or iPads back then, and an Android sounded like something out of the hit movie The Terminator. In 1986, Arnold Schwarzenegger was a former cyborg, now he’s a former California Governor – I’m not sure which I would list first on my resume.
Undoubtedly, there are some striking similarities between 1986 and today. Then, we had a divided government with President Ronald Reagan in the White House and Speaker Tip O’Neill in the U.S. House. Then, we had an economy in peril – unemployment was at seven percent in October of 1986 when the Tax Reform Act was signed into law.
And of course, Charlie Rangel was on the Ways and Means Committee. Like I said, some things never change.
But there are substantive differences too. Since 1986, there has been an exponential growth in pass-through entities such as LLCs and S- corporations, whose incentives to invest and create jobs are a function of the individual tax rates rather than the corporate rate.
Our deficit has skyrocketed from a few hundred billion dollars to more than one trillion dollars. International competition has exploded. Places like China, India and Brazil are real competitors, and several EU countries have already implemented aggressive tax reforms.
The Tax Reform Act of 1986 actually started several years earlier, and the roots of that reform were found in both the Democratic and Republican parties. Some labored away in Congress while others labored away in the basement of the U.S. Treasury. Wherever they worked, the goal was obvious – keep the momentum moving forward.
Tax reform wasn’t something to be finished in a matter of days and weeks, as some might suggest we do today. Instead, it came about in the same manner as so many other things that have true meaning and lasting value – methodically, meticulously and as the result of work on both sides of the aisle.
Similar to 1986, Washington began serious work on tax reform several years ago. Senator Ron Wyden has introduced a tax reform bill in every Congress since 2005, more recently with bipartisan cosponsors. Then-Chairman Charlie Rangel put out a bill in 2007, Bowles-Simpson laid out an aggressive framework in 2010, and my very first hearing of the 112th Congress was on tax reform.
Since then, the Ways and Means Committee has held more than 20 different events on tax reform to examine what is working, what is not, and what can be done differently.
We produced draft legislation last year that would bring America’s international tax system into the 21st century, and we moved to lower the top rate for families and job creators of all sizes.
The House of Representatives has passed budgets for the last two years that include a combination of pro-growth tax reform and spending restraints that economists predict will create up to a million jobs in the first year alone.
Key members of the Senate have also started to plant seeds for comprehensive tax reform.
And here I would like to thank and applaud my good friend Max Baucus for his leadership in this effort. While some spent the last few months of the campaign denigrating tax reform, Max has never wavered.
During three joint Ways and Means and Senate Finance hearings on taxes – the first held since bicameral tax-writers examined a war profiteer tax more than 70 years ago – our colleagues in the other body have called the code antiquated, overly complex and an anchor on job creation. They have also consistently stated that tax reform is necessary to strengthen our economy.
I couldn’t agree more.
Admittedly, in the absence of one big bill, many in America might not have known that so many were doing so much to advance tax reform.
But then a funny thing happened – the Presidential elections began to take shape and tax reform became part of the mainstream conversation.
Now, it would be easy to hang your head and say that the problems are too big, and that the work is just too hard. But as Chairman Rostenkowski said in 1985, “Don’t let yourself get misled…the tax reform train is moving. It is picking up speed, and there’s a real danger that doubters will be left behind at the station.”
Those same words and that same sentiment holds true today. Tax reform is more necessary now than it was in 1986, and that is why the Ways and Means Committee will write, act on and pass comprehensive tax reform legislation in 2013.
Let me repeat that: we intend to move a comprehensive tax reform bill in 2013 – no matter what.
Now, whether 1986 is the playbook for how to do tax reform is still unknown. One thing that is virtually undisputed though is that tax reform always takes leadership from the Oval office.
Nearly everyone who worked on the ‘86 Act has said that it required the leadership of the President of the United States. President Ronald Reagan made tax reform a cause.
He gave it a voice and put it on a platform, because he believed it was critical to producing policies that reflected a government that was working for the people, rather than for special interests.
President Reagan dedicated immense resources and political capital to advance his mission, and he worked with Democrats to make that mission a reality.
In doing so, Reagan and the Reagan White House reached out to the American people and to the other end of Pennsylvania Avenue.
He worked with Democratic Senator Bill Bradley, Democratic Congressman Dick Gephardt, Democratic Ways and Means Chairman Dan Rostenkowski, and Speaker Tip O’Neill.
So, the President has a choice to make before the end of the year. Does he simply want to stand for higher tax rates on top of a broken code, or will he support comprehensive tax reform that strengthens our economy?
I’ve said it time and time again – but that won’t stop me from saying it again here tonight – comprehensive tax reform is THE path forward. Tax reform can get more revenues for the President and the Democrats. And, tax reform can get more economic growth and job creation for the American people.
As Chairman of the Ways and Means Committee, I urge President Obama to show leadership – leadership that is necessary– and I ask him to join us to make comprehensive tax reform a reality.
When the 1986 Tax Act was finally complete, the headline in the Washington Post said it best by calling tax reform the “Impossible that became the inevitable.”
I’d like to see that headline again, and I hope that you would too. There is still so much more to do, and I am depending on all of you to help get tax reform across the finish line.
So, thank you for all you have done, and please continue to be a part of the coalition to advance comprehensive tax reform that spurs economic growth and job creation. I look forward to our continued work together.