WASHINGTON, D.C. – House Ways and Means Committee Chairman Kevin Brady (R-TX) today delivered the following opening statement at a tax reform hearing entitled “Increasing U.S Competitiveness and Preventing American Jobs from Moving Overseas.”
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Remarks as prepared for delivery:
“Good morning and thank you all for joining us.
“Before we get started, I want to take a moment to speak about the evil terror attack that occurred last night in the United Kingdom. Our deepest condolences go out to the victims, their families, and their loved ones. Please know that you are in our prayers.
“Today, we are continuing our work on pro-growth tax reform that will improve the lives of all Americans. This morning’s hearing is focused on strengthening American competitiveness and preventing American jobs from moving overseas.
“For years Americans have watched as our manufacturing plants, middle-class jobs and long standing U.S. companies have moved overseas, devastating communities and the families that depend upon them.
“Hundreds of thousands of good-paying American jobs have left—and continue to leave—to China, Mexico, Ireland, and other foreign countries.
“Some of our communities have never recovered. Because when these plants and companies move overseas, then local small businesses, housing values and local tax revenue disappear with them. I’ve watched as 17 key Texas companies have relocated their headquarters to England, Canada, Bermuda, Ireland, the Caymans Islands, Switzerland, and the Netherlands.
“Americans are being hurt because our nation is saddled with one of the most costly, unfair, and uncompetitive tax systems on the planet. According to the nonpartisan Tax Foundation, when it comes to competitive tax codes America is ranked nearly last among our global competitors: 31st of 35.
“The good news is that we are edging out Greece. The bad news is that nearly everyone else is eating our lunch—along with our jobs, manufacturing plants and research facilities. The urgency for bold, permanent, pro-growth tax reform has never been greater.
“We gather today because, with our current tax code, the playing field for American workers is not level. Not even close.
“Over three decades have passed since the last time we reformed America’s tax code. While Washington has been on the sidelines, our foreign competitors have been improving their tax systems for their businesses and workers.
“Today, it’s clear our tax code is failing American workers, families, and businesses in three crucial areas.
“First, our corporate tax rate—now the highest in the industrialized world at 35 percent—is at least 10 to 15 points higher than our competitors. This makes it harder for our businesses to compete globally and create jobs here at home.
“Second, our tax system discourages U.S. businesses from bringing home foreign profits to grow middle-class jobs and middle-class paychecks. Instead, our tax code encourages global U.S. businesses to keep profits abroad to grow foreign jobs and foreign paychecks. At last check, more than 2.5 trillion dollars of U.S. profits are stranded overseas, unable to be affordably reinvested back here in America.
“Addressing these two issues is important, and would be good enough to move America back to average—somewhere in the middle of the pack.
“But tax reform only happens once in a generation. Is our vision merely to be average? Given all that’s at stake for middle-class families, our goal in tax reform should be to vault America from dead last among our global competitors back into the lead pack—among the top three best places on the planet for that next new job, manufacturing plant or research facility.
“To do this, we must take action on a third crucial competitive issue—ending the ‘Made in America’ tax.
“Today, the vast majority of our international competitors apply taxes on products that are sold in their country—no matter where the product is made. And they remove taxes from products that are exported from their country, including products that are sold in America. This is called ‘border adjustment’—taxes are adjusted when products cross the border.
“Over 160 of our competitors border adjust their taxes. (These are all the blue countries on the map.) America is one of the very few who don’t (in red), along with countries like Cuba, North Korea and Somalia.
“In our country, we apply taxes only on products that are made in America. And Washington imposes that ‘Made in America’ tax on our products no matter where they are sold – including overseas.
“As a result, ‘Made in America’ products are at a major tax disadvantage here at home—and around the world. Why is Washington providing special tax breaks for foreign products over American made products? Why should Chinese steel get a tax break over American steel, Mexican auto parts and agriculture over American auto parts and agriculture, foreign oil over American-made oil?
“It doesn’t make sense. Especially since this a big reason our current tax code drives U.S. jobs and companies overseas.
“In the tax reform Blueprint we propose to end the ‘Made in America’ tax and instead tax all products and services equally when they are sold in America at a low rate of 20 per cent. No special tax breaks for foreign products. Everyone treated the same. True competition for the first time.
“And we lift the tax on ‘Made in America’ products and services when they are sold abroad—for the first time leveling the playing field for American workers, businesses and farmers.
“Our goal is not simply to eliminate any tax reason to move American jobs overseas, but to reestablish America as a 21st century magnet for new jobs and investment.
“And for the first time, companies will no longer gain by moving their headquarters to Bermuda, their manufacturing plants to China or their intellectual property to Ireland.
“As a result, for the first time in decades companies and industries are coming forward to describe how under the Republican Blueprint they can bring large parts of their supply chains back to America. These are the good–paying jobs, manufacturing plants, research labs, and technology centers that house cutting-edge intellectual property like patents.
“The current tax code told them to move these activities overseas. The Blueprint allows them to bring them back to the United States.
“We recognize this is a significant change from our current tax code. We know there are legitimate concerns—including from some of our witnesses here today and our colleagues on the other side of the aisle—about how it will affect American workers, businesses, and consumers.
“And we are committed to working with all of you to address these concerns. We have to get it right, and we will.
“It’s time for a tax code that rewards Americans’ hard work rather than pushing American jobs out of our communities.
“The Tax Foundation estimates that the House Blueprint as a whole will create 1.7 million jobs over the next decade—over 140,000 in Texas alone—and grow paychecks for middle-class American families by roughly $5,000.
“Imagine how successful American consumers will be when they have a secure, good-paying job and a tax code that allows them to keep more of their paychecks.
“It’s time for Washington to get off the sidelines and back into the game—fighting for our businesses, workers, and consumers.
“I want to thank all of our witnesses for being here. We look forward to hearing your ideas on how we can level the playing field for American workers and unleash a new era of American prosperity.”
“With that, I’ll now recognize Ranking Member Neal for his opening remarks.”