WASHINGTON, D.C. – House Ways and Means Committee Chairman today delivered a Tax Day speech at the U.S. Chamber of Commerce. In his speech, the Chairman discussed the need for pro-growth tax reform, the accomplishments of the PATH Act, and other topics under the Committee’s jurisdiction.
Remarks as prepared for delivery:
“Thank you very much for having me today.
“As a former Chamber of Commerce executive, I’m always honored to be here. I value your work and know how you are making a difference in the lives of millions of Americans.
“After all, for almost two decades, I worked as a Chamber of Commerce executive in three very different economies.
“First, I began my career in the agriculture, military and tourism economy of South Dakota.
“Next, I moved to the slow-growth, heavy refining, union-dominated economy of Beaumont, Texas.
“And then I joined the fast growing energy, healthcare and trade driven economy of suburban Houston.
“Each of my Chamber experiences gave me a unique opportunity to see which policies are working in America – and which policies aren’t working.
“While I learned a lot of lessons throughout my time as a Chamber of Commerce executive, the one thing that was most clear was how our broken tax code burdens America’s job creators and families.
“Every business and every industry I encountered along the way confirmed that the code we have is too costly, complex and unfair.
“Almost twenty years later, the same problems remain.
“Today, American families and job creators of all sizes continue to grapple with these same challenges as they do their taxes.
“Unfortunately, the process has only grown more frustrating over time. Today individuals and businesses spend approximately 6.1 billion hours complying with the tax laws – equivalent to 3 million full-time workers each year. And American taxpayers spend more than $31 billion on software and professional tax preparation services per year.
“The Tax Foundation reports that Americans will collectively spend more on taxes in 2016 than they will on food, clothing, and housing combined.
“And to make matters worse, too many people don’t even feel like the Internal Revenue Service will help them through this process. That’s why this week, the Ways and Means Committee passed four bills that will make the IRS more accountable.
“Enough is enough.
“Americans should not be forced to endure another year of this miserable experience.
“What America needs today is a new 21st Century tax code that is built for growth – the growth of families’ paychecks, the growth of local businesses, and the growth of America’s economy.
“As Chairman of the Ways and Means Committee, I can assure you that Ways and Means Republicans are serious about reforming our broken tax code.
“I’d like to talk to you today about recent action, our current process and the path forward on pro-growth reform.
“Over the past years we’ve deliberately laid the foundation for a new tax code in 2017. It began with working groups and the “Camp Draft” by former chairman Dave Camp which proved you can produce Reagan-style tax reform within the tightest constraints possible as well as the subsequent and substantive work by current-Speaker Paul Ryan on international tax reform; secondly by institutionalizing real-world score keeping in the Joint Committee on Taxation that recognizes the growth affects of tax reform; and recently we took a major step forward when we successfully ended the ridiculous annual cycle of temporarily, and too often retroactively, extending tax provisions each and every year.
“After months of negotiations, we passed the PATH Act that made 20 temporary tax provisions permanent and delivered $629 billion of tax relief certainty for families and businesses.
“Thanks to the PATH Act, Americans have a little bit more relief as they file returns this Tax Day to:
- Deduct their state and local sales taxes;
- Lower the cost of commuting to work;
- Grow their small businesses;
- Support the charities that are important to them;
- And save for college and retirement.
“The PATH Act has served as a springboard to our objective of comprehensive tax reform.
“We are already moving forward on tax reform that is based on six core principles.
“First, the tax code must be simpler, fairer, and flatter. Today, individuals, families and small businesses must grapple with a tax code that is impossible to understand. That has to change.
“Second, tax reform must close loopholes and eliminate the special interest provisions. We want to lower rates for everybody.
“Third, businesses both large and small must have a competitive tax system, including a fair and competitive tax rate.
“Fourth, our tax code has to stop encouraging the shift of jobs overseas. Too many American businesses are being acquired by foreign corporations – or are forced to engage in inversion transactions to avoid being a ripe target for foreign takeover. We need a tax code that encourages businesses to locate and invest in the United States, creating jobs here at home and helping to grow our economy.
“We need to replace the current outdated world-wide tax system with a permanent modern territorial-type system that helps American companies compete and win overseas – and then easily bring earnings back home to invest in new jobs, research and growth.
“Fifth, we need a tax code that is built for economic growth. And bold. Tax reform that merely gets us to average won’t cut it. The late Steve Jobs of Apple, when urging his team to develop innovative products, preached ‘when you’re behind, leapfrog.’
“I share that view in tax reform.
“Only by aiming high and taking an ambitious approach to pro-growth tax reform will we be successful over the near and long-term. Simply put, tax reform in the 21st Century shouldn’t aim to place us in the middle of the pack, but in the lead pack.
“That brings us to the sixth and final principle: A 21st Century tax system should not raise taxes to bail out Washington’s spending problem. This is all about growing the economy, not growing government.
“So what should that 21st Century tax code built for growth look like?
“President Reagan had the right approach: broaden the base and lower the rates. You can’t go wrong with that.
“Our committee is looking at tax reform with fresh eyes, examining the whole range of tax ideas – consumption tax, cash flow tax, reformed income tax, and any other approach that will be pro-growth. There is no perfect way to tax, but there are proven ways to grow investment – and that’s what we want in our new tax code.
“Now the question is – how do we get there?
“Throughout this year our Committee has been working to ensure we are ready to address all aspects of our tax system from individual to American-based businesses – both small and large – to international business.
“In February, we held a congressional hearing to explore how ongoing developments in the global tax environment are negatively impacting our economy and American workers.
“We specifically discussed ideas for reforming the U.S. international tax system to make it easier for American companies to compete overseas and create more jobs at home.
“We’re also looking at how other countries are taking actions with their tax systems that disproportionally burden American global businesses and ultimately, our workers. The Organisation for Economic Co-operation and Development in its Base Erosion and Profit Shifting project has advanced ideas that will make it harder for our companies to compete and grow.
“The European Union state-aid investigations also threaten to impose retroactive taxes going back ten years on American businesses. We cannot allow American taxpayers to foot the bill for tax revenue grabs in Europe and elsewhere.
“And as Chamber members and officials, you understand better than anyone how these developments – including inversions – create a negative ripple effect throughout our economy.
“As you know, every one of these American-based global companies has suppliers and other businesses that support their operations. These are local businesses, often small S corporations and LLCs, that will be replaced by foreign vendors if the American company becomes foreign through an acquisition or takeover and the business decisions are made in the new foreign headquarters. The result will be a loss of these local American businesses and the American jobs they create.
“Members of the Ways and Means Committee refuse to stand on the sidelines and allow this to happen. We are committed to protecting American workers and the businesses that employ them.
“Our focus must be on ensuring that businesses – both U.S. companies and foreign companies – can invest in America without prohibitive tax cost. The broken tax code is the disease and that’s what we must cure.
“Responses that attack companies that are suffering under the plague of the uncompetitive U.S. tax system are misguided and dangerous. When those responses go so far as to attack global companies that are investing and creating jobs in America by challenging how they finance their U.S. investments, they are irresponsible.
“So let me be clear – I do not support the Obama Administration’s strategy of trying to bully companies into staying in America and making it harder for foreign companies to invest in America.
“I share the concern about inversions. But there is a right way and a wrong way to tackle them. In its haste to build a tax wall to keep American companies in, Treasury built an even bigger wall to keep investment in America out – routine, legal investment that creates jobs and economic growth in our communities.
“In this case, the Administration’s strategy won’t solve the fundamental problem and likely will make it worse.
“Instead of strong-arming companies, we have a responsibility to create a tax code that attracts employers to America. We need to foster an environment that encourages companies to grow and invest in America and in American workers. Washington needs to work together on a strategy of innovation – not intimidation.
“Comprehensive, pro-growth tax simplification, including fundamental reform of the international tax rules, is the only answer. That is the focus of the Committee and we recognize the importance and the urgency for it. We also recognize the need to take a bold step here – as I said earlier, we can’t aim for average. And frankly it is just as hard – or maybe harder – to do tax reform that gets us to mediocre as it is to do the bold tax reform that will see us through to the next generation.
“Last month, we examined legislative proposals developed by Members that would replace our traditional income tax system with an entirely new approach to taxing on the basis of cash-flow or consumption.
“Those are bold ideas for pro-growth tax reform that we are excited to be exploring.
“And just this week, we had a constructive conversation on how to do broad, fundamental reform within the context of the income tax system, like we saw with the Reagan tax reform of a generation ago.
“Our Committee is leading a dialogue with the rest of the Republican House members about the need for tax reform and what it will take to get there.
“We’re meeting regularly with our colleagues to expand the conversation and hear the full range of their ideas for reform. The process has been very positive so far and I’m encouraged about the path forward.
“By June, we intend to produce a consensus blue print for comprehensive pro-growth tax reform.
“As our work continues, we need you to provide your ideas about tax reform in general and about specific proposals that affect our families and our communities, our businesses small and large, and our economy overall.
“Working together, this year we will design a tax system that is built for growth, which is what the American economy needs and what the American people deserve. And continuing to work together, next year we will enact that system into law.
“It’s been an honor to speak with you, and I look forward to working with you in the weeks and months ahead.
“Thank you again for having me today. And now, I’m happy to take a few of your easy questions.”