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tv   U.S. House of Representatives  CSPAN  January 20, 2011 5:00pm-8:00pm EST

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i do not think people in the house thought it was a serious legislative effort. i think the message that those people that voted for repeal were sending was that health insurance -- they are putting health insurance companies back in charge of medical decisions that have the ability to drop, deny or limit health insurance coverage. who should be in charge of health care? should the patients and doctors steps should be insurance companies? that is what we have seen. i mentioned 3.3 million seniors that have gotten help with their prescription drug costs as a result of this period of pocket costs that will go up if something like this were to become law. i think, thankfully, it is not going to. >> most democrats are concerned about the debate among spending
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cuts with republicans and goes too far. >> i think we are going to have a lot of time to work through how we get our fiscal house back in order and the steps we take to do so. we have to make shorure that we don't find ourselves crippilng innovateability to and provide the type of incentives that we need to create the jobs of tomorrow. >> is that a yes? >> whatever answer i just gave. >> we are playing multiple choice today. >> it is just true fault. >> the attorney general announced the military commissions for the bombing suspects will ago forward. it was 14 months ago that he said they would go to military
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commission. why so long? >> i read the story in the paper today. i think the individuals that are mentioned in the story were talked about in terms of going through military commissions quite some time ago. i do not have any sense of timing or any sense of when the final decision on that type of thing will be made. you've heard the president outline -- >> have they been made? >> in terms of timing, you have heard the president back at the archives speech talk about how we would go through different groups of those at guantanamo, how it would be dealt with in different ways. that is what you saw the president and administration works to a restructuring of the military commission law. >> president hu '
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s admission that there is work to be done on chinese human rights. 1.3 billion chinese did not hear those comments. they were blacked out. >> again, which is why one of the conditions to coming here was an an opportunity to take questions from you guys. look, obviously, there is very little we can structurally do to deal with that in terms of how they cover this visit. they have a very different governmental system. they have a different system on how leaders in their country are covered, but when the president was in shanghai more than a year ago, he talked about leaving and open society, having an open internet so that people in china
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can read about the news all over the world. the world heard the leader of china make that important admission, and the world war the stepstch to see they take over the course of the next many months to fulfill -- or to make the improvements that need to be made. >> on the establishment of the chicago headquarters, you speak about the economy getting back on its feet. is it a little early to get started on 2012? >> no. i think this is very much in line with the calendar you've seen align with similar efforts
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that were made ahead of the 2004 election and ahead of the 1996 election by presidents bush and clinton. i think that is just the way it works carrot >> de you need to begin fund raising it, a formal declaration? >> there are all sorts of things that have to happen over the course of a campaign. that accords with the types of timelines you have seen in the past. >> [inaudible] >> i think the setting up of a campaign makes it far more likely. but again, i think the official rendering of that decision would come as the story notes in the filing of that paper work with the fec. president falun gong's -- what does he hope to get? [inaudible] >> tomorrow, the president will
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go to visit the birthplace of general electric, talk about the economy. largest energy's division. it will be the future role of their advanced battery manufacturing -- the future home to their advanced battery manufacturing. this is a company that brought jobs from overseas back into the united states. that is important. and a company that as a result of some of the work the president did on commercial diplomacy while in india, saw an expansion of the business that they do all over the world that supports jobs here in america. i think that is a bit of the backdrop of the events tomorrow. >> [inaudible] >> there are likely to be some, but we will talk about those
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tomorrow. >> how do you all feel about the term obamacare? >> i do not know that i've spent a ton of time thinking about it. >> do you find it pejorative? >> i do not know that i've spent a lot of time thinking about what somebody may or may not call it. again, i do not know what a senior who is getting help from prescription drugs called said. i do not know a senior that gets a free preventative is it calls it. i do not know what -- a free presented a visit calls it. my sense is that all those people call it a number of different things but in their mind it means that they are finally getting a little bit of help with the problems that they
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have. we live in a country where, if you get sick, you ought not to go bankrupt trying to get that type of care and help you need. and that is what animated the president's decision to pass teh he bill. >> i am wondering if the president has had any contact with congresswoman giffords's family or any of the other victims since he was in tucson? >> now that i am aware of. i will double check and see if there have been. i have not seen any calls that i know of since tucson. heartened, we are all part an by the almost daily progress reports we hear from congresswoman giffords's family. i think it is nothing short of
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extraordinary the amount of progress that has been made in such a very short period of time. and peter, having been backstage before that and talking to some of those who were there that day, who had come from the hospital who still had bullet wounds from that a terrific day, their stories continue to give us strength and encourage us and inspire us each day. i told that to several of them that day. i think it will be true for a really long time. >> what is his message to the mayor's this afternoon? >> the mayors are in town. they will talk about a host of things that may years while talk to the federal government and the president about. >> they talked about the
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importance of the stimulus, what it did to close gaps in their projects. did they give them any warning that they need to do fiscal consolidation? >> i doubt that anybody here needs to warn them of "fiscal consolidation." many of them are dealing with and have dealt with for quite some time the impact on their budgets of a dramatic downturn in their economy. many of them are dealing with those problems far before coming here. yes, sir. >> you mentioned on tuesday the president will talk about some of the material and he went over and north carolina. [inaudible] >> i cannot amanda and if we went to this today, what we could possibly talk about on wednesday or thursday -- i cannot imagine. i will not get into the state of the union preview pool. >> the short-term focus on jobs
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in the medium term at focus on getting the fiscal house in order. >> i said both the medium and long-term dealing with our fiscal budget situation, but let's understand the steps that we have to continue taking in the medium and long-term to prepare our children for competing in an economy against the chinese and the indians and a whole host of different countries. >> does the president see tension between the short-term focus on jobs and the need to keep government spending -- >> we had to take in the course of two years some extraordinary steps to ensure that in economic downturn it did not become the next great depression. and we did that, and some of that stuff obviously, ia lot of that stuff has run its course through the recovery act. so, look, i think the president
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wants to and will outline what he thinks is the best course forward to ensure that we are dealing with a whole host of problems, including how we grow our economy, how do we help and work with the private sector to create jobs, and how we get our fiscal house in order at the same time. >> it is not a question of one thing now and down the road? >> even if you look at last year's budget, even at a time where the second half of the recovery act is still doing what it needed to do, the president presented a budget that frozez non security -- froze not security discretionary spending because we had to begin to take steps even entered >> on labor union reform. greatestdate's concerns about walmart. he said he would not stop there.
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in light of what the first lady said, would he say it was still true? would he feel comfortable buying goods of walmart? has walmart changed in how it's treating its workers and unionization? >> i think we are all in a different time with clearly steps that have been taken. i think the first lady was proud to stand with the countries largest retailer. they have taken some dramatic steps in how they are dealing with food and how they are marketing and packaging food that will make a genuine and big difference for people that shop there. and the first lady is proud to than happy to stand with any company that will make similar pledges to make a difference on
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behalf of the american people. >> in terms of those practices, as he can then and still off in terms of how they treat workers and pay workers -- as he condemned them still? >> the short answer is it's lots hass --- happened since 2007. >> you said earlier that with respect to president hu u, one of the conditions for coming here was the opportunity to take questions from you guys. are you saying that the white house said conditions? >> i was very clear in the planning of this that we would have a press conference and it would include questions from you guys. we were clear to make sure that that is what they understood it was going to take place if they came. >> was there any resistance to
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that? >> not at all. i did not deal directly with them on that, but in the pre- planning for this, this was something we talked about and not doing it was not an option. >> was there a press conference for the president's trip to china? a joint press conference with president hu ? >> they did not take questions. >> was this a reaction to that? >> we were in china. >> but they did not take questions in china. now you are on our turf. >> yeah, this is the united states of america. >> global warming. any reaction to the fact that orological ter optic
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association said that last year was the warmest year on the record. the president said there are other ways to skin a cat. >> i think there are continual reminders of that we will have to transition to a clean energy economy. without getting into whether or not that is in the speech, obviously, there are a number of different policy ways to do such a thing. whether it is renewable energy standards that create the type of market conditions wher eyou transition.hat there are obviously a number of different ways to do that. >> does the president consider it a big issue? >> i think energy independence and the security of our planet are and will continue to be issues we will have to deal with. again, we -- more and more and
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more of our oil comes from or ou r energy comes from places that are not here. that puts us at a disadvantage. we have clearly taken some steps to change the corporate average fuel economy standards that lessen some of that usage of foreign oil, but there is no doubt that we have a lot more to do. the recovery act invested in wind and solar. the plan we will visit tomorrow will soon be home to ge's advanced battery manufacturing use the car companies boast -- both foreign and domestic have a success marketing cars that run on electricity. we will have to meet many of those challenges. >> two questions. [inaudible]
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there was a mention of the historic meeting 30 years ago. [inaudible] >> i think, as i said earlier, i think we saw some progress on a host of important fronts that we wanted to see progress on. security, the economy, and human rights. but at the same time, again, i think whether it's our trip to india, south korea, japan, our trip to china last year, i think they are better evaluated over the course of the long term. have we set ourselves on the path to making real and substantial progress? so i think, while we are pleased with the outcome of the visit from yesterday, obviously, on each of those baskets i
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discussed, security, economy, he leaders n rights, the two talked about progress that we acknowledge it needs to be made in has not been and continue to try to be a leader in seeing that happen. >> you mentioned there was a still work to be done. what is the next step? >> the next step is with the chinese in taking, continuing to take actions at a faster pace to deal with the evaluation of their currency. again, obviously, there has been a decent amount of coverage on this. there are actions that you take to change the valuation and certainly inflation gives you sopmme real impacts, too, that indicate there have been some changes, but again, as the president said yesterday, not
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quickly enough. >> what are present -- one of the president's promises in 2008 was -- [inaudible] is this something that the president hopes to see past in the senate? >> i think there is a whole host of things the president made part of his campaign. we talked about doha a few days ago and things that are important to build off the progress of "don't ask, don't tell". i think there's continue to be the priorities of the president. we will continue to work to make progress oat -- in a much more challenging congress over the next two years. i think you'll see the president continue to push on a whole host of issues. >> does the administration see
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value in having one chamber of congress? [inaudible] >> i think there's no doubt that whenever you get something done in one, you're closer to seeing it come to fruition. >> the jobs bill. [unintelligible] >> i will not get into previewing the state of the union. >> the president is going to be talking with congressional democrats this weekend. does he have a message for them? will he be talking a little bit about what his state of the union will be? >> he travels of their tomorrow after he returns from schenectady. he will talk to them about the challenges that lie ahead at what we have to do, many of the themes you all line at the state of the union. >> democrats will have to respond to republicans who are not only trying to repeal the law, but they are going to
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replace health care. >> i did notice they pass it on all -- almost 1.5 page bill. many goals they espouse are the current law of thed.to make surt discriminated against for pre- existing conditions. that exists. it is called the affordable care act. happy that several years later they have got around to what they might do. all of you must be anxious to know what they are going to do. i think they have set forth some lofty goals, some of which, most of which are currently embodied in the law of the land. but, yeah, i'm happy for
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them to take a spin and tell us how they'll do what they passed today. i would suggest, too, as they talk about making some progress on the deficit, they do with the congressional budget office's indication that the action they took just yesterday and a couple of hundred billion dollars -- adds a couple hundred billion dollars to the deficit. this is the ceo that was the be all and end all of the -- this was the cbo that was the be all and end all of the scorekeeping. when they discuss the very same topic of the impact of the deficit and health care reform, all the sudden, that cannot possibly be right. that is not true. so i think it is important to underscore that the first legislative action that congress took was to repeal an law that
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helps seniors, helps families, and added a couple hundred billion dollars to the deficit. i am not entirely sure that in the run-up to 2010 campaign, they spend a lot of time talking to seniors about raising their out ofet costs -- their pocket costs. >> on the issue of gun control, the president said he could see more restrictions on semi- automatic weapons. is this administration going to navigate through the tough waters of gun control in the wake of what happened in arizona? >> i do not have an awful lot to add on that. i have no doubt that there will be proposals offered as a result of different circumstances that have happened in tucson. and the administration will
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evaluate those proposals. >> have you heard what the former vice president has to say on these matters? >> we are looking to some of these proposals. >> on china, on issues of unions. they have unions in china. >> sometimes i cannot hear. >> they have unions in china, and did they discuss that issue there. the first union and china was walmart. >> let me ask some of our guys whether that was a topic that came record >> on a completely different subjects, what are the president's doing plans for the ncaa championship game. >> i think he will do what he did last week. he went to play basketball and came back a little after kickoff.
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some staff and the president watched most of the game over and the theater. i think the president plans to do that again. and i think we have given this to a few papers in chicago and wisconsin. the president's prediction that the bears will win the game 20-17. >> has he made bets? >> not that i know of. >> will he still go to wisconsin? >> yes. we are still planning a trip to wisconsin. i might have just complicated the questions you asked on the political effort by predicting a team in wisconsin not doing as well against the team in illinois. won't go. >> no. of course he is going to wisconsin. i think the president hopes to
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have his team playing there. >> does he have plans to go? >> i would say that -- this is superstition. i'm a -- i will answer this question on behalf of him based on superstition. i think all of that is a way, way getting ahead of yourself. not nearly as much as i am. >> in the state of the union address, the president no doubt will remind americans that we have troops on the ground in two war zones. willie at the same time tried to get the american people and republicans at the same time behind the idea of pulling back on defense spending, considering everything else he made mention in terms of reducing spending? safe to say that we are going to have
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to see a tightening of the bill everything the government is doing in order to make progress on getting our fiscal house in order. the secretary of defense, secretary gates, has made some, has taken some steps on procurement reform and taken some steps to cancel weapons systems and programs that for quite some time the military itself has not wanted, despite the fact that congress might continue to fund it. i think those types of efforts have to have been because we cannot see taxpayer dollars wasted. >> the american people may not know about the debate over an engine. should the president point that out in the state of the union? >> i think whether it is in a
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speech or not, i think the president and the secretary will continue to work on it. >> do you think it is possible remarks on human rights are being over read it? that he said thatact he did not share western definitions of human rights. >> i do not want to translate the translation. as i started out by saying, but i think that, regardless of what he said yesterday, the true test is not in the words that someone speaks, but the actions that the country takes. and that is what animated the president to bring up the issue of human rights again. and i think it -- the actions that country takes is how we will evaluate the progress that they may or may not make over the course of coming months and
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weeks occurred >> is there any sense in which you could see this as scripted out, as a way to alleviate pressure while stating that china will continue? >> look, i think you could read it -- maybe you could read it several different ways. i think it was ended mission that we have not heard before. -- an admission we have not heard before. i know the way we read that. that is acknowledging you have improvements to make is part of that. but it is a very small part compared to what has to be done to make progress. and that is what we what. >> does he say that privately, though? >> i was not in some of the private meetings occurred >> thank you. on guantanamo. the reports that the administration is likely to start military trials in
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guantanamo, what does this mean for the administration's efforts staff between their countries? [unintelligible] >> look, let me at the beginning of my answer acknowledge that there are some prohibitions, legal prohibitions now on some transfers that i think you have seen in the past. we will continue the process of going through who is there. clearly, the courts continue that process of going through who is there and deciding whether or not they are continued, whether them being continually held there is in accordance with the losaws as
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you've seen courts do in the past. but none of these decisions change our fundamental desire and gold to see, because of our security, the present at guantanamo bay closed at once and for all. >> what about the delay in these? are there any deadlines? >> again, i'm pointing to the fact that the individuals named in today's stories were the same three individuals that were talked about to be tried in military commissions quite some time ago. >> let me follow up on april's question. represented mccarthy and senator lott and byrd have proposed bills that would ban the "time" magazine -- on ammo and guns. have there been any discussions
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between the white house that that is a proposal that would be pursued? >> i do not know what specific conversations they ahead. >> given the president's previous positions on banning assault weapons, is this something he is likely to support? >> again, i think we are looking through different proposals, the proposals you mentioned and others, and we will evaluate them based on those. >> is there a possibility you could be corrected and propose something of your own? >> i have not heard anything particular in here. >> the president's poll numbers have been moving up steadily. 50% for the first time in a year. to what does the white house interview that? >-- attribute that? >> i think i said earlier that what the american people said in the election is they wanted to political parties to work
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together and make progress on issues that were important to them, particularly economic issues. i think that is what they saw during a lame-duck session. i think that was a productive republicans and democrats working together to make sure their tax rate did not go up. i think there is some of his benefit to doing it. >> back on -- the president said after midterms, there would be plenty of time for 2012. i am guessing that in the state of the union he will talk about rising above politics and doing the work for the american people. >> i may change a few lines. sorry. [laughter] >> i'm curious. why announce this now?
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doesn't it complicate things? >> just because the president sets up the machinery of running for reelection does not mean that you are going to see the president doing a ton of political re-election events. that is just the nature of the way these things work -- you have to have, you have to set up a legal mechanism by which to begin to find something like this. you have to get people in place. you saw the quotes in the story that this will be located in chicago and focus on the type of grass roots effort were saw in 2008. but that does not mean that the president is going to spend a whole lot of time worrying about that. the campaign is going to be run by a group of people in chicago whose jobs will be to worry about that. not the president.
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>> the vice president sent an email to supporters today in which he said that this white house has accomplished more in the first two years and then any president since fdr. does this administration believes that? >> i will not contradict the vice president, that's for sure. >> [crosstalk] >> i know we got the post china blues, but a little help here. >> robert, i do not have to remind you that senator lieberman indorse campaign reform and said barack obama was not prepared to be president. is the president relieved to see senator lieberman out of the senate? >> obviously, we have a little disagreement on the 2008 presidential campaign. but i think senator lieberman -- look, take the most recent progress that we were talking
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about that was made in a lame- duck session. i think obviously senator lieberman is somebody who, while having disagreements with this white house and with senator obama when he was in the senate, clearly played an important and instrumental role in rolling back some think that he and the president shared, a belief in the injustice of, "don't ask, don't tell". i think, obviously, senator lieberman made a decision to go on and do something different with his life. while we have not agreed with him on every issue, i think, clearly, there are a whole host of issues -- energy independence, "don't ask, don't tell", a whole lot of issues that the president was happy to see senator lieberman said leadership and support on. >> do they get together and say
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let bygones be bygones? >> look, i don't -- i think there are obviously opportunities. i do not think the president needed to have some air-clearing moment. people are free to make decisions. senator lieberman was about to to support to run for president. here spentnk anybody a lot of time thinking about that. in fact, there were some who thought maybe because of that, senator lieberman would not be the chairman of the committee, and that was not a view that we held. >> i was wondering if the president has been briefed on what appeared to be an impending global food shortage as a result aberrant weather.e
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>> let me see if that came up in a nsc meeting or any other economic briefing. >> [inaudible] is the white house growing concerned about canada? is it possible there are havens? >> let me ask nsc. >> with the emphasis on regulation next week, there was a bill introduced today i that would require a vote on executive regulations before they would go through. do you have any comment on that? >> let me get some guidance on that. i am not familiar with it, but let me see if there is guidance from legislative affairs. thank you, guys. >> today on c-span-2, a town
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hall looking at u.s.-canada relations. they chose the discussions on topics like continental security, trade, immigration, and sovereignty. see it live at 7:00 p.m. eastern. on friday, former british prime minister tony blair testifies before the british inquiry into the iraq war. this is mr. blair's second time before the five member group, talking about his role in the lead up to the war. military preparedness, and his relationship with president george w. bush. see that live starting at 4:30 a.m. eastern, also on c-span-2. vermont democrat peter welch joined us on "washington journal" this morning to talk about house republican efforts to repeal the health care law. this is about half an hour. [captioning performed by national captioning institute] [captions copyright national
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cable satellite corp. 2011] for the house of representatives and of course all the front page news is about the successful vote yesterday. 245-189 with three democrats movinging to join republicans to repeal health care. what do you think is next for this effort? guest: there's reports this is symbolic because it won't go anhere in the senate and the president would veto it. but it's serious. because republicans have made it clear this is step one. step two will be trying to defund essential funding for the implementation or health care. also it will be a frontal assault for any of the regulations. they campaigned on repealing health care. they are following through on their promise to repeal health care and havenology to replace it. so it's a serious first step republicans are taking. because they have made it clear
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they are going to pursue this aggressively. marv: there's also a court challenge. another six states have joint in. that's over half the states seeking redraft to the new law. so where do you see all this culminating? how do you think it's the coming out in the wash? guest: well, first of all, we have a problem with health care in this country. that just has to be acknowledged. we have excellent quality care. and we have 47 million americans who don't have access to health care. extended access to over 30 million people. it also provided for long overdue insurance forms american families desperately node. these are the things that the repeal takes away. our kids now when they get out of high school or college, they get an entry-level job, generally they come with no health care benefits. those kids, our kids can stay
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on our policy until age 26. that's enormous relief of anxiety for parents. it's good for the kids when they get a first job. right now if you have a preexisting condition, under the law we passed, you're under the repeal you can't and right now if you have insurance and you get sick, the insurance company can't dump you when your renewell period comes up.y able to do it. these are long things that will be reappealed. they have decided to throw out the good as opposed to trying to improve the bad. that's the serious question en agenda, it really gets in the way of an
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improvement agenda. the question of the lawsuit. i think we have to acknowledge we, who supported health care, have to acknowledge that the individual panned date is extremely controversial. people don't like the idea of di affordable. just like in a lot of places people don't like the idea ofed insurance. but if we're going to have access for eb, and most americans believe we have to have that, but one way or another, you still end up with the in the -- in the hospital. if we're going to have eb covered, the question is should all of us help pay? my view is yes. ma of the opponents cey see that otherwise. so that's a fair combe. but we should engage in republicans saying if we're
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going to have a system at everybody's covered, how do we pay for that? >> you're welcome to call in with your comments about health care and or rger issues about the house and its policy direction under the new majority. what the democrats plan to do is to counter some of their nichetist.ls send a tweet or email. let me move to a secondary issue which is stability i congress. you and i were talking during the debate. you re a classmate of gabrielle gifford, but what has emerged in the wake of the tucson shooting, i wonder if you heard any change in tone? guest: yes. 50eu6 been somewhat pleased. it's not perfect. but civility does matter. a rep
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and democratic legislature. they had sharp differences but it was not just a matter of -- it allows you to listen to what your adversary is saying and allows you to have a certain kind of -- one of the reasons gabrielle gifford is one of the most popular numbers of congress and in our class, she had the ability to be very direct in her point of view. you had no confusing as to where gabby stood on any issue, but she spoke in a way where she was inviting the listener to speak, and then she listen is not good for any of us. host: after the debate the last few days, let's go to westward
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new jersey, and this is harold a republican. caller: good morning, everybody. peter, i would like to see every person who has a social security number also have catastrophic health insurance. sadly, the affordable health care law affords planned parenthood to get even more taxpayer money, which they should not get. under no circumstances should taxpayer money be used to do to a member of the human family what you wou not do to a kitten or a puppy. you would not tear legs off or crush the head of a puppy or kitten. before this day is done, plned parenthood is probably doing this to unborn members of the human family with taxpayer money. democrats refuse to remove the
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pro abortion language from the bill, why? guest: well, let me jusbe specific. i disagree with you. you're quite wrong about that. the legislation does not allow for the use of taxpayer fds for abortion. host: i want to -- a question from twitter. congressman, he writes, i know people who work only so they can get health care. they don't need the money. explain how the bill helps them. guest: not quite sure i fully understand the question. host: i guess it's the linkage between working and insurance. >> first of all, you're right. there's an 2340r78s number of people that work only because that's only way -- if you have insurance now and you want to change jobs, under the repeal, you could not do that without risking losing your coverage. one of the good things about
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this legislation is you will have portibility with your health care. you will be able to go from job-to-job and not be locked into a job. but the health care, we're providing significant subsidies for small businesses who want to provide health care. we're providing significant health to smaller and larger businesses who have retired health care. enact you're seeing major companies like g.e., comcast, microsoft opting into this plan showing they've made hard-nosed business decision that makes sense. i cannot answer your specific question because i don't know the incoe cutoff you're talking about, but there are subsidies. it's the ability to pay an approach to allow people to purchase the health insurance of their choice. keep in mind, by the way, i was in favor of a public option and
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this bill preserves the insurance-based model of providing health care coverage. so a lot of the characterization by opponents that it's a government takeover couldn't be farther from the truth. it's going to provide ackdrose health care. host: this is a new chairman of the house ways and means committee, dave catch, a republican from michigan on why he supports the bill. >> the problem with this law among its many fault sincere it puts government at the center of health care decisions not doctors and not patients. instead of families deciding what coverage is best for them. it has the center for health and human services deciding how much they can afford. instead of families and customers deciding in they need health insurance, the government is mandating they purchase it. this is all about t government.
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it's washington knows best. and it's wrong. host: congress moon welch. respond. >> well, that's wrong. first of all, it's going to be you deciding which health care you're going to purchase and which doctor you're going to see? there's no government control over who you decide to see as your doctor or who you decide -- which hospital you want to go to, so that's just flatout wrong. and again, this discussion about government takeover, i'm going to remind mr.amp what medicare is. everyone 65 years of age or older has access to medicare. we all have a reduction from our paycheck so when we're 65 each of them picks their docto hospital, proder, so
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mr. camp is either misunderstanding or mischaracterizing what this health care bill is. essentially this is the irony. it's a very conservative bill. i wanted to abdomen lick option so you and i would have the option to go into our so now we haven insurance-based approach where you and i can decide what insurance we're going to buy, what medical provider in any health care decision, the movement now is between the patient and the doctor. host: yesterday one side bar debate became house-member-own plans and few members decided to walk away from the health plan. that became quite a discussion last night. can you tell me how relevants
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the, members selecting plans from their inter, congress to their debate about the national plan. guest: a lot of people think the fix is in and there's a good deal available for congressman that isn't available for average americans. hen we passed the public option, we had to become part of that plan. to members of congress, we're going to have is to be in that plan. as it stands now, we would have to be part of that plan as well. i think there's a fair question on the part of city, in something that ought to be good enough for them or members of congress. i think having a plan that's available to citizens as well as members of congress makes a lot of sense. host: next call for you is from little rock.
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shaggy? caller: stagey. i want to say i hope the democrats key fighting to keep evidence and i have a cadillac insurance. and i ended up paying almost $10,000 in fees in addition to my insurance that my husband had. one, one emergency room visit. we need health care reform. please don't give up. and stay home and fight in that state, senate. host: comments in both ethose cases, so we'll move on. now you can't lose a race you have never run. guest: well, we did pass it in
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the house and lost it in the senate. we didn't havthe votes in the senate, and i don't control what happens in the senate. but i am with you. i wish we had been able to get that passed. by the way. it would have saved another host: you're going to have to help me with your name. caller: tawafa. -- tawana. first-time caller. first thing, i wanted to look at the two-base repeal as opposed to the 225-page law. i want to know how are they going to get people tax breaks or incentives to have health care if people don't have jobs? second thing, you talked about ms. gifford. and god bless her. but the thing is, i just want to prove a point. how many of those people who
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were victimized that day, how many of those people had health care? and last thing was to mr. mitchell about -- hillary clinton tried to pass health care. it's not an easy -- but i think reaching across the aisle is so on the part of the doing this. actually understanding. understanding it's a complicated issue. and it's not going to bal involved in two pages. no take my comment off the air. thank you. guest: well, you have a good point in the reaching across the aisle. vermont, we have aaccess to -- when i was a democrat our republican -- we were pushing for universal care. the governor on the republican side was argue fing cost at the
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same time. -- cost containment. the democrats argued access. we were both right. the only way you're going to us is stain -- going to sustain this is reaching across the aisle. with the moral tpwhroigs extend access to all our citizens. host: the paper on information today. here is a one argument he makes. obama care is creating 159 new offices and tens of thousands of pages of new regulation later he wris obama care i go fors -- ignores.
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guest: health care, we had no obama. none. health care is expensive. it's been going up two and three times the rate of inflation, the rate of profits and the rate of wages. we have a serious problem in this country that we have this escalating cost in health care and our ability to cope up with it financial, is jovend our grass. -- is beyond our grasp. a financial money machine. we have to change that. one way or the're. but that is indental i can in the -- the referee of how much a bill will cost says that the repeal will add $230 billion to the deficit. you know, i want to say something. we get back here.
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we had the election. the republics won. one of their big campaign plans is to repeal obama care. and it became an epithet. it was a million bad things to a million different people. but when you break it down. like should people have their kids on their policy until age 26 or should people with preexisting conditions -- i know? americans overwhelmingly and throwing everything out for political or political gam but is a bad idea. we are now a elected republicans and democrats. and the time for putting political points on the board is over. the time for making practicing matic progress is here. that means you impro what you have. you don't throw everything out.
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host: on the side in favor of getting serious about the health care in the nation. this is what "usa today" editorial team wrote. those who are ultimately serious about hammering down costs have huge positions, all radio active and ship costs to patients forfor me to carming less making these difficult choe to control against interrupt as i in the nation is going to have to be a bipartisan operation. guest: some of those things we're going to have to wrestle with obviously, but there are more elemental things we can do and are starting to do in vermont. 78% of expenses are associated with treating chronic conditions like diabetes and hyper tension. and most of those cases are treated in our current model on
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a fee for service basis. if you go into the hospital, you get an itemized bill from the surgery room to the anesthesiologist. if you have a chronic condition, everything is done on this fee for service basis. we established in vermont what is called the blue print for health. instead of being driven on a -- we provide a -- return so folks get care that is appropriate. so folks with diabetes need counseling and a lot of access to nursing care and have those patient ins a managed program, they are going to get the care they need when they need it and by a provider and at a low cost .
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it's a need-dren basis. host: in 2006, peter welch is the only vermont representative and serves on the oversight committee. i want to talk to you about that before we finish up. republican, you are on. good morning. caller: good morning. and thanks for c-span. i don't know if there's a relationship, maybe you could tell me, between my insurance and emergency room visits. they upped my i paid around $750 a year of which they will let me use $are 500 but then i have to pay $1300 before i can get 80%. so that's 33% they are going to charge me to use my money, i
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guess. then the emergency room visits, my son is a pharmacist in another state. and the young man came in and late night because my son works the night shift, and wanted mow trip. hen didn't have a prescription, so my son said is go to the counterand get a bottle of and if you take two eye blew pro fin and then the young man left and came back in an hour or two with his prescription for motrin. so the state paid for his visit to the e.r. and his medicine because he didn't want to fay couple of dollars for some eye blew pro fin off the store shelf. so how does his emergency room visit, which was not an emergency room -- which was not an emergency. and somebody had to pay for it and how did itise in my
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insurance? host: a related tweet. someone is asking if you could please explain what your -- lots of >> well,t's a lot. what we estimated when we were considering the health care ll was about $1,100 of your premium. if you purchase through your employer, $1,100 on your plan is paying for other people. that caller has a good point. one is the abuse of the emergency room and what you describe clearly was. that makes no sense what over. that cost does get passed on to you and if everybody does have access to care now, they don't have to go through this con have lewded approach of having to go through the emergency
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room and then i -- that's a huge expense for them to keep that up and runni and going. every time somebodcomes in, it's a big expense, but if they have no insurance there's still the expense of treat that person and somebody pays and that happens to be -- here's another question. why do we have medicare at all? guest: i think she's talking about prescription drugs. it's very expensive. one of the things i advocated and we did approve it in the house bill but lost it in the senate was price negotiation. in the v.a., they do price purchases and negotiation. if you're a big purchaser, and the they negotiate the best
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price. 've so instead of paying an asprin like they are buying one, they pay like they are buying 100. we wrote that the be negotiation by medicare to drive down the cost of prescription drugs to make it cheaper for srs to have access to the prescriptions they need. so that should be part of the law. ring announcer: our final seg ment you'll meet -- host: in our final segment, you'll meet our guest and we'll talk about health care provisions in this country. one last question. jim, you're a democrat. you're on. gong. caller: good morning representative if you would give specific answers that would be really easy for me.
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first of all, when you have a preexisting condition or if i come down for cancer or something right now, the insurance company can't deny me, correct? >> correct. >> under the current law. my second question is this -- from jacking up my rates so high because i came down with something that i can no longer afford it? guest: well, there's an authority to review rates we've given to them, so they don't have cart blonch to just run the meter on you. caller: so if i come down with something, my insurance between in buffalo can't say we're sorry. we have to cover you, but we just jack up your rates. guest: yes. $4,000 a month. host: there's insurance --
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you're payinguring the times when youen don't need coverage, because there will be a time when you do need the coverage. host: when people have a car accident, their rates tend to go after that. is there a parallel between that and the health care bill? >> well, the rates, there has to be an actuaryal -- if more and more people get sick, then the cost overall of health surance is going to go up. but should you have a system where you're punitively charged because you happen to be the person that does get cancer? and the answer to that is no. . .
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guest: that should be the responsibility whether you are a democrat or a republican. the leadership comes from darrell issa. he has to make the decision. if what he is saying that is that he was to do things that have a broad benefit to taxpayers in the concept of accountability and not have political witch hunt. if the history needs to be >> the house ways and means committee held hearings on possible changes to the federal tax code. witnesses included nina olson, bob mcdonald, and several tax policy analysts. they discussed how they structure of the impact -- tax code impacts the economy and how
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simplifying it could help create jobs. president obama and republicans have said the tax code should be reformed. this hearing was chaired by michigan republican congressman dave camp. we meet today in our first hearing in the 112th congress to expect -- began what i expect will be along discussion and will be bipartisan on the need to reform the federal income tax system. as i did on tuesday, i want to extend my appreciation to ranking member 11 for agreeing to move this hearing forward even though the committee did not officially organized until two days ago. 25 years ago, a democratic house
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and broken senate sent landmark legislation. this is the entire tax code of the u.s. and all the regulations. this pamphlet. this is where we are today. this is the tax code and all regulations that americans have to deal with today. the law and 1986 which marked the culmination of years of work broaden the tax base and lowered tax rates and it remains the basis of our system of taxation. in some sense, it is a shell of its former self. members of congress have loaded the tax code with a dizzying array of credits, deductions, exclusions, and exemptions. david bradford provided a tongue-in-cheek example to
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illustrate the concept of tax expenditures and why they are little more than disguised spending. he proposed to cut the defense budget for weapons procurement 20 while creating a new weapons supply tax credit that could be claimed by contractors for appropriate weapons donated to the pentagon. it would appear that spending and taxes would be reduced. allowing an elected officials to claim the government was smaller. nothing would have changed. a spending program would exist, it would be cleverly disguised as a tax credit. his cautionary tale seems to real to those who pass the tax code and its expenditures for congressional blessed industries and activities against moll. regardless of the merits of any individual tax expenditure, the picture is not a pretty one. the deficit commission which i on measure the impact of
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these expenditures in terms of higher tax rates. the report makes clear taxpayers foot the bill for those expenditures in the high -- form of higher tax rates. therefore called for eliminating all tax expenditures and would have moved rates to aid, 14, and 20% and dropped the corporate rate to 26%. those numbers would have been lower. as we will hear from the taxpayer advocates, the impact of the changes from the tax but to extend these expenditures can be measured by the tens of thousands of additional pages added to the code and the thousands of changes enacted in the last decade. the tax code is too complex, too costly, takes too much time to comply with and this adds more burdens on families and
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employers and makes more did go to create jobs in this country. i am under no illusion the task before us will be easy. to reform the tax code in a way that lowers the tax rate, britain's the base, and promotes the competitiveness of american employers, we will need to make some tough choices. i do not think this can there should be a partisan exercise and it cannot happen because one chamber passes a bill. it will require the active participation of all members and require us to work with the administration and we will have to talk to the senate now and again. we will talk to the american people. there impacted by the laws we pass. this is the first hearing of many. i have asked for witnesses to confine their remarks to defining the problems of the tax system. i look forward to hearing from many other witnesses in working with you as we undertake this
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challenge. we will have any further opportunities to consider solutions. our focus should be on making sure we understand the scope of the challenge. i yelled to my friend and ranking member, mr. levin. >> thank you. we welcome this opportunity. there is a need for tax reform. any tax reform which was true in 1986 will have to be bipartisan and bicameral, and it will require leadership from the executive which i am sure will be forthcoming. this hearing is a pickup of an effort some years ago. mr. rangel was chairing the committee and introduced
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legislation to try to move ahead this issue. i am not going to be here for a bit. i think kevin brady and i will meet with president hu of china. i hope this hearing will move the ball forward. let's not expect any touchdowns. it is a long way from the goal line. i do think we need to keep in mind some basic principles. including the name for our tax system to help create jobs and to promote economic growth. i think in -- and this may be somewhat controversial and difficult. we need to make sure that reform
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is fiscally responsible. another principle we need to keep in mind is any tax reform has to benefit the working families of america. the code isn mind complex and answering it through tax reform will not be easy. you have referred to the testimony of the national taxpayer advocate who is here with us and i join in looking -- welcoming you. glad we receive your testimony. on page 10, there is a new list. the tax expenditures under the caption on page 9. the dirty little secret.
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tax breaks benefit the masses and that is your language. i urge that everyone go through the list on page 10 to understand why some have advocated being there, the coverage and the need to have a -- an intelligent, for the right discussion as to each and every one of them. this is the kickoff. the field will not be easy. there maybe snow, rain, we are used to that in michigan. i think we need to pursue this and we look forward to working together to tackle this issue. thank you. >> thank you.
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we're joined by five witnesses. our first witness is nina olson. the national taxpayer advocate. we welcome you back to the committee. we will hear from bob mcdonald. the chief executive officer of procter & gamble. mr. mcdonald will need to leave promptly at 11:00 a.m. i do not think that will be an issue. our third witnesse is warren hudak. fourth, dr. kevin hassett. last, dr. martin sullivan, a contributing editor and tax analyst. we welcome you and we look forward to hearing your testimony. before recognizing our witness, let me know our time is limited.
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i will not be asking questions today. with the concurrence of the ranking member, questions by members will be limited to three minutes, giving more members the opportunity to be recognized. each witness will have five minutes. your statement will be made part of the record. recognized for five minutes. >> thank you for inviting me to testify about the subject of tax reform. let me begin by saying bluntly that in my view, this tax cut today is a mess. since the last major reform 25 years ago, the code has become an ever expanding patchwork of provisions with little logical connection and it is difficult for taxpayers to understand and comply with. in my report, identified the complexity of the tax code and
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the confusion and distress it engenders. i titled that section the time for tax reform is now. while there has been talk of reform, experience shows it will require a sustained, bipartisan effort with the support of an engage public to make tax reform in reality. i start by noting that the tax code as it stands imposes excess of compliance burdens on individual taxpayers. hoping taxpayers who can afford expensive tax advice and discriminating against those who cannot. the complexity of scarce understanding and creates a sense of distance between taxpayers and the government. under mining tax. morrell and leaving -- leading to lower levels. the complexity is also
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burdensome. making it more difficult for the agency to meet pat -- texas air needs and resulting in more on its enforcement actions then the code would require. despite the existence of narrow tax breaks, it is important to recognize the tax breaks by dollar value accrue to large segments of the taxpaying public. we are the special interests. if tax rates are to be lowered substantially and overall tax liability is to remain unchanged, virtually every taxpayer will have to give out cherished tax breaks. there is simply no free lunch. i am convinced that when i called a busy majority of taxpayers want simplification and will support it. lower tax rates will offset the loss of tax breaks. taxpayers will understand how their taxes are computed and
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will save time and money on return preparation. to assist congress in deciding which tax breaks and iras administered social programs to retain in which to eliminate, i suggest realizing a zero-base budgeting approach. under that methodology, the starting point for discussion would be a tax code without exclusions are reductions in income or tax. a tax break for iras administered social program would be added only of lawmakers decide that the benefits of running the programs through the tax code out with the complexity challenges that doing so crete's for taxpayers and the irs. tax reform will have a better chance to succeed if it proceeds on a revenue-neutral basis. there is widespread recognition we must take steps to reduce our current deficit levels. i am concerned if we attempt to
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solve those issues through tax reform, we may never achieve tax reform. we're likely to get stuck in partisan debates when we need a calm and civil analysis of the structure of the tax code. for all these reasons, i believe that fundamental reform must be made a priority. the simpler, more transparent tax code will substantially reduce the estimated 6.1 billion hours and $163 billion that taxpayers spend on return preparation. it will increase the likelihood that taxpayers will claim benefits to which they are entitled. it will reduce the likelihood that sophisticated taxpayers can exploit arcane provisions to avoid paying their fair share of tax. it will enable taxpayers to understand how their tax liabilities are computed and prepare their tax return. improved taxpayer morale and compliance and perhaps even the
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level of connection that taxpayers of field. it will enable the irs to administer the tax system more effectively and better meet taxpayer needs. i am confident that in the end, public support for a simpler code will be strong and deep. thank you. >> thank you. >> my name is bob macdonald and i am the chairman, president, and chief executive officer of the procter & gamble company. i am here in my capacity of the business roundtable initiative. i appreciate the opportunity to discuss corporate tax reform to competitiveness, u.s. investment, and u.s. job growth.
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the world is -- has changed since the basic rules of our international tax system were adopted. the spread of for markets has of -- opened up opportunities to sell products to the 95% of the world's population that live outside the u.s. american companies and workers face heightened competition from foreign competitors as they seek out these new markets. the time in which multinational corporation was synonymous with american corp. has long passed. as one example, in 1960, the largest worldwide companies were nearly all american companies. use headquartered companies comprise 17 of the world's largest 20 companies. by 1985, there were only 13. by 2010, six u.s. headquartered
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companies ranked among the top 20. in this hyper competitive environment, of many factors can disadvantage american companies and cause them to lose out in this competition. to the detriment of the u.s. economy and american workers, taxes are a very important factor. american companies seeking to expand our working with one of the least competitive tax systems in the world. let me explain why. as this slide shows, the u.s. has the second highest corporate tax rate among advanced economies. after japan adopts its proposed five percentage point corporate rate reduction, the u.s. will have the highest corporate tax rate in the oecd, 14 percentage points above the average. the slide shows it was not always the case that the system was always so uncompetitive.
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when the last major tax reform was undertaken, the u.s. went from among the highest corporate tax rates 2 among the lowest. since then, the tax systems of the rest of the world have, and suppressed as. as this next slide shows, the u.s. is one of the few remaining advanced economies that taxes its companies on foreign earnings from active business operations when remitted at home. most other countries have adopted territorial tax systems that exempt these active earnings from home country taxation. recently, both japan and the united kingdom have switched to a territorial tax systems. they have chosen these systems to improve the competitiveness of their businesses and their economies. this tilted playing field created by the system hurts the competitiveness of american
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companies and workers. diminished sales around the world reduce u.s. exports of goods and services along with investments and jobs in the u.s. high taxes imposed on american companies that bring foreign earnings back to the u.s. discourage use of these funds to expand u.s. operations. a high u.s. rate discourages investment here in america by u.s.-based and foreign based company's. the highest price paid is by the american worker in the form of lower wages and a more slower growing economy. on behalf of the business roundtable, i look forward to working closely with this committee, congress, and the administration on this incredibly important issue. thank you. >> thank you. mr. hudek, you have five
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minutes. >> good morning. i am pleased to be here as a small-business owner and as a tax professional assisting small businesses. my business provides a full range of tax services for small businesses. i know firsthand the challenges that my clients and our company face in complying with the tax code. the complexity of the tax code or -- are onerous. they cannot afford staff, tax professionals on hand, they have to access that at a tremendous price. they spend 1.9 billion hours every year to comply, $19 billion in costs in complying with the tax code. i am a member of nfid, and we surveyed our members and to of
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the top priorities for small businesses is the federal tax code and its complexity. one thing to be sure of. from a small-business perspective, the business cannot be separated from the owner. most small businesses are structured as [no audio] it is a simplified way of being able to understand taxes. the best example i can give in understanding the small businesses to examples from this year. we have to companies getting ready to retire. they wanted -- count on their business to be their retirement plan. they were regular corporations. in order to avoid the double
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taxation, they switched to a corporation because of the capital gains tax, they lost 50% of their earnings that they worked their live for. 18 hours a day, some of these businesses second generation. losing that kind of money is staggering. pursuing a new idea, starting a business. for one owner, he had to continue working into retirement. we're struggling with the tax code. to speak to the complexity, the ira's send out a post -- irs sent out a postcard saying there will not exceed payroll taxes to be remitted using a paper voucher. there were no longer allowing to
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submit that. some of my most sophisticated clients e-mail me and said what have we been doing wrong? what did i get this notice? they did not understand the nature of the notice. we have always submitted their taxes electronically. for eight or nine years, we have been submitting their taxes electronically and to get a simple postcard saying we will no longer except paper vouchers and they're panicked. what are we doing wrong? what is going on? it did not understand the fact that we were already doing it electronically. that is a simple example of misunderstanding. my clients, we tried to get them to understand the tax code which leads to terrible compliance problems. the tax code has to be simplified. thank you. >> thank you. dr. hassett, you have five
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minutes. >> thank you. it is a pleasure and honor to talk to about this topic. research looks at the long run economic impact of financial crises and they find that one can expect to have slower growth for a good long period, perhaps as much as a decade. we will grow about 1% year slower and the unemployment rate will be 8%. this is an acceptable to everyone but i noted this is a medium term problem and a short- term stimulus is of little use. more fundamental changes must be used. the first part of my testimony talks about the complexity of
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the tax code and provides a chart of the marginal tax rates under the current system that account for the phaseouts for they've targeted tax and policies we have in shows the marginal tax rate as we go up with income goes up and down like a city skyline. progressives favor a tax rates with [unintelligible] dungeon not think that anyone thinks the schedule shall look like a city skyline but that is what we have. this is indefensible. a reason why tax reform could have an impact. we can accomplish a lot. a will to find reform could produce significant growth affects for just to sketch the terrain. a survey conducted in 1998 found that some respondents found
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tax form [unintelligible] there are many possible reforms but they could have affected are just the big enough to offset the shortfall we have inherited because of the financial crisis. the of in the first part of my testimony, i make these points. a look at the case of the corporate tax. there is a consensus that the highest tax makes investment in the u.s. difficult. there would be much discussion of these factors in the coming months. the remainder of my testimony looks at the question of the effective rates. i began with the statutory rate analysis. it is an imperfect measure because it does not take into account the breadth of the tax
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base. take into account factors and narrow the base. the affectiv -- effectineive tax rate and [unintelligible] in a study, we looked at national rankings of statutory rates. in 2010, the u.s. average rate which was the rate that is marginal when you are trying to locate a plant somewhere was 29% while the average was 20.5%. this is the second-highest effective average rate in the oecd.
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even with the effective marginal rate, we're not doing so well. in 2010, the tax rate was 23.6% relative to the non-u.s. oecd average. this was the fifth highest in the oecd. any discussion of tax rates is incomplete without analysis of corporate tax revenues. with my ship -- we might expect the rate to be higher in the u.s.. our revenue is lower than the oecd average. this pattern is consistent with the literature that explores the chances of tax rates. we looked at the changes in revenue in response to other nations reductions in corporate rates. there is literature that finds
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a curve in the corporate tax base. given . wynns of the economy, and the high tax rate, from god we're considering reform. thank you. >> thank you. dr. sullivan, you have five minutes. her written testimony will be part of the record. >> thank you for this opportunity to testify. president reagan defied all skeptics and provided leadership for a bipartisan overhaul of the tax system. he lowered the tax rates and cut the tax breaks. it was a victory for the public over the special interests. the need for tax reform is greater than ever. tax complicity costs businesses billions, families and for anxiety and paperwork, and the perception of unfairness, due to outside cheating and caribbean havens or special interests to lobby their way to in seoul.es is an assaul
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-- insult. the list of subsidies defies any motion of a free market. my focus will be on the corporation tax which is in need of reform. japan has announced its intention to cut its rate by five percentage points, leaving the u.s. with the distinction of having the highest corporate tax rate in the world. cutting the rate is no longer just a good idea. it is a necessity. at the same time, we must recognize our dire budget problems. we are on the road to fiscal catastrophe. congress has done nothing to remedy the problem. to put the nation's finances on a sustainable path, just to get the debt to gdp levels to stabilize, far away from balancing the budget. that would require deficit reduction of $500 billion a
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year. with these unprecedented budget pressures, it seems reasonable to assume necessary corporate tax cuts must be accompanied by corporate based broadening. a fundamental feature of u.s. international tax law is that it favors foreign job creation over domestic. if an american corporation opens a factory in indiana, it pays a 35% tax rate. if the same corporation opens in ireland, it pays a 12.5% tax rate. said the factory generates $100 a profit. the choice is between the after- tax profit of $65 in the u.s. or $87.50 in ireland. the u.s. tax law provides a strong incentive for building factories in low tax countries. it is essential to discuss transfer pricing. it should be front and center of any discussion of the corporate tax reform. transfer pricing is not a detail.
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data indicate inappropriate profit shifting occurring on a large scale. i would like to bring to the committee's attention that over the last decade, the pricing problem has gone from bad to worse. when you work out the mouth, what you discover is that transfer pricing is not just a revenue problem which could be $30 billion or $40 billion a year. the effective tax rate for an investment in ireland is not just 12.5%, it is also -. this means the u.s. treasury department is subsidizing in investment in ireland and is no different from the congress -- commerce department sending checks to companies. this is corporate welfare. their respective of one's views
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about whether the u.s. should move to a territorial system, we should able to agree that the inefficiency of subsidies provided troop pricing is a drag on economic growth and job creation and any tax reform should include strong measures to reduce inappropriate profit shifting. multinationals record on domestic job creation is not good as indicated. between 1999 and 2008, the reduced domestic employment by million.ar the essence of a competitive tax system is a level playing field. government should not attempt to pick winners and losers. as you can see, our corporate tax code is created -- has created winners and losers. the winners are those companies that are able to locate profits in offshore tax havens.
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the losers are companies that do not have that opportunity. multinational corporations are important to the u.s. economy. their research and export intensive. america wants strong multinationals but their competitiveness are not the same thing. multinationals create jobs but so do small businesses and foreign headquartered companies in the u.s. >> thank you. thank you to our panel. the chair recognizes mr. rangel for the opportunity to question. >> thank you. fill the absence of our ranking member. this panel -- if we were to exclude the credits, deductions,
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the exemptions as dr. sullivan referred to, we could have a dramatic and decrease in the corporate tax rate. everybody wants to cut the loophole for the other guy but not the incentive that he enjoys. in your dealing with the corporate world, do you find in a tremendous objection to starting with the ground zero in terms of the loopholes we have in the corporate system so that we can more easily, dramatically reduce the statutory rate for corporations? >> we should think of tax expenditures just like direct expenditures. we need to go through our tax expenditures with a fine tooth
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comb and look for abuse and inefficiency. as we say on the direct spending side, everything should be on the table. we would -- if you start picking through the details, you will see that most of the tax breaks in the code could be trimmed and made much more efficient. >> there is no big target out there. we could start talking about mortgage deductions and charitable contributions and local and state deductions. that is the big mountain we would have to climb in the corporate area. -- in the corporate area, what would be the biggest obstacle if we started off with no exemptions? >what would we have to overcome politically? >> we would have to eliminate the tax incentives for offshore job creation that is in transit in our tax rules.
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>> you do not think that our corporate leaders would not think they would be competitive and they can decide to remove the subsidy for encouraging investment abroad. >> it depends on who you are speaking to. some corporations are not -- do not have opportunity -- they do not have a tax rates -- a lot of tax rates available. they will be in favor of lowering the rates across the board. thank you. i yield back. >> thank you. >> i would like to thank the chairman for this hearing. there are a number of reasons for congress to seriously consider tax reform, but i would like to focus on the impact on jobs. you expressed concern about the
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expiring tax provisions and the uncertainty that create -- they create. this is a concern of mine as well. someone from the small business background -- as someone from the small business background, owners have to plan for the future when they make investment decisions. tax relief that lasts one or two years is not all that helpful. when you are planning an investment that would pay off five or 10 years down the road, could you elaborate further on how the uncertainty of temporary tax provisions of fact some of the businesses to which you provide services? >> absolutely. the tax code causes business to think tactically incentive for strategically. when provisions are temporary, when provisions are put in place
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to incentivize, oftentimes, they miss the mark because of their complexities. section 179 deduction, the amt fix that we wait for is the $5,000 ore between a $ $10,000 tax bill the next year. that could make the difference between a truck or a marketing initiative for a new employee. it has a direct impact to the temporary provisions and the last-minute uncertainty that we have been seeing increasingly over the last decade. it is important that businesses think strategically and not tactically. i had a situation where, for instance, we had a complicated provision that allowed people
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who bought a certain size truck were able to get a deduction. he bought a truck and it was too big,. . that truck became is where house. he used to pick up his paper project -- products and whether unloading? if yohe was thinking tactically and not strategically and the tax code does that continuously. >> thank you. >> thank you. mr. johnson is recognized. >> thank you. i would like to have your comments. i think we have that irs people in darn near every corporation now. what they do is sit there and
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keep you out of trouble theoretically and turn around and come back at you when you make a mistake, which they are there to prevent, theoretically. that is a waste of effort, and i think you probably know that the irs commissioner does not file his own taxes, in part because he believes the tax code is too complex. he says and i will quote him. tax codesed a prepared -- a tax preparer for years. it is convenient." i want to thank you for being here and ask to what extent has our corporate tax system adversely affected investment
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and job creation in america? >> the issue as we have said is the corporate tax rate of the u.s., the rate itself, to be the highest in the world as well as the worldwide system, disadvantages american corporations. in the case of the procter & gamble company, the company in the ceo of, most of our competition is international competition. on average, we pay about two percentage points higher corporate taxes than those international competitors. we face a higher tax rate if we repatriate money if we are overseas. that is a disincentive for any company to invest in the u.s. in our case because we're a global company, and because we cannot export our products, we cannot make a disposable diaper
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in pennsylvania and shipping to china and make any money. we do have an organization around the world and we have 150 plants around the world. for us, there is never a decision as a company that we invest either here or there. we have to invest everywhere. in order to sell to the 4 billion people we reach with our products. >> this that make you think that some of the corporate structure might move overseas just to get out from under our tax code? >> soleil could be possible. what we are attempting to do is provide a competitive system for this country so businesses stay here and force the with the have for years. >> thank you. mr. stark is recognized. mr. neil.
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>> this is complicated work and often times in this town it is reduced to charred on. i have been to the gillette plant in austin. it is remarkable story about domestic manufacturing. perhaps it can lead us in on how many blades will be added during the super bowl to that razor. it is a closely held secret. is it possible to focus on growth and keep the initiative revenue neutral? >> it is a great question. we believe it is best to take a look at getting the competitive system first. many of our cfo's had meetings with secretary geithner last week. revenue neutrality, we asked to take that off the table and what we want to do is something that
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is fiscally responsible. the way that the chairmen and the ranking member talked about it. if we work together, we can develop a competitive tax system for this country and do it in a fiscally responsible way. that is what we're setting out to do. >> one mr. rangel kicked out his proposal, if you recall, the critics jumped on it. it was a starting point in the conversation, that is all it was. an opportunity to shed some light on the needless complexity of the current code. let me use an example of how i think we got burned here. a few years back, the former chairman of the committee argued for a repatriation and right now, american companies are estimated to be sitting on more than $1 billion offshore. that money was repaid treated at 5.25% and there were no jobs
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created. in one instance, one company laid off 6000 people. in the next few weeks after the money was repaid treated. -- repatriated. if the money is returned, is there a guarantee that job creation would occur? >> we start with the premise that we have a competitive system and we set it up. that would lead to economic growth and lead to business growth and that would lead to job creation. as a -- at the business roundtable, we encourage members to not look for a one time repatriation but to work with us, getting the competitive rate going to the territorial system so we can grow the economy and create jobs in this country. if we are in a territorial system, the repatriation takes
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care of itself and we create jobs here. >> how many people wake up and use a gillette razor every morning? >> not enough. [laughter] >> the delmon time has expired. time haslemathe gentleman's expired. >> thank you. i will be very brief. i want to thank the panelists were coming but i want to take this time to encourage you to move forward with fundamental tax reform. i think that last year, president obama's commission undermined the debt commission you served on and some of the members of the committee served on. is the power of this committee and undermines our constitutional duties that we have on this committee.
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i hope that you will work with chairmen levin and the bipartisan -- in a bipartisan manner and we can move real tax reform was nation through this house this year. it will be great if we could do it in a bipartisan way. i yield back. >> thank you. thank you for coming. following along with what mr. neal was talking about, i am from columbus, ohio. during the last campaign season in columbus and cincinnati, we saw in regarding trade and taxes and regarding incentives. the governor's race which was all about jobs, we saw the current governor attacked for a vote or votes in congress that he voted for tax breaks to send jobs, american jobs overseas. most of that was targeted for american worldwide companies who were expanding into different
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markets. procter & gamble has a huge presence overseas. can you tell me what those tax breaks are then sent jobs overseas in your mind? >> wind gusts everywhere. our decisions are not here or there. our international business is 60% of our total sales. . yet we pay our taxes in the united states and we're one of the largest taxpayers in the united states. what's important, as we grow overseas, that creates jobs in the united states. 20% of our jobs in the united states depend upon our international business. 40% of our jobs in ohio depend upon our international business. so even though we may be the largest consumer goods company in china with 7,000 chinese employees, we've got a lot of people in columbus, ohio, and in cincinnati, ohio, who depend
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upon the strength of that business for their jobs. and we take that very, very seriously. >> is it fair to say, then, and others have said this to me, c.f.o.'s and tax accountants, that if we aren't proactive here in the united states with respect to tax policy and competitiveness, even though procter & gamble has been in ohio for over 100 years, you don't have to be headquartered in ohio or the united states, and other countries would love to have you, is that a fair statement? >> i think the chart i showed earlier that showed how statute -- statutory tax rates have gone down over time is suggestive of the fact countries around the world are competing for investment and they're competing for companies like ours to move outside of their home country. we've got to get into that game and we've got to be competitive and we've got to get people to invest here in the united
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states. >> and ultimately, the more diapers you sell in china or the more toothpaste you sell in europe is going to mean more jobs in ohio? >> yes, sir. >> thank you. >> more jobs in ohio. >> thank you. >> mr. neal is recognized. >> thank you, mr. chairman. i want to come back to a point that i was raising earlier. dr. sullivan, i was caught by the statement that dr. haas had made that cutting corporate tax rates increase tax revenues. sounds a lot to me like tax cuts pay for themselves. i think tax reform is a worthy pursuit and very sensitive to the international arguments that are being made here today, but in some measure didn't america get into trouble based upon that notion that tax cuts pay for themselves? >> certainly the idea that tax cuts pay for themselves is very attractive politically and it's
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very easy, for example, in the 1980's, that notion was very popular. and there are some dynamic aspects to the revenue estimates. but to think that tax cuts pay for themselves, except in very extraordinary circumstances is mostly wishful thinking. if you look back at the 1986 tax reform act, we lowered the rates and broadened the base and immediately after the 1986 act, there was a whole set of hearings in the senate finance about where did the corporate revenue go. there actually was less corporate revenue collected than expected. so i think there should be -- and also, if you follow the efforts of the joint committee and the treasury department, the official revenue estimators, i don't think they'd ever score it that way. >> part of the problem is the fact we're fighting two wars and we've cut taxes by $2.3
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trillion, and that's been a drain on the federal treasury, so in the course of this conversation, based upon what you've said, would you argue that tax cuts pay for themselves? >> no, certainly not -- no, i would not argue that corporate tax cuts pay for themselves. >> so that invites the next question as we go forward, how do we devise a system, as mr. mcdonald said, that perhaps can be revenue neutral and at the same time keep our companies competitive in a global economy? mr. mcdonald, do you want to weigh in on that as well. >> congressman neal, i think that is the challenge. and what we've said is let's prioritize getting into the competitive system and make sure we do it in a fiscally responsive way. i'm not exactly sure we'll be revenue neutral but let's do it in a fiscally responsible way. >> the last question, mr. olson, i appreciate your work. my time is running out quickly. but i do want to thank you for your parallel pursuit of my
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career, doing something about alternative minimum tax. >> thank you, sir. >> thank you, mr. chairman. >> thank you very much. mr. davis is recognized. >> thank you, mr. chairman. when we talk about international business and its reach and impact domestically, i'm harkened back to being deployed in the middle east in the 82nd airborne division, taking a walk under the desert in the moonlight, a wrapper blew up to my feet and it was an arabic labeled pampers pack edge and i began to understand the reach of our economy. g.e. has 1,230 employees who live across the river in our district and creates $130 million in wages. and your company purchased $160 million in goods from 260 suppliers in our region in kentucky. those are real numbers, those are real jobs that impact a lot of lives and a much broader
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supply chain that are multiplied in our community. at a time the country is struggling to regain its footing, we looked at job creators, small businesses, but also very much so large businesses like p and g as a means to put americans back to work. companies want to manufacture in the united states but are faced with a tax structure that encourages them to do elsewhere. you try and grow p and g and -- p and g, do you factor tax liability in your decisions and do you look more at the corporate marginal tax rate, your overall tax rate, and why? >> we certainly do look at tax rate, congressman davis, whenever we cite an operation anywhere in the world, we look at tax rate. as i said earlier, because we do sell to four billion people a day around the world, we really have to invest everywhere. and normally what happens is when we invest in the united
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states, it becomes a decision of where to put the operation in the united states. right now we're building a factory in utah, in boxelder, utah, a $300 million investment and will employ about 300 people. and we did that because it's a paper factory and we need to get our paper products more efficiently on the west coast. one of the things you see today going on, which is very different than it was in the 1980's, in the 1980's when i joined procter & gamble, the manufacturing expense of the product was more important than the logistics cost. but because of the cost of fuel today and for other reasons, the logistics costs are much higher than the manufacturing expect so it becomes much more difficult to produce a product in the united states, for example, particularly something as low value or as low cost as a diaper and ship it somewhere overseas. but what we have in cincinnati, what we have in kentucky, our
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high-paying, technical jobs, our research and development operations are there, our corporate headquarters is there and those really have a lot of very highly skilled people who are running our businesses around the world. >> do you have a sense just in closing, when you create a -- or open a new market or expand in an overseas market, what is the multiplier effect back home on jobs, generally? >> it can be anywhere from 6-10, depending on the supply chain. we work very hard to develop suppliers who can be global suppliers for us. in fact, today we're recognized as one of the top companies in the united states for developing minority owned suppliers. we'll take a minority owned supplier and we will work to develop them into a global supplier and today we do about $2 billion a year of business with minority owned suppliers in the united states. many of them located in kentucky or in ohio.
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>> thank you. >> thank you very much. mr. reichert is recollectologyized. -- is recognized. >> thank you, mr. chairman. i want to thank mr. camp for holding this hearing. and i think all of us in this room all have recognized for many years that the tax code is complicated. an understatement. but i think the testimony and the questions we've heard today, the testimony from mrs. olson saying it's a matchwork, it has no logical connections, it's confusion and it creates mistrust, mr. h oumbings dak is , it's onerous. those are words we have used over and over again on the panel. i hope we can come together in a bipartisan way to address some of these issues. yesterday we had the opportunity to meet, some of us did, with mr. ballmer from microsoft and he was saying the same things you were saying
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about the corporate structure. but i think that one of the things that really instruct me as he spoke to us yesterday was he urged us to think not just about a corporate tax rate but a competitive tax system's as the point that all of you have been making today. and of course one of our big concerns is, at least one of mine, is the small businesses and so my question is for mr. hudak. in what challenges does the amount of business income taxed at the individual level present for reforming the tax code in a way that helps american businesses grow and create jobs and compete? >> well, 70% of small businesses are pass-through companies and are taxed at the individual rate. so taxing anything beyond what
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a business owner is due for his work is really taxing capital formation and is hitting on his ability to invest, create jobs. certainly everybody should be subject to the full force of employment taxes for the value of their work. but beyond that, the cost of -- because of the corporate structure of the small business, when you tax beyond that, you're really hitting on the small business owner's ability to form capital, dream dreams, invest, innovate, and that's a very important point. >> i appreciate the answer and i yield back. thank you. >> mr. doggett is recognized. >> thank you, mr. chairman. . let it be remembered that congress began this debate on
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whether or not to reduce corporate tax revenues to pay for our national security on the same day that our committee leadership, like our president, is meeting with the chinese. because the first question that needs to be answered is how much more will america borrow from the chinese so some corporations can pay less? to say as a representative of the roundtable has said here, quote, revenue neutrality should be off the table may be consistent with the misguided holiday tax deal that added another trillion dollars almost to the national debt. but it is just another way of saying go borrow from the chinese. of course there may well be some merit to lowering the spratt -- statute -- statutory tax rate. but one should realize to the
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extent we lower the statutory rate, if all corporations were paying that would represent a tax increase for many of our multinationals. you noted general electric for one that would pay many times the effective rate if it paid the lower statutory rate being proposed. to call for a four territorial system is really just another way of saying we want a permanent repatization of a holiday like the one that didn't produce more jobs no americans last time. and it's a sure-fire way to encourage the continued export of more american jobs. i would ask you, dr. sullivan, when we talk about competitiveness, which all of us are for, shouldn't we be concerned about promoting a level playing field so that our smaller american corporations, the ones that are the real engine for economic growth, who don't have subsidy --
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subsidiaries and whose lobbies have not come up here to add hundreds if not thousands of pages to the tax regulations chairman camp showed at the beginning of this meeting and make it so complex so they have a level playing field and aren't at a disadvantage against their larger multinational competitors. >> thank you, mr. doggett. yes. most important thing we can do to improve the competitiveness of our tax system is make the tax system neutral across all types of companies. we need to look for pockets of over subsidization and what we find in certain areas of international tax law. we want a level playing field so job creation can be uniform across the economy, particularly when or deficit is at these incredible levels. >> thank you. mr. ross com --
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mr. roskam is recognized. an observation and a question. i'm from suburban chicago and sometimes am amazed at conversations i'll have with folks in the chicagoland area who are working for worldwide american companies who don't have a sense of clarity in that their very employment is dependent on the success of that company in overseas markets. so my statement is to you as the leadership of the business roundtable, i think that there's a lot of advocacy that is left on the table because businesses are somehow reluctant to engage in substantive philosophical conversations because they feel like they'll be perceived as donkeys and elephants and get in partisan issues, when you're really talking about a world view that says capital markets are good, competition is good, and i'm telling you, i am amazed at the level of
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conversation. so that's my observation. >> i agree with you, congressman. >> glad to hear. >> all of our members would agree, we have to do a better job. >> terrific. to amplify mr. tiberi's point, there has been the slogan, shipping jobs overseas is a bright and shiny bumper sticker which is very, very catchy and it seems like the more subtle or robust argument is a five paragraph economic essay which makes lots of sense but you've got to get through all five paragraphs. if you come get through all five paragraphs you go oh, makes sense, i get it. but many on both sides of the aisle have done a very bad job of communicating overseas markets, their relationship to american prosperity. and i would just encourage you, we've got a short time this morning but just encourage you and want to be a part of this conversation with you about how to communicate that more effectively to american citizens that understand and that need to understand
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prosperity overseas for u.s. companies means prosperity at home. >> absolutely, congressman. i wanted to clear up a potentially misrepresentation of a territorial tax system. a territorial tax system which i discussed earlier says we pay the same tax as a u.s. company in a foreign market that our competitors play pay, that our foreign-based competitors pay. it's not a tax break. we're not talking about a tax break. what we're talking about is paying the same as our foreign-based competition. our foreign-based competition doesn't have to pay tax, in cremental tax on the repatriotization of funds to their home market. that's the decision -- that's the difference. it's very simple. >> mr. gerlock is recognized. >> following up on that point, mr. mcdonald and also what mr. neal raised a few moments ago, from your perspective, given your domestic business activities as well as your
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foreign business activities, from the perspective what it would take from a tax code change to have you consider investing more in domestic job creation rather than foreign job creation, would that then be just a general reduction in the corporate rate itself, tax rate, or should there be more specific targeted language for the repatriated dollars we'd want to have you bring back to the united states and hopefully invest and not bring back, as you raised, mr. neal brought back but not have any jobs created. from your perspective, is a general tax rate reduction more fair to you in the job rate dough mountainwest ti education or saying if you brought the jobs back domestically, you'd get a different rate if you invested in r&d activities, something targeted you would get that tax benefit by doing that. what in your mind would be the better way from a tax code standpoint to encourage you,
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proctor and gamble to invest in the united states. >> our principle would be let's come up with a competitive system and that would be both the rate and moving from a worldwide to a territorial system. and what i would suggest is let's benchmark the other countries that we're competing with because we're also not just talking about american companies investing here, we're talking about chinese companies. i've met with chinese c.e.o.'s who say help me figure out how to invest in the united states. and they're struggling with our tax code as well. and that's part of president hu's visit and the reason i'll need to leave, too, is because we're trying to get chinese companies to invest here and if we can get to a competitive system like those other oecd countries that have improved their systems, then i'm sure we will succeed. >> thank you. >> thank you, chairman. mr. thompson is recognized. >> thank you, mr. chairman. and thank you for holding this hearing. i think it's an important discussion that we have to
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have. i think we need to simplify our tax code, all the tax codes. and i'd like to just ask the chairman for his help and cooperation this year on expanding that. i'm going to reintroduce my bill on estate tax reform. i think it's a sad day when family farms have to be sold in order to pay estate tax on those family farms and hopefully we'll be able to create a situation where if you inherit the family farm, you keep farming it, you'll be able to get a postponement in any estate tax so i hope you would expand it to that. i don't think the idea of a tax policy that encourages jobs in this country vis-a-vis overseas as a bumper sticker. we were passed out this sheet that shows the number of foreign jobs that were created between 1999-2008 versus
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domestic jobs that were lost. i think we need to have a tax code that in fact does encourage job growth here in the united states of america. and i understand that businesses consider all of their investments, foreign and domestic. and when they figure out their bottom line. but i think we have to pay particular attention to creating jobs here and then lastly, and kind of a statement but also a question, there's been a lot of talk about deficit neutrality when we work on reforming the tax code. i just don't think you can put that off the table or take care of it later on. i think this is a real, real important issue, not only because of the growing debt but because of the impact it's going to have on companies like procter & gamble. there was discussion just this last year of lowering the u.s. credit rate and because of our
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big deficit and our big debt. and i think that would impact u.s. competitiveness and u.s. corporate profits if that were to happen. so i don't think this is something we can ignore. i'd like to hear from both dr. sullivan and mr. mcdonald on that specific thing. how would that hurt u.s. companies, both here and abroad if our credit rating was lowered because we don't pay attention to the deficit of our tax reform? >> we need short answers. >> i think congressman thompson, we've seen the impact of that if you look what's going on in europe right now in places like greece and spain, places like ireland. so we know what will happen. it will be a higher interest rate and harder to get capital. the chart you referenced, while a good chart, we have to get into the detail of that because
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the businesses and the economies are growing much faster in places like asia and africa than they are in places like europe and the united states. so of course any time you have a global business, you'll be hiring more people in those geographies. i just think we need to get into the details and understand why those jobs were created abroad. >> the gentleman's time has expired. dr. sullivan, if you would answer briefly. >> thank you. 's thank you, mr. chairman. the deficit problems we face are unprecedented, they slowly weaken the foundations of our economy by sapping capital formation and we risk financial collapse, so these are very serious problems for our competitiveness. >> thank you. mr. hiller is recognized. >> thank you, mr. chairman, and i appreciate you having this hearing. i apologize i missed some of what was said here this morning because i was on the radio and the timing and discussion had specifically to do with our tax
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structure and what's going on here in washington, d.c. and what we're trying to do. and i told them it's great we're able to get the republicans and democrats together and actually start talking about some tax reform, long overdue. long overdue tax reform. and there isn't a small businessman or manufacturer in my district that isn't talking about how complicated this tax form and the taxes are. we have 14.4% unemployment in nevada and i'm confident the tax structure has something to do with that. and i'm happy to hear the administration talking about their desire and eagerness to look at tax reform. there are commissions out there. there are committees out there, leadership on both sides of the aisle as we're seeing here in this committee meeting but i think what is missing and important to concentrate on is it's the constituency out there, via small businesses and manufacturers that are talking about the need for fundamental change in our tax code so they
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can be competitive not only here in this country but abroad. we're hearing stories after stories. i don't know if this was brought up, microsoft, talking about having to borrow in this country because they can't bring money back from overseas. they have billions overseas but can't bring it back to america to create jobs. their only choice is to borrow because that's what's best for their shareholders. those kind of stories, those kind of issues that we have right now are fundamentally flawed with the process we have. so, mr. chairman, i certainly do appreciate this hearing. i saw a couple charts talking about denation here in this country. i know gas prices and food prices are going up but you get past those two obstacles you look at deflation of other goods and services. we're looking at falling wage growth here in this country and i believe it has a lot to do with the codes we have, the tax
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codes here in this country. and quickly, i don't know how much time i have left but you talked about a simpler code, mrs. olson, have we gotten to the point that our code has run its course, our current tax code has run its course and is there alternatives out there to the current code as opposed to just making it simpler? >> as i said in my testimony, i really think you need to, on the individual side, really just put everything on the table, and then go through it, not from a cost benefit but say is this a policy we should run through the internal revenue code? first, is it a policy we want. second, is it a policy we should run through the internal revenue code him if it's a policy you want, if you answer the second question, you have to think what is the burden you're putting on individual taxpayers to have to document this thing, to tie their businesses up into knots in order to meet the requirements for it. and then what are you making
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the i.r.s. do? how are they going to treat taxpayers whether they're businesses or individuals. right now you've just heard a morning of testimony about the difficulties that taxpayers are facing. >> all right. thank you. >> dr. price is recognized. >> thank you, mr. chairman. i want to congratulate you on attaining the gavel for this committee. i want to graduate you and commend you for your passion for fundamental tax reform which is so necessary. i frankly am struck by the unanimity of the panel, especially as it relates to corporate tax rate and the need to decrease the corporate tax rate. i think it's imperative we not punish the job creators. i think as the charts have shown, a high corporate tax rate does in fact punish job creators because we live in a global economy. i was struck, dr. hassett, by comments about any decrease in corporate taxes, not increasing revenue necessarily to the federal government. i wonder if you'd comment about
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what many of us believe a decrease in corporate tax rates actually increases revenue to the federal government. >> thank you very much, mr. price, for the question, and mr. neal, i welcome the response to respond to the earlier exchange. the thing is that there is a well-developed literature, including a recent brookings paper, a paper by a german economist who is definitely not republican or democrat that shows that really a lot of the lessons of mr. sullivan's testimony are apparent in the data, that if you're a high tax place, it's relatively easy for companies to move their prove toits a low tax place. that's why you saw the lower average rates in mr. sullivan's testimony for some companies is that they've within very adept at locating activity in lower tax places. if we reduce the tax here in the u.s., then they have less of an incentive to locate their profits and activity abroad and then it's just an empirical
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question, is the change in incentive enough so you can reduce the rate and get more revenue? it's almost never the case with taxes at least in the near term you reduce the rate you get more revenue. but in the corporate tax space there are academic papers that find that result. i would say a rough reading of the literature is the revenue maximizing tax rate and the corporate tax space is maybe around 30%. so if we're above that, it means we're losing revenue, in part because it's easier to transfer price to lower tax jurisdictions. that's why i -- and i put a reference in my testimony that -- inside that reference. >> a quick comment as well on something else that's always been an area of disagreement and that is the repate reation of dollar -- repatriotation of dollars. they think that would be a bad thing to come back. the converse of that if you leave the money over there it's better for the united states. isn't it better for american
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workers in our american economy to in some way allow for the re patriotation of resources? >> we need to allow firms to put their money where it will be best put to use regardless of taxes and repatriotation wouldn't be relevant and i think it should be a permanent measure. >> thank you. mr. larson is recognized. >> thank you. i want to thank the chairman and thank him for this opportunity. i have three quick questions for the panelists. one for mrs. olson. if you would expound upon -- in your testimony you said if tax compliance were an industry it would be one of the largest in the united states, consume 6.0 billion hours and requires the equivalent of more than three million full-time workers. that's pretty amazing statistic. i'd like you to expand upon that, noting that it seems to me that our current tax system
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is broken. it was antiquated in the last century, we're already a decade into this century and still haven't made much gain in terms of straightening it out. second question to any of the panelists, with regard to transaction taxes, noted on "60 minutes" more than $60 million takes place in transactions over the counter that are unregulated. in terms of looking at revenue that takes place in the atmosphere or done mathematically, it seems to me like this is an opportunity that's worth looking at as opposed to taxing one's labor. so i would be interested in answers to those questions. ms. olson? >> i think what those numbers point out, and i must note those numbers include business taxes as well as individual. but i urge this committee to not forget the individual taxpayers, the 132 million individual taxpayers who are your constituents who are
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suffering under the current burden this code. and as we talk about businesses making decisions where to place their profits or activities, that very ability to make those decisions leads to a great distrust of your constituents, of the internal revenue code and of government and leads to the sense they are being discriminated against by their code and by their government because they do not have those kinds of breaks and those are the things we were trying to get across in our testimony. >> over-the-counter transaction taxes, dr. sullivan, dr. hassett? >> i do think it's important we re-evaluate the tax code in light of the financial crisis to remove the elements of the code that contributed to it, for example the deductibility of debt. however, a transactions tax has been tried in many countries around the world and it's very hard to administer, so i think
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its initial appeal wears off the more you look at it. >> i concur with dr. sullivan. >> so there's no way to regulate over-the-counter trade in a way that it produces $60 trillion of revenue? >> unless we went to a multilateral -- where all countries agreed to do this, the trading activity, because it's so mobile, which -- to other countries. sweden tried this several years ago and other countries have tried it, and they had to repeal it because it just -- they couldn't administer it effectively. >> thank you. the gentleman's time has expired. mr. buchanan is recognized. >> yeah, thank you, mr. chairman. someone mentioned earlier, it's interesting we're having a tax debate and the president of china is in town at the same time. 's for someone that's been in business himself for 35 years, i can tell you it's not florida
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i represent, sarasota and florida, against alabama, mississippi competing for business, the fact of the matter that we're competing around the world and one of our biggest competitors today, by far, the 8 un00-pound gorilla is china. i've done business overseas as well. i think about this and the fact we haven't touched the tax code in a material way since 1986, i think it's appropriate we have these discussions today because i personally believe what makes america special and great is free enterprise. so let me jump over to mr. mcdonald quickly, to you, when you talk in terms of the business roundtable, the fact of the matter is, and i was a c corporation and moved to an s and now i have a bunch of l.l.c.'s my family runs. but the bottom line is half the tax revenue i understand is through pass-through entities. so when you look at lowering the tax rate or discussion of tax rate for corporations, what are you going to do about all those employers who have 500
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employees, 50 employees that are l.l.c.'s, i hope that will be taken in consideration. you can't do one without the other or else you end up with a competitive advantage over someone else that happens to be a large family run business. >> i agree with you, congressman. and you're right, it's about half. >> what would you suggest? when you're looking and discussing around the business round stable, hopefully are you guys talking about c-corps.are you looking at the l.l.c.'s and sub-s' and partnerships and everything else? >> as suggested earlier a and my comments were about creating a competitive code for everyone, not just our members which happens to be the larger corporations but we realize 50% or so are the smaller companies and think the code has to be competitive for all of them. >> thank you. mr. hudak, let me ask you
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quickly, when you look in terms everybody talks jobs, the fact of the matter, 70% of the jobs created in america are small, medium-sized businesses, in the state of florida, tallahassee, 99% of all companies registered in tallahassee, whether they're l.l.c.'s or partnerships are small, medium-sized businesses. what are one or two things, because you work with small businesses, that we should consider to help small businesses in terms of cost and complexity, what are the two biggest things we could do in terms of having impact? >> simplification on all levels of the tax code. for instance, sole appropriator, to take the home office deduction, it's a reduction that refers to the code 13 times. something you shouldn't do is like the 1099 provision. right now as a tax practitioner, i feel more like a paper pusher, i don't know who will collect all the w-9's
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to collect that information but we don't have the staff to do it. >> thank you. i yield back. >> mr. schock is recognized. >> thank you, mr. chairman and thank you for hosting this very important first hearing. mr. mcdonald, has your group studied approximate how much money among your member companies and companies at large could be repate reated if congress -- repatriotated if congress does so at either zee -- or some amount? >> i don't have that number now but i can get back with for you that number. we've chosen as a group to prioritize the discussion to getting to a competitive discussion and a system that's territorial instead of worldwide that would allow for the repatriotization. >> and since that's your focus, what's the rate you decided would be necessary here in the united states that would not incentivize the sourcing of
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multinational from a foreign source? >> right. we haven't chosen a single rate. again, i think the exercise we all need to do together to be fiscally responsible is to look at those eocd countries we're competing with and see what effective rate we would need in order to compete effectively with them but we haven't chosen a number yet. we look forward to working with you to do that. >> yeah. i think this is a very important action that we can take sooner rather than later and doesn't have to be a part of the larger discussion of tax code simplification. i find it hard to believe, some of my colleagues think if we repatriot this money no jobs will be created. we met with the c.o.e. of a largely publicly traded company they mentioned just 400 that would have to be repatrioted and think it would be in the
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trillions of dollars with all the companies and no jobs would be create fed that money didn't come into our economy sounds a bit crazy. dr. sullivan, in your estimation, your opinion, which seems to vary a little bit from the rest of our panel, do you have a number in find in what you think the corporate rate in america needs to be to descent vise foreign sourcing when the customer is of equal distance? >> thank you for the question. obviously we want the rate as low as possible. let's talk about what realistically can happen. if we just do revenue neutral -- based on treasury estimates, if we do revenue neutral corporate tax reform and get rid of most of the major incentives, research, production credit, accelerated depreciation, we go full throttle, we'd be lucky to get to 30% if we want to be revenue neutral. if we want to go below that we need to find other revenue sources. >> are you making the
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assumption that the level of investment would remain static regardless what the rate would be? >> no, no i'm not. i think investment would increase as a result of the lower rate. >> you stated earlier obviously there's some risk-reward based on that, do you have a number in mind? >> number four. >> what the rate should be? >> as low as possible. >> 0%? the gentleman's time has expired. mr. blumenauer is recognized. >> thank you, mr. chairman. let me begin by expressing as a number of our colleagues have, an appreciation for your starting our deliberations dealing with the tax code. i think you've taken the right direction and i will say the right tone. i have appreciated that and look forward to working with you on it, because this is clearly a unique opportunity. part of the opportunity is simply the value that is wasted
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that you've documented, ms. olson, part of our difficulty in having a productive conversation about the tax code is that it is so hopelessly complex that everybody's right, every generalization, every complaint, right, left, center, they're right. they can find an example. i am a tax junkie, as a revenue committee chair and a state legislator ions ago. i went to law school and took tax classes because i wanted to learn more about the job. i could not do my taxes today under torture with weeks. and i'm not warren buffett. it is a scandal, and it's approaching a crisis point.
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the cost of compliance, the disconnection from tax provisions with what they were incomplined to do, the alternative minimum tax, the tax on millionaires who evaded taxes has morphed into a tax on the near rich who pay their taxes and no billionaire hedge fund is ever touched by it. i hope, mr. chairman, that we'll be able to move forward with this with dispatch because i think it is a symbol of whether or not government itself can respond to something that is universally agreed, is in need of fixing, but whether we can follow that path. in that connection i guess i have one question i would offer to ms. olson, mr. mcdonald, can we do this successfully if we
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disconnect the individual tax provisions from business, or do they need to be done concurrently? >> well, i think that although the business and the individual issue -- they present different issues and different questions, but i do not think you can do them separately. in part because so many businesses are pass-through entities and you still have to deal with the individual side. >> mr. mcdonald? >> yes, sir. i would agree with that as well. many of those pass-through entities are suppliers of ours and they're very critical to our business all over the world. so has to be done together. >> great. thank you. >> in an effort to continue everyone's opportunity, mr. rangel and i had a discussion and we're now going to move to two minutes per member. with that, mr. lee is recognized. >> thank you, mr. chairman. in shortness of time, i will just make a brief statement. but really what i heard here
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today and as a former businessman, the -- what we hear with regards to the tax code does not bring a lot of confidence for businesses to want to invest in this country with all things being equal. with regards to labor, the cost of building a facility when you have this differential in tax code, it is mind-boggling, and ms. olson talked about 6.1 billion hours with regards to compliance costs. the only area of this economy where i know we spent more time is debating health care. so that is a frightening number because that is a cost that is an impediment on job growth in this country. some of the recent statistics, "wall street journal" just a few weeks ago, literally $2 trillion in liquid assets are sitting on the sidelines primarily because of the fault we do not have enough certainty. our tax code over the last decade literally 10 years ago,
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very few pieces of tax legislation that would be considered temporary, less than 12-18 months. today that number has grown exponentially. thereby, again, making decisions on long-term investment and capital. we want to attract the other multinationals to the united states, so we said the fortune 500, we looked on the position of u.s. corporations. there are many other countries around the world, we want those jobs here, unless we do something about our tax code and make it priority, we won't see the significant job growth all americans frankly deserve to have. i appreciate you being here today and look forward to moving forward on the subject. >> all right. thank you. ms. jenkins is recognized. >> thank you, mr. chairman, and thank you for holding the hearing. i think i join my colleagues in having a passion for this particular topic, in particular i have a keen interest, i spent my real life many years practicing public accounting in
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the tax side of things, and i recall the last time congress discussed tax simplification was a wonderful time in my career because it was job security, and so every time congress begins a discussion about job security, i think every c.p.a. firm in the tax department holds a party that day. and so with that in mind, i know we don't have enough time, i could spend hours with you folks, but does anybody want to just try to prioritize for us if you could change three things, what they might be? keeping in mind, i guess, priority would be job creation and economic growth, if anybody wants to tee that up. and i'd just love to know your two-second thoughts on flat tax/fair tax? >> i certainly would prioritize, congresswoman jenkins, getting to a
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competitive tax system, because as you saw, we're uncompetitive with our foreign competition today. i think that the main thing is the corporate rate just has to come down to make us more competitive so that's all three of my things. >> ms. jenkins, i'd add to that and say this tax reform has to take into account our true deficit problems which i don't think this congress has fully come to grips with yet. thank you. >> all right. thank you. thank you very much. mr. kind is recognized. >> thank you, mr. chairman. i want to thank you for holding this hearing which i hope will be the beginning of many hearings we have in this session. and one recommendation, mr. chairman, is perhaps getting the co-chairs of the fiscal commission upon which you and others served, testified with some of the recommendations as it affected the tax code and deficit reduction. but ms. olson, let me first start with you and thank you for the work the national taxpayer advocate group does and your recommendations you
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submit to us from time to time and i hope all of us do heed your admonition we don't lose sight of the tax implications, and i think there's a sense, a fundamental unfairness for average working families, small business owners who feel that unless they've got their team of accountants, team of tax lawyers that they're not able to take advantage of the great complexity and the loopholes that do exist. and i think this does affect the compliance issue of tax filing and underreporting and the cheating and the tax gap that has grown just given the complexity of this code. so as we move forward, i hope that we can marry the issues of corporate reduction along with the individual rate, which i think is going to be imperative. my guess is that most of the folks in the audience today are more focused on the corporate rate and what's going to happen there and not the individual rate. back to what mr. hudak raised with us in your written testimony, most of the businesses in this company are pass-through entities and not c
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corpses but s, sole appropriators and partnerships and why getting to the rate will be important for the job growth which occurs in most of our districts which are small business oriented instead of the multinational businesses and implication. i also agree with the rest of your testimony that as we get into the corporate tax rate it should be done through the prism of international competitiveness issues in light of the changes that have happened with the tax code in other countries to make us as competitive as we need to be. it's one of the reason with, back to you, mr. hudak, i had an s-corp bill to simplify and make easier the compliance and get in the built-in gains we have to work on. working with you and others we'll have a chance to get into that. thank you. >> thank you. >> mr. paulsen is recognized. >> thank you. i know when the conversation of tax reform is brought uping it's around simplicity and the fairness arguments we heard today but i'm pleased a lot of
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the conversation today is about economic growth and competitiveness, without a doubt. i'm wondering, maybe mr. mcdonald first, if you can expand and talk a little bit about debt versus equity and the concept of how we encourage businesses and individuals to borrow and finance their operations through debt rather than through asset creation or capital formation. and why that is important, why we should be focused on that. >> i understand that steve ballmer was here yesterday talking about the amount of money microsoft has overseas, and obviously with that money overseas and the inability to repatriot it without paying more tax, again, i want to again underscore the fact that we all pay tax in overseas markets. the difference with the united states and a very few countries that i showed on the chart was you have to pay an additional tax when you repatriot the money to your home country. there are few countries in the world that do that, the united states is one, which causes
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them to have to borrow money here. at the procter & gamble company, we pay almost half of our profits and dividends and most of our shareholders are employees, are retirees, are people in this room and aren't institutions. less than our shareholders are institutions. we have to have that cash in order to pay those dividends and it becomes a burden to create that cash when you have to pay a higher tax rate on that money coming back. you're in a sense taxing the shareholder, taxing the common person. >> thank you, mr. chairman. >> thank you. mr.berg is recognized. >> thank you, mr. chairman. this is my first hearing. i can't think of a better topic. i am just tickled pink hearing all the people that are presented and, you know, an issue like this is so critical. i'm a small businessman, it's good to hear my colleagues, both republicans and democrats have the same frustration with their taxes as i do. so again, i don't want to take
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any more time here but thank you for being here and thank the chairman for holding this committee. >> thank you. mr. pascrell is recognized. >> thank you, mr. chairman. thank you for putting this together on this critical issue. ms. olson, it's always an honor and pleasure to listen to you because you make sense. you are a true advocate. and i'm glad you brought up the subject of the average taxpayer because frequently, as has happened frequently, that person's forgotten. so while we are maybe trying to prioritize the cutting of corporate taxes, which i think is important, we need to address, and it will be addressed, you cannot -- and i want to know if you disagree with me. you cannot address, for instance, that issue in a vacuum without talking about what the trials and tribulations are of folks who
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are making $25,000, $35,000. do you agree or disagree with me? >> i absolutely agree. >> do you think, then, systemic change is doable? >> yes. i think it is entirely possible. and it will take great courage and dedication, and i think you have to educate the public -- we're talking about educating the public about businesses but we need to educate the public to what they get through benefits through the code and what will happen if we get rid of some of those benefits but lower rates. >> and educating the public is critical. >> absolutely. >> and ourselves. >> absolutely. >> take, for instance, and i don't make this a centerpiece, do you think most americans know and most of the great folks on the panel with you, that federal, state and local taxes, income taxes, i'm sorry, consumed 9.2% of all personal
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income in 2009, which is the lowest rate since 1951? >> probably. >> yes or no? >> no. >> do you think that's important -- >> yes. >> in looking at this thing in context? >> absolutely. >> do we know what we're talking about on this side of the aisle? >> i'm not going to -- >> on this side of the barrier, about taxes? >> do you know what -- >> yeah. >> absolutely. >> thank you. >> you're welcome. >> the gentleman's time has expired. ms. black is recognized. >> thank you, mr. chairman. and likewise, as has already been said, this is certainly a very important topic. i know in consideration of the time, that maybe we won't be able to answer these two questions i have and perhaps more in writing, i'm not sure you'll have an immediate answer to them. but ms. olson, for you, in looking at individuals, i'm curious, if we were to simplify the system, because you testified that people don't trust and they try to evade, has there been any study done
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to show if there were a more simplified system we would perhaps collect more revenue because of so much evasion? and that would be one question i'd have. >> it depends on how you structure the system. we know people have withholding and the income is reported to the i.r.s. that 99% of the taxes, their income is reported so the taxes are paid on that income. when you don't have that kind of reporting and you have lots of opportunity to take deductions and claim special benefits, then that increases the opportunity to, you know, avoid and underreport. and so if you structure the system right, you can minimize noncompliance. the more complexity you have in the system, the more opportunity you have to have noncompliance. thank you. >> mr. chairman, my understanding is that we are able to submit questions that then can be answered separately , am i -- >> yes. members are able to submit questions for the record. and if they do, i hope our
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panel will respond promptly. >> ok. thank you. thank you. i want to thank you, mr. chairman. i think this is a wonderful hearing and i'm glad it's just the beginning of a process. i'd like to submit for the record my opening statement which i wasn't able to make. i'm very glad, ms. olson, that you talked about -- that we need to do the individual reforms with the corporate reforms, in my family when i was growing up, my father was a waiter in one of the las vegas hotels, the way we did our taxes is we waited for my ankle naty to come from new york once a year to do the taxes for us. and i don't think that's a good process for any american family, and i'm sure least of all my own. we just passed a massive tax package last month, and in it it had all the tax extenders, every one of them i supported. and i found that i had friends
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in the race car track world and the taxi companies that use propane gas. they kind of camped out in my office and explained how important all of these tax credits and tax breaks were to their business and how much they created jobs. now, let me ask you something, if we actually lower the tax rates for corporations and companies throughout the united states, is that going to be enough or are they going to be willing to give up all these individual tax credits and breaks that are in our tax code, or are they still going to be coming to me explaining how they still can't make ends meet, they're going to go under and they need to have additional tax breaks, because that's going to kill us when it comes to our deficit. there has to be revenue coming in somehow to support this country. >> can i make a point about that? i think that goes to the need for education so the people understand that at least on
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average maybe their bill won't increase, but on the other hand, i think it's very important that we will never get rid of everything. so when you decide to put something in the internal revenue code, you have to make sure that you-all have the information to be able to evaluate. >> and the witnesses can submit their answers in writing. >> and let me ask -- >> your time has expired. >> about repatization. >> mr. mcdermott would like to question so he is recognized. >> thank you, mr. chairman. i ask unanimous consent to enter into the record an article by david k. johnston called "johnston's take, reasons, rules and riots, our societal panic." >> without objection. >> it talks about the history of taxation. and that we establish progressive taxation along the greek lines because we realize the people at the top got most of the benefit so they ought to pay most of the taxes. and the republicans when they took over the congress last week passed a rule which was a
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-- got no ripple in the press, nobody even mentions it, they said if we cut taxes, we don't have to replace the money. it's not a loss to the budget. now, i find it very hard when we've been operating under pay-go rules to think we'll do any kind of a reduction in corporate taxation and not replace the money unless this is simply a hearing on how do we cut spending? how do we cut investment in education, in higher education, in infrastructure. i'd like to hear from you, mr. sullivan, do you -- do i understand correctly what that rule means? >> if i understand what it means is that tax cuts do not have to be paid for, which i think is -- again, in this fiscal environment is absolutely outrageous and it's dangerous to the long term health of this economy. >> so it's saying we're really

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