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tv   Key Capitol Hill Hearings  CSPAN  April 10, 2015 12:00pm-2:01pm EDT

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recovery, is not robust enough. your party cap it down and you blamed it on president obama -- host: we got the idea. guest: president obama has been president for the last six years. his party controlled congress for the first part of his first term and did what they wanted. republicans to block much of anything between 2008 and 2010. so i think we just have a very different perspective about the state of the economy and what it is going to take to get it going. i am persuaded that republican principles, limited government, free enterprise, and a strong america will be better for this country than what we have had host: over the last six years. host: -- caller: yes, i do agree with the previous caller in many regards. number one what he said about obama inheriting a mess, a truly
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monumental mess. bush tax cuts and the war. and when obama got in office, he had this to the economy by creating -- he had to pick up the loss of revenue from the loss of millions of jobs. i think about ronald reagan, i think about the current republican governors, i think at all things. i think about the idea that income inequality grew three under republican governors. that top 1% has gained all the wealth. in the bottom 99% of americans have suffered tremendous laws -- loss under these policies that were put upon us by reagan and thatcher. also, the fact that republicans denied reality of climate change. it is detrimental to the public. then there is the war. and the poor is also a major
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concern of mine. but the most important thing is when you do your homework, i find out the same thing to be true. one of those things that is true is the fact that when you look at what -- what part produces the most jobs, i find that democratic presidents produce more jobs than republican president. host: we have a lot on the table there and a little bit of time. guest: i think you will find that most americans have not been happy with the state-of-the-art economy under the obama administration. that is one of the reasons why president obama has really been able to get a majority of americans saying they approve of his job performance. i think in 2016, americans are going to be ready for a different approach and a different path. from what the democrats have offered over the last eight years. and i am hopeful that the republican nominee in 2016 will paint a compelling picture of a
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better and more hopeful future. host: it is something to talk about, mr. ayres, in your book. the issue that henry brought up or our last caller, about income inequality. is that an issue that resonates with voters? guest: it is not income inequality in and of itself, peter. it is the lack of economic tune -- opportunity for all. if we can get more growth that filters down to all people in this country, that is what they are most concerned about. americans are not particularly concerned about unequal economic outcomes, as long as the game is fair and everybody is moving up. the problem recently has been that we have had too few people moving up. we haven't had growth in median incomes in the middle class. that is really the issue, rather than inequality, per se. i talk in my book about the
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importance of opportunity versus addressing inequality. the majority of americans really want greater economic opportunity, rather than have the government try to enforce some kind of limit on how much equality or inequality we have at the end of the competition. host: are focus groups valuable? guest: focus groups are very valuable, as long as you understand what they do, peter -- >> defining the taxpayers, the real challenge for tax reform. i am peter russo and i am very pleased to host this event. in january, the chairman initiated another effort to get a tax deal done. this is no deal -- easy task eared the past years have seen a bewildering number of tax proposals. none of which crossed the finish. many economists, like those at
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cato, prefer something more radical or something that replaces the tax code itself. for decades now, there has been a constant hunt to find new things. have already seen gas taxes cigarette taxes, and for a very short time, soda taxes. there is an area left unturned in a hunt for new sources. of course, high taxes and increased complexity are only the symptom of a larger problem the inability of elected officials of both parties to control spending. and successful resistance has been largely unsuccessful. for the most part, this year's budget appears to be an achievement. but that is only half the coin.
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in addition to controlling spending, it is essential to get the economy going at a rate comparable to that of previous recoveries. so many of our current woes would be alleviated by robust economic growth. i shouldn't have to sell the benefits of this, but it would be easy to imagine millions of people returning to the workforce and taking themselves off footsteps. however, it does not appear that this particular mix of elected republicans and democrats are about to come to any agreement. so that provides an opportunity for us to discuss opinions of our own -- ideas of our own. what is income? what is currently taxed? and what are the effects? to my left is daniel mitchell, a senior fellow at cato who specializes in fiscal policy, particularly tax reform.
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prior to joining cato, mitchell was a senior fellow at the heritage foundation. he has been published in numerous outlets including the "wall street journal" and the "new york times." he earned a phd in economics from george mason university. david burton is a senior fellow at the heritage how -- foundation focusing on regulatory and administrative law. burton was general counsel at the national small business association for two years before joining heritage in 2013. he previously was chief financial officer and general counsel at a startup, a conservative alternative to aarp. he received his doctorate degree from the university of maryland school of law. finally, jason fichtner is a
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research fellow at the mercatus center. his research focuses on social security, federal tax policy, federal budget policy, to increase savings and investments. his work has been featured in the "washington post," "the wall street journal," and "the new york times." he earned his ba from the university of michigan, ann arbor. each will speak in turn for 10 to 12 minutes, after which, we will open it up to questions and answers. please welcome dan mitchell. [applause] 3 thank you, peter -- daniel mitchell: thank you, peter. tax reform oftentimes -- people think it is all about the tax rate. should you have a system with high tax rate? or should you have a tax system based on one low rate.
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today's panel is really looking at another big part of tax reform. and that is understanding the definition of taxable income and in particular, looking at two competing theories of how to tax capital income. i have a couple of slides that i think will help make this issue more understandable about defining the tax base. as i said, the issue of tax rate is important. for those of us who want certain types of tax reform, we think it is very important to have a low marginal tax rate on productive behavior. why? because presumably work, saving, investment, risk taking, those are good things in our society. and when you have a high tax rate on those things, you are going to discourage people from being productive. i have an image i found on the internet. i think this really boils down to what the essence of economics is. i agree with politicians when
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they say, we need higher taxes on tobacco because that will get people to smoke less. i don't agree that we should actually try to control people's private lives, but i agree with them on the underlying economic analysis. when you tax something more, you get less of it. as our little dinosaur is pondering, if higher taxes on cigarettes will lead to less smoking, what higher taxes on work lead to less work? or for that matter higher taxes on saving and investment. so the issue of tax rate is very, very important. but our topic today is not a challenge for tax reform, what i think is the real challenge for tax reform. because of you look at some of the proposals that are out there -- and you can go all the way back to the 1980's -- so much of what really happens when we are talking and debating about tax reform in washington is the fundamental discussion over whether or not we are taxing all
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income whether we are taxing it zero times, one time, or more than one time. and as the bottom bullet point suggests, i think one of the major issues we need to wrestle with is how do you deal with the tax burden on income that is saved and invested. there, of course, are -- and david and jason will both be talking about some of the specifics in this discussion, but i'm trying to focus on the underlying theory. until we can get our minds around what the real debate is about. so let's look at what i think is really -- this is really a fight over. there are two competing tax bases out there. in the big picture fight, there are two. -- which actually is, basically undermines our current system. and it is certainly the tax base that the joint committee and
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others use when they analyzed the tax system. and it basically assumes that there should be double taxation. that government should not only tax income, but also changes in net worth. you contrast that to the consumption base. the consumption base, at its core, is simply whether or not you should treat income equally, whether it is consumed today or consumed in the future. and what is consumption in the future? it is just another way of saying saving and investment. why is that important? it is important because right now, we don't have that neutrality between current and future consumption. why not? because we impose all this double taxation, triple taxation on income that is saved and invested. a consumption-based tax it doesn't mean a tax collective cash register. yes, the national sales tax is a
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consumption-based tax. but so is the flat tax. so is the x pack -- packed -- pact that peter referred to. you are either taxing people when they first early income, or you are taxing people when they consumed income. but if you get rid of double taxation, you have to, by definition, a consumption-based tax. and when you look at, say, the flat tax versus the national sales tax, they are basically different sides of the same coin. they both have the consumption base. the only difference is the collection point. the flat tax taxes your income one time when you first earn it. and something like a national sales tax taxes your income at one low rate when you spend it. but the bottom bullet point is the important thing. neither of them have double taxation, which is of course pervasive in the current system.
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you won't be able to read this chart, but it shows the different between a consumption-based tax and the other taxpayer the right side is basically the tax base, sort of what our current tax base is. the top green box is your income. the first green -- blue box is your pay tax on income. then the second green box is year after tax income. you can either consume it today or consume it in the future. if you consume it today, that is the left side. the government pretty much leaves you alone. but what if you consume that income in the future? that is the right side. and between the capital gains tax, the corporate income tax, the double tax on dividends and the death tax, it is possible for that single dollar of income to be taxed over and over and over again. which means, of course, there is not that neutrality between current consumption and future consumption.
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now, why is that a bad idea? well it is a bad idea because even -- every economic theory agrees that capital formation is a key for long-run growth and higher living standards. why do workers get paid? they get paid because they produce. what determines how much they produce? a lot of it that has on the quality and the quantity of the machinery, the capital that they work with. so when you impose extra layers of tax on saving and investing that are already imposed on immediate consumption, you are creating a tax bias against capital and, therefore reducing tax capital in the country and ultimately hurting workers because they will not earn as much because they will not be as productive. it makes no sense to impose a tax bias on productive behavior, especially productive behavior in the form of saving and
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investing, since every economic theory -- i mean, the socialists and the marxist, they have crazy ideas. they think the government should do the saving and investing. but at least they agree that capital formation is key to run -- long-term growth and higher living standards. i think this image sums up the difference. if you want to harvest apples, what is the smart way to do it? do you pick the apples off a tree? or do you chop down a tree? if you are taxing capital, you are chopping down the tree. or at least you are sawing off the branches. in a smart, intelligent system where you are trying to maximize income and prosperity for an economy in the long run, you want to pick the apples but leave the branches and leave the tree so that you will get another crop of apples next year and the year after that and the year after that. whereas the mindset of the other taxpayers is, well, not only do
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we want to tax the apples, but let's at least saw off some of the branches. why? i am not sure other than, here is the political challenge. we have it for two reasons. first, class warfare. who has a lot of saving and investing? rich people, by definition. who has a lot of capital? if we decide that we don't like rich people for political reasons, or we decide they are the easiest target -- well, you oppose -- impose taxes on capital. a lot of times, rich people also have a lot of capital that might not be easily accessible if you are simply imposing a high personal income tax rate. that is one reason why we have these destructive policies to the other reason -- policies. the other reason i think is just ignorant.
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how many of us have seen warren buffett make a silly claim that his secretary pays a higher tax rate than he does? he wants us to forget that any capital income he is receiving has already been taxed at the corporate level. not to mention the fact that the income was taxed before he first invested it in some income producing assets. so, if you simply focus on one tax in isolation and you ignore all the other taxes in the stream that are affecting that same dollar of income -- and a lot of people i generally don't think it is malice or class warfare -- they just don't understand the difference. well, except if the only reason you got a capital gain is, which by the way, because he took income and invested it, but wider assets go up in value? they go up because of expectation in the marketplace
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that they will generate more income in the future. so whether you are doing it forward-looking or backwards looking, the capital gains tax is a form of double taxation. i will go ahead and stop at this point. we want people to understand that double taxation exists. there is no actual ambiguity about it. if we had somebody appear from a left-wing think tank, they would agree. there is a consumption-based system. they would simply argue that the other system is justified for reasons of revenue collection or redistribution or something like that. they will agree with the notion that there is double taxation. so, with that, i will go ahead and stop and turn the floor over to david burton. david burton: thank you, dan. i have been asked to talk about two things.
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investment and the international tax system. so, let me start with investment. let me ask you a question, or post something for you to think about. if you buy a one million-dollar machine or a $100,000 machine to make widgets, and then your 100 thousand dollar machine in the first year earns $200,000, hasn't made any money? most people would answer that question, no. so, this is the basic core idea underlining the fact that capital expenses should be deductible like other business expenses. you see that in section 179, but it should be applicable to all investments. let me try to explain some reasons why. dan mentioned that investment is key to productivity and increasing real wages. we see that all over the world,
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many, many different cases. but in the united states, the last time we did anything significant in terms of moving -- was in 1981. under president reagan. -- which was a substantial move towards -- because businesses could deduct their capital expenses more rapidly. as a result of that, you saw an investment boom that was all most unequaled in our history. that lay the foundation for a very extended. of strong economic growth, and one of the most robust, dynamic recoveries that outlasted the reagan administration. so this is a real-world effect. it can have a tremendous positive impact on the american people. in more formal terms, when you delay the deduction of capital expenses, potentially as long as
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39 years under the current system, you raise the cost of capital. a business has to earn more money pretax in order to justify the investment. and as a result, you get less investment. you get less productivity growth. less incorporation of new technologies. and lower real wages than you would otherwise get. if you have a flat tax type environment, or the current tax system, you mold towards expensing the sales tax. similarly by not taxing as consumption the purchase of a machine, but either system gets you to that result. a couple other things. there is a secondary consideration. the current system plays favorites. it picks winners and losers. so by giving some types of investment relatively accelerated deductions, and
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expensing others as long as 39 years, it extorts the capital. do you want to broaden the capital stock? make it deeper, have more investment? than the other question is where does that float tackle our current -- that flow? in any of the fundamental tax reform plans, flat tax, anything that moves towards expensing solves that problem, as well. let me just briefly touch on one other question. we hear a lot about lowering the rates and broadening the base. and that is good. but consumption tax is broader than the current tax system. but in the business sector, we got rid of most of the true junk in 1986 in the 1986 tax reform act. if you get rid of things that are not treating capital investment correctly, there is only enough base brothers in the corporate side to drop the race -- rate about two points, maybe
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three. so the problem we face today is that we are an outlier. we have an levels of business taxation compared to virtually every other industrialized country. we have the highest edge into a corporate rate. we have among the very worst treatment of investments. and we also are the only major industrialized country that taxes its businesses on income earned everywhere in the world instead of just income earned in the united states. so when you combine those three rings, and a number of -- things , and a number of other things, you basically realize that we have a serious problem. we are making the united states one of the least attractive places from a tax perspective. and we see that. our businesses are no longer as competitive as they once were. we need to repair that damage. so, with that, let me move to the international. the u.s. taxes u.s. corporations
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on income earned throughout the world. now, we also provide a credit for foreign taxes paid, but that credit is limited to the u.s. tax rate times the foreign sourced income. it is really not that simple because the foreign source income is divided up into a whole series of batches. based on the type of income and what country was burned in. then you have a complex series of rules allocating income for expenses between the united states and abroad for purposes of determining whether the income was earned within the u.s. or abroad, which is necessary for purposes of the foreign tax credit and other reasons. but the short of it is we tax us-based businesses on the incomes throughout the world. one way to avoid that is to merge with a foreign corporation. if you merge with or corporation, the new combined entity is only going to be
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subject from u.s. tax cut its u.s. income. as long as we do that, we are basically driving corporate headquarters outside of the united states. so when you see anheuser-busch merging with in bath -- inbev, it is really simple to decide that the new corporate headquarters will be in europe. and asked the people of st. louis how that is working out for them. when chrysler and mercedes merged, the new corporate headquarters was in germany. not in the united states. and so on down the line. the only way we are really going to prevent this tremendous push to move corporate headquarters from the united states to abroad and, in effect, control the businesses abroad is to move to a territorial system that taxes u.s. businesses on u.s. sourced income. and having a corporate headquarters has a number of positive affect. obviously, you have the higher
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paid corporate functions in the united states instead of abroad. but it is also proven that u.s. businesses tend to sell more goods made in the u.s. to their foreign pop -- hub than if the business is run offshore. somewhat counterintuitively, it is better for u.s. exports to have a territorial system. i guess the last point i would like to make on the international stuff is that u.s. multinationals have become fairly good at gaming the current system. it doesn't raise that much money. it almost gets into the category of a fiction -- and that is the cousin are able to manipulate the pricing, the pricing of intangibles such as trademarks royalties, and other copyrights, patents, so on and so forth. and lastly interest. whether the borrow abroad or
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borrow in the united states. so that they can, basically increase their foreign tax credit the end what is theoretically the right answer. and drive down the effective tax rate on foreign sourced income. so moving to incorrect system -- a territorial system that no longer encourages these inversions will probably not cost any money. so we have a system that is basically having all these adverse economic effects on the competitiveness of us-based businesses, it isn't raising any, or very little, money. and if you addressed -- address the intangible questions, you can do that and not lose any money. in terms of how to do that, the former chairman of the ways and means committee had a number of good proposals that would solve the issue. so these are somewhat difficult
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problems, but they are solvable problems and would put the united states back into the mainstream. and that is what we need to do. we need to move our business tax system to a more competitive tax system. we need to reduce our corporate and passed through rates. we need to move towards expensing of capital expenses, rather than binding the system to it. and we need to move towards a territorial and border adjusted tax system. with that, i will turn it over to jason. jason fichtner: thanks, david. good afternoon, guys. there is an old joke that if you lined up all the economists and and, the one thing you would not get is a conclusion. but we are actually up here in a lot of agreement on tax policy. on what is wrong with taxes, the tax system, corporate income tax, what needs to be done with it. and it puts me in an odd spot. my two colleagues has -- have
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said almost everything. i am going to cut up at some point that they touched upon and we emphasize the importance of it. we are also now getting into the start of the presidential sort of election season, if you will. and with that, candidates come out with their various tax plans, and there is misinformation on what taxes does and doesn't do. it might be a good time to review some of the important issues about tax rates and bases and margins. so, with that, i want to highlight what both david and dan said about how economists generally prefer a broader tax base with lower marginal rates. this is very important because it really is the tax rates that drive the decision at the margin. it is at the margin where we decide whether or not to work that extra hour. whether or not it is a -- it is
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too expensive to invest the extra dollar. you will hear some discussion about corporate tax and whether or not we have the highest tax rate. we do. some will say our effective tax rate is lower, but the effective tax rates -- because we have so many exemptions -- that this incentivizes some behaviors. that creates inequities and vice in the tax code. it is that the effective tax rate that drives the decision, it is the margin. so we really have to focus on the margin and lower the tax rate. we also have a question that comes to both individual and corporate about what we mean about a tax expenditure? we just got rid of all the corporate and individual tax expenditures, we could raise $1.3 trillion. well tax expenditures aren't all loopholes. certain preferences in the tax
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code are actually like government spending. but others actually aren't earned. so again, to give you an example. the exclusion of employer provided exclusions for health care. they are in a text on it, we are not taxed on the benefits. the preferential treatment of capital gains is actually designed to off-site -- offset some of the double taxation that both of my colleagues talked about. hence, it is not a tax expenditure. certain administrations have called it a tax expenditure. others like president bush have not. if you look at the documents for the budget, and a list a tax expenditure budget, it changes from administration to administration. so it is not consistent.
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david mentioned the tax reform act of 1986 and how a lot of the junk we have was taken out. it is important to note that that was true. that tax reform is considered the most successful tax reform in american history, and also the worst. we have today more exemptions in the tax code before we passed tr 1986. before we start running the base and lowering the rate, we still have the first problem. that base starts getting there were and there were again. we might ask a have a chance to do corporate tax reform keep -- reform, even under this president. he has exit called lowering the corporate tax rate to 20%. but that might be an area for compromise. i am not sure, but it could be. but keep in mind, the united dates' -- -- united states'
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corporate tax code imputes both potential economic growth and potential tax revenue. again, my colleagues mention this. many developed companies are both reducing the corporate tax rate and restructuring the corporate income tax code to make that simpler. i will note that some states in the united states have also been lowering their corporate tax rates and offering competitive tax packages to attract businesses and investment. foreign investors are doing that, as well as a -- as well. this drives competitive profit-seeking corporations to minimize the tax exposure and deferred income overseas to lower tax countries. and even for some, to reincorporate outside the u.s.. even worse, some companies take a debt in order to pay dividends to shareholders in order to maintain income overseas. and last, our country will fall
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further behind if we do not lower our rates. again, u.s. corporations must turn their accounting departments into profit maximizing centers. companies now need complex financial engineering tactics to minimize revenue losses using tax code preferences. this is why we are so interested in broadening the base and lowering the tax rate. because through various parts they can allow -- exhaustive economic research clearly proves the smoke -- this most sick affect. the more you tax, the less you get. it also makes it so that incentives matter. success will reform will lower the tax rate on both. the u.s. tax code -- tax rates that treat similar taxes unequally can distort consumer
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and investor decisions, which damages the economy. the current treatment is an o-matic of these problems. something david mention. shifting to full expenses, allowing businesses to write off all expenses would offer in even ground for capital investments. it would also greatly simplify the tax code, increase investments, and decreased the ability of politically interested companies to gain tax benefits. one thing we should not do, we shouldn't raise taxes. that will make matters worse. the u.s. corporate tax is among the highest in the industrialized world. this takes his -- there jobs money, and companies with them. the former chair of president obama's advisers and david romer suggest that a tax increase of 1% of gdp reduces output by nearly 3%. further, according to research,
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both macro economics and micro perspectives suggest that higher taxes slower's economic growth. again, we are looking at the idea that if we lower rates in order to get rid of some of these loopholes, we ask a could raise revenue. david mentioned that, as well. also important to keep in mind, especially corporate, that corporate taxes are a part -- . are, in part, -- r come in part, a tax on labor. it now assumes that 75% of the tax is paid by capital. this is actually a change. a working paper pointed out at one point that slightly more than 70% of the burden actually falls on labor. we are trying to increase taxes on labor -- companies, that really passes it onto the consumers. one of the keys to successful --
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a successful reform is to move away from us betting system that depends upon an easily manipulated tax system. i know my time is running short and i want to leave some time for questions, but i want to point out something that dan mentioned. that was about warren buffett and how he pays a higher tax rate -- or he pays a lower tax rate than his secretary. that became also a political issue. but it points out the importance of the income tax and who bears it. to put it straight, the corporate tax rate is 35%. if the business has one dollar of profit that it wants to distribute to its shareholders, it is not first tax 35% on that one dollar. that leaves 65% to go to you, the shareholder. but we now have a capital gains tax rate of 20%. if you are in a higher income
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bracket, it is 23.8%. that means your effective tax rate is over 50% if you are in the highest tax bracket. so we are already taxing capital at 50%. that is the reason why we have a lower tax -- capital gains rate. we might want to discuss whether we should ask a get rid of the corporate income tax altogether, and just start taxing income all the came. we would have no corporate income tax at all. that would definitely increase savings and investment, and also make the tax code more efficient. with that, i will to and it over to questions. thanks, guys. peter russo: i wanted to entertain as many questions as possible. let's take your questions in the form of a question, and not another way. >> all this just assumes that
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taxing -- taxing consumption is completely a good thing. and that it, obviously, -- a consumption tax, that is, then taxing the income. i don't dispute that. but there is a bias in all of these i think that you are biased at all these consumption taxes -- that you are biasing against people consuming. so you sort of switch the bias in favor of, you know, now we are not biased against investment, but we are essentially being biased against consumption. my suggestion, which i made to danny couple of times, is that you should tax the undeveloped -- undervalued tax of the land, in which i don't think there is a bias one way or the other. my question to you is, why do i never hear about this tax? it is so superior and it would
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be politically much easier to get because there are going to be lots of people who don't want consumption -- bias against consumption. they are going to go crazy if you ever try to get a consumption tax. daniel mitchell: i think i have heard of a few small town string that, but i have never looked into it. a consumption tax is simply an income tax with income properly defined. i.e. no double taxation. that is why i said that a flat tax has the same tax base as a national sales tax. they differ only in the sense that you don't have these extra layers of tax on income that is saved and invested. so you're getting rid of a bias, but then you have neutrality. of course, i think it was adam smith who reminded us the
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purpose of our production is ultimately consumption. that is why we work, that is why we live. but to me, that just brings us back -- and i get to the point jason was making -- about we should have a smaller tax burden, not a higher tax burden. whether you are learning -- looking at it from the perspective of earned income, or percentage to consume your tax rate is very high -- if you are driving a bigger wedge between your pretax income and are post tax consumption, that is what is doing the damage. you want to make sure that the bachelor -- marginal tax rate on productive behavior, however you want to phrase it, you want that tax burden to be as low as possible. jason fichtner: let me just -- david burton: let me just mention one quick thing. if -- you want to send -- $100 spend $100 in walmart tomorrow -- if you want to spent $100 in
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walmart tomorrow, how much is earned? the income tax is, in effect, a consumption tax. it just also taxes savings and investments again. it is not as if consumption is somehow off the hook in income tax. jason fichtner: it is very important that people generally understand -- david burton: it is important that people understand it. their definition is consumption is change in net worth. according to think about is how much do you have to earn pretax to spend money today -- and if we have a 50% tax, the tax is consumption. then if it is a -- if you want
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to consume in the future, they also tax that consumption plus whatever you earn by deferring it. that is really different. -- difference. it is a tax treatment of future consumption. jason fichtner: there are two sort of principles that economists try to apply when thinking about what the fair tax code -- and of course, fairness is in the eye of the beholder. but one concept is the ability to pay and who has the ability to pay a tax. the reason the consumption tax is important is the fact that you are going out and putting dollars way -- down -- suggest that you have the ability to pay. where other measures, that looks at capital gains and would tax
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unrealized capital gains, you might have the ability to pay it, but you don't have the cash flow. so one of the things to look at about property taxes, it is not just the ability to pay that is important, but also is there a tax flow that allow someone to have the ability to pay on a transaction point. keep that in mind. >> i am happy to hear about the tax reform concept, and also simplifications, but when you look at tax reform, you have to look at expenditures. when you look at issues like subsidizing companies and corporations, and it looks like -- and i was told by a government official that more men are getting the subsidies. and actually spending a lot of taxpayer money to get women and minorities to get the subsidies. i asked, what if we got rid of the subsidies? would it be fair? and he said, well, it would be fairer than the way this now. don't you think that a simple vacation process would be easier
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? because women who start their own businesses use credit cards. there is a process and they don't have the time. do you think simplifying the tax reform and also, -- cutting back is a safer way to go? jason fichtner: simplification is hugely important. what investments to make? with we basically decided to make ethanol a tax advantage why not start in ethanol business? we should definitely try to find ways that broaden the base by getting rid of some of these loopholes that allow us to lower the rate. it is important to point out that not all tax expenditures are loopholes. again, the lower the rate is,
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the less valuable these exclusions are in the first place. daniel mitchell: i agree that they hold out the promise of making life sim -- simpler, but instead of the flat line tax plan, he has a two line. what did you make last year? second line, send it in. all joking aside, one of the advantages of the comprehensive tax of a plan -- if you get rid of the depletion schedules that david was talking about and replace them with expensing, that is vastly simpler. if you get rid of the capital gains tax, that is vastly simpler. a lot of the good things that should be done to eliminate double taxation and move more towards a cash flow-based tax system also get rid of some of the most complicated provisions in the tax code.
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tax system. it gets rid of all the mess that david talked about in terms of worldwide taxation. one thing about worldwide taxation, a lot of you have probably seen stories about companies keeping $2 trillion offshore. why are they doing that? they are doing that because we have a policy called deferral that enables companies to at least delay -- to get rid of -- guess what? companies no longer have an incentive to hold money overseas. so the complications that we have are a function of the bad policy and a bad policy that we have gives us the weaker economic performance and the reduce competitiveness. there is sort of a win, win, win situation when you do the policy. and i am sure that is not
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advocating for the repeal of deferral. he is advocating it to a territorial tax code because president obama would like to change some of the deferral rules. david burton: one last thought. the list is endless. it disproportionately and adversely affect small firms and startup firms. and large firms can grapple with the complexity, but also, you know calculating and the cost of making calculations does not -- they are disproportionately large for small firms. so that is a huge burden on entrepreneurial leadership tried to launch the businesses or growth of businesses. >> this has been a terrific
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conference. and, of course, the title is the tax place. that is, obviously, a critical issue. but i have also heard at least three of you on this panel talk about the impact of the corporate tax rate, which people know is the highest in the world. and i have even heard a discussion about simple vacation and complexity -- simplification and complexity. the base, the rate, and complexities/simple vacation. -- simplification. on the off chance that there is an impressionable staffer on the ways and means committee here, what might the four of you -- and i would really like to get all four of your opinions on this -- like him or her, the staffer, that is to take back to chairman ryan and say chief
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this is what we might accomplish in this congress? >> we will go left to right. jason fichtner: the first thing to take back is the lesson that only people pay taxes. corporations are fictional entities so the burden falls on people. seconds then, the ideal rate. in our use the word rate for corporate taxation, is zero. i think that what you can get done is the narrative that we are not competitive with our trading partners. and that to be competitive we should be at or at least equal to which meets the rich be no higher than 25%. that is still higher than i -- which means the rate should be no higher than 25%. that is still higher than i would like. that seems to be a narrative i would sell. daniel mitchell: i am going to
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disagree and want small sense with what jason said. we want income to be taxed only one time. therefore, we shouldn't have both the income tax and the tax on capital gains. you could move the corporate tax to zero. i think, administratively, it is much simpler just to tax the income once at the corporate level and not have the double taxation and individuals. there is one corporate taxpayer. that is a lot easier than checking cap potentially hundreds of thousands of shareholders. it is just simply a question of administration. in terms of your question, jim let me cite an example. ireland is one of the few other countries besides the united states that has a worldwide tax system. but nobody really complains about it because ireland's corporate tax rate is only 12.5%. i forget whether david or jason made this point. if your marginal tax rates get low enough, that some of these
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distortions go longer have a big value. let's imagine we are going back to 1980 and the jimmy carter tax rate of 70% was still there. that tax deduction was rate valuable. by the time it got to the end of the reagan years and that rate was 28%, yes what? -- guess what? where you going to hire as many lawyers and accountants and so on and so forth to benefit $.20? no, you had much greater incentive to earn income and be productive without worrying about tax consequences. so the rate is critically important. the whole purpose of the session today is also to focus on the fact that we should fix the base. but the reality, they are both important. make sure you have the base defined correctly because we do want to penalize the saving and
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investing that every economic theory agrees is so critical. david burton: let me briefly just bring us back to what the point of tax reform -- the point of tax reform is primary to grow the economy. to increase the welfare of the american people. the potential gains from fundamental tax of or are on the order of 50% of gpd. which would make the country feel like it is a noble that it has experienced -- is in a boom that it hasn't experienced since the 1980's. most of that gain, most of that potential gain, comes from an improvement in business taxation , the taxation of capital. so reducing marginal tax rates on entities and oversee corporations this critical, but getting the tax rate rate is also critical. and to the extent we are dropping rates by getting rid of
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unwanted preferences like wind energy credits or the income housing credits or the employer-provided health insurance for -- take your pick -- it is progrowth. it improves the welfare of the american people on the whole. to the extent you are dropping tax rate by further extending the period over which you have to conduct -- conduct your investment, whether it is progrowth or not is a very iffy thing. it probably isn't. so you lose all the growth of fact by broadening the base by raising the cost of capital. that is one of the problems that -- that the proposal had is. a large portion of the revenue that was raised in that proposal was raised -- buy allowances, or doing things like making advertising --
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if you do things like that, you are not doing something that is meaningfully progrowth. we have to buck up and i think understand that we are now way out of the mainstream in the industrialized world. we tax our businesses to heavily. we need a business tax cut. and we are not going to be able to drop the rates and become competitive, get to that 25% average, by the way, just an average, by broadening the business tax base because there is not enough deadwood or inappropriate tax references in the corporate code to do it. >> i have a question about whether or not you know good estimates of how much you get from improving the efficiency allocation of capital, as opposed to changes in the overall cost of capital?
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david burton: i think the answer to that is not very. most of the simulations looking at tax reform tend to simply look at the capital deepening a fact. i.e. enlarging the capital stock. there is no doubt that you get gains from a more efficient allocation of capital. the sick price three would lead you to that result. as far as i am aware, the optimal tax analysis doesn't look at that issue, either. it just looks at the relatively simple, you know, size of the capital stock. and i think it would be good if we could get people to focus on the efficiency gained from a more efficient allocation of capital because it is certainly
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there. the simplest way to get there and accomplish both results is expensing. alternatively, you have to come up with some economic depreciation concept, but that is, i think, conceptually difficult to impossible because to know the actual decline in the value of the asset, you have robust secondary markets, and we don't. so i don't think you can ever solve that problem in terms of getting it right except by expensing. daniel mitchell: let me add one thing to that. every distortion credit that is put in the tax code is put in there to encourage people to make decisions that they wouldn't otherwise make a good they are not economically sensible. two bright people into making economically senseless decisions, there has to be an economic cost to that. what is the cost of all these
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ethanol and wind credits? ok, how are those resources otherwise used in a way that are presumably better for the economy? it would be good if somebody went out and measured that. david burton: let me add one more thing to show how weak that literature is. as far as i know, the only people that have actually looked at this, other than i think some folks within the treasury that have them published is the study in the early 1980's. if you really look at that study, they looked for clean at the length, but in terms of the pattern -- they looked economically at the length, but in terms of the pattern -- there is no empirical information. and, therefore, the proponents of an income tax have an invaluable theoretical problem.
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they are always get along because there is no relation. they have to guess. the whole tax system is based on a guess. jason fichtner: i would just add one more thing because the discussion is very would rather not force the joint task force on the hill to do something gymnastic. what i think i do know is we see the corporate tax base in some ways a road because of the uncompetitive nature of the tax system. one thing i would also have staffers take back to the members, even if it costs money, we should still do it because it would be better in the long run. we should stop focusing on aesthetic revenue loss, and this none -- on the static revenue loss, and get this done.
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peter: so, this week senator paul announced his candidacy. we saw senator cruz, and it looks like this weekend hillary clinton will announce. that is what i heard on television. what do we know about their tax plans, if anything? david: well, senators lee and rubio will be speaking to the heritage foundation on their plan, and we released a paper analyzing it. they are very positive on the business side, and i think people should look at what it does because it is one of the more construct plans. then, i mean, you may want to talk more about this, but as far as i know, senator cruz and senator paul's plans are very,
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30,000-feet-type flat tax plans without much detail. so, i do not believe secretary of state clinton has given any details about what she would do on tax. jason: i would add out of senator leahy and senator rubio their plan is one of the best, and they are not trying to hamstring themselves levying revenue-neutral. they are going for more efficient tax codes and growth. i think that is important. peter: one last one. >> you were talking earlier about what the goals of tax reform being complexity. having worked on tax reform" protects specifically, i can tell you that any -- reform
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specifically, i can tell you any reform will be complex. it is so complex now, that even if they cut it in half, he would still be incredibly complex. tax people forget that if you talk to the average person about simple text concepts -- tax concepts their eyes will spend over. they cannot understand any of that. even other attorneys that i talked to who are not tax attorneys can not have a meaningful discussion about taxes. my point is, this idea of getting rid of complexity without getting rid of the income tax, to me, whatever you want to call it -- income tax as a consumption tax -- if you start off with income, that determination is --an obstruction, and a very broad abstraction. daniel: you definitely highlighted a big obstacle, but
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i disagree with you because if you look at the hong kong flat tax, because it does not have taxation, because it is a territorial system, the hong kong flat tax that has been around for 60 years is very durable. it is remarkably simple. is it as simple as the postcard? no. other tax systems around the world -- you find some of them where it is literally a page back and forth. if you are dealing with the tax base correctly, as i said before, that automatically eliminates so much of the top location. if you are in business and you have to figure out depreciation -- simply putting on your form these are the wages paid, my raw material cost, the investment expenditures, what is left is taxable income, you can have a dramatically simple system. i do not think the definition of income is collocated if you have a consumption base. if you mix it with 102 years of
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congressional micromanagement then you get to this is in the you correctly described, which is a big, giant mess. it can be solved. whether it will be -- we will be up here when we are 110 giving the same presentations. david: let me mention that the sources of the new flat tax really a cash flow tax, and the sales tax -- one is no depreciable lives. you just deduct expenses. the inventory. it is a mess. particularly if you take the tax law seriously. before you know it, you have employed an army of accountants. that goes away because you deduct the winning curve. then, international -- the income sourcing, allocation firms, deferral rules, separate
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baskets, all goes away, but under a sales tax, financial transactions are also irrelevant to the tax base. you no longer have to take into account capital gains who your bank accounts, or interest expenses because it addresses neither deductible nor taxable. all the major sources of complexity in the income tax fall away with any of these plans because they are really consumption taxes. >> regulate [indiscernible] david: yes, in a flat tax you want. in a sales-tax it would be irrelevant. it also does not matter so much anymore. peter: and with that our hour has come to a close. thank you for coming. one little housekeeping thing. on friday, april 17, at cato institute, we will have another event called should the gao
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cover the federal reserve. do i come everybody. thank you to our speakers. -- thank you, everybody. thank you to our speakers. [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]
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text the issue of taxes will be on the house calendar this week as they take up several bills dealing with irs oversight and repealing the estate tax. you can watch this program later in our schedule or online at c-span.org. speaking of the house, congress, all this week we have been introducing you to the newest members of the 114th congress. join us tonight at 9:00 p.m. eastern for a conversation with montana republican freshman ryan zinke, montana's only represented. after that, we look at the legacy of former first lady laura bush. here is a preview.
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>> they are partners in everything, and she is an anchor to him. he is usually supportive of everything that she does. in fact, i will just say one comment here about even going to afghanistan. you heard about the trip that we planned, which is 10 years this month. when laura bush interviewed me and she said i want to go to afghanistan, that was the first thing she said, and my first question to her was does the president know, and she said yes. i knew what that meant. if he knew, that was all the support in the world that we needed. he supported her to go. he sent her all over the world as an advocate, a representative of him -- the pump -- closest personal envoy you could possibly send all over the world is your spouse, and she was so effective. they were partners in everything. personal lives obviously, and
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devoted to their family. also, in this important work of the country. she was there in every single part of it. >> and on c-span2 tonight, more book tv in prime time. a pair of our in-depth programs featuring walter isaacson and ronald kessler. on c-span3, more american history tv. a number of our recent stops in our cities tour, including places like austin texas wheeling, west virginia, and more. that begins at 8:30 -- 8:00 p.m. >> were you a fan of the first lady's series? it is now a book, looking inside the personal life of every first lady in american history, based on original interviews with more than 50 preeminent historians and biographers. the details of all 45 first lady is that they these women who there were, their lives
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ambitions, and unique ownerships with presidential spouses. the book "first lady" provides lively stories of these fascinating woman who survived the scrutiny of the white house sometimes at great personal cost while supporting their families and famous husbands, and even changed history. c-span "first lady's" is an illuminating, inspiring read and is now available in hard copy or as an e-book. >> now more from our conversations with new members of congress. democrat norma torres of california is currently the highest ranking american official of guatemalan dissent. she was sent to the u.s. at the age of five. she worked for a time as a police dispatcher. this interview, from her office on capitol hill, is about 25 minutes.
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>> representative norma torres from california's 36th congressional district. as a freshman member of congress, what is the difference serving here and your time in the state senate? representatives torres: caller: -- it is quiet a difference between the two chambers. -- i should say the three chambers. the biggest difference i think is our inability to work across the aisle. in california, we certainly did a better job with that.
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[video clip] -- represented torres i think : members have to commit to working together. we have to commit personal time getting to know each other traveling in each other's districts and learning about the issues that are important and respecting those issues. steve: i would suspect another big difference is the amount of money it takes to run for congress and to get reelected. what has seven like for you? -- what has that been like for you? representative torres: it is incredibly hard to get here. the money involved in politics makes it almost impossible for someone like me, and average mom, a 911 dispatcher by trade it's incredible that i made it this far, but here i am. steve: why did you decide to seek elected office? norma: i answered a call as a dispatcher of an 11-year-old -- representative torres i : answered a call as a dispatcher of an 11-year-old girl who died at the hands of her uncle.
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it really pushed me into a political world that i frankly did not know existed. i was the average mom, raising my children, all i had to do was go to work, come home, and pay my bills. over that issue, it was a very difficult time for the city of los angeles and the state of california. we were facing proposition 187 at the time, and i was asking for changes to help the primarily spanish-speaking community in los angeles to hire more bilinguals and to be more responsive to their needs. steve: let me go back to that story because you have talked about it let me take it one step further. what happened? you get the call. she is with her uncle good she is 11 years old. tell us this all story. representatives torres: it was a very hot summer night. there were only three dispatchers that spoke spanish at that time. and this person called for help. the call started very early with her uncle taking his live-in girlfriend into -- he put a gun to her head and dragged her next-door with -- where the little girl lived. it took 20 minutes for me to answer her call. by the time i answered it, all i
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could hear was screaming. later i learned that their horrific sounds i was hearing was her head being bashed against the wall. she was shot five times point-blank. the person who shot her fled. our officers were there within 20 seconds of me advising them that there was a crime in progress. i really felt that we could have done more. so i did more. i began a process of trying to get my department to be more sensitive, to recruit bilingual dispatchers, not only in spanish, but in other languages. then i had to go before the public safety committee in los angeles.
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many times i have to testify against my own department. that is not easy to do. steve: did they apprehend the suspect? representative torres: they did. eventually he turned himself in. he served i believe for years or six years in jail for that crime. i spent many months waiting to go to trial. i was her only witness. it was the call that captured the shooting, the screams, her last words, which i really did not know what they were until i went to the process of translating the tape for the officers. her last words were, uncle please don't kill me.
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in many ways it changed my entire life. steve: what does that tell you about our criminal justice system that he only served six years? rep. torres: it was very disappointing, disappointing his family was well off and they were able to convince the jury that he was intoxicated and therefore he did not know what he was doing. it was a crime of passion. steve: what was the girl's name? did you talk to her family over the years? rep. torres: i have not. i have not. steve: that was the starting point for your political career? rep. torres: that was my starting point. i often say that i hate politics, not really. it's the work that i have to do to do what i love to do, and
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that is serve my community. it has been my life. steve: you were born in guatemala. you came to the united states when? rep. torres: i came to the united states in 1970. i was sent here by my parents to live with my father's oldest brother. he lived in whittier california. his youngest brother was here, but was serving in the u.s. navy at the time. my mother was very, very ill. guatemala was a war torn country at that time. there was a lot of violence. my father felt that they could not take care of me because they were so busy with my mother's illness. he thought it was better for me to come to the u.s. i was told i was coming on vacation, but in many ways i think i over his country a great deal. i have had a wonderful life
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here. steve: did you speak any english? rep. torres: i did not. back then, we did not have in recess a second language program. i went to school in a classroom with other kids. i learned english fairly quickly because as a child you don't have work, a lot of things on your mind other than that i want to be able to play with other kids and communicate with them. steve: what do you remember about your mom? she has since passed away. rep. torres: i don't remember a great deal. i think that is unfortunate. steve: and your dad? rep. torres: my dad is remarried and lives very close to where i live. i moved back in with him within eight years of me leaving guatemala. i ended up back with my dad in my teenage years. that's difficult for a girl not having her mom.
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for any child. steve: brothers, sisters cousins? rep. torres: i have two older sisters, seven years apart. i was the baby. they still treat me like that. steve: why? rep. torres: i think they have always tried to protect me. they have always thought since i was the youngest that they needed to protect me. steve: your first elected office was city council. rep. torres: yes iran for city council in -- i ran city council in the year 2000. i was a member of, ask me. at that time president mcintyre challenged the membership to run for elected office. he said, i don't care what you run for, county commissioner whatever it is, put your name on the ballot and run.
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america needs a voice at the table. america needs to be at the negotiating table. i took that to heart. after being through what i went through in the city of los angeles, i felt that if they can do it, why can't i? i want to help my community. i love my community. i have a lot to offer. i won by 75 votes. i broke my ankle five weeks before the election and rented a wheelchair and kept on going. i did fetid an incumbent who had been in office for 11 years -- i defeated an incumbent who had been in office for 11 years. he had switched parties. very conservative, republican, and i defeated him with his own constituency. steve: how did you break your ankle? rep. torres: walking on a broken
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sidewalk. i continued to walk for a block. i have no idea that it was broken could when i got home, my sister was there, and she's a nurse. as soon as i took off my tennis shoes, my foot blue up -- blew up. she took me to the hospital. steve: would you ever have imagined that today you would in the house of representatives? rep. torres: absolutely not. absolutely not. back then, people said that she only cares about certain things heard there was an issue with the l.a. county fair that i had taken on. they were proposing an expansion project. they had done and eir, and there were 67 issues that needed to be negotiate and i was involved in
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all of that. gaining the respect of my community and the trust of my community was really important but i never thought that i would ever make it this far. steve: let me ask you about union membership rate it is on the client across the country. why is that? from your past experiences, is there a way that you could change that curve? rep. torres: i think that in many ways labor has gotten away from doing what we used to do really good before. that is our outreach effort. i think we need to do more of that, engaging the membership at their level. on things that are important to them, like childcare. prior to meet being elected to city council, i was very involved in state and national lobbying efforts. because of childcare. i worked the graveyard shift because i could not afford to hire a babysitter.
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those were the things that many of my colleagues -- their children went to the local library. that was childcare for them. single moms, i'm grateful that i'm not a single mom. still, two income family raising three sons was very hard. in a neighborhood like a pamona, i have to be there for my kids to make sure that they are on the right path. steve: you have three boys names? ages? rep. torres: robert is 28. christopher is 25. my baby matthew is 22. steve: what do they think of their mom being in congress? rep. torres: they think it is an
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incredible challenge for them. we have a very competitive household. their biggest complaint is how are we going to be a road to compete with mom. what do i have to do to be better than congress? i think they are now realizing that. it is not a title that makes me who i am. it's my involvement in my community. steve: is there a budding politician in your family? rep. torres: maybe. my oldest son, robert, ran for local office, but did not win. he stayed very well-connected and continue to get involved with community issues. steve: how did you and your husband meet? rep. torres: we met at a baptism. some friends were having a baptism party, a barbecue, backyard barbecue, and that's how we met. i always said that i did not
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really like him, but i fell in love with him. he is my best friend. eventually we started dating and we have been married this year 29 years. steve: what about your routine here in washington? how often you get home? what is your schedule like? rep. torres: i go home every week. i have to. otherwise i would not see my family. my husband thinks that his mission in life is to keep me grounded. if he was to come to washington, d.c., he said it would be harder for me to get california. travel is hard. it's hard because unfortunately there are no direct flights to the airport that is 10 minutes away from my home. to enjoy afternoons with my
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family i have to fly out of lax, which means i have to leave at 5:30 a.m. for an 8:20 a.m. flight. going home, it's a little bit harder. i either go through texas or phoenix to get to the airport. steve: how do you maximize your time on the airplane? rep. torres: i try to sleep, because when i get home, i have to hear about everything that has happened while i been gone not only at home, but in the community. then i tried to catch up on reading. steve: let me ask you about immigration, because you are an example of the immigration system in this country, the debate that is front and center. what recommendations would you give democrats, and more importantly republicans, as this debate continues?
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rep. torres: more so to my republican colleagues, i am a perfect example of immigration gone right. when i immigrated -- when my family immigrated to the united states, it was a lot easier. there was a process that did not take 30 years. you can petition for family members, and we did all that. it was a good process. it allowed me to participate in this country, not just as a taxpayer, but as a voter and community activist, and eventually run for office. i think exactly that is the american dream that we want every person who comes to this country to be able to reach. full potential to participate in making this great country what it is. steve: where in guatemala is your family from? have you been back there? rep. torres: three years ago, i
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went as a state assembly member. i was invited by the government the second time around. it's very difficult for me to travel to guatemala. i had no idea that they have been following my political life. i'm very popular. these central american countries, this is an issue that i've been trying to address, the governments are very corrupt. the people saw me as an example of someone who works the graveyard shift and still serves the community. i think that is what they want to see out of their government. steve: aren't you the highest ranking guatemalan in our
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government today. rep. torres: not only do i have my district to represent, but we get calls from all over the u.s. it's quiet in honor that the people from that congressional district had given me. steve: back in november, you another freshman representatives came to washington as representatives elected later into the orientation process. you told the l.a. times that is like drinking water from a fire hose. what is it like? rep. torres: we had just won an election, so everybody was tired. i think we got one week off, but i was not really off because i was a state senator. i had to shut down my senate office. when i came here, there was so much information given to us. it is the way congress can say that we gave you that
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information, now you're on your own. steve: there is a picture behind you, and i think there is a story with that photograph. can you explain? rep. torres: the office lottery. it was a lot of fun actually. we got to choose numbers and it was done by alphabetical order so torres, i was one of the last members to choose a number. but i think i pulled in the mid-30's, 37, and that was the face that i was thinking -- making. i did not think i would have a great chance to get a nice office. steve: you also learned about d.c. weather, did you not? rep. torres: i was not prepared, still not prepared. another congresswoman who was my
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member of my congress a before redistricting offered me a pair of boots. she said you need to have boots that are snowboots. those california but still work here. steve: you have moved up from city hall to the state assembly to the state senate to congress. what is next? rep. torres: this is where i am going to be for a while, i think. there is a lot of work to do here. there are a lot of relationships to mend. they don't see themselves here. i think it's a great opportunity for me to say, look, i came from four floors underground, working the graveyard shift, the mom next door, the soccer mom next i should say. here i am. if i can do it, you can do it too.
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but more importantly, we need your involvement. it's too easy to forget where you come from when you come to d.c. steve: do you have heroes, role models, people who have influenced you along the way? rep. torres: i have had a lot of people who have helped in one way or another, either through constructive criticism or holding my hand during that may election, where i won by 250 votes. it was a very difficult time in my life. i had lost my home to a fire. i was sitting in the living room of a temporary house that we managed to rent. every time a precinct reported she squeezed my hand. we won by a landslide that election, but i have had people
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like that who have truly cared about me. steve: talk for a moment about the house fire? rep. torres: i was in the middle of running for mayor and it was -- i had taken a leave of absence from my job as a 911 dispatcher. i was helping my union with developed initiatives. i was on the phone. we were planning a demonstration the next day for these houses for sex offenders who are being sent to my hometown. so my husband is driving and he puts it on speaker phone and
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and it's the kids, the house is on fire. i'm thinking that i live on a hillside. i'm thinking it is the hill that is on fire. you never think that this is something that could happen to you. we drove home, we were 10 minutes away. we had to run the last four blocks because there were so many emergency vehicles. it was devastating. i went from driving a mercedes to driving a kia, but we managed. we survived all of that. steve: what was the cause? rep. torres: the cause was electrical. we moved into a home that was built in the 1920's, and the electrical had not been upgraded, so here we are, a family with three computers, a tv in every room, and some of the bedrooms have two tvs because you have to watch football, and not just on one channel, but two different
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channels. it was quiet a devastating experience. i lived in five different places in 14 months. homelessness, i think that's why i'm so passionate about homelessness. i think it is america's black eye. you never know, it could happen to you. it happened to me. had it not been for a credit card with a zero balance, i would have been living in my car. we had no place to go. because of that credit card, i was able to check into a hotel and the hotel was my home for the first three weeks. eventually, i worked with my insurance company and we found a temporary house to rent. i can't tell you how frustrating and how difficult it is for a family with young boys, a dog
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and a cat, defined place to live. even though i was a councilmember, even though i was on the ballot to be the mayor, somehow it's very difficult. people don't want folks who come with that baggage. i don't see it as baggage. my kids and my pets help to drive my politics. eventually, we found a temporary place. but then we had to move again to a hotel, and they found a more stable tenant. so we lived between hotels and this temporary house for 14 months. steve: thank you for your time and thank you for sharing your story with us. we appreciate it. rep. torres: thank you.
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[captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] qwest join us tonight at -- >> join us tonight at 9:00 p.m. eastern for a conversation with montana representative ryan zinke and after that, a look at the legacy of former first lady laura bush. speakers include anita mcbride. on c-span2, it is book tv in primetime. a pair of in-depth programs featuring walter isaacson and ronald kessler. on c-span3, a number of stops on c-span's cities tour with locations that include austin, texas, wheeling, west virginia, and more. that starts at 8:00 p.m. >> during this month, c-span is
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pleased to present the winning entries in the student cam competition. it encourages middle and high school students to think critically about issues that affect the nation. students were asked to create a documentary based on a theme -- the three branches and you -- to demonstrate how a policy, law or action has affected them or their community. tate and cameron are second prize winners. their entry focused on national parks and entrant -- waterways. >> here, seconds from the beaten path lies 45,000 acres of rich and abundant ecosystem. it has remained one of the most desired natural resources in central florida. with all of the attention, the men and women caring for the
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park on a local level maintain the pristine environment of a state park. it is beautiful. it is fragile. mostly, the river is wild and scenic. >> ♪ do you ever think hard, honey how we got here today you may think it sounds funny but better get down and pray ♪ ♪ >> the source is here. quotes we spoke to a park manager -- >> we spoke to a park manager who clued us in. >> when you look at all of our acreage, 95% of our visitors come in here for the springs. people are coming in in the summer to enjoy the water, to cool off, to have a barbecue on the hill.
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>> robert brooks warns of the trade-off of having so many visitors at the park. robert: anytime time you have people in a natural system, there is an impact. every footprint leaves a mark on the ecosystem. working here, it is a balance between the use of people, and protecting the resource. that is an ongoing thing. >> hound you walk the fine line between recreation and restoration? robert: maintaining the trails filling in the potholes on the road. there are a wide range of activities. burning to promote healthy growth in the ecosystem -- a healthy, clean stream to swim in, sit by, it is the main thing where after. >> keeping healthy springs is a long-term struggle. robert: the high demand for water by the populations in
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growing areas has depleted some of the springs and the flowing of the springs. fertilizers and other men-made chemicals that get into the water from houses and the people in the area also contribute to the growth of algae, and some exotic vegetation that is not good. >> one exotic species that has been a problem is hydrolyzed. robert: it is an exotic species introduced into the north american water systems. it tends to grow and overtake the native vegetation. >> 20 stand more about why it is such -- to understand more why it is such a threat, we spoke to the biologist. paul: it is category one and category two. category two alters ecosystems. it is there, and it persists for
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a long time. category one, which is worse alters ecosystems, and ultimately displaced natives. >> one reason why it is so difficult to control is because of how it spreads. paul: here, little piece breaks off. people go by, knock a piece off and the next thing you know, the water takes it downstream and it finds a new place to attach itself. it grows so well. it is prolific. it thrives on high nutrients the sunlight. the environment here is perfect for the plants. robert: we are conducive to it. we have warm waters, constant temperatures. >> conditions are only made worse by the presence of chemical runoff. robert: it is a plant, and you are putting the lives are putting fertilizer on a plant. >> this dual threat is not limited. ecosystems across florida, and much of the southeast have
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experiences pervasive combination. federal, state, and local governments are tackling the issue to create specific standards. one such regulation is an epa legislation that outlines the growing concerns over water quality in florida. checks on the recommendation of hydrologist, they have new criteria replace the former narrow characterization. it puts limits on phosphorus and nitrogen entering the water, which robert brooks says is a nice thing. robert: if we keep letting phosphorus go up nobody wants his women that. senator john barrasso says regulations are not a good thing. senator morass of -- senator morass of -- senator john barrasso: it is affecting our
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resources and our water. >> however, robert and paul champ in the commitment of the state and federal government in preserving the river. robert: we have had good cooperation at the federal level. paul: there is money out there from the feds. robert, between all of the agencies involved, the federal epa, state and county governments, there are a lot of regulations being put in and being enforced to maintain the health of the river. >> part of the reason why the river has been so well maintained is because the cooperation of various states -- various authorities in front of. nicholas: saltwater dries it out. paul: we all work for the same state, so having the relationships with each other we need it.
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>> in the end, the driving force behind preserving the river is the strong support of residence and visitors. kelli: it is one of the last bastions. it would break my heart. robert: we have many people working on it here and i think the way forward is going to be up. >> to watch all of the winning videos and learn more about our competition, go to c-span.org and click on studentscam and tell us what you can, the issue these students address on facebook and twitter. >> utah senator mike lee on your screen, weighed in on three of his friends and senate colleagues running for president. senator leahy says -- senator lee says senator paul, senator
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cruz and senator rubio are good candidates, but he's not ready to endorse anyone. he talked about his new book. this is just shy of an hour.
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dave: i am dave cook from the monitor. thank you for coming. our guest is senator mike lee and it is an opportunity for what the senator's new book calls a compliant press corps that is all too willing to blame republicans for everything and everything. -- anything in every thing. [laughter] i guess tells of a unique childhood where his dad served as solicitor general under president reagan. starting at age 10, he began attending supreme court arguments. fellow mormon harry reid was a friend of the lee family and as the story goes, once locked a preteen michael lee in a garage. overcoming scars that might have caused, he earned his degree at brigham young university. he worked for several john, twice for samuel alito once when
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he was an appellate judge, and later on the supreme court. our guest was in private practice in 2010 when he stunned the political establishment and defeated robert bennett for the gop senate nomination from utah. the almanac of american politics says he was the end of senator when he took office in january, 2011. the senator's new book is called "our lost constitution -- the will. version of america's founding document." -- the willful subversion of america's founding document." it is the second book. so much for biographies. on to the mechanics. no live blogging or tweeting. no filing of any kind while the breakfast is underway. there is no embargo when the session ends. to release the selfie urge, we will e-mail several pictures to
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all reporters as soon as the breakfast ends. as regular attendees know, if you would like to ask a question do the traditional thing and send me a subtle nonthreatening signal, and i will happily call on one and all. we'll start by offering the guest an opportunity to make opening comments and then moved to questions around the table. thank you for doing this, sir. senator lee: two are very much. it is a pleasure to be here with all of you to talk about my book -- thank you very much. it is a pleasure to be here with all of you to talk about my book. i have enjoyed it immensely. i wrote the book for the simple reason that i think when you talk about the constitution in the abstract, it is a little easy to make it boring. i was raised in a home where we talk about the constitution routinely around the dinner table. i was about 30 when i realized that every family does that. as my wife explained to me, a few years ago, as i was trying to get my own children interested in the constitution, she said whether you are talking to your own children, or two
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friends, or, you know, people of any age, it will make it a lot more and thing if you can tell it in the form of the story. if you can tell the story behind something. it makes it not only more palatable, but it makes it interesting. i wanted to talk -- tell a few of the stories behind the constitution stories that inform us as to the reasons why certain provisions were put into the document in the first place and also tell some of the stories about how some of those same provisions have fallen into disrepair, or at least wanted to obscurity, and how best they can be restored. one of the stories that i really enjoy in the book is this story about how alexander hamilton actually openly advocated for a monarchy at the constitutional convention in 1787. he did so at his own political peril and detriment. a lot of people believed this might have been something that sunk any presidential ambitions he might have otherwise had.
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his idea of the monarchy was, of course soundly rejected by the convention, and with good reason. they were very concerned, first and foremost, about the excessive population of power in the hands of a few, or especially the hands of a one. that is why spoke about the fact that it is a little ironic that we consolidated so much power in the second branch in modern times. we have done so, moreover, in a bipartisan fashion. this is nothing one party or the other that has done this. nor has it been the executive that is simply seized all of this power. congress has been all too willing, and even eager to immigration. it is an easy way for congress to avoid accountability for making laws. it is a very easy way for congress to accept all of the glory, and none of the blame when identifying certain broad policy aspirations, but not having to do the actual dirty
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work of upsetting the policy. -- of setting the policy. these are some of the things i discuss, talking in that instance about the legislative powers clause. in other instances i talk about the erosion of other things like the origination clause, the fourth amendment and other aspect of the cost of two that i consider important. they are far too often elected. with that, i look forward to your questions. dave: let me do one or two below my own, and it will go to eric watson michael burgess, phil francine, sue davis, and lisa to start. let me do a constitutional question or two in the thought that my colleagues might have other topics in mind. as reid wilson recently noticed -- noted in "the washington post," legislators and 27 states have passed applications for a constitutional convention to pass a balanced budget amendment, and proponents in another state where republicans control both legislative
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chambers are pushing for passage. the you support the move to a convention -- do you support the move to a convention? a lot of people think there are dangers because it is not clear how it would operate and what subject to could deal with. senator lee: i am one of those people that think there are dangers there because all 27 times we have amended the constitution we have followed one procedure, congress proposes, the state ratifies. the alternative is where two thirds of the state call for congress to convene a convention, thomas convened such a convention, make -- congress convenes such a convention and they become ratified. i was taught growing up by my late father that there was great risk in this because we had never had a constitutional convention, at least not since 1787. the last time we started with a convention, we came up with something altogether different. my dad's view was let's leave good enough alone as far as calling for another convention. he has been dead 19 years, and
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somewhat arguing those 19 years a lot has happened to suggest that congress cannot be counted on to propose amendments that we needed, and that the american people who pretty overwhelmingly support the idea of a balanced budget amendment to the constitution. i will continue to push for a balanced budget amendment through congress, which is where i served. that is within my ability to control. if the states want to call for a convention, i suspect it will continue to do so. dave: i do read things other than "the washington post," but there was a fascinating column by robert sampson on the idea of down to the budget, and in essence, the argument was neither party -- it would be very hard to do without either party having to swallow a fair amount of ideology republicans eating to admit that without tax increases, big and probably
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dangerous cuts in defense are inevitable. democrats needing to concede that all the spending for the elderly is not sacrosanct, although i choke when i say that as you see the color of my hair. what is your view about the level of hypocrisy that is involved in calling for a balanced budget amendment, when we know that voters want more spending than they are willing to pay for. senator lee: i do not know if it is fair to call it hypocrisy. i think these are difficult questions. difficult, weighty questions. they also would involve an overarching question that looks at the amount of debt that we have a community about $18 trillion. in fact, we are paying about 200 $85 billion in interest on that debt. that is a lot of money. scary part is it is roughly the same entity we had 20 years ago when the debt was a small fraction of its current size about one-fit of its current
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size -- 1/5 of its current size. eventually, the artificially historically low yield rates we are paying on treasury instruments are likely to return to the historical average, even assuming there is not a rebound above the historical average. even if they just returned to the historical average, it will not be very long after that that we are painting close to $1 trillion a year in interest on our debt, and that will threaten all kinds of things. so, in addition to the fact that it has been said that our national debt may well present one of our biggest single threats to our national security, it also presents one of our biggest single threats to everything else that we do. dave: do you worry about tying the hands of the government at a time when you might need to prime the pump? senator lee: i do, and i also worry about the government not having its hands tied to make sure that it shores up the very
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programs that are important to shore up. dave: eric watson from bloomberg. eric: your tax plan does raise taxes on some middle earners and as been discussion on the right about the child tax credit. can you explain a little bit why -- that makes sense, and you think senator rubio, should he announced for president, can win the nomination based on this? senator lee: ok. as for the first part of the question, here is what we are trying to a couple share -- in addition to other features of the tax plan, we are trying to eliminate the marriage tax penalty and the parent tax penalty. the parent tax credit is directed at the parent tax penalty, little known but
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significant feature in our existing tax code that has the effect of -- sort of taxing american parents twice. once when they pay their taxes on the individual side, and on the payroll side. again, as they incur the substantial cost of raising children. according to the u.s. department of agriculture, it cost on average, $20,000 to raise a child to maturity. today's children will become tomorrow's workers, taxpayers, paying the benefits of tomorrow's retirees. wrote to our entitlement programs, hard-working parents get stiffed twice. imagine tubule antithetical couples, and imagine for tax purposes they are virtually identical sets of twins -- similar incomes, charitable conservation patterns, similar deductions. except that the couple a has
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quadrature in, couple b chooses to remain childless. while raising children, couple a will incur $1.2 million on average. couple b will not have that expense. couplea has produced four different taxpayers that will sure plans for anyone that retired that shore up if you mean this tax plan will win him the white house, i don't think anybody's going to win. it's a one-trick pony. but i doth it's a good plan and i think he's a good candidate. should he get into the presidential race i think he'll do well. >>

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