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Paul Ryan
  Wall Street Journal CFO Network Representative Paul Ryan  CSPAN  June 20, 2015 11:31am-12:04pm EDT

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udget and we are forcing ourselves to work together. and it was such a huge structural change that it upset a lot of people. but we needed to do it. from the six regional banks to a real matrix was a big change and it is going to be an important one. we took $400 million out of the budget at the same time. structural reform is hard. taking money out of the budget is hard. but we have to do both at the same time. we cannot wait. the good news is we are basically through it. when they did this kind of structural change 20 years ago they put a couple $100 billion extra into the budget and their business dropped. this year, we took $20 million out and business grew 24%. so it was tough because we did so many at once but my advice is if you've got to do it, just do it and get past it as soon as you can. it is not something a lot of
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leaders of bureaucratic institutions have tried before so it was new for the world and grip. i am glad we did it. if we had not done it, we would have to start now. that is my advice. get great help and then figure out what you need to do and then just get started and finished as soon as possible. >> jim yong kim, rebecca blumenstein, thank you. [applause] >> wisconsin resident of paul ryan also spoke at the wall street journal annual conference. the chair of the ways and means committee discussed tax policies. this is about 30 minutes. can really: welcome, congressman. good morning to everyone out there. i want to start talking about the news out there. you and another center -- senators sent a letter to the
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treasury department talking about basically version and proper shifting project. it has not gotten a lot of attention, but it seems to be a big deal. talk a little bit about what was in the letter and how you see that in terms of your own efforts to work on the tax code. rep. ryan: it certainly has the attention of tax writers. first of all, we come from the school of thought which believes and tax competition, not harmonization. it means we want to see countries compete for more free enterprise taxes. it is not trying to harmonize everyone's taxes up. kimberly: which is what this project is attempting to do. rep. ryan: correct. it's also attempting to grab a tax base of our domestic corporations. we want to make sure our treasury has a united front against the best direction
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project, which is one of the reasons we stood up and spoke of that. the other thing is we want to bring attention to having to deal with the tax based issues in such a way that we want to give america the place but it's -- where it is a haven. they call it highly mobile ip income. we want to make sure that america is a place where it makes sense to keep those operations here because of our favorable tax treatment. those are the kinds of things we talk about one we talk about international tax reform as a component of tax reform. kimberly: what are the biggest threats to u.s. businesses from this project? where they are headed on these rules? rep. ryan: that you will have a system where there is no haven for lower tax rates and we have other countries trying to assert their jurisdiction into our domestic firms to tax them. where we break down these traditionally observed international legal barriers between firms and countries. kimberly: there seems to be other things like disclosure requirements.
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you mentioned them in the letter. rep. ryan: that is something we are very concerned about. we're concerned about ip protection, data protection, and the privacy of firms. i think we will probably get into this conversation on tax reform we want to acknowledge the fact that it is probably in our interest to see if we can move quickly to do international reforms that address this issue so as to cauterize it, in a way, to prevent the corporate tax base being eroded so we have a tax base to work with. kimberly: so this adds to the urgency of doing something here. do you think that is widely understood in the congress? rep. ryan: not really. it's the people involved in tax-writing do this. i think the members of congress understand that america has a terrible tax system, very anti-competitive. it locks money up overseas and versions typically get the
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headlines, but it is also takeovers of foreign companies buying u.s. companies because of the tax arbitrage forest is it. tax policy other countries have. members of congress are on an increasing basis seeing this sense of urgency. i do think this issue is something for everybody. kimberly: do you think the treasury has the authority to sign on to this? rep. ryan: no. that congress has to. d think the obama administration agrees with you? rep. ryan: i have had a decent amount of conversations with the treasury. i think they agreed with our view of things more than not but not in every instance. we want to make sure this is clear that the legislative branch is the one that writes the laws and nothing other than that. kimberly: you mention this issue of the corporate tax base. how much does that to the urgency, because it seems we are heading in a direction where you may not have a base reform at a
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certain point. rep. ryan: if the corporate tax base you wrote so much because of all of these international rules or because of our absolutely inferior tax system or tax treatment of u.s. corporations, we will not have a tax base with which to reform our tax code. that is important. for those of us who were comprehensive tax reform, we think it is important that we stabilize our tax base so it can get to that day. can we do that with this president, that is probably more you want to go with this. there is a big difference between our view and the president's. we think taxes should be lower for individuals. this president is 46'6" percent overseas. which is late. . canadians are 15%.
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the international average tax rate on businesses is 25%. we have to get things down across the board. that is something the administration does not share with us. there is an impasse. kimberly: so no comprehensive tax, that is all the deal. rep. ryan: it will not happen for dust with an administration that for ideological or other regions cannot get to where you need to go to have a truly reformed comprehensive tax system. so the question for us is what can we do in the meantime that gets us a step in the right direction? let's say there are 12 things to do to get through comprehensive tax reform can we get to were three of them done. as we do that, we do that, we're looking at the international system. we want to move to an exemption system. we won every day a recreation -- we want to fix this clumsy system that we have and so the way that we look at this is can we set up something that we know is when to be a permanent future of the new system anyway that
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helps protect the tax base and helps get american firms in a more competitive footing. kimberly: what are the top prospects of that? having mentioned that you can't do corporate tax reform, given all the things you have said what can you do that gets you in these that in the right direction that deals with the threat on the international harmonization? rep. ryan: we think a conversion from a worldwide system to an exemption system is something that we would like to be in the cards. tax extenders applies to both sides of the code that has to get done and we believe many of these provisions should be permanent. we think that is in the right direction for the tax reform. some are going to grandfather on and some ought to be permanent. we have to figure out how to get in the right direction. there's a lot of talk about an
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innovation box as the way for having lower tax rates to help keep the income here and making the system a little more competitive in the form we getting the comprehensive leader on. so we see the tax reform either as one bigger second 2017 or one now which we can bite off what we chew and get done and make us competitive and then the rest of it done in 2017. kimberly: what are some of the ones that should go away? rep. ryan: i will not get into that. it does not help to get into the goal of comprehensive tax reform to do this on anecdotal bases outside is showing what the new system we are trying to get to. we ask everyone who cares about provisions in the tax code is to understand our goal is a better tax code for america, more progrowth that makes us more competitive globally.
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in the context of that, consider the end result. when we go through this anecdotal yesterday's, noted that without showing comprehensive visions, it is counterproductive to getting it done. kimberly: how do you sure companies that it is worthwhile thinking and taking the long view? rep. ryan: i think people realize that. kimberly: given the situation that we have not necessarily accomplished -- rep. ryan: we have to win an election first. i have been involved in some of these things, we need to tell people who we are, what we believe, and what we will do if elected. so then how the obligation and made it to do that if elected. this is the biggest priority of the ways and means committee, to me. comprehensive tax reform. it is a matter of economic survival and competitiveness. we did in 1986. the world followed suit. it triggered a round of tax
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competition. so now we have the worst code in the industrialized world. we need to kick off a new round. kimberly: where do you think, of the ideas you mentioned, the administration is most likely going to work with you on? rep. ryan: we do talk with treasury, in particular, a bit about international conversion. and extenders. there are active conversations about how do we get that taken care of. there is also a component about the fact of if you go from worldwide to it and exempted system, there is a slug of money that comes into the system. some folks want to see that as a highway trust fund solution. i believe it is a way of doing it where it does not deter taxes only want to do as well. we are discussing and exploring these so if we find common
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ground on this piece, which we see as consistent with tax reform with which is something we do not think is -- kimberly: can you do the steps you mentioned that balances the issues of secor and small businesses? rep. ryan: that is what comprehensive tax reform is all about. unfortunately for us we do not have an administration that sees it that way. they want high tax rates on individuals. i believe, in a better political climate, which is hopefully in 2017 -- there are other ideas out there, we want to spend 2016 exploring those ideas and encouraging talking. it will lower rates across the board so you have more parity. we used to have that until we had the fiscal cliff. kimberly: what is the timing on this?
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we are already in the midst of 2016 presidential elections. rep. ryan: it will be this summer and fall. as we go through this summer, we will continue to explore the international. in the fall is, if we do something, we would have to do that. extenders, we want to do as early as possible. december 11 last year, we had to find out until then to see if these provisions will be extended, only to see them go away december 31. that is not certainty. we want to address that as soon the can. kimberly: how are you going to spend your time in 2016? your predecessor spent years going through having all of these sessions, which were very bipartisan. there were a lot of people on both sides of the aisle interested. coming up with what you and i would call a traditional tax reform. the idea to broaden the base and
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lower the wage. what we have out there now is a whole bunch of candidates on both sides talking about major changes. can you talk about some of those on what you think is -- what are some of the ideas of a totally different kind of tax code? rep. ryan: that also be encouraged. that outside the box thinking. i am thankful for dave camp and that what he has done. not just the intellectual work but the scorekeeping work. all the nuts and bolts work you have to do to do tax law writing and reform. we are building off our knowledge base of that work. the base case, as we see it, in 2017, is that are the very least we do is are a variety tax reform. broaden the base, lower the rates. the base case from our perspective is that should be no
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higher than 25%, no matter which corporation you are. -- we are the highest rate in the industrialized world. that is not even the escort your talking about. the question is can we come up with a leapfrog plan that lead cross the rest of the world and shows them we had a even more secure your tax for a system that better -- that is better than the rest of the world's. given the fact that our size of government relative to the size of our economy, about 20% of gdp , is smaller than most other countries' , surely one of the weaker, with a better system that would rise above what anyone else has. you want to invert into america. you want to found your company and your business in america. manufacturer in america. it makes sense to do that.
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because of our intellectual property and rule of law and workforce our currency, we want to be an american firm. those of the kinds of things we think about. at the least, we are going in a better direction if we seek -- get the government we are seeking, which is good tax reform that gets us competitive or even something superior. we will spend 2016 looking into all of that. doing hearings, research examining these things. kimberly: anyone's you particularly -- you're not going to go there. consumption taxes all out on the -- rep. ryan: all of these things are things we want to encourage a robust conversation on. it is about america leading becoming a place where we get faster economic growth, more mobility and opportunity. one of the biggest drags on the
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goal is our tax system. kimberly: can you do a major -- when bush came into office, he had his tax proposals. but they cost money. we are in a different -- if they were not deficit neutral, as it were. can you do that in a environment today where the debt is where it is and the deficit is what it is? if you cannot, can you have a tax code and aggressive enough to go? rep. ryan: i think the answer is yes. kimberly: yes, you can do it, so the public on it? rep. ryan: yes, you can get a tax plan through. we improved a couple of our tools that we used to write tax bill this year. we improved modeling capabilities, and we're still refining that. to the point where we actually use economic modeling that looks
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at how the economy response to tax changes. go figure, human beings respond to changes in government policy. until this year, we do not take that into account. we used static scoring in the past. now we use macroeconomic storing -- macroeconomic scoring which is what i called reality-based scoring. we do that now so we make smarter decisions. the revenue target that has been traditionally used sets of -- sets revenue higher than what the law actually is. so we believe in what we call the current policy revenue target which is the truth. the r&b credit gets renewed every single year. our friends on the other side of the aisle say they do it every year. but the moment we say make this permanent, they say no. raise taxes on someone else. what they are basically saying is if -- you have to raise taxes
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on other hard-working americans to keep them the same for anybody else. it is a false dichotomy. if these are provisions, r&b credit section 179, that we intend to permanent and will always extend on an annual basis , let's call it what it is an be honest with ourselves and make it that. that gives us the kind of revenue target, combined with better scorekeeping roles that are more reflective of reality that we think will be better progress legislation then we have been in the past. kimberly: isn't what you're talking about someone in opposition with not only democrats but some republicans now who have embraced the idea , that you need to be using the tax code more to reward middle class families, more deduction more exemptions, -- that is on the personal side, i know, but you know it leads into the
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business side as well. so you are talking about a path of people that are going very much different direction. rep. ryan: i believe in limited government. i guess i am more libertarian on this issue. it is your money. the way that these conversations turn out, which is we want you to send your money to washington and then if you engage in behavior that we approve of, we will let you keep some of it back. i would rather you keep it in the first place. it comes from the people who made an earned it. decide for yourself what you want to do with your money. i believe in a more economic and neutral tax system. the reason i believe that is for, one, freedom's sake liberty's and growth's sake. the best way to help families and help people get out of poverty is a faster economic growth. you do not want to leave any growth on the table. that is why our texture and
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principles are profamily pro-growth pro-business entrepreneurial and that is kind of the school of thought i generally come from. kimberly: so you have some of the more powerful people in the come -- in the country in the room it in terms of companies. what is the corporate community need to help you get this done? rep. ryan: do not fight for the tiny table scraps or the carved out piece of an exemption here or that benefit that might be good for the industry here. think about the broader goal of getting the tax rate down and the goal of getting america to a more competitive system. even if you might lose this particular carved out benefit, think of the broader goal, which is a more competitive tax system which means more competitive growth and it makes you want to stay as a united states company instead of having temptations
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from shareholders to convert or whatever. that is what i asked able to think about. >> questions from the audience. this one asks you to appear into your soul, congressman. kimberly: if he has one. [laughter] >> we are about to find out. imagine you are a cfo and you see an opportunity to purchase another company in your industry in a happens to be located in the u.k.. you can save $100 million or increase your earnings 20% by doing so by accomplishing this inversion. you compelled -- you feel compelled as a fiduciary to get into this on behalf of the shareholders. what would you do, stay patriotic or fulfilled your fiduciary? kimberly: dichotomy. rep. ryan: it gives us a chance to get our political system fixed so we can fix this thing and you will have your cake and eat it, too.
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you will be an american company entering a better tax system because we will have fixed this mess before it gets out of control. george osmond and i talk about this. they are rocking and rolling over there. there are a lot of lessons to be learned here. please note we are trying to apply these lessons. we do not have the political plans aligned like we need to to fix this. this is our highest priority. we are moving as fast as possible in this direction as we can. play the long game with us and do not go for the gratification. that is what my soul says. >> i would hesitate asking what the cfos may do in this case. beyond the need to reform the federal tax system, there is an increasing issue related to state taxes. the need to grow the revenue states are charging or changing the apportionment rules resulting in many instances where we are double tax on the same revenue. is this even on washington's radar? rep. ryan: we see it but states
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are sovereign. states can do these things if they want to. i have long thought that if we lead not only do we lead the world like we did in 1986, but we also lead the states. our state, which has done a lot of good to have a more competitive tax system, we want to encourage a more competitive taxes them, we want government more lean and paid for. that shows you where the growth is going to go. kimberly: are you looking to states for any ideas of what you will do? any states where you think wow we should do something like that? rep. ryan: i thought the governors often. these days it is about health care and things like that. on tax reform, because there is such an international component it is not something as worried about. it is more something we are discussing. >> i have more here. is anyone from the audience who wants to raise their hand?
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explain the broadening the base meaning at the notion of that. the reduction in tax rates the businesses are more than offset? rep. ryan: what i described to kim, better and more accurate estimating. an accurate revenue target. the benefit you get from lower rates, hopefully, at the end of the day, it ought to make everyone better off. these are the current system we have today, and he tried to move your effective rate down. the statutory rate still matters and affects decision making and a lot. we have to get that down. we have to broaden the base of income that is taxed so we do not have a huge revenue loss. it is that simple. you are all cfos and you know what i am talking about. all i ask is indulgence to know that may be your finances are
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rate around this particular tax benefit or that particular tax expenditure, but know that at the end of the day, we just want to get his rates down in the first place so you do not have to go through this convoluted process of trying to get some of your money back by contorting your business planning into these tax systems. we should have a system that is neutral so that you make your business decisions they saw what is best for your business because it is a good as this decision, not based on what the tax laws tell me i ought to do. that is where we are trying to get to. that is why i say we should all be for that. >> if democrats win the white house in 2016, what is the probability of major tax reform? kimberly: that is a good question. rep. ryan: i don't know the answer to that question. >> do you want to take a guess? [laughter] kimberly: percentages on -- o
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dds? >> is a possibility? -- is it a possibility? rep. ryan: i was involved in a lot of the campaigns. i don't think they want a third obama term. i'd not think they want growth below 2% and stuck at 45 million people. but america losing its standing in the world and of the military being weakened and of the regulatory state pumping out unpredictable regulation after regulation and of wages being flat, like they have been. i don't think that people want a third term of that and so i am confident we will be able to prevail and get the kind of government we need to fix this mess and clean it up. prevent the crisis in the horizon. get our tax system in the right place. clean up the regulatory status
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so it is critical. get this economy out of the ditch it isn. attacked their root causes of welfare and we can get people to work. i think we can prevail over that and i think we will. i do not want to go the other direction. >> how does the gop convince the public that lower corporate tax rates are good for them when corporations are thought of as the big bad wolf? that is a tough sell and now we looking -- now we are looking into the soul of companies. rep. ryan: lower tax rates across the board, not just corporations. if we do the class envy or class warfare, we will not win. but if we show that -- i believe in the reagan style of campaign. jack kemp was my mentor that taught me politics, so to speak.
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we will not win if we pander to and tried to cap into year, envy, and anxiety. we will win if we show people a clear solution-based approach we get help investigation and opportunity and if we go and pray on the class warfare thing we shouldn't even bother trying. this is to do more competitive american economy i think we will be fine. >> is it better to pass the corporate tax reform this year will wait until the new presidency? rep. ryan: problem that we have is that they do not pay corporate taxes. they pay individual taxes and when you have a white house that will not allow the rates to be lowered, you will exacerbate the disparity between the tax treatment between the two kind of firms so that isn't something that we want to see happen.
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i don't think that we will have that done right now so that's why we are spending our time hopefully it will pay off on trying to clean up the international rules and get the tax bills that deal at the end of the year problems extenders that don't with whatever kind of reforms can we do that doesn't involve this nest of rates of the differentials. >> last, unless there's a question from the audience a 50% of taxpayers paid no federal income tax, how do you you convince them to change the tax law? rep. ryan: not everyone is always there. people turn and move. but don't we want more growth and more jobs? don't we want america to be leading the rest of the world
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would we want to be following? i don't think people want us to be a welfare state which i would argue that trajectory that we are on. i think people want to see a vibrancy, they want to see growth again. they want to see the have a shot at the american dream which is the condition to determine the outcome of your life. we shouldn't be speaking to people as if they are stuck in their current station in life and put up with it and tolerate it. that's not what we do in this country. let's talk about how we can make sure everybody can get to where they want to go in life and that we can equip people with the opportunity. we be leaving the quality of opportunity not outcome. one speaks to the traditional founding of the country and the principles that built this country, that give the opportunities and a great story. we were poor people in ireland when the famine came over, and we are thriving. everyone has these stories that's what those country is,
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and he really cares about that. >> thank you very much. [applause] >> tonight, ruth bader ginsburg talks about her life and career, and offers are thought on gender equality. she was interviewed recently at an event hosted by the american constitution society of 8:00 eastern on c-span. this weekend, the c-span cities to her t --our partnered to talk about key west, florida. >> they found this house for sale and bought it for $8,000 in 1931. pauline converted this hayloft into his first formal writing studio. he fell in love of fishing, he