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22–372 2017

MEMBER PROPOSALS FOR IMPROVEMENTS TO 

THE U.S. TAX SYSTEM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TAX POLICY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MAY 12, 2016 

Serial No. 114–TP07 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

ROBERT J. DOLD, Illinois 

TOM RICE, South Carolina 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

DAVID STEWART, Staff Director 

JANICE MAYS, Minority Chief Counsel and Staff Director 

SUBCOMMITTEE ON TAX POLICY 

CHARLES W. BOUSTANY, JR., Louisiana, Chairman 

DAVID G. REICHERT, Washington 

PATRICK J. TIBERI, Ohio 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

RICHARD E. NEAL, Massachusetts 

JOHN B. LARSON, Connecticut 

LINDA SA ́ NCHEZ, California 

MIKE THOMPSON, California 

LLOYD DOGGETT, Texas 

iii 

C O N T E N T S 

Page 

Advisory of May 12, 2016 announcing the hearing .............................................. 2 

WITNESSES 

Panel One 

The Honorable Danny K. Davis, Member of Congress, Washington D.C. .......... 24 

The Honorable Lynn Jenkins, Member of Congress, Washington D.C. .............. 23 

The Honorable Sam Johnson, Member of Congress, Washington D.C. ............... 19 

The Honorable Peter J. Roskam, Member of Congress, Washington D.C. ......... 22 

Panel Two 

The Honorable Vern Buchanan, Member of Congress, Washington D.C. ........... 25 

The Honorable Tom Rice, Member of Congress, Washington D.C. ..................... 26 

The Honorable David Rouzer, Member of Congress, Washington D.C. .............. 27 

Panel Three 

The Honorable Robert J. Dold, Member of Congress, Washington D.C. ............. 29 

The Honorable Anna G. Eshoo, Member of Congress, Washington D.C. ............ 32 

The Honorable Patrick Meehan, Member of Congress, Washington D.C. .......... 27 

The Honorable Ted Poe, Member of Congress, Washington D.C. ........................ 31 

Panel Four 

The Honorable Ken Buck, Member of Congress, Washington D.C. ..................... 33 

The Honorable Matt Cartwright, Member of Congress, Washington D.C. ......... 36 

The Honorable Andy Harris, Member of Congress, Washington D.C. ................ 34 

Panel Five 

The Honorable Rob Bishop, Member of Congress, Washington D.C. .................. 39 

The Honorable Rodney Davis, Member of Congress, Washington D.C. .............. 37 

The Honorable Keith Ellison, Member of Congress, Washington D.C. ............... 40 

The Honorable Scott H. Peters, Member of Congress, Washington D.C. ............ 38 

The Honorable Dana Rohrabacher, Member of Congress, Washington D.C. ..... 41 

Panel Six 

The Honorable Dave Brat, Member of Congress, Washington D.C. .................... 42 

The Honorable Peter A. DeFazio, Member of Congress, Washington D.C. ........ 54 

The Honorable Scott DesJarlais, Member of Congress, Washington D.C. .......... 47 

The Honorable John Fleming, Member of Congress, Washington D.C. .............. 49 

The Honorable Randy Hultgren, Member of Congress, Washington D.C. .......... 47 

Panel Seven 

The Honorable Andy Barr, Member of Congress, Washington D.C. ................... 58 

The Honorable Kevin Cramer, Member of Congress, Washington D.C. ............. 57 

The Honorable Matt Salmon, Member of Congress, Washington D.C. ............... 30 

The Honorable Steve Scalise, Member of Congress, Washington D.C. ............... 56 

The Honorable Terri A. Sewell, Member of Congress, Washington D.C. ............ 55 

Panel Eight 

The Honorable Mike Coffman, Member of Congress, Washington D.C. ............. 60 

The Honorable Tom Emmer, Member of Congress, Washington D.C. ................ 59 

The Honorable Janice D. Schakowsky, Member of Congress, Washington D.C. 62 

Page

iv 

Panel Nine 

The Honorable Erik Paulsen, Member of Congress, Washington D.C. ............... 63 

SUBMISSIONS FOR THE RECORD 

Coalition to Extend and Improve the 179D Tax Deduction for Energy Efficient 

Buildings ............................................................................................................... 66 

FAIRtax—Benefits of HR–25 .................................................................................. 70 

ACRO, Association of Clinical Research Organizations ....................................... 72 

AimBank ................................................................................................................... 74 

Alliance for Industrial Efficiency ............................................................................ 76 

American Bankers Association ............................................................................... 81 

ATCWG, Adoption Tax Credit Working Group ..................................................... 84 

Alcoholic Beverage Industry ................................................................................... 91 

ECG Engineering, PC .............................................................................................. 93 

EcoTech Solutions .................................................................................................... 96 

AGA, American Gas Association, EEI, Edison Electric Institute, NEI, Nuclear 

Energy Institute ................................................................................................... 98 

Encentive Energy ..................................................................................................... 100 

Energy Efficiency Pros LLC .................................................................................... 103 

Energy Harness Corporation .................................................................................. 105 

ESP, Energy Solutions Professionals, LLC ........................................................... 107 

EtaGen, Inc. ............................................................................................................. 109 

Geothermal Energy Association ............................................................................. 112 

Havtech Inc. ............................................................................................................. 115 

Historic Tax Credit Coalition .................................................................................. 117 

Small Businesses Healthcare ................................................................................. 123 

International Association of Fire Chiefs ................................................................ 126 

IBAT, Independent Bankers Association of Texas ................................................ 130 

LabCorp, Laboratory Corporation of America ....................................................... 132 

Municipal Bonds for America ................................................................................. 134 

NDC, National Development Council .................................................................... 137 

Prosperity Through Preservation, Historic Tax Credit Coalition, National 

Trust for Historic Preservation ........................................................................... 147 

NVFC, National Volunteer Fire Council ................................................................ 155 

NRDC, Natural Resources Defense Council .......................................................... 158 

NGVAmerica ............................................................................................................ 162 

NSWA, National Stripper Well Association .......................................................... 172 

OSRAM Sylvania ..................................................................................................... 177 

Pennsylvania Bio ..................................................................................................... 179 

PEW Clean Energy Initiative ................................................................................. 181 

PPD, Pharmaceutical Product Development ......................................................... 185 

R&D Credit Coalition .............................................................................................. 187 

Ralph Abraham, M.D., Member of Congress ......................................................... 193 

Rob Bishop, Member of Congress ........................................................................... 195 

Charles W. Boustany Jr., M.D., Member of Congress 

Statement on H.R. 4832 ...................................................................................... 197 

Statement on H.R. 3846 ...................................................................................... 199 

Statement on H.R. 928 ........................................................................................ 201 

Statement on H.R. 1218 ...................................................................................... 203 

Dave Brat, Member of Congress ............................................................................. 204 

Ken Buck, Member of Congress ............................................................................. 210 

Matt Cartwright, Member of Congress .................................................................. 212 

David N. Cicilline, Member of Congress ................................................................ 213 

Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation ..................... 216 

Mike Coffman, Member of Congress ...................................................................... 221 

K. Michael Conaway, Member of Congress ........................................................... 223 

Joseph Crowley, Member of Congress .................................................................... 224 

Mike Doyle, Member of Congress ........................................................................... 230 

Anna G. Eshoo, Member of Congress ..................................................................... 232 

John Fleming, Member of Congress ....................................................................... 233 

AMAC, Association of Mature American Citizens ................................................ 234 

Americans For Tax Reform ..................................................................................... 235 

NTU, National Taxpayers Union ........................................................................... 236 

60 Plus Association .................................................................................................. 237 

Bill Flores, Member of Congress ............................................................................ 238 

Louie Gohmert, Member of Congress ..................................................................... 240 

French Hill, Member of Congress ........................................................................... 243 

Page

v 

Randy Hultgren, Member of Congress ................................................................... 246 

Lynn Jenkins, Member of Congress ....................................................................... 275 

Kenny E. Marchant, Member of Congress ............................................................. 276 

Bill Pascrell, Jr., Member of Congress ................................................................... 279 

Erik Paulsen, Member of Congress ........................................................................ 282 

Ted Poe, Member of Congress 

Statement on H.R. 2883 ...................................................................................... 283 

Statement on H.R. 5185 ...................................................................................... 285 

Tom Price, Member of Congress ............................................................................. 286 

Dave Reichert, Member of Congress ...................................................................... 289 

EEI, Edison Electric Institute, NEI, Nuclear Energy Institute, NRECA, National Rural Electric Cooperative Association, APPA, American Public 

Power Association & LPPC, Large Public Power Council ................................ 290 

Pete Domenici, U.S. Senator, Retired .................................................................... 293 

Tom Rice, Member of Congress .............................................................................. 295 

Mac Thornberry, Member of Congress ................................................................... 300 

Pat Tiberi, Member of Congress ............................................................................. 303 

Michael R. Turner, Member of Congress 

Statement on the Brownfields Redevelopment Act of 2016 .............................. 304 

Statement on H.R. 518, H.R. 519, H.R. 520 ...................................................... 305 

Statement on H.R. 3846 ...................................................................................... 307 

Jared Huffman and Dana Rohrabacher, Members of Congress .......................... 309 

John P. Capazzi, AIA .............................................................................................. 311 

Subchapter S Bank Association .............................................................................. 313 

SCAN, Save the Children Action Network ............................................................ 317 

Siluria Technologies ................................................................................................ 321 

Tax Avoidance Research Center ............................................................................. 328 

Tax Centric Lighting ............................................................................................... 330 

(1) 

MEMBER PROPOSALS FOR IMPROVEMENTS 

TO THE U.S. TAX SYSTEM 

THURSDAY, MAY 12, 2016 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON TAX POLICY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:05 a.m., in 

Room 1100, Longworth House Office Building, the Honorable 

Charles W. Boustany, Jr. [Chairman of the Subcommittee] presiding. 

[The advisory announcing the hearing follows:] 

2 


22372.001
3 

f 

Chairman BOUSTANY. The Subcommittee will come to order. 

And welcome to the Ways and Means Subcommittee on Tax Policy 

Member Day Hearing on Tax Legislation. 

Before I go forward with my statement, I want to, without objection, recognize our Ways and Means Committee chairman, Chairman Kevin Brady, for a statement. 

Mr. Chairman, thank you for joining us on this important hearing. 

Chairman BRADY. Well, thank you, Chairman Boustany, for 

holding this hearing, and for leadership of the newly-renamed and 

muscled-up Tax Policy Subcommittee. 

I am glad to welcome so many of you here today to share your 

ideas and participate in this process. After all, it is been years 

since we have been able to hold a Member Day hearing on Tax 

Code improvements like this one. 

As we all know too well, the annual chaotic process of extending 

temporary tax provisions was time consuming and, when extended 

retroactively, made no sense. Fortunately, with the permanent tax 

relief in the PATH Act, we were able to put to rest this decadesold problem. Now we are returning to a regular order process. We 

are deliberately and thoughtfully considering improvements to the 

Tax Code that will grow our economy and make our Tax Code fairer, flatter, and simpler. 

Our hearing today is an important step, Chairman, in fulfilling 

our commitment to creating opportunities for legislators to be legislators when it comes to tax ideas. Today’s hearing demonstrates we 

are serious about considering tax legislation through an open and 

transparent process. We are committed to introducing bills, considering them, and moving them to the floor. The fact that over 30 

Members or more are sharing their ideas today is a testament to 

the new process, and to our return after so many years to a regular 

legislative order. 

And our newly renamed and enlarged Tax Policy Subcommittee 

is a sign of our seriousness about good process for developing and 


22372.002
4 

enacting good tax policy. I look forward to listening to your bold, 

fresh ideas about the best way to fix America’s broken Tax Code. 

Again, I want to thank you, Chairman Boustany, for your strong 

and your thoughtful leadership of the Subcommittee. I yield back. 

Chairman BOUSTANY. Thank you, Mr. Chairman. We appreciate you being here. And thank you for your leadership of the full 

Committee, and your commitment to getting tax reform done, and 

also to moving forward with these Member bills today, as we look 

at how we can improve our current Tax Code. So we thank you for 

your leadership. 

Today the Subcommittee will hold a hearing on Member proposals for improvements to U.S. tax system. We are honored to 

have a number of our esteemed colleagues join us today to present 

legislation that they have all invested a great deal of time and energy to develop. As Chairman Brady mentioned, it is encouraging 

that so many of our fellow Members of the House of Representatives have come here today to make a record of their priorities for 

making improvements to our current Tax Code. 

Members of the Subcommittee, followed by our full slate of Member witness panels, will have three minutes to discuss their current 

tax legislation priorities. Because of the numerous Member interest 

on this, we are going to stick very strictly to the three-minute rule 

on this. Keeping in mind that a large number of Members are testifying, I want the Members to be efficient with the testimony, and 

really focus on why these bills are important. What is the impact 

of these bills, and why should we be duly considering these bills? 

I would also like to remind Members of their ability to submit 

written testimony in support of their legislation. Thank you again 

to all the witnesses for taking time from busy schedules to be with 

us today. And we look forward to hearing from Committee members and other Member witnesses about these various proposals. 

Before I recognize my fellow Subcommittee members, I would 

like to take a moment to highlight a few pieces of legislation that 

I see as addressing critical areas of need in our current tax system. 

I would like to begin by talking about H.R. 4297, a bill I introduced that provides much-needed protections for U.S. companies 

adversely affected by the country-by-country reporting measures 

that were instigated by the OECD’s BEPS Project. During our Tax 

Policy Subcommittee hearing on the BEPS Project in December, 

our witnesses impressed upon us the need for companies to be able 

to file country-by-country reports with the IRS for this year to ensure the confidentiality of the information that ultimately will be 

reported to foreign countries. They also shed light on the significant competitive risk to American companies of being required to 

provide master file reporting, as contemplated by the BEPS project. 

We have expressed these concerns to Robert Stack, Deputy Assistant Secretary for International Tax Affairs, stressing the need 

for Treasury to act to protect American company interests in the 

confidentiality of their tax return information. I welcome the comments from Treasury in recent weeks indicating that they recognize the need for the IRS to accept country-by-country reports for 

2016. We will continue to monitor developments in this area to ensure American companies are protected. 

5 

H.R. 4297 also provides a statutory framework to protect American companies against countries that may abuse the master file 

reporting requirements, and fail to safeguard the confidentiality of 

taxpayer information. And it requires an annual report to Congress 

on reported abuses of these disclosures by foreign countries, to ensure that such proper—improper treatment of American job creators is taken seriously. 

Another important piece of legislation before this Committee this 

Congress is H.R. 2911, ‘‘Small Business Healthcare Relief Act,’’ 

which I introduced last year, along with my friend Mr. Thompson 

of California. H.R. 2911 is bipartisan legislation that will restore 

flexibility, choice, and certainty to small employers and their workers who use Health Reimbursement Arrangements. This legislation 

is necessary in the wake of confusing Treasury guidance that has 

subjected many employers to significant tax penalties that may not 

exist today. 

I would also like to briefly mention H.R. 3161, a bill I introduced 

last year that would permanently reform the tax treatment of timber. 

And finally, I want to mention a bill by my good friend, Mr. Kelly 

of Pennsylvania. His bill, H.R. 3846, the ‘‘Historic Tax Credit Improvement Act,’’ which I have co-sponsored would reform and enhance the rehabilitation of the historic tax credit. I applaud him for 

taking the lead on this issue. 

And now I would like to yield to the distinguished Ranking Member, Mr. Neal, for the purposes of an opening statement. 

Mr. NEAL. Thank you, Mr. Chairman, and thanks for calling 

this Member day hearing on tax reform proposals. This is the third 

Member day meeting that we have had on this precise topic. Today 

we will continue to hear from our colleagues on their tax proposals. 

The Ways and Means Committee has an important job to do and 

broad responsibilities. 

We must take our jurisdictional reach seriously. And as you 

know, historically our Committee has had jurisdiction over approximately a quarter of all legislation introduced in the House of Representatives. Of the bills referred to the Ways and Means Committee, more than half are tax bills. 

We remain the gatekeepers of this House. As such, we must 

make sure that we scrutinize every piece of legislation put forward 

to ensure that only the best ideas move forward. Today it is an excellent opportunity to hear from our colleagues and to start the 

process of making sure that only the best ideas rise to the top. 

Mr. Chairman, in your introductory remarks, you said that 

‘‘Members have invested a great deal of time and energy to develop 

legislation that we can use to make our current Tax Code work better for all Americans.’’ I certainly am in complete agreement with 

you. Many Members of this Committee have thoughtful pieces of 

legislation that have languished in legislative purgatory due to 

Committee inaction. It is time not only to have these thoughtful 

pieces of legislation granted a hearing, but to actually act upon 

them. 

I have a wide and well-known interest in a series of credits that 

have been proposed before the Committee. I, along with Speaker 

Ryan, in fact, have talked about the whole notion of what we might 

6 

do to strengthen the earned income tax credit for childless workers. 

Everybody knows and has great regard for the EITC, but we also 

know that it reduces poverty. And for childless workers, they receive virtually no earned income tax credit. According to research, 

Federal income tax and payroll taxes pushed 1.2 million childless 

workers into poverty, and another 5.8 million deeper into poverty. 

There is consensus about strengthening the earned income tax 

credit, and I would hope that we would act upon it. 

I also have a broad belief in the whole notion of what we might 

do to give the economy a shot in the arm, investing in our community so that we can rebuild and grow economies at the same time. 

It is estimated that there were seven to nine million people who 

are working part-time that are desirous of full-time work. The new 

markets tax credit, the low-income housing tax credit, the historic 

tax credit, and an issue that I worked with Alan Krueger on a long 

time ago that was highly successful but left out of tax packages 

subsequently was the Build America Bonds campaign. 

We all know the work that these credits can do in our community. New markets helped rebuild and build, in fact, a Holyoke 

Health Center. Holyoke is a stressed city in my constituency in 

desperate need of health care. This new center will go a long way 

in the fight to lower the high mortality rate. Build America Bonds 

is a true success story. The program was over-subscribed and every 

Member of Congress during that period of time that had an airport 

expansion, you could almost conclude that it was due to the Build 

America Bonds campaign. 

Our infrastructure is crumbling, and we need to do something 

about it, and what we did last year is but a step in the right direction, and demonstrates how difficult it is in the modern Congress 

to accomplish anything that at one time we all broadly agreed 

upon. 

Finally, retirement security. Ten thousand Baby Boomers are retiring every single day. Half the people that get up and go to work 

in the morning every day in America are not in a qualified retirement plan. My proposals on the auto IRA and the saver’s credit address this very issue. Chairman Tiberi was formerly the chairman 

of this Subcommittee. He pointed out to me, along with the former 

chairman, Dave Camp, that they were down to one issue and they 

were still trying to work that through. 

Social Security is a mandated savings program. I don’t understand why we can’t embrace the whole notion of mandated savings. 

The statistical data is very clear on that initiative, and the American people need a boost in savings and, in particular, retirement 

savings. So, the impending retirement crisis is in front of us. It is 

leveraged in some part by the Tax Code, and I hope that we can 

move forward on those proposals. 

The legislation that we have talked about in large measure, 

these are not controversial. And there was a time, again, when this 

Committee was able to move those sorts of initiatives forward. We 

need to build some good will. I think Kevin Brady has done a good 

job of hearing what we have to say on this side of the aisle. But 

removing many of the barriers to greater savings is something that 

we all ought to see as a priority, and I hope that we will continue 

7 

to embrace some initiatives that might grow the middle class. So 

thank you, Mr. Chairman. 

Chairman BOUSTANY. I thank the gentleman. 

Mr. Tiberi. 

Mr. TIBERI. Thank you, Mr. Chairman. I am going to touch on 

three bills and submit written testimony on some others. 

H.R. 4770 would clarify rules relating to the Section 199 deduction for domestic manufacturing. For years the IRS has not been 

clear about the manner in which they implement the domestic 

manufacturing deduction for companies that use contract manufacturing arrangements. Last summer the IRS issued regulations that 

further punished these companies by only allowing the contract 

manufacturer to take the deduction and not the principal company 

who often owns all factors of production. The bill I introduced with 

Mr. Neal would allow either the principal company or the contract 

manufacturer to take the deduction based on each party’s substantial contribution to the manufacturing process. 

The goal of Congress passing the law to implement the Section 

199 deduction in 2004 was to protect U.S. jobs and promote American manufacturing. Instead, the IRS regulations will do the opposite, and deter U.S. contract manufacturing. This bill will restore 

the job-creating incentive for companies to manufacture their products here in America. 

The second bill, H.R. 3608, would—right or wrong, has impacted 

over 750 businesses in the U.S., including my home state of Ohio 

for more than four years. The bipartisan bill simply clarifies that 

the tax on commercial air transportation, also called the ticket tax, 

does not apply to aircraft management services for general aviation 

flights that do not use tickets. The IRS can implement the tax 

laws, but it can’t impose a new tax. 

However, in 2012 the IRS’s chief counsel released a memorandum stating that services provided in support of aviation are 

taxable as if the services are transportation itself. The IRS said 

that the ticket tax applies to businesses that supply pilots, mechanics, maintenance, and scheduling in navigation, and the other services needed for general aviation flights, but don’t supply the aircraft along with those services. 

For decades it has been clear, and Congress has specifically 

noted that commercial aviation is required to pay the ticket tax, 

while general aviation pays the fuel tax. However, the chief counsel 

of the IRS ignored this and seeks to impose a tax where Congress 

expressly chose not to apply one. My bill will restore congressional 

intent and right the wrong. 

H.R. 5187, the R&D ASC Tax Credit, is a bill that I introduced 

with Congressman Larson, that will go a long way to encourage additional investment here, in the U.S. We introduced the Research 

and Experimentation Advances Competitiveness at Home, or 

REACH Act, just this week. The bill builds on the work done in 

the PATH Act at the end of the year that makes the R&D tax credit permanent, by increasing the R&D alternative simplify credit 

from 14 to 20 percent [sic]. As the rest of the world keeps improving their Tax Code to entice companies to locate there, this will do 

more to encourage companies to locate their R&D here in the U.S., 

8 

and incentivize businesses to invest in the U.S., creating jobs and 

spurring innovation here at home. 

Thank you, Mr. Chairman. I yield back my three seconds. 

[Laughter.] 

Chairman BOUSTANY. I thank the gentleman. He is quite 

amazing. 

Mr. Thompson. 

Mr. THOMPSON. Thank you, Mr. Chairman, and thank you and 

Ranking Member Neal for putting on today’s hearing. I think it is 

important that our Committee have a forum to hear proposals from 

Members both on the Committee and off the committee. 

I want to use my time to discuss a couple of important issues, 

and I will submit written testimony on a couple of others. 

As part of what—the omnibus deal last year we made bipartisan 

progress when we extended the tax credits for wind and solar energy for five years. There were strong feelings on both sides, but 

we came together and we made a compromise, and we need to 

build on that foundation. 

I introduced a bill to extend the renewable investment tax credit 

for five years. Representative Reed and I just introduced another 

bill to extend remaining parts of the ITC and hope that we can all 

come together again to get this done by the end of the year. This 

extension would help bring renewable energy to the point where it 

is cost-competitive with other sources of energy. 

Another bipartisan bill that would level the playing field for renewable energy is the Master Limited Partnership Parity Act with 

cosponsors from both sides of the aisle in both the House and the 

Senate. MPLs are now available to fossil fuel projects, but not to 

renewable energy. This bill would bring needed parity. 

The New Markets Tax Credit is also a bipartisan effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities. The new market tax credit investment totaled over $5.7 billion in California, alone. I saw $11.5 million in my district, and I know for a fact that it works. This investment creates real jobs in communities that wouldn’t otherwise have 

access to capital. 

Last year I worked with the Treasury Department to make it 

easier for BRAC sites such as one in my district, Merritt Island, 

that was closed, to more easily qualify for the new market tax credit investment. Expanding the new market tax credit creates jobs 

and economic growth in low-income communities, and that is a bipartisan goal. 

I have used my time to talk about bills and issues, but the point 

that I really want to make is that the Committee and this Congress should be focusing its intention on legislation that helps all 

of our constituents back home. 

The Chairman mentioned our HRA bill that we have been working on helps constituents, helps constituents and makes the promise of access to quality, affordable health care for people very real. 

So I hope we can work together and get some of these done. And 

thank you for the time. 

Chairman BOUSTANY. I thank the gentleman. 

Mr. Reed. 

9 

Mr. REED. Well, thank you, Mr. Chairman, and thank you for 

holding this hearing and getting our input. And I know there has 

been a slew of bills that we have brought to your attention and will 

continue to bring to your attention, but I wanted to highlight some 

of the efforts, in particular. 

As I care deeply about our job creators in America and our manufacturers, and especially small businesses that are the backbone 

of our American economy, I want to make sure that we are promoting policy, tax policy, that provides them with an opportunity 

they need to succeed. 

One area that my colleague, Mr. Thompson, and I have just recently joined in, and he mentioned in his testimony, is the H.R. 

5167, the Technologies for Energy Security Act. I think this is a 

common-sense proposal that should be taken into consideration as 

we go forward, making sure that our tax policy reflects a commitment to our energy sector that is not only a job creation component 

of our economy, but also brings national security concerns to light, 

as we deal with the issues around the world. 

I would also be remiss if I did not specifically target some areas 

that we are working on in the Tax Code that—to target relief for 

our vulnerable working families and vulnerable fellow citizens 

across the country. In particular, I would like to highlight to the 

chairman the bipartisan work we are doing on H.R. 2752. That is 

the work opportunity tax credit, trying to make that permanent as 

part of this discussion going forward, as well as H.R. 3110, our National Disaster Tax Relief Act of 2015. To me this sends a clear 

message to our fellow citizens that we want to stand with them 

and make sure that we have a Tax Code that is in the best position 

not only to be fair, but to recognize the difficulties that many of 

our fellow citizens face on a day-to-day basis. 

So I join with you, Mr. Chairman, to work together in order to 

fix our broken Tax Code, and these are but just a few of the examples that I would like to bring to your attention, as well as a slew 

of bills that we have submitted to you, and will continue to advocate with you and the entire Committee as we go forward with tax 

reform. 

And with that, I yield back. 

Chairman BOUSTANY. Thank you, Mr. Reed. 

Mr. Doggett. 

Mr. DOGGETT. I am going to yield to Ms. Sa ́nchez or Mr. Larson. 

Chairman BOUSTANY. Okay. 

Mr. Larson. 

Mr. LARSON. Thank you, Mr. Chairman. And thank Ranking 

Member Neal and Chairman Brady for providing us the opportunity to have hearings like this. 

Like Mr. Tiberi, I intend to talk about three bills and then provide written testimony on others, including the bill that he mentioned, which includes extending the R&D tax credits, which has 

been received with overwhelming popularity across the nation, and 

clearly in my district. 

I have three bills that I would like to discuss. One of them this 

Committee has passed in the past. It is the Volunteer Responder 

Incentive and Protection Act, a bill that many in the Committee— 

10 

many on this Committee support. Mr. Reichert and I have introduced the bill again. And, I think as everybody knows, especially 

when it comes to volunteer firefighters and EMT personnel, unfortunately, the IRS subjects them—we believe unfairly—to tax on 

incidentals that they receive. 

And if the tax wasn’t bad enough for volunteering your services 

and putting yourself in harm’s way, it also creates an incredible administrative nightmare for a number of these small rural agencies 

that depend so much on our volunteer firefighters. Volunteer firefighters comprise—and EMT—more than 70 percent of the firefighters that we have across the nation. So I hope and—that we 

can continue to work on this Act together. 

The other bill that I would like to talk about is the Promise Zone 

Job Creation Act. This is a bill that I introduced, along with Chairman Rogers. Chairman Rogers, in fact—and Mrs. Noem on our 

Committee, as well—have promise zones in their district. There are 

only a handful, but what Mr. Rogers has done is demonstrated 

what you can do on a volunteer basis with a promise zone, and expand and reach out to the rural poor, combining all segments of the 

society: the volunteer base and the academic base. He is not only 

fighting—he is creating jobs, and he has done this—and the idea 

is for rural and urban areas that are depressed to create job incentives through the code with this. So I hope that we can continue 

to work together on the Committee with this. 

And lastly, Mr. Chairman, in my 23 seconds left, we also have 

a bill that would—we call the Philanthropic Enterprise Act and— 

again, that I have introduced with Mr. Reichert. And this is a targeted bill that would make a technical fix in the Tax Code to ensure that companies that devote all of their profits to charity 

through a foundation—in this case, in my home state, like Newman’s Own, can continue, going forward. This is another bipartisan 

effort that I believe the Committee should take up before the end 

of the year. 

I associate myself with the remarks of Mr. Neal, and I thank Mr. 

Kelly and Mr. Renacci and Mr. Reichert, Mr. Tiberi, for working 

with us, and look forward to working with you, Mr. Chairman and 

Mrs. Noem, on other legislation that we have. Thank you so much. 

Chairman BOUSTANY. Thank you, Mr. Larson. 

Mr. Kelly. 

Mr. KELLY. I thank the Chairman and—for giving us the time 

to actually talk about some of these things. There are several 

pieces, and most of us are actually on these together. H.R. 5002, 

the Steel Industry Preservation Act with Mike Doyle, we are in 

that together. We are in the Historic Tax Credit Improvement Act, 

which you highlighted; Preserving Access to Orphan Drugs Act 

with Mr. Neal; and then H.R. 1752, Health Care Sharing Ministries, with Danny Lipinski out of Illinois. 

What I want to talk about, and what I think is really critical— 

and this is in honor of Mother’s Day and working parents—I 

worked with three working moms, right here, Ms. Sa ́nchez, Senator 

Ayotte, and also Senator Capito, to come up with something called 

the Working Families Relief Act. This is H.R. 4867. And we worked 

with Save the Children to have this come into legislation. And I 

11 

think one of the things we were looking at is it has become so difficult for working families to actually provide child care. 

So, here is what this Act does. H.R. 4867 expands the pre-tax deduction as part of the dependent care assistance program to 

$10,500 a year for married couples and $5,000 for single filers. This 

increase in the tax deduction closely matches the average annual 

cost of child care. And this pre-tax deduction is indexed to inflation. 

The bill would also provide employers with a tax credit to help 

with the administrative costs of starting up such a program for 

their associates and it gives employers a $1,000 tax credit for 

matching contributions of their associations. This is going to encourage more employers to offer this flexible spending account for 

all the folks they work with. 

Now, here are a few facts to consider. Six out of ten families with 

children, both parents are working. And that percentage is even 

higher for single moms, where 7 out of 10 moms work outside the 

home to take care of their kids. Working moms are much less likely 

to be living in poverty than their counterparts that stay at home. 

The problem, however, is that child care costs have skyrocketed to 

over $10,500 a year. Child care costs have grown almost eight 

times the rate of family incomes, according to most news reports. 

And for example, in Pennsylvania a 2-parent household is spending 12 percent of their income on child care. And with the average 

cost of child care coming in at over $10,500 a year, it is no wonder 

families are struggling so hard to make ends meet. This is impacting the ability for families to buy a home and pay off their student 

debt. 

The American people feel too often that Washington is out of 

touch with economic realities our nation is facing, and it is time for 

us to get back home with the people that we represent, to actually 

feel what they are going through and then reacting to help them. 

So expanding the dependant care assistance program will help 

more working families participate in and afford quality child care 

without going broke. 

Everyone in America benefits when our children have a strong 

start in life through quality child care. And any investment in the 

next generation of Americans is just, quite simply, a very good investment. 

Therefore, it is my sincere hope that the Committee will mark 

up this legislation in the near future for our children’s family—for 

our children and for our working families. 

Mr. Chairman, I appreciate it. Ms. Sa ́nchez, thank you so much. 

And Save the Children were absolutely incredible in helping us to 

get to this. So thank you so much. I yield back. 

Chairman BOUSTANY. Thank you, Mr. Kelly. 

Mr. Renacci. 

Mr. RENACCI. Thank you, Mr. Chairman, for holding this hearing. I am grateful for many ideas that my colleagues have and will 

present today. Indeed, I am a proud cosponsor of many of these 

bills. 

The premise, though, behind many of these bills is rooted in the 

fact that we have an outdated and anti-competitive tax system. Because of that, we continue to try and make changes. But it is really 

time for an overhaul. By not overhauling our tax system, the U.S. 

12 

has fallen drastically behind. Over the last three decades, the average marginal corporate income tax rate among OECD countries has 

fallen from 48 percent to under 25 percent. In fact, since 2000, we 

are one of only three of 34 OECD countries that have not cut their 

corporate tax rate. 

With the highest corporate tax rate in the industrialized world, 

it is no wonder U.S.-based businesses hold back on domestic investment and hiring plans, instead choosing to invest in other countries 

with what—much more pro-growth tax regimes. Corporate income 

taxes are the most harmful tax to economic growth. That is likely 

why every OECD member besides the U.S. relies more heavily on 

consumption tax measures which raise revenue with less economic 

damage than the corporate income tax. 

I am aware of arguments that—critical of the move to drastically 

reduce the corporate tax rate saying we shouldn’t join the race to 

the bottom. Other critics say that corporations shouldn’t have a 

lower tax rate than individuals. But framing this as a them-versusus narrative completely ignores the incidence of corporate income 

tax. 

It is so important to understand who bears the burden of a high 

corporate tax rate. I said it before, I will say it again. The burden 

of corporate tax rate does not ultimately fall on corporations, it is 

born by people, customers, workers, and investors. Americans are 

angry with Washington, they want big change. I agree that we 

need big change. That is why I started working with my colleagues 

about a plan I am preparing that will make our business tax system the most competitive in the world. We can’t settle for a corporate tax rate that is the middle of the path. 

This pro-growth plan will repeal the corporate income tax rate, 

replace it with a single-digit tax on business activities. This will 

provide a tax platform that fosters growth, encourages investment, 

and ensures a level playing field. My plan would also reform the 

individual tax system to ensure that low to middle-income households still see an increase in after-tax income, even taking an impact of a consumption tax, and as revenue growth on a dynamic 

basis. 

These are big, bold ideas. While some may say that such a plan 

is too far outside the mainstream of politically viable, we are at the 

point where we need an overhaul, not an oil change. Old plans may 

not be well received by some special interest folks, but I feel compelled to show the people of Northeast Ohio my commitment to 

both overhauling our business Tax Code to keep more companies’ 

investment in jobs in America, and reforming our individual tax 

system to raise after-tax incomes across the board and reduce complexities. Your success should be up to you, not the Tax Code. 

I look forward to continuing to meet with Members on both sides 

of the aisle about this plan, and I hope to roll out more details in 

the coming weeks. Thank you again, Mr. Chairman, for holding 

this hearing. I yield back. 

Chairman BOUSTANY. Thank you, Mr. Renacci. Next we will go 

to Ms. Sa ́nchez. 

Ms. SA ́ NCHEZ. Thank you, Mr. Chairman, for holding this hearing to allow Members to bring their unique perspectives on the tax 

reform debate. 

13 

While it’s impossible for me to highlight everything that I think 

should be a priority, I am going to try to mention just a few key 

ideas. The first point that I want to reiterate is a point that I have 

made so many times that I feel like I am back to teaching a firstgrade classroom, because I have to repeat myself, repeat myself, repeat myself. But tax reform needs to be comprehensive, and not 

piecemeal. And so I very much appreciate my colleague Mr. 

Renacci’s comments on that particular point. 

We can’t fix the Tax Code for one group and leave others worse 

off. So my biggest fear in this process has always been a final package that would put American workers, the domestic businesses that 

employ them, on even more unequal footing in our Tax Code. So 

we have to be cognizant that we don’t advantage one group at the 

peril of another. 

It is not a secret that our Federal Tax Code is woefully out of 

date. But how we get from here to there, I think, deserves a lot 

of thoughtful deliberation for us to really get into the nuts and 

bolts of it and roll up our sleeves. 

The process is also going to require very thoughtful feedback 

from those who are going to be affected by the changes that we will 

eventually make to the code. And equally important is the fact that 

each day we don’t keep moving forward on tax reform we continue 

to fall further and further behind other jurisdictions. 

The Federal Tax Code needs to be reformed in a way that is fair, 

that is simple, and that provides certainty. Our Tax Code reflects 

our priorities as a country, and creating an environment for goodpaying jobs to flourish, while allowing families to save should be 

a top priority as we move forward in talking about tax reform. 

Family responsibilities are often the greatest joy that people experience, but it is often one of the most stressful aspects of most 

people’s lives. During my time on this Committee I have been 

proud to work on legislation to help ease the burden of child and 

elder care costs in a bipartisan fashion. And for that I am grateful 

to my colleague, Mr. Kelly, for mentioning H.R. 4867, which deals 

with child dependant care. And it is my hope that the Committee 

will keep these unique financial responsibilities in mind as we 

move forward on updating the code. 

Beyond that, I just want to mention that working families are 

only able to meet their needs at home when they are able to earn 

a decent wage at work. In Southern California we are lucky to be 

the home to many domestic industries that pay the types of wages 

that allow working families to thrive and to move up on the economic ladder. Our manufacturing sector, in particular, has been 

one of the brightest spots as our economy recovered from the Great 

Recession. So fostering an environment for good-paying jobs to 

flourish in this country should be of paramount importance for the 

Committee. 

A competitive manufacturing sector allows American businesses 

to export their goods all over the world, and will help hasten our 

recovery. So, Mr. Chairman, again, I look forward to continuing to 

work with my colleagues to make sure that we get tax reform right, 

as we move forward. 

And I want to thank you for the time, and I yield back. 

14 

Chairman BOUSTANY. Thank you, Ms. Sa ́nchez. Next we will 

go to Mr. Holding. 

Mr. HOLDING. Thank you, Chairman Boustany. You know, last 

year we took a meaningful step towards tax reform by passing the 

PATH Act. And today we have an opportunity to build on the success of that legislation. 

One meaningful provision made permanent last year was the 

IRA charitable rollover provision. In the current law, seniors can 

roll over up to $100,000 from their IRA to an eligible charitable organization, tax free. However, as it currently stands, this provision 

excludes contributions to donor-advised funds, even though these 

funds are considered to be qualified charitable organizations under 

the code. 

I have introduced legislation, H.R. 4907, the Grow Philanthropy 

Act, to eliminate this unnecessary exclusion and treat all qualified 

charities equally under the rollover provisions. 

Given their ease of use and ability to directly impact local communities, donor-advised funds have become one of the fastest-growing philanthropic vehicles, and in 2014 alone paid out more than 

$12 billion in grants to charities. Donor-advised funds allow individuals, regardless of their means, to set up a fund and give to 

their preferred charities and pass these benefits on for years to 

come. By allowing our seniors to roll over contributions from their 

IRA to a donor-advised fund, we not only increase seniors’ choice 

with regard to charitable donations, but also encourage increased 

donations for years to come. 

The Grow Philanthropy Act is a simple and straightforward fix, 

and I encourage all my colleagues to join me in supporting this. 

In addition to the IRA charitable rollover provision, the PATH 

Act also made the R&D credit permanent. But unfortunately, this 

credit excludes a very important sector of innovative researchers. 

Under current law, Mr. Chairman, if a company conducts all of 

their research in-house, they are able to use 100 percent of their 

eligible expenses. However, if they contract out their research to a 

clinical research organization, a practice which is extremely common in the life science industries, the sponsor of that research is 

only allowed to use 65 percent of their eligible expenses towards 

determining the credit, and the remaining 35 goes unused. 

Additionally, the clinical research organization that has contracted to conduct the research is unable to claim the R&D credit. 

This is in stark contrast to other countries. Mr. Meehan and I have 

been working on a bill, H.R. 2481, the Domestic Research Enhancement Act, which would fix this problem, and I would also encourage my colleagues to support this bill. 

Thank you, Chairman Boustany, for the opportunity to testify, 

and I yield back. 

Chairman BOUSTANY. Thank you, Mr. Holding. Next we will go 

to Mr. Reichert. 

Mr. REICHERT. Thank you, Chairman Boustany, for holding 

this important hearing. I want to talk about three bills rather 

quickly. Some have already been mentioned. Others have been 

mentioned that I will not talk about that I am supporting. 

First is the S Corp Modernization Act, includes common-sense 

simplification proposals supported by Members of the House and 

15 

Senate on both sides of the aisle. I would like to thank Mr. Kind, 

especially, for his work with me on this bill to encourage growth 

on Main Street by reforming and repealing unnecessary rules and 

limitations on S Corporations. 

Specifically, one provision in the bill allows non-resident foreign 

individuals to be eligible beneficiaries of an electing small business 

trust. So I have heard from a seventh generation family who owned 

a company and the struggles it has faced, based on the nationalities of the spouses of the family members, including family members who have had to sell their stock in the company because of 

current restrictions. With the number of burdens our business owners face, does it make sense to maintain yet another hurdle, simply 

based on who someone decides to marry? 

I am also proud to partner with Ron on the Promotion and Expansion of the Private Employee Ownership Act that encouraged 

the creation of employee-owned businesses through S Corporation 

employee stock ownership, known as ESOPs, allowing more hardworking Americans to have a stake in their companies and hope for 

a secure future. 

Additionally, Mr. Larson and I, as he has mentioned, have been 

working on legislation near and dear to my heart to support the 

work of philanthropic enterprises that seek to be successful businesses and sources of change in communities. One such example is 

a brewer out of Minnesota called Finnegans, and then, of course, 

Newman’s Own, mentioned by Mr. Larson. These companies donate 

all of their profits in a quest to eliminate hunger. Our bill will encourage the creation of these types of businesses committed to donating all the profits to charity, and making a difference in our 

communities across this country. 

So, in conclusion, Mr. Chairman, in Washington we know one or 

two things about beer and about brewing beer, spirits, and wine, 

the number of jobs these growing industries support, and I look forward to working with my colleagues on this Committee to update 

and reform our alcohol excise taxes. 

I yield back. 

Chairman BOUSTANY. Thank you, Mr. Reichert. 

Mrs. Noem. 

Mrs. NOEM. Thank you, Mr. Chairman, for holding the hearing. 

It is great that today we are opening up the Committee for different ideas on how to improve and simplify the Tax Code, something—that is a goal that we share with the American people. 

I want to discuss several bills I am working on that I believe are 

common-sense improvements to the Tax Code. And some of those 

bills I am working on have a lot of potential to fix some of the 

issues that we are dealing with in South Dakota. The first involves 

the Federal Government’s trust responsibility to our native people. 

Native Americans and Alaskans are exempt from the individual 

mandate under the Affordable Care Act because of its obligation of 

the Federal Government to provide for their health care. In the 

haste in which the law was written, tribal governments that primarily employ Native Americans and Alaska Natives are not exempt from the employer mandate, meaning tribes will be forced to 

offer coverage or pay a tax penalty for individuals whose care is already the responsibility of and paid for by the Federal Government. 

16 

To solve this problem, I have introduced H.R. 3080, the Tribal 

Employment and Jobs Protection Act, which would exempt tribal 

governments, businesses, and organizations from the employer 

mandate. Without action, tribes fear that they could be on the hook 

for millions of dollars of penalties under the mandate. This money 

will have to be diverted from other vital services in Indian Country. 

I would also like to enter into the record a letter from the Rosebud Sioux Tribe in support of my bill, Mr. Chairman. 

[No response.] 

Mrs. NOEM. Mr. Chairman, I would like to enter that letter. 

Chairman BOUSTANY. Without objection. 

[The information follows:] 

17 


22372.003
18 

f 


22372.004
19 

Mrs. NOEM. Thank you. I am pleased to have bipartisan support 

for this legislation, and the support of many of my colleagues on 

this Committee. 

Second, I would like to talk about ways to improve the Tax Code 

to promote economic development in Indian Country. Many tribes 

seek to provide for their members through economic development. 

However, because of IRS rules, tribes are not eligible to be shareholders in S Corporations like other tax-exempt entities. This can 

take potential economic development opportunities off the table for 

communities that need them most. The Tax Code should not hinder 

tribes working to improve the quality of life for their members. For 

this reason I am working to fix this and I am looking forward to 

working with my colleagues on this issue. 

Finally, I just wanted to mention updating the tax incentives for 

American alternative energy. I will again be introducing bipartisan 

legislation with my colleague from New Jersey, Mr. Pascrell, to extend and reform the biodiesel tax credit, and to ensure that it is 

properly focused on American production, similar to other energy 

and manufacturing provisions in the code. 

So thank you again, Mr. Chairman, for holding this important 

hearing, and I yield back. 

Chairman BOUSTANY. Thank you, Mrs. Noem. I should state 

also, without objection, all Members’ opening statements, as well as 

their written statements will be made part of the record. 

I want to thank all the Subcommittee members for their participation in this hearing. And now we are going to move on to our 

panel, our first panel, which are members of the full Committee, 

Mr. Johnson of Texas, Mr. Roskam of Illinois, Ms. Jenkins of Kansas, and Mr. Davis, also of Illinois. We appreciate you being here, 

and I look forward to your testimony. 

Mr. Johnson, you may proceed. 

STATEMENT OF THE HONORABLE SAM JOHNSON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. JOHNSON. I appreciate you letting me testify in front of you 

today. I want to discuss my bill, which is H.R. 4381, the Service 

Member Retirement Improvement Act. By way of background, last 

year’s defense authorization bill included significant retirement reforms. The reforms included a reduction in the military pension, 

but also included, for the first time ever, a match for servicemembers’ retirement contribution to the TSP. This is a 401(k) plan 

for Federal workers and those in the military. 

Unfortunately, as it turns out, these reforms may inadvertently 

harm those guard and reserve forces who happen to also participate in the retirement plan in their civilian jobs. A problem is that 

those guard and reserve forces who contribute the maximum possible in their civilian jobs can’t then participate in the TSP. As a 

result, they don’t get the TSP match to help make up for the reduction in their pensions. And why is that? Because the IRS caps the 

amount an individual can save for their retirement through work. 

Generally speaking, that is $18,000 per year. 

So, what my common-sense bill would do is simply allow these 

servicemen to contribute the maximum to both their civilian and 

military TSP. I would note that the IRS already allows state and 

20 

local workers, as well as teachers, to contribute the maximum 

amount to both the government and civilian retirement plans. So 

if that is the case, why shouldn’t our brave men and women in uniform be allowed to do the same? 

Mr. Chairman, my bill is supported by over 10 major military 

and veterans groups. I would like to submit for the record a letter 

of support from some of those groups. 

Chairman BOUSTANY. Without objection. 

[The information follows:] 

21 

f 


22372.005
22 

Mr. JOHNSON. As a member of this Committee who fought in 

two wars, I can tell you that those serving in our country deserve 

the best. And the bottom line is they should not be penalized when 

it comes to saving for retirement. Moreover, in our increasingly 

dangerous world we must ensure that our military can recruit and 

retain the best and the brightest. This bill would help ensure just 

that. 

Thank you again for the opportunity to speak in support of the 

bill, Mr. Chairman, and I yield back. 

Chairman BOUSTANY. Thank you, Mr. Johnson, and thank you 

for your service. 

Mr. Roskam. 

STATEMENT OF THE HONORABLE PETER ROSKAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. ROSKAM. Thank you, Chairman Boustany and Ranking 

Member Neal. Sitting on this side, it is a good thing we have all 

got good self-images. Because without eye contact, you get a little 

bit unsettled. But thank you very much, just for the chance to be 

before you today. 

I am here to present quickly three bills, and then just plant the 

seed on one concept. The first bill is called the Legacy IRS Act, and 

it was an initiative, actually, of Congressman Cramer of North Dakota. And here is what he is trying to do. And I am involved in 

this, along with Mr. Blumenauer, Paulsen, and Tiberi on the Committee. 

Currently, you can donate your IRA to a charity, tax-free. And 

you can leave money in your will, tax-free. But if you move your 

IRA into a charitable life income plan, that is taxed. So middleclass retirees can’t afford the tax hit because they need that money 

to live off of, and what we are trying to do then with this bill is 

simply eliminate the taxation of that move from an IRA to a charitable life income plan. 

It is not controversial, I think it makes a lot of sense. It is not 

unlike Congressman Johnson’s initiative a minute ago. That is the 

first bill. 

The second bill is this, to stop taxing death and disability. And 

this has been introduced today, along with Congressman Kind of 

the Committee. When a student passes away or becomes permanently disabled, their student loan debt is forgiven. That is great. 

The problem is there is a tax liability that is attached to that. That 

is not great. In fact, it is ridiculous, and it is absurd. And so, the 

bill would remove that tax liability. Again, very common sense, and 

it is consistent with the theme of removing that tax liability, or the 

underlying liability, itself. 

Third bill, quickly, is called the Free File Act. It makes permanent the free file program, 75 cosponsors in the House. This is a 

good public-private partnership to allow people access to sophisticated tax software at no cost to themselves. 

And then, finally, an idea—and this is just seed planting at this 

point, but it is a bill that I am working on and will intend to move 

forward, and it is based out of a hearing that the Oversight Subcommittee had. And it is this concept. There are elements of the 

Tax Code that relate to enterprises that choose to do business with 

23 

state sponsors of terror. It has to do with Section 901(j) of the Internal Revenue Code. There are some provisions in place that make 

it very uncomfortable to do business with state sponsors of terror. 

But we need to make it more uncomfortable to do business with 

state sponsors of terror. 

You may have seen in the news Boeing Company is actively contemplating this exercise. That is, they are seriously thinking about 

selling planes, a fungible production, to the Iranians, when everybody admits that the Iranians are sponsors of terror. We need to 

do what we can, I would argue, in the Tax Code and within our 

jurisdiction. So I will be, at some point, presenting that. 

Thank you, and I yield back. 

Chairman BOUSTANY. Thank you, Mr. Roskam. 

Mrs. Jenkins. 

STATEMENT OF THE HONORABLE LYNN JENKINS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS 

Ms. JENKINS. Chairman Boustany, Ranking Member Neal, 

thank you for holding this hearing. Distinguished Members of the 

Committee, thank you for affording me some of your time this 

morning. 

One of the bills I would like to discuss this morning is H.R. 5193. 

It is the 529 Enable Account Improvement Act of 2016. As you recall, the President used his 2015 State of the Union Address to propose taxing 529 college savings distributions. In response, my colleague, Congressman Ron Kind, and I worked closely on legislation 

to protect 529 plans. And that became law at the end of last year. 

So, H.R. 5193 builds upon this success and further improves 529 

accounts in a variety of ways. First, it takes common-sense steps 

to encourage more employers to provide access to 529 Able plans 

by encouraging employer seed money and extending the current 

$500 tax credit for small employer retirement plan start-up costs 

to small employers establishing new employee payroll deduction 

programs for 529 or Able accounts. 

The legislation also removes barriers that discourage 529 account 

savings. I have heard from many families that do not set up these 

accounts because of the 10 percent penalty tax that occurs when 

someone makes a non-qualified distribution. This bill addresses 

these concerns by extending the current exception from the 10 percent penalty tax to transfers made directly from 529 accounts into 

IRAs, transfers made from 529 or Able accounts to charity, and 

withdrawals from 529 accounts to pay for student loans. 

Finally, the legislation would repeal the unnecessary IRS interpretation of the investment direction limitation on these accounts, 

as well as allow tax-free rollovers from 529 accounts to Able accounts. I encourage my colleagues to support this legislation. As a 

mom with a daughter who is graduating from grad school on Saturday and a son in undergrad, I understand the importance and urgency here. 

I would like to move on to another important bill, H.R. 4626, the 

Building Rail Access for Customers and the Economy Act, known 

as the BRACE Act. Across Kansas, small, privately-owned freight 

railroads move goods and raw materials for our constituents. Congressman Blumenauer and I introduced this bill to improve the priVerDate Sep 11 2014 23:45 Jul 28, 2017 Jkt 022372 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\22372.XXX 22372
24 

vate sector’s ability to maintain services by permanently extending 

the Section 45(g) short-line tax maintenance tax credit. 

As of today, 260 rail customers with 880 locations and 47 states 

have joined saving our service, and are calling on Congress to pass 

the BRACE Act. I highly encourage my colleagues to support that 

legislation. 

And finally, I would like to briefly mention H.R. 4672, which 

would restore and make permanent the suspension of the net income limit on percentage depletion for oil and natural gas produced 

from marginal properties. It is important relief, it is critical to preserving the production of oil and gas from America’s smallest producers. 

And with that I yield back. Thank you. 

Chairman BOUSTANY. I thank you, Ms. Jenkins. 

Mr. Davis. 

STATEMENT OF THE HONORABLE DANNY DAVIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. DANNY DAVIS OF ILLINOIS. Thank you for the opportunity to highlight a few of my priorities for improving our tax system. 

First, the Julia Carson Responsible Fatherhood and Healthy 

Families Act would help close the gap in the earned income tax 

credit by expanding it to childless workers and non-custodial parents, the only group that the Federal tax system taxes into poverty. 

The earned income tax credit is an amazing pro-work success story, 

and it currently excludes millions of low-income young men who 

face low and falling labor force participation. I am pleased that 

both Speaker Ryan and President Obama have supported this critical expansion to promote work and reduce poverty. 

In addition, the Fatherhood Act would lower the age of the 

earned income tax credit eligibility to 18 for foster youth. Currently, the earned income tax credit disadvantages former foster 

youth who enter the workforce earlier, experience higher rates of 

poverty, attend college less often, and receive less, if any, financial 

support from parents than their peers. Lowering the age of the 

earned income tax credit eligibility for former foster youth promises 

to promote economic well-being, reduce poverty, and increase labor 

force participation for these vulnerable youth. 

Secondly, my VITA Act would permanently authorize the community volunteer income tax assistance matching grant program that 

funds critical tax preparation, taxpayer outreach, and related financial services for tens of thousands of low-income families. 

Finally, I ask that the Subcommittee hold a hearing on the Adoption Tax Credit Refundability Act that I led with Representatives 

Black, McDermott, Franks, Marino, Langevin, and Bass. This bill 

would restore the refundable element of the credit, and help thousands of low-income families. Half of the youth adopted from foster 

care live in families at or below 200 percent of the Federal poverty 

level who receive limited benefits from this credit. Our bill is supported by the 150 member organizations of the adoption tax credit 

working group, and the hearing would provide an excellent legislative history to prepare this bill for consideration next year. 

25 

I thank you for this opportunity and yield back the balance of my 

time. 

Chairman BOUSTANY. Thank you, Mr. Davis. I want to thank 

all four of you for bringing these important tax proposals before the 

Subcommittee. And they will be taken under consideration. Thank 

you so much. 

We will call our next panel up: Mr. Buchanan, Mr. Rice, and Mr. 

Rouzer. This panel will also include Mr. Meehan. So it is Mr. Vern 

Buchanan, Tom Rice, Mr. Rouzer, and Mr. Meehan. 

[Pause.] 

Chairman BOUSTANY. Mr. Buchanan, you may proceed. 

STATEMENT OF THE HONORABLE VERN BUCHANAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. BUCHANAN. Thank you, Mr. Chairman. I also want to 

thank the Ranking Member and the Committee today. I have four 

bills that will help grow the economy and create jobs. 

My first bill is a pass-through bill that simply says small businesses shouldn’t pay more than corporations, or big corporations. 

We need to lower the tax on corporations. There has been discussion about 35 to 25, 28 percent. I am supportive of that. But today 

the average business in Florida, a pass-through, is 43 percent. Big 

corporations are at 35. Many places in the country, state and Federal, it is over 50 percent. My bill simply says lower those tax rates 

to the same—nothing higher than corporate rates, going forward. 

That is my pass-through bill. 

My second bill is a start-up bill. Simply, we have got more businesses that are closing than opening for the first time in our history, and I want to take the write-off for a start-up from $5,000 to 

$20,000, which would be 4 times what it is today. It would encourage more start-ups. It is a bipartisan bill. There are many businesses I have seen over the years starting in their garage, and you 

end up with an Apple computer. We need to encourage more startups, this bill will do that. 

Also, I have a retirement bill. I read the other day, 62 percent 

of Americans—I couldn’t believe it when I read it. It is true, I 

guess, 62 percent of Americans don’t have $1,000 in the bank. The 

idea is to let small businesses work together to lower your administrative costs to put retirement plans in place. That is what that bill 

will do. 

My last bill is a bill on—a citrus bill. In Florida we have been 

impacted. Ninety-nine percent of the trees have a disease called citrus greening. In Texas it is 50 percent. And what my bill will do 

will allow investors to get the same write-offs, working with farmers, to get those deductions that they need. We need to be replacing 

these trees. When you think of Florida you think of orange juice, 

and we are completely at risk in that industry. 

And again, I want to thank you and the panel for the opportunity 

today. 

Chairman BOUSTANY. Thank you, Mr. Buchanan. 

Mr. Rice, you may proceed. 

26 

STATEMENT OF THE HONORABLE TOM RICE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA 

Mr. RICE. Thank you, Mr. Chairman. Chairman Boustany and 

Ranking Member Neal, thank you for hosting today’s hearing to 

hear Members’ tax proposals and priorities. I would like to discuss 

an issue that is of great importance to the Southeast: providing appropriate clarity for the nuclear production tax credit. 

Eleven years ago Congress included the nuclear production tax 

credit within the Energy Policy Act of 2005. As the last domestic 

nuclear power reactor was built decades ago, Congress designed the 

nuclear PTC to encourage investment in advanced nuclear energy 

projects. 

South Carolina and Georgia heard this call loud and clear. These 

states are building 4 new nuclear units, the first in 40 years, in 

America. As the cost of construction for advanced passive nuclear 

power facilities is understandably expensive, both public and private entities were required for the facilities’ development. In each 

unit one of the partners is a not-for-profit entity owning approximately 50 percent, both in South Carolina and in Georgia. 

According to the current Treasury Department guidance, the notfor-profit entities cannot efficiently utilize the credits, and therefore, cannot pass the savings on to their customers. As the guidance reads, the savings from the nuclear production tax credit will 

not be passed to ratepayers in South Carolina, Georgia, Florida, 

and Alabama who have helped shoulder the cost of the unit’s construction. 

Interestingly, the ratepayers for the for-profit companies get the 

credit, but the not-for-profits, like the municipalities and the 

states, don’t get the credit. The Treasury’s interpretation creates 

inequities among the project’s stakeholders that must be corrected 

for the program to work, as Congress originally intended. Other energy technologies are able to efficiently use their credits with public-private partnerships. Nuclear energy should have the same consideration. 

For the purpose of this hearing I will use an amendment I introduced last year. The amendment would allow all owners within an 

advanced nuclear public-private partnership to be eligible to efficiently capture the value of their allocated credits. The credit 

would be provided to private entities that own or assist the development of the project. The reallocation of the credit will be passed 

on to the ratepayers of these public entities. The Joint Committee 

on Taxation has stated this clarification offers minimal cost, $12 

million—not billion, $12 million—over 10 years. 

In the last few months I have worked closely with Chairmen 

Brady and Boustany to share my continued interest in providing 

an appropriate fix for this oversight. I am grateful for the many 

hours the Ways and Means tax staff has dedicated to assisting me 

in finding a solution that works both for this body and the Senate. 

I will continue to work on this issue until we are able to pass these 

savings on to South Carolinians, Georgians, Floridians, and 

Alabamans. 

Thank you again for your time. 

Chairman BOUSTANY. Thank you, Mr. Rice. 

Mr. Rouzer, you may proceed. 

27 

STATEMENT OF THE HONORABLE DAVID ROUZER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. ROUZER. Thank you, Mr. Chairman. I appreciate the opportunity to be here before the Committee to discuss H.R. 5015, which 

is the Combat Injured Veterans Tax Fairness Act. At the outset I 

think it is important to note that there is a Senate companion of 

this bill that has been reported out of the Senate Finance Committee. 

On background, in 1991 a Federal district court case, St. Clair 

versus United States, determined that one-time lump sum disability severance payments received for injuries resulting from active service should be excluded from taxable income, similar to 

monthly disability payments. The only problem is that is not what 

has happened. Despite this court decision and the resulting regulatory guidance, taxes on combat-related disability severance payments have been withheld improperly for many years. 

Now, veterans are typically not even aware that their benefits 

were improperly reduced. Most have surpassed the three-year period in which a taxpayer can file an amended tax return with the 

Internal Revenue Service and, therefore, are unable to recover the 

improperly-withheld compensation. And that is what this bill, this 

legislation, aims to fix. 

The Combat Injured Veterans Tax Fairness Act of 2016 directs 

the Department of Defense to identify veterans who, since January 

1991, when the Gulf War began, have been separated from armed 

service for combat-related injuries, and who have received a severance payment; identify instances of improper withholding; and determine how much the combat wounded veterans are owed. 

Now, in terms of number of veterans this would affect, we are 

looking at approximately 14,000 from all 50 states, as well as the 

District of Columbia. The Joint Committee on Taxation has stated 

that the effect on receipts is less than 500,000 per year for Fiscal 

Year 2017 and 2018, as well as, in the aggregate, over the 2016 to 

2026 budget window. 

I want to thank the National Veterans Legal Services Program 

for identifying this problem. And Mr. Chairman and Members of 

the Committee, I urge us to move forward on this. I think this is 

good common-sense legislation that would be one more win, one 

more thing that we can do to help our veterans who are in need. 

Thank you, Mr. Chairman, I yield back. 

Chairman BOUSTANY. Thank you, Mr. Rouzer. 

Mr. Meehan, you may proceed. 

STATEMENT OF THE HONORABLE PAT MEEHAN, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. MEEHAN. I want to thank the Chairman, and the Ranking 

Member and the full Subcommittee for this opportunity, and I am 

here to speak about three legislative priorities. These are going to 

create jobs, they are going to enhance the promotion of alternative 

energy and, most importantly, they are going to also help us promote better investment and health outcomes. 

28 

First I would like to urge support of H.R. 5172, which amends 

the Tax Code to extend and phase out the energy tax credit for all 

Section 48 technologies. Congress acted in December 2015 to renew 

the phase-out—renew and phase out the investment tax credit for 

investment and manufacturing of solar energy technologies, but it 

left out the rest of the advanced energy technologies in Section 48, 

which include fuel cells, CHP, micro-turbines, geo-thermal heat 

pumps, and small wind. 

This was a drafting error. It has resulted in Congress inadvertently picking winners and losers, and the leadership in both chambers have acknowledged that fixing this oversight is a priority. My 

bill would extend the investment tax credit to all Section 48 technologies, and under a phase-out as soon as and as quickly as possible. We are just trying to give those other technologies the exact 

same treatment as we gave solar, and we are phasing out this credit at the end of 2021, just like we did with solar. It levels the playing field and prevents Congress from picking winners and losers. 

I would like to talk about 2841, the Domestic Research Enhancement Act of 2015. It is a piece that I have worked on with my colleague, George Holding. It ensures the United States remains a 

leader in medical innovation, and encourages employment in the 

high-wage research sector. Specifically, the bill would modernize 

the R&D tax credit to recognize the important role that research 

plays in the development of innovative new medical products. 

Currently, providers of what they call contract research services 

aren’t eligible to receive any portion of the R&D tax credit. And 

also, when the sponsor of the research, generally a bio-pharma 

company, contracts with a clinical research organization, its eligible expenses for the credit are reduced from 100 percent to 65 percent. The remaining 35 percent just vanishes. 

Our bill would expand the R&D tax credit to enable the CROs 

to be eligible for the 35 percent of the credit that currently disappears when the work is contracted out. And by enabling contract 

research organizations to capture a portion of the research and development tax credit, it is currently—this legislation will promote 

better health outcomes and allow us to remain competitive, globally. 

Lastly, I am pleased to have bipartisan support for Mr. Kelly, 

Mr. Larson, Mr. Neal, and Mr. Kind on H.R. 2179, the PARTNER 

Act. It deals with early-stage research by incentivizing investment 

in R&D-focused small business. America and our life sciences workers lead the world in medical research. They are at the tip of the 

spear in their efforts to find new treatments and cures. But right 

now the Internal Revenue does not permit high-tech research passthrough exemptions from the definition of ‘‘passive activity’’ under 

the passive loss tax rules. 

The bipartisan bill permits an exemption for small businesses 

where more than half of its business is qualified research, and only 

those entities. The rules have the effect of blocking private investors from partnering with a merging pre-revenue high technology 

small businesses [sic]. Our bipartisan bill lowers that bar and gives 

the research a chance. 

29 

It is estimated that $10.3 billion a year would be invested and 

create about 156,000 additional jobs. I appreciate the time and consideration for each of these bills, and I thank you, Mr. Chairman. 

Chairman BOUSTANY. Thank you, Mr. Meehan, and I want to 

thank all four of you for your testimony and bringing these important tax propositions forward. And we look forward to examining 

them further. 

And with that, you can—we are done with you for now, and we 

will call up the next panel. 

We have Mr. Dold, Mr. Poe, Ms. Eshoo, and Mr. Salmon. 

[Pause.] 

Chairman BOUSTANY. I thank our colleagues for joining us 

today. 

Mr. Dold, you may proceed. 

STATEMENT OF THE HONORABLE BOB DOLD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. DOLD. Thank you, Mr. Chairman. I certainly appreciate the 

opportunity to highlight a couple of important bills that I believe 

are worthy of the Committee’s further consideration. 

H.R. 4165 is the Mechanical Installation Incentive Act of 2015. 

It encourages facility and building owners to increase the use or 

maintenance of mechanical insulation by offering a 30 percent tax 

credit in the fiscal year in which the mechanical insulation was put 

in service, or the maintenance completed. This bill will increase energy efficiency, while also creating thousands of good-paying jobs. 

This tax credit will be available for five years, giving ample time 

to implement the necessary installation or maintenance. 

My second piece of legislation, Mr. Chairman, is one that is near 

and dear, I think, to many of our hearts. As anybody that is talking 

to constituents lately, talks to students, one of the questions that 

comes out of their mouths is, ‘‘How am I going to be able to afford 

to pay for college,’’ or, ‘‘How am I going to be able to afford the student loan debts that I have?’’ 

H.R. 5191, the Help for Students and Parents Act, will make 

paying for college much more accessible to students. Over the last 

three decades, the average tuition for a four-year college has more 

than tripled, while the typical family income has barely budged. 

The result is that college seniors, as they prepare to graduate this 

spring, will have an average debt of about $30,000. 

Whenever I talk with these students and the parents that I hear 

from they are saying, ‘‘Paying for college is getting further and further out of reach.’’ And we need to be able to do something if we 

want to enable them to be able to go to school or get another education, whether it be becoming a skilled welder, or whatever it may 

be. We want to make sure that they are actually getting the education they want. 

My legislation proposes an important yet common-sense shift in 

the way that our country approaches student loan debt. 

Under current law, if an employer pays an employee’s student 

loan debt, the amount received by the employee is taxable income. 

The Help for Students and Parents Act would change this by excluding from the graduate’s income the amount that an employer 

30 

contributes towards the employee student’s loan repayment, up to 

a cap of $250.00, which stands in current law today. 

The exclusion from income to the employee would greatly help 

with maximizing the dollars earned that go towards paying off 

one’s student loans. To encourage employers to adopt this, the bill 

also provides a small tax credit to employers, based off the amount 

that they contribute to help with the employee’s loan repayment. 

The second part of the bill increases our focus on parents who 

want to save for their children’s education. On this front, the bill 

provides an exclusion from family’s income for employer contributions to 529 plans. And a small tax credit is given to the employer 

to encourage the employer’s contributions towards college savings 

accounts that an employee sets up for their children. 

This legislation will allow graduates to pay back their loans faster at a lower overall cost. Our bill aims to dramatically increase 

the uptake of employer-sponsored plans. For employers or employees, right now, they only participate about three percent of the 

time. And that becomes a—much more of a problem as we look at 

what students want to do. They are not saving for retirement and, 

therefore, we want them to get into the process of actually saving. 

The faster they pay on their student loans, the faster they can 

start saving for their own retirement. 

I recognize my time has expired, but I also want to commend 

Rodney Davis for his work on this particular issue. But I do believe 

this is an area that we can come together in a bipartisan way to 

really start tackling the student loan debt problem. 

I thank you and yield back. 

Chairman BOUSTANY. Thank you, Mr. Dold. 

Mr. Salmon, you may proceed. 

STATEMENT OF THE HONORABLE MATT SALMON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA 

Mr. SALMON. Thanks for holding this important hearing on tax 

legislation. As the Committee knows well, tax policy affects just 

about every part of American life. 

Of course we all want to ensure that the Tax Code is fair, it 

incentivizes beneficial behaviors that strengthen the nation and 

our economy. But we can always improve. 

When I returned to Congress I noticed part of the current Tax 

Code that is actually punishing those who wish to protect their 

hearing when hunting in the outdoors and while target shooting. 

Today a Depression-era antiquated and, frankly, oppressive tax 

provision instituted under FDR is restricting the ability of lawabiding Americans to access basic hearing protection equipment for 

firearms. 

In fact, not only is it part of the Tax Code, it is much more difficult for American sportsmen to protect their hearing while hunting, but it is also making it more difficult to purchase a suppressor—essentially, a muffler. In fact, I believe the same gentleman that invented the muffler invented the suppressor—than it 

is to buy an actual firearm—that is kind of ridiculous—such as an 

AR–15 or a semi-automatic shotgun. It doesn’t make sense. 

As one who suffers from hearing loss myself, due in large part 

to my many years as an avid sportsman, I can tell you it is an imVerDate Sep 11 2014 23:45 Jul 28, 2017 Jkt 022372 PO 00000 Frm 00038 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\22372.XXX 22372
31 

portant issue that we don’t make it harder for folks to protect their 

hearing. 

As you may know, a suppressor is a common-sense piece of safety 

equipment which protects hearing of sportsmen and observers 

alike. While suppressors do not even come close to silencing the 

sound—in fact, Hollywood myth, I think, sometimes guides our policy. If you actually participate in shooting with a suppressor, you 

will find that it significantly reduces the sound, but you still know 

that a shot has been fired. 

Again, like I said, they don’t even come close to silencing, they 

just reduce the sound to levels below just 140 decibels. And 140 

decibels is comparable to a thunder clap, a rock concert, a jack 

hammer, or a jet engine at about 100 feet, and is the maximum 

level permitted in the workplace by OSHA. 

By reducing the noise to more tolerable levels, we also reduce the 

disruptive effects that firearm noise has on wild game populations. 

In short, the use of suppressors makes things better and safer. In 

fact, Mr. Chairman, I think a lot of other nations are a little bit 

more progressive on this than we are. In fact, they require—countries that have very strict firearms laws require that you hunt with 

suppressers because of noise safety. 

And I am going to just wrap up, because I think it was included 

in the 1933 Act because a lot of the fish and game people felt that 

it would increase poaching. Well, 39 states have laws that allow 

hunting with suppressors, and there hasn’t been a greater incidence of suppressors [sic]. And if using that logic makes a lot of 

sense, maybe we should make everybody go through the class three 

process with ATF when you buy a bow and arrow, because that 

makes no noise. 

And so, I think it is a ludicrous policy. We have close to 70 cosponsors, bipartisan, and I think it is an idea whose time has come. 

The industry is doing very, very well. What is wrong with protecting your hearing if you are an avid sportsman? I think it is a 

common sense. 

Chairman BOUSTANY. Thank you, Mr. Salmon. 

Mr. Poe, Judge Poe. 

STATEMENT OF THE HONORABLE TED POE, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. POE. I want to thank the Chairman and the Ranking Member for allowing me to testify today. I am here to discuss H.R. 2883, 

the Master Limited Partnership Parity Act. This bill is a bipartisan 

bill. And I also want to thank Representative Thompson for being 

a coauthor of the bill, and Senator Coons and Senator Moran have 

the same bill over in the Senate. 

The bill will go a long way to encourage energy development domestically in the United States. This Master Limited Partnership 

Act is a simple bill that expands the MLP tax structure to include 

all forms of renewable, domestically-produced energy. 

Right now, MLPs are a successful tax structure that is used by 

many oil and gas companies. The structure has been very successful for U.S. companies such as Enterprise, which is based in Houston, Texas, and other companies. The structure has allowed these 

capital-hungry companies to track investments they need to grow, 

32 

investments that may otherwise not have gotten without the structure. 

So the bill would allow clean energy projects to utilize MLPs as 

a beneficial tax structure that taxes a project like a partnership, 

but that trades its interest like a corporate stock, a C Corp. This 

allows access to liquidity and equity markets, and prevents double 

taxation. For the last 30 years MLPs have given natural gas and 

coal industries access to private capital at lower cost. And so, this 

is not a subsidy or a tax credit, this is a corporate tax structure 

that treats all energy producers the same, and promotes domestic 

energy. 

I also want to discuss another piece of legislation. It is based on 

a hearing that I had in the Terrorism Subcommittee last month. 

We found out that many individuals who work for 501(c)(3) organizations that funded Hamas now work for other U.S.-based organizations: American Muslims for Palestinians, or AMP. The Holy 

Land Foundation for Relief and Development, Kind Hearts for 

Charitable Humanitarian Development, and the Islamic Association for Palestine are all guilty of financing Hamas. 

And what has happened, people who work for those organizations 

have moved to another organization that is a 501(c)(3). It is called 

AMP. And that organization is right now involved in trying to 

have—boycott investment and sanctions movement against the 

country of Israel. 

And so, workers associated with these organizations or implicated in terror finance are free to work wherever they want to in 

other charities. This bill, all it does is require charities to be more 

transparent and give information if any of these new people come 

to work for that organization, so that the public and the donors 

know, and the government knows that these people are just moving 

from charity to charity under—I mean, under the guise of a 

501(c)(3) organization, but are involved in supporting terrorist organizations. 

Thank you, Mr. Chairman. 

Chairman BOUSTANY. Thank you, Judge Poe. 

Ms. Eshoo, you may proceed. 

STATEMENT OF THE HONORABLE ANNA ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Thank you, Chairman Boustany and Ranking Member Neal and Mr. Larson, all the Members of the Committee. I 

really appreciate your opening up the Committee to have other 

Members that are not part of your committee to come in and share 

ideas with you. It is a very good idea, and I hope that what we 

bring forward will create some sparks and some benefits for our 

country. 

I am here to talk to you about a bill that I have introduced. It 

is a bipartisan bill, H.R. 4696, the Helping Our Middle-Income 

Earners Act, the HOME Act. It really is a simple piece of legislation. It would allow homeowners who live in a community association who make up to $115,000 in annual income to deduct up to 

$5,000 in community association assessments from their Federal 

tax liability. 

33 

Community associations, which include condominium associations, homeowner associations, and housing cooperatives have 

grown substantially in recent decades, and offer affordable housing 

opportunities for our mutual constituents in countless communities 

across our country. Today over 65 million Americans reside in 27 

million housing units within a community association. 

For example, in my Silicon Valley congressional district alone, 

260,000 housing units are in a homeowner’s association. We know 

that middle-class families are struggling to keep up with the rising 

cost of living. And the purpose of this legislation is to provide these 

homeowners with tax relief to help them stay ahead, financially. 

The HOME Act also recognizes the community association assessments and fund infrastructure and services that would traditionally be provided by the homeowner’s local municipality and 

paid for through their property taxes. These services include street 

and sidewalk maintenance, trash and snow removal, storm—water 

management, among other services. Because these homeowners 

pay property taxes and community association assessments, they 

are effectively taxed twice for local service. 

This problem was recently highlighted in articles on May 4th in 

the Washington Post and in the Chicago Tribune on my legislation. 

So I again thank and commend the Subcommittee for listening 

to the priorities of your colleagues who are not Members of the 

Committee. And I also hope that you will give this bill a fair consideration as you look to broader changes to our nation’s Tax Code 

over the remainder of this Congress and continuing into the next 

one. 

Thank you. 

Chairman BOUSTANY. Thank you, Ms. Eshoo. I want to thank 

all four of our colleagues for bringing these important tax proposals 

forward, and we will certainly look at them. Thank you. 

Well, next call up our—one more panel of our colleagues: Mr. 

Buck, Mr. Harris, Mr. Meadows, and Mr. Cartwright. 

STATEMENT OF THE HONORABLE KEN BUCK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Mr. BUCK. Thank you, Mr. Chairman, and thank you for holding 

this hearing and allowing us to give you some input in the Committee. 

Mr. Chairman, I want to thank you for the opportunity to speak 

on behalf of H.R. 4220, the Water and Agricultural Tax Reform 

Act. Throughout rural America, residents cite the rising cost of 

water as one of their greatest challenges. I see it happening in Colorado. When farmers can’t afford water their crops lie withering in 

the fields, and the entire community suffers, from the farmer and 

his family to the towns and cities that rely on the agricultural industry for food and jobs. 

The Water Act empowers rural America. It keeps water affordable, while allowing farmers to have a stake in the resources they 

use every day. The Act specifically reforms the IRS rules applying 

to mutual irrigation reservoir and water companies. These entities 

are member-owned farmer cooperatives. They maintain water storage and delivery systems in much of rural America. The cooperatives can qualify as tax-exempt entities, provided that 85 percent 

34 

of their income comes from member shareholders. These members 

include farmers, ranchers, and rural water users who purchase 

water from the cooperative. 

It has become increasingly difficult for mutual irrigation reservoir and water associations to stay in business because of costly 

water infrastructure maintenance. Under current law, if one of 

these cooperatives receives more than 15 percent of its income from 

non-member sources such as recreational leases or crossing fees, it 

will lose its tax-exempt status. This forces rural water users to 

bear the burden of operations and maintenance costs in the form 

of high water assessments, just to maintain their tax exemption. 

This common-sense legislation excludes certain revenue streams 

from the 85 percent member income test. By requiring the proceeds 

from the extra revenue to be used exclusively for the operations 

and maintenance of the water companies, we can assure that these 

funds are reinvested in rural water infrastructure. This will support local economies, promote more efficient use of water, and help 

agricultural workers across the country. 

This legislation is supported by the American Farm Bureau Federation, the Family Farm Alliance and rural water associations in 

many states. I urge the Committee to empower rural America by 

moving the Water and Agricultural Tax Reform Act forward. 

Another important tax priority for me is H.R. 2903, the Craft 

Beverage Modernization and Tax Reform Act. This bill modernizes 

excise tax rates for brewers and importers. Colorado is home to 

hundreds of brewers, from local micro-breweries to major Colorado 

employers like MillerCoors and Anheuser-Busch. This bill has 

brought together brewers of all sizes, and the tax relief afforded 

under this bill will provide the capital necessary for these businesses to grow. Thank you. 

Chairman BOUSTANY. Thank you, Mr. Buck. 

Dr. Harris, you may proceed. 

STATEMENT OF THE HONORABLE ANDY HARRIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MARYLAND 

Mr. HARRIS. Thank you very much. What I am going to describe 

today is H.R. 5308, the Asset Act, which is another pathway to a 

state tax reform. 

You know, the bottom line is we pass the estate tax repeals 

through the House, nothing happens to it. So we really should 

begin to think if we can never pass estate tax repeal, of some way 

to mitigate the effect of estate tax. 

We all know what happens to a successful business or farmer or 

rancher, you know, they work hard, they accumulate things 

through their lifetime. The estate tax sits, and a lot of times they 

have to dissolve the business or the entity. If not, it is a tremendous inefficient allocation of capital during the course of doing business, because you are spending your time figuring out how to avoid 

the estate tax. 

So what this does, this bill, the Asset Act, permits individual taxpayers to opt in to a new system in which death would no longer 

be a taxable event. By taking the uncertainty of death out of the 

question of how and when assets should be liquidated, the Asset 

35 

Act will contribute to economic growth and preserve the stability 

of these companies, which are frequently family-owned companies. 

Small business owners, farmers, ranchers, and others don’t have 

to live their life fearing the tax liability imposed under the existing 

state tax, and won’t have to dismantle profitable companies, sell 

farms and ranches, over-purchase life insurance, and waste their 

money on lawyers and accountants with sheltering strategies while 

they’re alive. 

The key is that it gives the individual taxpayer the right to determine his or her destiny and to provide vital businesses and jobs 

at a time when we need them most. 

Under our proposal, individuals would essentially pay—have the 

ability to pay their estate taxes during—pre-pay them during their 

earnings years, and the government would then, on their death, 

would forego traditional Federal and estate tax and only collect 

capital gains taxes when those assets are sold at a time of the 

heir’s choosing. 

The taxpayer would have to opt into the approach by agreeing 

to pay an additional tax on his or her adjusted gross income every 

year while they are earning money and accumulating the estate for 

the life of the taxpayer. The bill has it as one percent of adjusted, 

but we want to make it revenue neutral so that, in the end, it is 

a revenue neutral bill. No tax will be levied against the estate of 

a taxpayer on their death. Again, only the capital gains will be paid 

when the heirs to the decedent decide to sell the assets in the estate. 

The taxpayers would have to pay the fee for a minimum period 

of time. In the bill we have seven years but, again, it may need to 

be adjusted to make it revenue neutral. And the choice is irrevocable, once a taxpayer chooses this system. 

So what it would mean is that you give the business owner a second, predictable way to deal with estate taxes. Again, forgoing the 

need to liquidate estates at the time of death and spending inordinate amounts of money—and again, capital—inefficient spending 

of—allocation of capital during the business’s productive life. 

Thank you very much. 

Chairman BOUSTANY. Thank you, Dr. Harris. 

Mr. Meadows, you may proceed. 

STATEMENT OF THE MARK MEADOWS, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF NORTH CAROLINA 

Mr. MEADOWS. Thank you, Chairman Boustany and Members 

of the Subcommittee. It is refreshing to have this kind of open environment to discuss possible legislation, and so I want to applaud 

the Subcommittee on your willingness to entertain this type of dialogue. 

I want to encourage the Subcommittee to endorse and support 

H.R. 210, which is the Student Worker Exemption Act. The genesis 

of this particular piece of legislation actually came from a chancellor of a university in my district as I was meeting with him. Not 

wanting to be political, he said, ‘‘there is one thing that would really help us out as it relates to the Affordable Care Act.’’ 

Knowing that the Affordable Care Act can conjure up all kinds 

of rhetoric on both sides of the aisle, he said that the particular 

36 

provision in the Affordable Care Act that requires universities to 

cover their student workers under the employer mandate was having a chilling effect on the amount of hours that they could give 

people who were wanting to work their way through college. And 

indeed, what was happening is that if they work for more than 30 

hours for 3 weeks—so that would include summer time—they were 

actually having to put forth the expense and cover them under the 

employer mandate when, indeed, the Affordable Care Act actually 

required those who are 25 years of age and younger to be covered 

under the parents’ plan or other types of insurance. 

So this was essentially a double insurance plan that was defeating the purpose of student workers on college campuses. We introduced that particular piece of legislation, we offer it here for your 

consideration. 

I can tell you that it has been endorsed by a number of university associations that would normally not endorse a piece of legislation that comes from someone with conservative pedigrees, such as 

myself. And I say that it has had tremendous support by Democrats, those in higher institutions. I think it is something we can 

all get behind, and it is certainly a common-sense approach to addressing some of the unintended consequences of the Affordable 

Care Act, and I certainly offer it up for your consideration. Thank 

you so much. 

Chairman BOUSTANY. Thank you, Mr. Meadows. 

Mr. Cartwright, you may proceed. 

STATEMENT OF THE HONORABLE MATT CARTWRIGHT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA 

Mr. CARTWRIGHT. Thank you, Chairman Boustany and all 

Members of the Subcommittee for holding this Members Day. I join 

Representative Meadows in thanking you for doing this, and encourage you to continue this sort of dialogue. I am here talking 

about H.R. 1100, the Military Spouse Job Continuity Act, which I 

introduced along with Representative Rob Wittman. 

This bill represents a small tax credit that could have a big impact on American military families. Every year, over a million 

servicemembers, receive change of station orders often requiring 

moves across state lines. Military spouses move along with them, 

and many times put their careers on hold when relocating. H.R. 

1100 simply seeks to alleviate that burden borne by military 

spouses who must re-license or re-certify in order to continue working in their chosen profession when they move with their servicemember spouse. 

Specifically, the bill provides for a tax credit of $500 for the renewal or transfer of an active duty servicemember spouse’s professional license. It applies only to the administrative fees owed to 

state licensing boards or certificate granting institutions. Currently 

there is no Federal program covering this. 

The numbers speak to the need of this tax credit. Nearly 35 percent of military spouses in the labor force are in professions that 

do require licenses or certifications for employment. The top three 

occupations of military spouses all require licensing or certification. 

37 

We are talking about teachers, child care workers, and registered 

nurses. 

A military spouse’s ability to continue in his or her own chosen 

profession impacts the military’s ability to do business and retain 

its servicemembers. Nearly 70 percent of married servicemembers 

reported that their decision to re-enlist was largely or moderately 

affected by their spouse’s career prospects. 

This bill enjoys wide support from military organizations, including the National Military Family Association, the Military Officers 

Association of America, and the National Guard Association of the 

U.S. In fact, the Military Officers Association of America has included that in their voting score card for this Congress. 

H.R. 1100 has strong bicameral and bipartisan support with 144 

cosponsors in the House and 14 cosponsors in the Senate for Senate Bill 210, introduced by Senator Bob Casey from my state. 

These men and women uproot their families and relocate in order 

to meet the needs of our national defense, and the government 

should be doing everything possible to make that transition seamless. 

Thank you again, Mr. Chairman, and thank you, all the Members of the Subcommittee. 

Chairman BOUSTANY. Thank you, Mr. Cartwright. Well, I want 

to thank all four of you, our colleagues, for bringing these very important tax proposals forward. We will look at them, and we thank 

you for your testimony today. 

Let’s call up our next panel: Mr. Rodney Davis, Mr. Scott Peters, 

Chairman Rob Bishop, Mr. Keith Ellison, and Mr. Dana Rohrabacher. 

[Pause.] 

Chairman BOUSTANY. Just take your time, Mr. Davis. 

[Laughter.] 

Chairman BOUSTANY. You may proceed with your testimony. 

STATEMENT OF THE HONORABLE RODNEY DAVIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RODNEY DAVIS OF ILLINOIS. Sorry, we go the other way 

in Ag, I apologize. Not used to sitting on this end of the witness 

table. 

Mr. Chairman, thank you for your time, and to the esteemed— 

our esteemed colleagues on this Committee. I appreciate the opportunity to talk about a very important issue: student loan debt. The average student graduates with nearly $30,000 in debt, and Americans owe more than $1.3 trillion in student loans. Student 

loan debt now represents the second-highest form of consumer 

debt, only behind mortgage debt. Not surprisingly, the student loan 

debt crisis has forced many recent college graduates to delay buying a home and saving for retirement. 

According to the Institute for College Access in Success in 2012, 

1.3 million students graduated with student loan debt; 153,400 of 

those students have since defaulted on their loan, costing taxpayers 

$4.5 billion in default liabilities. And that is just one recent graduating class. 

Employers like PriceWaterhouse Coopers and others are looking 

at new ways to help solve the student loan crisis. But it is time 

38 

Congress does its part. I propose legislation that would offer tax incentives to private businesses to help employees repay student 

loans, much in the same way it currently works when an employer 

provides tuition assistance. 

The Federal Government already does this, and I know many 

congressional staffers take advantage of the student loan repayment assistance program here on the Hill. But as of now, assistance an employee receives from their employer counts toward their 

gross income, and only three percent of American employers in the 

private sector provide some sort of student loan repayment benefit. 

We need the existing tax incentives employers receive for tuition 

assistance to be applied to student loan repayment, and not to be 

counted as gross income for employees. My bill, H.R. 3861, the Employer Participation and Student Loan Assistance Act, would do 

just that, helping companies recruit and retain young talent. Although the cap of $5,250 per year would remain the same, I 

believe this is a clean and simple fix that has a lot of support from 

both students and employers. And it is important to keep in mind 

the tangible benefits helping to reduce default rates would have on 

our economy. 

Recently my colleague next to me, Scott Peters, who has a similar bill, and I agreed to work together on this issue to help reduce 

the burden of student loan debt. We look forward to continuing to 

work with our colleagues in Congress, educational institutions, the 

private sector, and, most importantly, students to push for common-sense solutions to the ever-growing problem of student loan 

debt. 

And I want to end, Mr. Chairman, by reminding this panel that 

in one graduating class alone—one graduating class, 153,400 

former students have defaulted on their loans, leaving a potential 

$4.5 billion hit to the Federal taxpayers. We need to act. 

Chairman BOUSTANY. Thank you, Mr. Davis. 

Mr. Peters, you may proceed. 

STATEMENT OF THE HONORABLE SCOTT PETERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. PETERS. Thank you, Mr. Chairman, Mr. Neal, for convening 

this hearing and for giving me the opportunity to discuss an innovative, bipartisan proposal that would reduce the burden of student 

loan debt. And I thank Mr. Davis for his acknowledgment. We are 

trying to see if we can’t combine these ideas, because they are pretty similar, as you will hear. 

Affordable higher education for hard-working Americans is central to future generations achieving the American Dream and to 

our nation’s competitiveness. So we should be making it easier and 

more affordable for students to go to college, not keeping it financially out of reach for more and more families. 

Substantial student loan debt not only is a burden for graduates, 

but it is diminishing purchasing power and severely limiting lifetime earnings. The Wall Street Journal reported that the average 

debt for a 2015 graduate was just over $35,000. A study by DIMOS 

recently found the average student debt for a dual-headed household with bachelor’s degrees leads to a lifetime loss of nearly 

39 

$208,000 in income, and student loans, as Mr. Davis said, recently 

surpassed credit card debt to become the second-biggest source of 

personal debt in the United States. 

In our dynamic new economy, high-quality jobs now require far 

more formal education and mid-career learning than in the past, 

which can be expensive. Employers have an incentive to help their 

employees pay for education that adds value to their business. 

My bill, the Bipartisan Student Loan Repayment Assistance Act, 

would give borrowers relief from their student loan debt burden 

through incentivizing employers to offer student loan repayment 

assistance. It encourages employer-employee matching programs to 

repay student loans, similar to a matching 401(k) plan and the student loan assistance we offer to staffers and the House of Representatives. Employer and employee student loan contributions 

made through a repayment agreement would not be taxed as income, and the contributions wouldn’t be sent directly to the lender. 

Students will be able to make investments that grow the economy, like buying a home, starting a family, and putting away 

money for retirement. Businesses will be able to attract and retain 

high-skilled employees and well-qualified graduates, and a more 

skilled workforce will allow America to compete better in the global 

economy. 

Congress must embrace the opportunities to invest in our nation’s future as we work to reduce America’s student loan debt and 

unleash our economic growth. 

I thank the Committee for its consideration, look forward to 

working with you and my colleagues to move this policy forward, 

and certainly welcome any of your questions. Would yield back the 

balance of my time. 

Chairman BOUSTANY. Thank you, Mr. Peters. 

Chairman Bishop, I assure you I’m not going to ask any questions about Puerto Rico. You may proceed. 

Mr. BISHOP. Yes, right, right, sure. 

STATEMENT OF THE HONORABLE ROB BISHOP, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH 

Mr. BISHOP. Gentlemen, it is good to be here. I have a statement for the record, if indeed you have a record. We can introduce 

that later. 

I have long been involved on the study group on Germany. I am 

past Chairman of it. And I remember one time I was over there 

talking with Senator Coats, who was then the ambassador to Germany, and we recognized that in western and southern Germany, 

where there is a great deal of interface with American military, 

positive attitude towards America was understandable. 

In East Germany, where that contact was less, so their attitude 

was less. And we agreed at that time that one of the best things 

we could do for foreign policy was to get more interaction between 

people knowing about America, having that personally there. And 

one of the best ways of doing that was with foreign exchange students. 

Look, when the Iraq War broke out, Chancellor Schroder decided 

to use that as part of his campaign attacking the United States. 

One of the members of his party that helped us the most was a 

40 

gentleman in the Bundestag by the name of Hans-Ulrich Klose, 

who was always stating that in 1957 he spent a year as a foreign 

exchange student in Clinton, Iowa. Those kind of friendships that 

we develop through foreign exchange programs have an amazing 

amount of help in our foreign policy on the grass roots level. 

In the 1960s a deduction was given to those who were hosting these students of $50. The bill that I have, which is 4296, or something like that, would simply change that to $900, which is the rate 

of inflation since the 1960s. It hasn’t happened since that time. 

Anything we could do to encourage this kind of student interchange has a long-term impact on the foreign policy. You could do 

something in this Committee that would have a great impact on a 

committee that is not part of your jurisdiction. I have hosted these 

kids. So, actually, if you wanted to pass this and make it retroactive, that would be cool, I could live with that. 

[Laughter.] 

Mr. BISHOP. But it has an impact, and it is a positive impact, 

and it is one of the things that we could do to try and express the 

idea of getting people over here so they understand America and 

they can go back home and they can promote and be friends of 

America in the future. I think it is a small step that could have 

enormous impact later on. 

Thanks. 

Chairman BOUSTANY. Thank you, Chairman Bishop. 

Mr. Ellison, you may proceed. 

STATEMENT OF THE HONORABLE KEITH ELLISON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA 

Mr. ELLISON. Thank you, Mr. Chairman and Ranking Member 

and all the Committee members. 

Last week I met with a formerly homeless veteran with a service-connected injury who now is living in Fort Snelling, which is a 

old fort in Minnesota which is now home to veterans housing. And 

he said this to me. He said, ‘‘Congressman Ellison, you can’t get 

clean on the street. You can’t hold a job on the street. We need 

housing.’’ 

And, you know, I hear from young people every day who want 

to buy a home, but see most of their income disappear to cover 

rent. Crushing rent, college debt—as already been mentioned— 

make it difficult that they will ever be able to establish a downpayment to afford to buy a home. They may, but it may be a long time. 

Yesterday nearly three dozen Realtors stopped by my office to 

urge me not to make any changes to the $70 billion mortgage interest deduction. And these are my friends, and I appreciate them a 

lot. But as much as I want to see things the way my friends do 

in this—in the Realtor community, I cannot ignore the pressing 

housing needs of Americans and the current problems that the current mortgage interest deduction causes. 

The status quo means giving significant tax breaks to families 

that earn more than $100,000 a year, while giving a little bit either 

in home ownership or rental housing to people with lesser income. 

That is why I introduced the Common Sense Housing Investment 

Act. This bill replaces the regressive and badly-targeted mortgage 

41 

interest deduction with a 15 percent flat rate credit. The 15 percent 

credit my bill proposes would help more than 16 million current 

homeowners. And there are at least a third of these homeowners 

with a mortgage that don’t even itemize their taxes. 

Future homeowners will also benefit. They will know what the 

future tax benefit would be. And by converting to a credit and lowering the cap on the amount of the mortgage interest from one million to 500,000, we raise $200 billion in 10 years. With that money 

we can provide tens of millions of affordable new homes, and can 

fund the National Housing Trust Fund, move families off decadeslong waiting lists, expand the low-income housing tax credit, and 

Section 8, and upgrade our public housing. 

H.R. 1662 doesn’t provide enough revenue to end our affordable 

housing crisis. My other bill, the Inclusive Prosperity Act, can kick 

in some additional funds. The Inclusive Prosperity Act enacts a 

wafer-thin tax on the sale of stocks, bonds, and derivatives. The 

revenue would support education, child care, and pollution cleanup 

and other investments. Financial transaction taxes are not a radical idea; 40 nations have or have had financial transactions tax. 

The financial transactions tax raises revenue for investment and 

curbs dangerous high-frequency trading. 

The Common Sense Housing Investment Act and the Inclusive 

Prosperity Act are examples of better choices for working families 

in our future, and I urge the Committee to support both. Thank 

you. 

Chairman BOUSTANY. Thank you, Mr. Ellison. 

Mr. Rohrabacher. 

STATEMENT OF THE HONORABLE DANA ROHRABACHER, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. ROHRABACHER. Well, thank you very much, Mr. Chairman and Ranking Member and Members of the Committee. I appreciate this opportunity to bring H.R. 4577 to your attention. That 

is the Expanding Employee Ownership Act of 2016, which I introduced with Rep. Collin Peterson as my cosponsor, as coauthor back 

in February 12th of this year. 

This bill, I believe, will be the most bipartisan-supported bill that 

ever has come to the floor of the House, if we permit it to come 

to the floor of the House for a vote. It is—basically wants to expand 

the ownership of—by employees of stock in the companies in which 

they work. 

The proposal would be like ESOPs on steroids. This is where 

every time a company would give a distribution of stock to its employees—it has to be a general distribution—those employees, if 

they keep that stock for five years, do not have to pay income tax 

on the stock. So it is tax-free to them. If they hold it for 10 years, 

another provision kicks in where, after that 10-year period, a capital gains tax will begin to be eliminated, and that is phased in 

over a 10-year period. So after 20 years an employee will have no 

capital gains tax on the stock that he has been given, and no income tax, as well. 

I believe that would—what we are talking about would dramatically expand the employee ownership and—of their own stock and 

42 

their own companies, which would bring about more cooperation 

between management and labor, a much longer view of decisions 

by labor—by the management, knowing that the employees had to 

be taken into consideration because, after all, they are owners of 

the company, as well. 

So I am—I would ask that this be made—would be brought to 

the floor, and I—as I say, I think this reflects a bipartisan commitment of both Republicans and Democrats not just to empower big 

businessmen, but let the average person in this country start to 

benefit from capital ownership. And the reason we have such a 

large dichotomy now, and wealth ownership in our country, is that 

so many people don’t own any capital. And it is capital that actually creates wealth. And so we have cut them off. 

This would encourage that type of broad ownership, help working 

people, help our companies have stable employment with good employees. It is a win-win for everybody. 

Chairman BOUSTANY. Thank you, Mr. Rohrabacher. I want to 

thank our colleagues for bringing these very important tax proposals forward, and we will take them all into consideration. We 

thank you. 

Let’s call up the next panel. Mr. Brat, Dr. DesJarlais, Mr. 

Hultgren, Dr. Fleming, and Mr. DeFazio. 

[Pause.] 

Chairman BOUSTANY. Ranking Member Neal has to chair a different event, he will be back shortly. I just want to have that recorded in the record. 

[Pause.] 

Chairman BOUSTANY. We thank our colleagues. And Mr. Brat, 

you may proceed. 

STATEMENT OF THE HONORABLE DAVE BRAT, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA 

Mr. BRAT. Thank you, Mr. Chairman. Encouraging personal savings is more important now than ever. We need to make it easier 

for the American people to work, save, invest, and live the lives 

they want. That is why Senator Jeff Flake and I introduced the 

Universal Savings Account Act. 

Universal savings accounts would be like Roth IRAs, but far 

more flexible. American adults could contribute post-tax income up 

to $5,500 per year. Savings could be invested like IRAs and earnings would grow tax-free. Withdrawals wouldn’t be taxed at all. 

Anyone who doesn’t contribute the full amount in a year or who 

makes withdrawals could backfill it later. These accounts would let 

people save for any of life’s challenges and opportunities with the 

knowledge that their resources will be there when they need them. 

They could also supplement retirement savings, but they could 

also be used for a car, college, downpayment on a house, and much 

more. 

Other options already exist, but they have complicated rules and 

restrictions. Many Americans won’t risk putting their hard-earned 

income into restricted accounts that penalize general withdrawals. 

Universal savings accounts are simple and easy to use. Canada and 

Great Britain have had something similar for years. Canada’s acVerDate Sep 11 2014 23:45 Jul 28, 2017 Jkt 022372 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\22372.XXX 22372
43 

counts were established in 2009, and only 6 years later, 48 percent 

of Canadians had one, including many middle-income families. 

These accounts would create opportunity by reducing double taxation and expanding national savings. 

The U.S. personal savings rate is only 5.5 percent, currently, 

much lower than it should be, and much lower than it was in the 

1970s or 1980s. In Macro Economics 101, which I used to teach for 

20 years, students learn that savings equals investment at the 

macro level, and per capita income growth requires capital investment. With a growth rate of only 0.7 percent in the fourth quarter 

of 2015, we clearly need to boost both savings and investment. 

These accounts would also help reform Federal and state programs, with minor changes that could be used for education savings accounts, Roth health savings accounts, cash-based income 

support programs, and more. Our proposal has been endorsed by 

Americans for Tax Reform, the National Taxpayers Union, and the 

Association of Mature American Citizens. 

My Virginia constituents like it, regardless of their political 

leanings. I hope we can all work together on ideas like this to help 

our constituents face life’s challenges and opportunities. 

I ask unanimous consent to insert supplemental materials about 

the bill into the record. 

Chairman BOUSTANY. Without objection. 

[The information follows:] 

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Mr. BRAT. Thank you, Mr. Chairman. 

Chairman BOUSTANY. I thank the gentleman. 

Mr.—Dr. DesJarlais, you may proceed. 

STATEMENT OF THE HONORABLE SCOTT DESJARLAIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mr. DESJARLAIS. Thank you, Mr. Chairman and Members of 

the Committee. I want to thank you for inviting me to come before 

you today to discuss H.R. 2874, the Andrew P. Carpenter Tax Act. 

I am truly humbled to have had the honor of introducing this bill. 

On February 19, 2011, Marine Lance Corporal Andrew Carpenter passed away from fatal wounds sustained while on a combat 

mission in the Helmand Province of Afghanistan. A resident of Columbia, Tennessee, Andrew enlisted in the United States Marine 

Corps in 2007, and went—was on his second tour of duty in Afghanistan when he laid down his life for his country, leaving behind his wife, Chrissy and then soon-to-be-born son, Landon. 

Three years prior to his tour of duty, Andrew had taken out a 

private student loan, which the loan company ultimately forgave 

following Andrew’s death. However, as hard as it is to believe, the 

pain and anguish of his family was exacerbated upon learning that 

the amount of this discharged loan, by law, would be factored into 

their gross taxable income for that year, a nearly $1,800 tax bill. 

Having already sacrificed so much for our country, it is simply 

wrong to require our military families to pay taxes on loans already 

forgiven. This is why I have reintroduced this bill. 

Simply, this bill amends Section 108 of the Internal Revenue taxexempt private student loan forgiveness from being categorized as 

gross taxable income for families of veterans who have lost their 

lives while serving on active duty in the United States armed 

forces. This legislation attempts to shield the families of American 

fallen soldiers from ever having the IRS add to their loss by callously presenting them with a tax bill. The only thing these parents should receive is a flag and the admiration of the American 

people. 

This bill, which passed unanimously in the House during the 

112th Congress, has received the support of the National Guard 

Association of the United States and the Veterans of Foreign Wars. 

I am truly humbled to have had the honor of introducing this bipartisan bill, and look forward to working with this Committee to 

fix this problem, and would humbly ask that you consider bringing 

this to the floor. And it would be an awful kind gesture to do it 

before Memorial Day—not that I am asking much. 

Chairman BOUSTANY. Thanks, Dr. DesJarlais. 

Mr. Hultgren, you may proceed. 

STATEMENT OF THE HONORABLE RANDY HULTGREN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. HULTGREN. Thank you, Chairman, thank you Members of 

the Committee. I really appreciate this opportunity. 

As you all know better than most, our Tax Code reaches into 

every sector of our economy and every home across America. I support having a tax system that allows for everyone to keep as much 

48 

of their hard-earned money as possible. Americans and their representatives in Congress agree it is time to simplify the Tax Code. 

It naturally follows that we should analyze how that simplification will affect the country. Here is one item that I think is working: the current tax-exempt status provided to municipal bonds. 

This is why I recently partnered with Congressman Ruppersberger 

to create the Municipal Finance Caucus. 

While serving in local government in Illinois I saw firsthand the 

benefits provided by this reliable option for financing community 

development. I am talking about the roads we drive on, schools for 

our children, affordable family housing, water systems that supply 

safe drinking water, hospitals and clinics to treat the sick, airports 

and ports that help move product domestically and overseas, and 

utility plants that power our homes, businesses, and factories. 

In 2013 a study by local government groups found that if the tax 

exemption is eliminated or capped, that it is more costly to issue 

the debt. These costs are real. Building the Red Gate Bridge over 

the Fox River in St. Charles in 2011 would have cost the City of 

St. Charles, Illinois an additional $619,000 in interest costs, without the exemption. Will County wants to build a new courthouse 

and law enforcement complex affordably. 

Washington disagrees on how to strengthen our infrastructure, 

but I believe decisions made by local communities handling local 

projects tend to be more efficient than one-size-fits-all policy from 

Washington, D.C. I like to think of this as fiscal Federalism, and 

our colleagues agree. Last year Congressman Ruppersberger and I 

were joined by 122 of our colleagues, Republicans and Democrats, 

in a letter to the House leadership, saying as much. And I plan to 

submit this for the record. 

Mr. Chairman, this impacts all of our districts, and I know even 

in your own district, the St. Martin Parish School District issued 

bonds last year to build new schools and improve existing ones. 

The issuance would have cost an additional $1.2 million if the tax 

exemption were capped, as called for in the President’s budget. 

Ranking Member Neal, Springfield, Massachusetts, recently completed an issuance used to fund 22 separate projects, including 

school renovation, road improvement, HVAC work at City Hall, and 

would have cost the city and its taxpayers almost another $7 million. 

U.S. municipal securities market is now a robust $3.7 trillion. 

Unfortunately, the media likes negative stories. It is frustrating to 

see breathless articles on the latest debt collapse. Certainly we 

need to make sure debt is being used and issued and managed responsibly, but there are also thousands of successful infrastructure 

projects across our great country. We must keep telling their stories. 

We should also be thinking of other ways that state and local 

government can partner with the private sector to support job 

growth. 

I would ask the opportunity to be able to submit the rest of my 

testimony. 

Chairman BOUSTANY. Without objection. 

Mr. HULTGREN. With that, I would yield back. 

Chairman BOUSTANY. Thank you, Mr. Hultgren. 

49 

Dr. Fleming, you may proceed. 

STATEMENT OF THE HONORABLE JOHN FLEMING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. FLEMING. Thank you, Mr. Chairman. Today I am here to 

testify on H.R. 1397, the Seniors Tax Simplification Act, which 

would save millions of taxpayers money, but not cost the revenue 

one cent. 

Every day and every day for the next 14 years, 10,000 Americans 

will celebrate their 65th anniversary—excuse me, 65th birthday. In 

2010, about 13 percent of the national population was 65 years old 

or older. That percentage is expected to grow to 18 percent by 2030. 

Recent IRS statistics tell us that about 23 million seniors file taxes. 

That is nearly 16 percent of all tax filers. Millions of these senior 

filers claimed a pension or annuity and social security benefits. 

There is no doubt that the American senior population is increasing and, in all likelihood, the number of senior filers will increase, 

as well. 

What is concerning and unique to this segment of the population 

is the fact that seniors, by virtue of their age and type of income, 

are precluded from using Form 1040 EZ, the easiest and most basic 

individual income tax return form available. 

Earning social security retirement—excuse me, H.R. 1397, the 

Seniors Tax Simplification Act, remedies this dilemma by providing 

a brief, easy-to-read form called Form 1040SR, specifically designed 

for older American taxpayers earning social security retirement 

benefits, interest, and capital gains. 

The new Form 1040SR would not limit taxpayers by age or taxable income levels. H.R. 1397 would grant Americans over 65 years 

old access to a straightforward tax form, and one that is tailored 

to their specific income needs. 

Under my legislation, seniors would no longer be categorically excluded from the option of easy filing. In 2015, income tax filers had 

a choice between three tax forms: Form 1040EZ, Form 1040A, and 

Form 1040. All forms allow taxpayers to claim the earned income 

tax credit. Each form, however, becomes incrementally laborious, 

based on a taxpayer’s age, taxable income, and tax deductions and 

credits. The new Form 1040SR would mirror Form 1040EZ, with 

the exception that anyone over 65 could use the form, and tax filers 

would not be limited by a taxable income. 

Like Form 1040EZ, Form 1040SR would not allow taxpayers to 

itemize deductions or claim any tax credits, with the sole exception 

of the earned income tax credit. My legislation provides seniors 

with a choice. Like all tax filers, seniors will need to decide which 

form is best suited for their unique financial complexity. The easiest tax form is not always the best, but at least seniors will have 

the ability to decide that for themselves. 

I would note for the record that H.R. 1397 has received broad coalition support, and I ask unanimous consent to submit letters 

from AMAC, Americans for Tax Reform, National Taxpayers 

Union, and 60-plus associations as part of my testimony here 

today. 

50 

Chairman BOUSTANY. Without objection. 

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Mr. FLEMING. Thank you. An enactment of H.R. 1397 is not expected to cost the taxpayers any money. It could actually save seniors time, energy, and resources. And thank you very much. 

Chairman BOUSTANY. Thank you, Dr. Fleming. 

Mr. DeFazio, you may proceed. 

STATEMENT OF THE HONORABLE PETER DEFAZIO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. DEFAZIO. Thank you, Mr. Chairman. Thanks for this opportunity to be here today. Mr. Chairman, I am the co-chair of the 

House Small Brewers Caucus created in 2007. We now have 207 

Members representing 43 states. 

For the first time since Prohibition we have more breweries in 

the United States than at any time in our history, 4,300. These 

small businesses, for the most part, support nearly half-a-million 

jobs. And yet they are one of the most highly regulated and taxed 

business sectors in the country. Craft brewers paid $307 million in 

Federal excise taxes last year. Small brewers who produce less 

than two million barrels a year pay $7 for the first 60,000. After 

that they pay $18 per barrel. 

Our colleague, Representative Paulsen, has introduced H.R. 

2903, the Craft Beverage Modernization Tax Reform Act, which 

would reduce the excise tax from $7 per barrel to $3.50 per barrel 

on the first 60,000 barrels brewed, and it would reduce the tax 

from $18 to $16 for all brewers, large and small, on the first 6 million barrels. 

This is a very modest proposal which would do a great deal to 

grow America’s small businesses. It is very expensive to start and 

to expand a small brewery, and this reduction in excise taxes 

would be used to purchase equipment, much of which is manufactured in the United States, and produce more jobs here in the U.S. 

And ultimately, the craft breweries, obviously, are helping us with 

our trade deficit, since the two largest brewers in America are now 

foreign-owned. So there are many, many benefits to recommend it. 

This bill has more than 200 bipartisan cosponsors. It is supported by the Brewers Association, Beer Wholesalers Association, 

Wine Institute, many other organizations. You know, I will admit 

that there is some self-interest, since my state of Oregon will benefit greatly from the bill, we have nearly 1,000 craft breweries, 

wineries, and distilleries that contribute $6 billion to our economy. 

I think this is a very common-sense proposal that would stimulate a tremendous amount of growth in small businesses, and I recommend it to the Committee. 

Chairman BOUSTANY. Thank you, Mr. DeFazio. I want to 

thank all our colleagues for bringing these important tax provisions 

forward, and we will take them under consideration. Thank you 

very much. 

We will now move to our next panel: Majority Whip Steve Scalise, Mr. Cramer, Mr. Barr, and Ms. Sewell. 

[Pause.] 

Chairman BOUSTANY. We thank you for joining us today, and 

we will start with Ms. Sewell. 

55 

STATEMENT OF THE HONORABLE TERRI SEWELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA 

Ms. SEWELL. Thanks, Mr. Chairman. Thank you for the opportunity to come before you today to present the Workforce Development Tax Credit Act, H.R. 1781, a bill designed to increase apprenticeships through a new Federal tax credit for employers. I introduced this bill in response to the feedback I received from employers who participated in our first job fair in Birmingham, Alabama. 

In a breakout session, employers expressed deep concern about 

the shortage of skill, talent, and its relationship to unemployment. 

They reported that positions remained unfilled, and they were unable to expand because they couldn’t find employees with the skills 

needed to help their businesses remain competitive. These employers predicted, then, that these shortages will only grow worse if we 

do not better equip our young and unemployed people with the 

skills needed to succeed in the workforce. 

According to the Manufacturing Institute, the skills gap is expected to contribute to 2 million of the 3.5 million manufacturing 

jobs expected to open in the next decade. Apprenticeship programs, 

both domestically and internationally, have proven effective in combating the skills gap, while increasing middle-class wages, reducing 

income inequality, and expanding social mobility. There are—they 

are among the best pathways to provide American workers with 

the skills and knowledge needed to acquire good-paying jobs and to 

grow the economy. 

Studies suggest that for every dollar spent on apprenticeship pro- grams, employers may get an average of $1.47 back in increased 

productivity, reduced waste, and greater front line innovation. 

With the proven value of apprenticeship programs in mind, we 

crafted legislation modeled after a bill in the South Carolina legislature that created one of our country’s most successful apprenticeship programs. It was called Apprenticeship Carolina. The funding 

provided by the state is modest, yet the incentives has increased 

apprenticeships in the state sixfold since it was first created in 

2009. 

International companies often cite an inadequate number of 

skilled workers for intermediate technical occupations among reasons for not expanding operations in the United States. These companies from Germany and Switzerland among them have made 

skills training a top priority. 

In 2014 we worked with our governor’s office in Alabama to attract an international copper company, Golden Dragon, to its first 

U.S. plant in the most economically depressed county in the State 

of Alabama in my district. Less than two years have passed, and 

the company is already experiencing concerns that local employees 

do not have the skills needed to achieve the productivity and quality required in today’s global competitive marketplace. This is an 

indictment of our nation’s disinvestment in skills training. 

If we fail to properly train our young people for jobs in the 21st 

century, we will put both them and our country at a disadvantage 

for generations to come. We can and must do better by investing 

in these training programs. 

I look forward to working with this Committee to advance this 

and other tax legislation that encourages companies to invest in 

56 

America’s workforce. In so doing, we can revitalize our manufacturing sector and increase our global competitiveness. Thank you. 

Chairman BOUSTANY. Thank you, Ms. Sewell. We will next go 

to our distinguished Majority Whip, Mr. Scalise. 

STATEMENT OF THE HONORABLE STEVE SCALISE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. SCALISE. Thank you, Mr. Chairman. I appreciate the opportunity to come and testify before the Committee. I want to also talk 

about H. Con. Res. 89, the resolution to oppose a carbon tax. 

As the Members of the Committee know, the two most important 

policy areas impacting our country are taxes and trade. And that 

is why I am here today to discuss a tax that will negatively impact 

American families and, by extension, trade and American competitiveness. My concurrent resolution expresses the sense of Congress 

that a carbon tax would be detrimental to American families and 

businesses, and is not in the best interest of the United States. 

In some ways, we have seen this before. I am humbled that in 

the 113th Congress, with over 150 cosponsors, the House passed a 

version of this concurrent resolution as an amendment to the 

REINS Act. Now, the REINS Act is another initiative that I believe 

we should continue to promote. It is the idea that unelected bureaucrats in Washington who want to come up with some crazy 

regulation that has negative impacts on the economy should not be 

able to move forward with those regulations unless they have come 

before the elected representatives of the people, where they ought 

to be able to state their case on CSPAN, in front of our elected representatives, and provide the data. And if it is a good idea, we will 

pass it, and if it is a bad idea, we defeat it. But we should be held 

accountable, not some unelected bureaucratic who is not held accountable for that. But, of course, that is a discussion for another 

day. 

Let’s go back to H. Con. Res. 89. In July of 2013, the House 

passed the Anti-Carbon Tax Resolution as an amendment to the 

REINS Act by a 237 to 176 vote, which, by the way, was a bipartisan vote in support of the legislation. 

I hope that my testimony here today will lend additional support 

to revisiting this effort in the near future. I reintroduced this legislation in the 114th Congress because I believe it is critically important for the House of Representatives to be on record when it 

comes to a carbon tax. Here is why. 

A carbon tax, which is defined in the resolution as a Federal tax 

on carbon released from fossil fuels, is really an energy tax and an 

energy tax that includes taxing most means of electricity generation, gasoline, natural gas, and home heating oil that will negatively impact American families. With stagnant wages in the middle class over the last decade, increased electricity and transportation costs are not the right policy solution for hardworking Americans. 

The higher transportation and electricity costs will then lead to 

an increase in the cost of all goods and services, with the massive 

amount of regulations and red tape that has been proposed and finalized by this Administration—by the way, that will also raise the 

57 

price of all goods—a carbon tax would further devastate our economic potential. 

I have said that a carbon tax will raise energy prices across the 

board, and it will. But what should also be noted is that it will disproportionately affect those at the lower end of the economic spectrum, and those on fixed incomes. The reason is that our lower income citizens spend a larger percentage of their household budget 

on energy costs. So a tax that targets low-income families and seniors is not one that I believe the American people support. 

So I want to thank the Chairman for the invitation today, and 

I also want to thank the several organizations that have sent letters of support for this concurrent resolution. As a side note, Chairman Brady, the full Committee Chairman, was the first cosponsor 

we picked up after introducing this legislation. 

I will continue to work with my colleagues to have this measure 

considered on the House floor because the American people deserve 

to know where everyone stands on a carbon tax. 

Thank you for consideration, Mr. Chairman. I yield back. 

Chairman BOUSTANY. I thank the distinguished majority whip. 

Mr. Cramer, you may proceed. 

STATEMENT OF THE HONORABLE KEVIN CRAMER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

DAKOTA 

Mr. CRAMER. Thank you, Mr. Chairman, for the opportunity to 

present today H.R. 5171, the Legacy IRA, introduced by Ways and 

Means Oversight Committee Chairman, Mr. Roskam. 

You know, since its enactment in 2006, the charitable IRA rollover has helped thousands of donors—millions of donors, really— 

contribute millions of dollars to thousands of American charities as 

they feed the hungry, find housing for the homeless, provide all 

kinds of services for the American citizens, including caring for the 

sick. 

Under current law, as you know, the individuals aged 70-and-ahalf years or older are allowed to make direct contributions from 

an IRA of up to $100,000 per year to public charities, and to private operating and conduit foundations without having to report 

the IRA distributions as taxable income. And, you know, this used 

to be part of the extender package every couple of years or so. And, 

fortunately, we were able to make it permanent law last year in 

the PATH Act. 

In an effort to build on this momentum and really expand the opportunity both for donors and charities, as I said, Chairman Roskam, Representative Blumenauer, Paulsen, Tiberi, and I have recently introduced H.R. 5171. This bipartisan legislation expands 

the charitable IRA rollover to provide middle and lower-income individuals and families more opportunities to give to a charity or a 

cause that they support. 

Specifically, the bill authorizes tax-free IRA rollovers for gifts 

which benefit charities and provide taxable retirement income for 

donors called charitable life income plans—things like annuities. 

Many IRA owners want to make charitable gifts, but are also in 

need of the retirement income. And the life income IRA rollover is 

58 

a way for donors of more modest resources to combine charitable 

gifts with retirement income. 

Let me just give an example. I mean if you were a middle-income 

family, you reach, as the wage earner, the age of 65, you retire, and 

never in your wildest dreams did you think you could make a 

$100,000 contribution to your alma mater, but you have this IRA. 

At the age of 65, if this legislation becomes law, you can make that 

$100,000 contribution to your alma mater, they could put it into an 

annuity that pays you, say, $5,000 per year income that you need, 

which is obviously good for the charity, obviously good for the 

donor, who now has $5,000 a year they didn’t have before, good for 

the economy because that income is now rolling around the economy. And, for those that care, it is also good for the government, 

because that $5,000 per year is now taxable, generating revenue. 

There are lots of good reasons to incent contributions in charity, 

not the least of which is charity actually replaces the need for government services, in many cases, and delivers those services in a 

much more compassionate way than the government ever can or 

ever would. 

Without going into the details, I think that the merits are obvious, and I look forward to working with Chairman Roskam and 

others on the Committee to bring this bill to the floor and hopefully 

pass it. Thank you, Mr. Chairman. 

Chairman BOUSTANY. Thank you, Mr. Cramer. 

Mr. Barr, you may proceed. 

STATEMENT OF THE HONORABLE ANDY BARR, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. BARR. Thank you, Chairman Boustany and Members of the 

Subcommittee, for hosting this listening session and providing me 

an opportunity to relay the tax priorities of my constituents before 

the Subcommittee on Tax Policy. 

Kentucky’s sixth congressional district has the great fortune of 

having a very diverse economy, from manufacturing to agriculture, 

health care, education, and high-tech start-ups. With that said, 

let’s be honest. People think of Kentucky, they think about our 

world-class horse racing and breeding industry and Kentucky bourbon. And that is what I would like to discuss with this Subcommittee today. 

First, horses. On the heels of last year’s triple crown with American Pharaoh, and last Saturday’s Kentucky Derby champion, 

Nyquist, there is much to celebrate about our sport. But this is 

more than just a sport. It is a dynamic, job-producing industry with 

an annual economic impact on the United States of $39 billion. And 

so I would like to commend to your attention H.R. 3671, the Race 

Horse Cost Recovery Act. This would make the three-year depreciation for race horses permanent. We have been able to include this 

in the tax extenders package for a number of years. It is time to 

make this permanent. And it is not just a benefit to this industry. 

It is sound tax policy because the useful life of this asset is three 

years, once a race horse is put into service. 

Now, bourbon. Kentucky’s distilling industry has been an economic driver for generations. This is true now more than ever, as 

59 

Kentucky and many other states across the country have witnessed 

an explosive growth in craft-distilled spirits. One could argue bourbon has never been more popular. In fact, there are currently more 

barrels of bourbon aging in Kentucky than we have citizens in the 

entire commonwealth. American whiskey and bourbon also enjoy a 

growing share of the global liquor market, accounting for over $1 

billion of the $1.5 billion in total exports of distilled spirits. 

That is why I want to bring to your attention legislation I have 

introduced. H.R. 867, the Aged Distilled Spirits Competitiveness 

Act of 2015. This bipartisan legislation would correct a provision in 

the Tax Code that leaves American bourbon and whiskey distillers 

at a competitive disadvantage against other sectors of the liquor industry, particularly foreign competitors. 

As you may know, Section 263(a) of the Internal Revenue Code 

requires bourbon producers to capital interest expenses incurred to 

finance the production of bourbon and whiskey during the long 

aging process, which can be anywhere from 2 to 23 years. This interest expense is not deductible for tax purposes until the bourbon 

or whiskey is sold years later, after the aging process. Aging can 

be thought of as part of the manufacturing process. Bourbon that 

has not aged is not yet bourbon, and therefore should not be considered inventory under the Tax Code. This tax treatment is 

unique to the United States, as other countries allow for the immediate expensing of aging spirits, causing a competitive disadvantage to U.S. distillers. 

H.R. 867 would provide a level playing field for U.S. bourbon and 

whiskey producers by allowing immediate deduction of interest expenses related to aging bourbon and whiskey. This simple change 

would promote the bourbon industry that brings in billions of dollars in economic activity and supports over 9,000 jobs, producing 

significantly more state and Federal revenue than foreign-produced 

competitors. 

I appreciate your consideration of these two important measures 

for a growing economy in both the horse and bourbon sectors. 

Thank you. 

Chairman BOUSTANY. Thank you, Mr. Barr. We appreciate you 

bringing your testimony forward. All of our colleagues, for that 

matter. And these tax proposals will be given consideration. Thank 

you. 

Let’s call up our next panel. We have Mr. Emmer, Mr. Coffman, 

Ms. Schakowsky, and Mr. Woodall. 

[Pause.] 

Chairman BOUSTANY. We thank our colleagues. Mr. Emmer, 

you may proceed. 

STATEMENT OF THE HONORABLE TOM EMMER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA 

Mr. EMMER. Thank you, Chairman Boustany. Thanks to you 

and the Members of the Subcommittee on Tax Policy for inviting 

us today. 

It is a privilege to represent the people of Minnesota, and I know 

they are pleased to see that Washington is working on comprehensive tax reform that will help lift Americans out of poverty, put 

60 

more money back in the pockets of families, and enable businesses 

to flourish. 

At 39 percent, the United States has the highest corporate income tax rate in the developed world. This puts us, America, at a 

tremendous disadvantage, sending jobs, companies, and tax dollars 

overseas to countries which have far more business-friendly rates. 

In my home state of Minnesota, we recently lost two companies 

to foreign countries. Sadly, as we all know, it isn’t just Minnesotans who have been harmed by the developed world’s most uncompetitive and dated corporate tax system. Since 2000 there has been 

a 28 percent reduction in U.S.-headquartered companies in the 

global Fortune 500. 

Many countries have caught on to the negative effects of high 

corporate income tax rates. In fact, our neighbor to the north, Canada, our largest trading partner, recently reduced their rate to 15 

percent. The United States’s second, third, fourth, and fifth largest 

trading partners—China, Mexico, Japan, and Germany—have corporate tax rates of 25 percent, 30 percent, 24 percent, and 15 percent. 

The Create Jobs Act, which we have introduced, will ensure the 

United States has a competitive corporate income tax rate by setting our rate five percentage points lower than the average corporate tax rate of the other Organization for Economic Cooperation 

and Development countries. These are 33 free-market countries 

that American often trades with and, in fact, competes with. 

It also creates a mechanism for Congress to recalibrate the corporate tax in a timely manner. Under the Create Jobs Act, every 

five years, by November 1st, the U.S. Treasury will calculate the 

new corporate tax rate. If the formula suggests it should go up, 

then a majority of both the House and the Senate must approve 

the new rate by December 30th. If the formula calls for a decrease, 

that will occur automatically. 

If the Create Jobs Act was enacted today with the average OECD 

corporate tax rate at about 25 percent, the U.S. corporate income 

tax would be reduced to about 20 percent. According to the Tax 

Foundation, a 20 percent U.S. corporate income tax would create 

more than 640,000 jobs, increase GDP by 3.3 percent, and increase 

wages by 2.8 percent over the next 10 years. Clearly, this legislation would have a profoundly positive impact on the citizens of this 

great country. If signed into law, American corporations would 

have a predictable tax system to plan for the future, but also a system flexible enough to remain competitive in the 21st century. 

I want to thank you all again for this opportunity to present testimony to you about the Create Jobs Act. And it is my hope that 

it will be included in the Ways and Means’s highly anticipated 

comprehensive tax reform package. Thank you. 

Chairman BOUSTANY. Thank you, Mr. Emmer. 

Mr. Coffman, you may proceed. 

STATEMENT OF THE HONORABLE MIKE COFFMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Mr. COFFMAN. Thank you, Mr. Chairman and members of the 

Ways and Means Subcommittee. Today I want to talk about H.R. 

61 

4969, the EARNIT Act, which is the Enhancing Advancement, Reducing Non-Compliance, and Improving Trust Act. 

What this is is it involves an expansion of the earned income tax 

credit and a way to pay for it. And in 2014 President Obama talked 

about increasing the Federal minimum wage to $10.10 an hour, 

and the non-partisan Congressional Budget Office did an analysis 

of the economic impact of that. And they said, yes, you would lift 

900,000 Americans out of the poverty line, as defined by the Federal guidelines. But you would also cost the economy 500,000 jobs. 

And so, what I—in looking at the earned income tax credit, it is 

heavily, heavily weighted towards individuals with children, as opposed to individuals without children. And so, what this legislation 

does is, number one, it lowers the eligibility for the earned income 

tax credit across the board, whether you have children or not, from 

age 25 to age 21. And then, secondly, it pluses up the EITC benefit 

for childless, low-wage, low-income workers. And so, I think this is 

very positive. 

So how it pays for this is that the IRS did an analysis in 2003– 

2005 [sic] on the earned income tax credit and found that there 

was a lot of individuals that were receiving it that did not have 

their child living with them in their residence. And so, in a—so, 

what the—and they came up with a better verification process that 

has never been implemented, and that is—to have a third party, 

whether it be a social worker, a lawyer, employer, or other public 

official verify that there is a child living with that low-wage worker, in terms of their eligibility. 

And so, the—there was an analysis done by the—oh, the Tax 

Foundation, I believe, that is a part of the Congress—I am trying 

to get the specific name for it here. And so—oh, the Joint Committee on Taxation estimated that there would be a net—if you had 

that requirement, that there would be a net increase in Federal 

revenues—i.e. not paying out the tax credit to those who were not 

eligible—of $3.7 billion over a 10-year period, which is more than 

enough to pay for the proposed expansion of the earned income tax 

credit under my proposal. 

And with that, Mr. Chairman, I am respectful of the time, and 

I yield back. Thank you. 

Chairman BOUSTANY. Thank you, Mr. Coffman. 

Mr. Woodall, you may proceed. 

STATEMENT OF THE HONORABLE ROB WOODALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. WOODALL. Thank you, Mr. Chairman, and thank you for 

having us today. I have watched this Committee for most of my 

adult life, and I have never been more optimistic that we are going 

to get to actual fundamental tax reform with the hours that this 

Committee has invested and the seriousness with which it is taking it. 

But the truth is we have had hours of conversation today about 

fixes to the Tax Code. We could have hours more tomorrow and 

hours more the next day. At some point we have to confess this 

Tax Code cannot be fixed, and we have to throw it out, and start 

over again. There is not a member of this body, if they could write 

62 

the right Tax Code to govern America, that they would write this 

one. 

We have got to start all over again from scratch. The power to 

tax is the power to destroy, and an income tax destroys productivity. I think we have won the debate that a consumption tax is 

the way to get the economic engine restarted here, in this country. 

A group of activists, a group of economists, folks in a group called 

Americans for Fair Taxation, said, ‘‘If we started from scratch, 

what Tax Code would we write?’’ And what they came up with was 

a plan called The Fair Tax. It is H.R. 25. It is the most widely cosponsored fundamental tax reform bill in this Congress. And it 

throws the Tax Code out. It begins with the point of view that businesses don’t pay taxes, businesses just collect taxes. And I don’t 

want to have a Tax Code for job creators in this country that is just 

a little bit worse than everybody else’s. I don’t want to have a Tax 

Code for job creators in this country that is on par with the rest 

of the world. I want to have a Tax Code in this country that leads 

the rest of the world. 

I want to take our corporate income Tax Code from worst in the 

world to first in the world. Fair Tax does that by admitting that 

businesses don’t pay taxes, they simply collect taxes, abolishes the 

corporate income tax and requires that they collect a point of sale 

retail sales tax on all of the final consumer goods. 

I want to make sure that individuals don’t have to fight with 

their government for the privilege of paying their taxes. There is 

absolutely no sense that every April 15th dread seeps in to every 

American family across this land. The Fair Tax recognizes that you 

shouldn’t have to have a law degree or an accounting degree to pay 

your taxes. Simple point of sales retail sales tax, every American 

consumer would pay their taxes with every purchase that they 

make. The average American family would never see the IRS 

again. 

I don’t want to make it easier to file your income tax statement; 

I want to get you out of the business of filing your income tax 

statement. 

Mr. Chairman, we have an opportunity here, because we all recognize a problem, because there is no Member defending the current code to do the big things. We have tried nibbling around the 

edges for years at the time. I applaud this Committee for the work 

to get to that next big idea, and I encourage you to take a look at 

H.R. 25, the Fair Tax. 

And with that, I would welcome any questions and yield back. 

Chairman BOUSTANY. Thank you, Mr. Woodall. 

Ms. Schakowsky, you may proceed. 

STATEMENT OF THE HONORABLE JANICE SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Now for some different ideas. I thank you, 

Mr. Chairman, for allowing me to testify before this Committee on 

two pieces of legislation I have introduced to improve the fairness 

of our tax system: H.R. 389, the Fairness in Taxation Act; and H.R. 

2619, the Patriot Employer Tax Credit Act. 

63 

We are the richest country in the world at the richest moment 

in history, yet we operate here in an environment of austerity, unable to pay—to afford things like quality education and infrastructure investment and security in a social safety net that our country 

needs. Today we simply don’t raise sufficient revenue to meet today’s needs or invest in our future. 

My Fairness in Taxation Act would update tax brackets for the 

highest-income Americans. Right now, there are seven brackets 

that end at $450,000 of income, and absolutely none after that. So 

someone making $450 million pays the same as someone that 

makes $450,000. My bill would create new tax brackets, beginning 

at $1 million in income, ratcheting up to $1 billion in income—and, 

yes, there are Americans that make that. 

It would also stop special tax breaks for millionaires on their capital gains and dividends. These changes would raise $800 billion 

over the next decade, which would then be injected back into education and infrastructure, research and development, et cetera, and 

support a strong middle class. 

We also need to improve tax fairness for our businesses. Right 

now our Tax Code rewards the wrong behavior. In recent years we 

have seen a wave of U.S.-based companies move their headquarters 

overseas to dodge U.S. taxes through tax inversions. Meanwhile, 

too many workers struggle with low wages and retirement insecurity. 

My Patriot Employer Tax Credit Act would reward companies for 

doing the right thing. It would provide a tax credit for the first 

$15,000 on qualified wages for employers that invest in American 

jobs, avoid tax inversions, pay fair wages, provide quality health insurance, contribute to their workers’ retirement, and support jobs 

for active duty military veterans and those with disabilities. And 

we would pay for these tax credits by closing an existing loophole 

that allows companies to deduct interest expenses used to invest 

overseas. I think that is a sensible idea. Stop tax provisions that 

encourage overseas investment to reward companies that invest in 

good jobs here at home. 

These bills are the type of tax reform that I believe we desperately need, reforms that raise revenue, increase fairness, and 

invest in quality American jobs. I urge you to advance this legislation, and thank you once again for the opportunity to testify. 

Chairman BOUSTANY. I thank our colleagues on this panel for 

bringing these important tax proposals forward, and we will take 

them under consideration. We thank you. 

And we will conclude now with our final panel, which will be Mr. 

Paulsen, a member of the Ways and Means Committee. 

[Pause.] 

Chairman BOUSTANY. I thank my colleagues. Mr. Paulsen, you 

may proceed. 

STATEMENT OF THE HONORABLE ERIK PAULSEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA 

Mr. PAULSEN. Thank you, Mr. Chairman. I know we have 

heard a lot of great testimony today about important tax initiatives, many of which I support. And while Members of Congress do 

64 

all that we can to represent our constituents and advocate on their 

behalf, we simply aren’t qualified in the same way that they are 

to discuss issues important to them and to their businesses. And 

that is why I would like to yield some of my time today to Mr. Clint 

Roberts. He is the chief marketing officer of Surly Brewing Company in Minneapolis. And Clint will speak about his brewery and 

what passage of legislation that I have introduced, the Craft Beverage Modernization and Tax Reform Act, would do to help their 

ability to invest in Surly and hire more Minnesotans. 

Clint, if you would like to, come forward. 

Chairman BOUSTANY. Welcome, sir. 

Mr. ROBERTS. Thank you, Chairman. Thank you, Representative Paulsen and thank you to the Committee for the opportunity 

to testify today. My name is Clint Roberts. As Erik mentioned, I 

am the chief marketing officer at Surly Brewing Company in Minneapolis, Minnesota. 

For almost a decade, the Brewers Association and the brewing 

industry have been working with Congress to try and pass legislation that recalibrates the Federal excise tax to reflect the makeup 

of the craft brewing industry, and to spur additional growth. The 

Craft Beverage Modernization and Tax Reform Act, introduced this 

Congress by Representatives Paulsen and Kind, would lower the 

Federal excise tax for the brewing industry, as well as the wine 

and distilled spirits industries, and make the alcohol beverage excise tax system more progressive for smaller producers. 

It is legislation like this that would have a major impact on 

Surly, as well as other craft brewers. In Minnesota, we have seen 

firsthand how laws that are supportive of the craft brewing industry help foster growth. 

In 2011 we set out to tweak state legislation to allow production 

breweries to sell pints of their own beer, so we could build our destination brewery, complete with two restaurants, an event center, 

and a beer garden, in addition to the production facility. When we 

set to change the law, there were 35 breweries in the state. Now 

there are 105 breweries that employ more than 8,600 Minnesotans. 

The Craft Beverage Modernization and Tax Reform Act is the type 

of legislation that would have a similar impact on our community, 

as well as other members of the beverage alcohol industry. 

We have seen firsthand that legislative advancements like this 

can be incredibly important to the craft community and local economies. It has created a phenomenon of sorts that shows no sign of 

slowing. 

In December 2014 we opened our $34 million destination brewery. Last year we brewed almost 65,000 barrels of beer, and this 

year we hope to brew 80,000. We have the capacity to brew almost 

100,000. Once we near capacity, we will have important decisions 

to make. The demand for our beer is there, but additional growth 

requires continued investment in our brewery. 

In total, our company employs almost 300 employees, a full-time 

equivalent number of 159. We had lofty job creation numbers as we 

dug in on our destination brewery, but this number has exceeded 

those goals. It has been great for our local economy, and it has 

helped us to expand into other states. We opened in three new 

states just last week. 

65 

We look to continue to invest in our operation, which will create 

a range of jobs and broad economic impact. If we are able to get 

our Federal tax liability reduced, we will put the money back into 

our company. We have to. The craft beer climate is unbelievably 

competitive, because of recent growth. Our consumers want more 

and expect more. We are ever evolving to meet the demands of our 

consumers. 

I can only speak to how this bill would impact the craft brewing 

industry. But if it has a similar impact on other alcohol producers, 

it is no surprise that this bill has had broad, widespread bipartisan 

support from not just the alcohol industry, but also agricultural 

and manufacturing associations. Passing the Craft Beverage Modernization and Tax Reform Act would be good for the brewers in 

Minnesota and the brewers located in your states and across the 

country. 

This is a big issue for our small business. We have seen firsthand 

the tangible success stories from enterprising legislation. 

Thank you again to the Committee for taking the time to learn 

about this important issue, and to Representative Paulsen for his 

support of the craft brewers in Minnesota and across the country. 

Chairman BOUSTANY. Thank you, Mr. Roberts. 

And Mr. Paulsen, thank you for bringing this testimony forward. 

Mr. PAULSEN. Thank you, Mr. Chairman, for your time and attention today, and I am happy to yield back. 

Chairman BOUSTANY. Thank you. I would like to thank all of 

our esteemed colleagues for appearing before us today. It is clear 

from the testimony that you all have put a great deal of time and 

consideration into these improvements to our current Tax Code. 

And I am pleased that we have had an opportunity to make a 

record of those priorities. 

Keep in mind that, while we are looking at these current—these 

improvements to the current Tax Code, we are still committed to 

comprehensive, full tax reform, as a Committee. 

As we continue to formalize the record, we encourage you to have 

any stakeholders that also care about these issues to submit statements for the record. Please be advised that Members will have 

two weeks to submit written questions to be answered later in 

writing. Those questions and your answers will be made part of the 

formal hearing record. 

And with that, the Subcommittee stands adjourned. 

[Whereupon, at 12:42 p.m., the Subcommittee was adjourned.] 

66 

Submissions for the Record 


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Æ 


22372.282