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22–336 2017

SECOND MEMBER DAY HEARING ON 

FUNDAMENTAL TAX REFORM PROPOSALS 

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 

APRIL 13, 2016 

Serial No. 114–TP06 

Printed for the use of the Committee on Ways and Means 

( 


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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 


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C O N T E N T S 

Page 

Advisory of April 13, 2016 announcing the hearing ............................................. 2 

WITNESSES 

Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation ..................... 39 

The Honorable Bob Goodlatte, a Representative in Congress from the Commonwealth of Virginia ......................................................................................... 5 

The Honorable Roger Williams, a Representative in Congress from the State 

of Texas ................................................................................................................. 11 

SUBMISSIONS FOR THE RECORD 

American Bar Association (ABA) ........................................................................... 60 

American Forest & Paper Association (AF&PA) ................................................... 63 

American Citizens Abroad (ACA) ........................................................................... 66 

Annette Guarisco Fildes, President and Chief Executive Officer, The ERISA 

Industry Committee (ERIC) ................................................................................ 70 

National Conference of State Legislatures (NCSL) .............................................. 74 


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(1) 

SECOND MEMBER DAY HEARING ON 

FUNDAMENTAL TAX REFORM PROPOSALS 

WEDNESDAY, APRIL 13, 2016 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON TAX POLICY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 3:34 p.m., in 

Room 1100, Longworth House Office Building, Hon. Charles W. 

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

[The advisory announcing the hearing follows:] 


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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON TAX POLICY 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

Wednesday, April 6, 2016 

No. TP–06 

Chairman Boustany Announces 

a Second Member Day Hearing on 

Fundamental Tax Reform Proposals 

House Ways and Means Tax Policy Subcommittee Chairman Charles Boustany 

(R–LA), today announced that the Subcommittee will hold a hearing on Member 

proposals relating to fundamental reform of the income tax system. The hearing 

will take place on Wednesday, April 13, 2016, in Room 1100 of the Longworth House Office Building, beginning at 3:30 p.m. 

This hearing will focus in particular on tax reform proposals within the context 

of an income tax system. It is the second hearing in a series of Subcommittee hearings on tax reform proposals by Members of Congress, following the Subcommittee’s 

March 22 hearing focused on cash-flow and consumption-based tax reform proposals. 

Oral testimony at this hearing will be limited to Members of Congress who have 

either introduced or cosponsored legislation that represents a fundamental reform 

within the context of an income-based tax system. Members wishing to testify at 

this hearing should contact the Subcommittee at (202) 225–5522 or robert.cusmano@ 

mail.house.gov by no later than noon on Friday, April 8, 2016. However, any individual or organization not scheduled for an oral appearance may submit a written 

statement for consideration by the Subcommittee and for inclusion in the printed 

record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page 

of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you would like to make a submission, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a 

Word document, in compliance with the formatting requirements listed below, by 

the close of business on Wednesday, April 27, 2016. For questions, or if you 

encounter technical problems, please call (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any materials submitted for the printed 

record, and any written comments in response to a request for written comments 

must conform to the guidelines listed below. Any submission not in compliance with 

these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

1. All submissions and supplementary materials must be submitted in a single 

document via email, provided in Word format and must not exceed a total of 10 

pages. Witnesses and submitters are advised that the Committee relies on electronic 

submissions for printing the official hearing record. 


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2. All submissions must include a list of all clients, persons and/or organizations 

on whose behalf the witness appears. The name, company, address, telephone, and 

fax numbers of each witness must be included in the body of the email. Please exclude any personal identifiable information in the attached submission. 

3. Failure to follow the formatting requirements may result in the exclusion of 

a submission. All submissions for the record are final. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available online at 

http://www.waysandmeans.house.gov

f 

/. 

Chairman BOUSTANY. The Subcommittee will come to order. 

Today the Subcommittee on Tax Policy will hold the second in a 

series of hearings to focus on fundamental tax reform. At the last 

hearing we concentrated on Member proposals that would reform 

the U.S. tax system by moving away from an income tax-based system to a cash-flow or consumption as the basis for taxation. 

This afternoon we will look at tax reform proposals within the 

context of an income tax system. And we are honored to have two 

of our esteemed colleagues here today to testify about bills they 

have developed to reform our current income tax system, reforms 

that fundamentally change our complex, unfair, and outdated Tax 

Code to make it more conducive to economic growth. 

These are important ideas, and our colleagues have invested time 

and energy to develop and put them forward. I appreciate the seriousness of their commitment to advancing a pro-growth tax system 

for the 21st century. 

We are also fortunate to have a second panel with Tom Barthold, 

Chief of Staff of the Joint Committee on Taxation. Mr. Barthold 

will help us explore key considerations and broad-based tax reform. 

He will use our former Chairman’s tax reform plan, Dave Camp’s 

plan, as an illustration of the kinds of choices that must be made 

in fundamental income tax reform. I know that discussion will be 

very beneficial to the Subcommittee. 

Our hearing today is particularly timely, given that the deadline 

for individuals to file their tax returns is fast approaching. This 

year is a bit unusual because of the calendar. Tax Day is officially 

April 18th, which gives taxpayers a few more days to complete 

their annual tax filing obligation. But even that extra weekend is 

cold comfort when faced with all the forms, schedules, worksheets, 

and special rules that make up our broken Tax Code. 

Tax reform should minimize the burden on American taxpayers 

so the billions of hours and tens of billions of dollars they spend 

on tax compliance today could be freed up and dedicated to creating a growing, vibrant economy. 

As I said at our first hearing last month on this, our efforts on 

tax reform require that we take a fresh look and consider all ideas 

and proposals, including those being presented today. Ultimately, 

the Ways and Means Committee must weave the most pro-growth 


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concepts and ideas into a bold plan that fundamentally and comprehensively reforms our tax system. This hearing continues that 

effort, and the Subcommittee will continue to solicit and evaluate 

all ideas as we build consensus for a path forward. 

Thank you again to each of our witnesses for taking time from 

your busy schedules to be with us today, and we look forward to 

hearing about your bold proposals. 

And now I would yield to the distinguished Ranking Member, 

Mr. Neal, for the purposes of an opening statement. 

Mr. NEAL. Thank you, Mr. Chairman, and I want to again acknowledge your efforts in calling this hearing today on income tax 

reform proposals. It is the second hearing that we have had in a 

month, and I do not believe, as you know—and we have discussed 

privately as well as professionally—that we are really any closer to 

reforming our broken and inefficient Tax Code. 

Time is of the essence, Mr. Chairman. The American people are 

imploring us to act. We need to replace our current Code with one 

that promotes job growth, lifts wages for all workers, and grows the 

middle class. 

The Panama Papers have highlighted the urgent need to crack 

down on those who engage in exotic tax schemes nationally and 

internationally in order to evade paying their share. If the recent 

wave of inversions were not enough to spur this Committee to action, perhaps the Panama Papers will. 

Mr. Chairman, at the very least I hope that we can use this Subcommittee to hold hearings on these recent revelations. Reforming 

our Tax Code remains of the utmost importance. I look forward to 

hearing from our witnesses today on—as they offer their ideas and 

plans on how to create jobs, promote economic growth, and address 

those that knowingly and willfully engage in tax avoidance and tax 

evasion. Thank you, Mr. Chairman. 

Chairman BOUSTANY. I thank the gentleman. We have a distinguished panel today. We will start with two of our fellow Members of the House of Representatives. And first we have the Honorable Bob Goodlatte, representing the Sixth District of Virginia. He 

will be testifying about H.R. 27, the Tax Code Termination Act, 

which would terminate the Internal Revenue Code by the end of 

2019, with any new Federal tax system adhering to a set of principles that promotes simplicity and fairness. 

And next we will hear from the Honorable Roger Williams, representing the 25th District of Texas. He will be testifying about a 

suite of bills that represent the Jumpstart America Act, which 

would consolidate individual tax rates, lower the corporate tax rate, 

and encourage business investment through immediate expensing. 

Each of your tax reform bills will be made part of the formal 

hearing record. Traditionally, the Committee allots 5 minutes to 

each witness to deliver oral remarks. I might be a little lenient on 

this, but not too lenient, so we can get on with this. 

But we will now begin with our good friend, Representative 

Goodlatte. 


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STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE 

IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA 

Mr. GOODLATTE. Well, thank you, Chairman Boustany and 

Ranking Member Neal. It is an honor to be here, and I appreciate 

the opportunity to testify before the Committee today. 

You need look no further than Article 1, Section 8 of the Constitution, which grants that Congress shall have the power to lay 

and collect taxes, to see the role of this legislative body in crafting 

our Nation’s tax policy. The American people have entrusted us 

with a great responsibility. Our constituents rightfully expect us to 

spend their hard-earned tax dollars responsibly, but they also expect that we collect tax revenues fairly, simply, and in a way that 

does not hinder job growth. 

Both sides of the Federal ledger, revenues and expenditures, 

should reflect the fact that the American people are owners of this 

country, not just customers. For far too long, an unacceptable, complex Tax Code has remained the law of the land. Is it not enough 

that we collect the taxes we do from our neighbors, that we must 

also spend more of their resources complying with the Tax Code 

itself? 

Tax Day is quite possibly the day that most reminds us of this 

unfairness. Citizens across the country will have spent weeks—and 

in some cases months—completing their tax returns by next Monday. They will devote billions of hours complying with the Tax 

Code, and will spend billions of hard-earned dollars on tax software, tax preparers, and other expenses related to collecting and 

filing their Federal income taxes. 

I recommend the House Committee on Ways and Means—I commend them—for holding this hearing in advance of Tax Day. There 

is no time like the present to find real solutions to this complex 

problem. 

While there are many in Congress with ideas for what a new tax 

system looks like, I have introduced legislation that would set a 

foundation to ensure we follow through with creating one. The Tax 

Code Termination Act simply puts a date certain on the expiration 

of our current Tax Code and, with a simple structure, directs Congress to establish a new tax system before that expiration. The bill 

is as simple as it sounds. 

First it sets December 31, 2019 as the sunset date for our current Tax Code with exceptions for self-employment taxes, Federal 

insurance contribution taxes, and railroad retirement. Seniors 

health and retirement programs need to be debated and addressed 

separately and in a manner that isn’t clouded by countless other 

issues and interests. 

Second, it outlines a simple framework for a new tax system, one 

that applies a low rate to all Americans, provides tax relief for 

working Americans, protects the rights of taxpayers, and reduces 

collection abuses, eliminates the bias against savings and investment, promotes economic growth and job creation, and does not penalize marriage or families. To be clear, this legislation does not 

choose one proposal over another. 

Third, the Tax Code Termination Act declares that a new tax 

system should be approved by July 4, 2019. And lastly, the bill requires a two-thirds majority for a change in these dates. 


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This legislation has twice passed the House of Representatives in 

the 105th and 106th Congresses, and is supported this Congress by 

130 Members of the House, who all support different plans and 

ideas for tax reform. I am also proud to have the support of several 

Members of the Ways and Means Committee, including Chairman 

Brady and Subcommittee Chairman Boustany. 

I have been proud to introduce this legislation for the past few 

congresses, and it would be my honor to work with each of you to 

see this legislation passed by the 114th Congress. I have yet to 

hear an argument for maintaining our current Tax Code, but I 

hear argument after argument for why we need a new one. 

Comprehensive tax reform will not come overnight, but we 

should not delay taking a first step. Setting a date certain to implement a new tax system by 2020 will provide a real timeline for debating and approving a new tax system for our Nation. 

Thank you for the opportunity to testify and I will be happy to 

answer any questions. 

[The submission of The Honorable Bob Goodlatte follows:] 


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114'1'11 CO:-JGRE::iS 

~T S~;s;.;IO:" H. R. 27 

To terminate the lntc!l'll<tl Rc"cnue Co ~ of 1986. 

IN TilE HOUSE OF' REPHESE:'\T.\TI\'ES 

J ANUAllY (i. 2015 

~lr·. GooDI.,\T'l'E (for himself, lr·. )L\IliNO, Mr. JOYCE, lr -. \VAJ,m;no, Mr·. 

WrJ.;;o~ of Routh C:m-olinn, ~Jr. Pl £>HH><, ~Jr. P01' of 'rxa~. ~It ·. 

Pn•I'ENOEn, ~It-. FnA.'IKS of Arizona, lr . ~I LViu'\'EY , )Jr. Yo uo, :llr . 

. Jo:-.:Es, ~lr. CHABOT, Jr . D uNCA.'i of 'l'cnncs.~0c, Mr. VHM'FETZ, ?llr·. 

RoE of Tennessee, Mr·. Lor-:o, :lit-. St>NSENBHEN:-<EH, :llr·. Bu,mAKJs, Mr·. 

GAJll!ET'l', lr. UI!JJWJTII, Jr. CIJJ,BERSON, 'lr. AMASII, I r. 

S<:li\\'BIKEHT, )lr. AMODEI, Jr . EsniOm:t~I!S'O, ~Ir-s. l3J.,AClffiUilN. Jr. 

\VimEH of Texas, :llr. FOJUJES, :llr·. :\'EWIIOUSE, )Jr. GOSi\lt, and ) It·. 

\Voon,\I,J,) inh·o(hwcd the following- hill; which was t"<'fcn cd to the Com· 

mitt·cc on Woy~ an<l )lc<111s, "nd iu adtlitio11 to l'lrc Committee on Rules, 

for n period to lw subsequently flctl•rmincd b.1· the Speaker·. in CH<·h e>~~c 

for consideration of such pro1·isions as full within the jurisdicliou of the 

committee conccmcd 

A BILL 

To terminate t he Internal He,·enue Code of 1986. 

Be it enacted by the Senate and Ilouse of RezJ1·eseufa2 fives of the Un·iterl States ojAmerica in Congress assembler!, 

3 SECTION 1. SHORT TITLE. 

4 'rhis Act ma,,· be c-ited as the '"l'ax Code Termination 

5 Act" . 
8 


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SEC. 2. TERMINATION OF INTERNAL REVENUE CODE OF 

2 1986. 

3 (a ) ~ GE:-\ERAL.- Xo tax shall be impo:;ccl b.v the 

4 Intemal H<wcnue Code of 198G5 ( 1) for an,v taxable yea r beginning after Decem6 ber :31 , 20H); and 

7 (2) in the case of an · tax not imposed on the 

8 basis of a taxable year, 011 any taxable event or for 

9 any period after Decembe1· 31, 2019. 

10 (b) EXG ~PT O~ uhsect u (a) sl1all not apply to 

11 ta.ws imposed by12 ( 1) chapter 2 of such Code (relating to tax on 

13 self- emp o~·mcnt income); 

14 (2) chapter 21 of suc·h Code (relating to Ped15 e1·al Insu rance Cont1·ibutions Act); a nd 

16 (3) chapter 22 of such Code (relati ng to Hail17 t·oad Retit·ement 'l'ax Act). 

18 SEC. 3. NEW FEDERAL TAX SYSTEM. 

19 (a ) S'I'RUC"I'URE.-'l'hc Congress hereby declares that 

20 any new l•'ecleral tax s:n;tcm should be a simple and fait· 

21 system that22 (1) applies a low rate to all Amcrieans; 

23 (2) provides tax relief for \YOI"I\ing American:;; 

24 (3) protects the rights of taxpa.ve•·s and reduces 

25 tax c:ollcction abuse:;: 

•HR 27 lli 
9 


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(-!-) elimi nates tlw bias aga inst saYings and n1-

2 YCstnwnt; 

3 (5) omote~ economic gnmt h and j oh e~tion ; 

4 and 

5 (6) does not penalize ma1Tiage o1· families. 

6 (b) 'l'n ~u OP hrPr g~ IJ~KTA'l'IOK n order to en7 sure an easy t.ranf>ition and pffcdivc implementation, the 

8 Congress hereby declares that an.'· new I•'ederal tax s.vsten1 

9 should be approved by Congress in its final fo1·m no later 

10 than .July-+., 20HI. 

l l SEC. 4. DELAY OF TERMINATION DATES. 

12 (a) Two-'l'nmm; :\fA.JOJWJ'Y HEQwfRED.- ln the 

13 House of Repl'esentati,·es or the Senate, a bill o1· j oint 1·es14 olution, amend111ellt, o1· confe rence re JX>rt 

15 change of the dates specified in section 2(a ) of this Act 

16 may not be considered as passccl or agreed to unless so 

17 de termined b~· a Yotc of not less than two-thirds of the 

18 i\fembcn; voting, a guom m being present. 

19 (b) HULES OF 'l'TIE SE~A'l' ~ AND liOuSg.-The p1·u20 \'isious of subsection (a) arc enactecl b~· the Congress as 

21 an exe rcise of the l'nlemaking power of the H ouse of Hep22 rcsentatiYes and the Scn!1t.c, I'Cspcct.iYely, and as such the.'· 

23 shall be considered as part of the rules of' each Ilouse, 

24 cs ect \' l~ , o1· of that House to which e~' sp ecif'i call,,· 

•HR 27 lli 
10 

f 


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..J. 

upply, aud such rule!> shall supe rsede othe r rules onl.v to 

2 tho CJ\ient that they arc inconsistent theJ'C\\'ith. 

0 

•HR 27 IH 
11 

Chairman BOUSTANY. I thank the gentleman. 

Mr. Williams, you may proceed. 

STATEMENT OF HON. ROGER WILLIAMS, A REPRESENTATIVE 

IN CONGRESS FROM THE STATE OF TEXAS 

Mr. WILLIAMS. Thank you, Mr. Chairman, for allowing me to 

testify this afternoon. Mr. Chairman, my tax plan, simply titled, 

‘‘Jumpstart America,’’ focuses on a business perspective tax reform. 

Other tax reform measures might focus on loopholes or pick winners and losers; mine does not. Frankly, we must begin to empower 

America’s great assets, the small business community, the last real 

hope to turning our economy around and cash-flowing America. 

Last Congress, when the conversation on tax reform began to 

take shape, I asked myself what areas were important to me, someone who is a second-generation small business owner with over 44 

years of experience still owning my business, and someone who has 

just about seen it all when it comes to our national economy. I remember dollar gasoline, I remember 20 percent interest. I remember the ’88 meltdown. We all remember 9/11. And I can tell you 

that Main Street America is hurting more now than ever before. 

As I traveled around my district, and even since my first election, I talked to my fellow small business owners, I talked to manufacturing sector people. I talked to people in distribution, my 

friends in the oil and gas industry, and frankly, the average American entrepreneur just starting out. 

So, Mr. Chairman, this is what I hear. First, they want a simplified Tax Code, both on the individual and corporate side. While 

there is debate on just how long it is, I think we can all agree the 

Tax Code needs to be simplified. H.R. 2842, the Individual Rate 

Simplification Act, brings the personal Code down to 20 percent for 

the first million and 30 percent for everything over a million. As 

many of the Members already know here today, business owners 

often use their personal tax returns as a flow-through for their 

companies. Taking the individual tax rate to a simple 20 percent 

creates a unified business income tax rate which is globally competitive. 

Next, all businesses, big or small, want to spend less time on 

taxes. According to a poll conducted by the National Federation of 

Independent Business, most surveyed wanted a less complex tax 

system. Small business owners in particular found it frustrating to 

devote much of their time to taxes when they could instead focus 

on revenues and their company. 

H.R. 2946, the Incentivize Corporate America Act, reduces the 

corporate tax rate to 20 percent. The United States current rate is 

around 39 percent, the highest statutory rate of any developed 

country in the free world. As we have seen over the last few years, 

companies are literally moving their headquarters to avoid rates. 

That is wrong and un-American. Lowering the tax rate would 

incentivize corporations to move their businesses back to the 

United States, helping us to regain our competitive edge in the 

global economy. 

The next set of bills focuses on moving to a cash-flow tax base. 

H.R. 3017, the Invest in America Act, cuts the capital gains and 

dividends to 15 percent. 


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H.R. 3213, the Fixed Asset Relief Act, allows 100 percent expensing of fixed assets, providing businesses the ability to deduct tangible personal property from the tax base in their year of purchase. 

Instead of having to schedule out deductions, a small business 

owner will be able to take the entire deduction immediately. As 

someone who has personally done this, I can tell you this is a game 

changer. Bonus depreciation reduces the tax bias against investment and allows businesses to create new jobs and put more people 

to work. 

Finally, H.R. 3216, the Paycheck Relief Act, reduces the payroll 

tax for not only the employee, but also the employer, by 2 percent. 

From 2011 to 2012, employees enjoyed a reduced rate that helped 

boost take-home pay for Americans. In addition, if future Administrations want to empower small business owners who employ half 

the private-sector jobs, combining a reduction in employee payroll 

taxes is crucial. 

In 2010 the CBO explained that the Congress, by cutting the 

payroll taxes, would boost employment more if given to the employer, as well. 

If these three bills sound familiar, well, they are not new ideas. 

Capital gains and dividend rates at 15 percent, accelerated depreciation on assets, and lowering the payroll tax all have been used 

before to help jumpstart the American economy in the past. And 

I believe it will help jumpstart America again. 

The next pillar of my tax reform plan deals with keeping America competitive with other nations. We absolutely need to lower the 

repatriation tax rate in this Nation to 5 percent, while making it 

permanent, not on a one-time holiday basis. H.R. 3083, the Bring 

Jobs Back to America Act, is self-explanatory. It creates more jobs 

and brings jobs back to America we never had. 

In addition, this plan recommends not eliminating last in/first 

out as an accounting method, or using an international method 

that puts American companies at a disadvantage. Industries that 

use the LIFO accounting method include car dealers, the beer and 

wine distributors, and almost anyone in the manufacturing industry, also in oil and gas. Although proponents of doing away with 

the LIFO point to a $100 billion pot of money—a carry-forward, as 

we call it—I assure you any LIFO will destroy American companies 

and kill Main Street. 

In addition, using international financing reporting standards or 

eliminating LIFO all together will not solve America’s debt problem. Frankly, I was extremely disappointed to see LIFO used as a 

pay-for in the bill produced by the Committee’s former Chairman 

last time. Over the last year I have worked closely with Members 

of the LIFO Coalition that advocate that LIFO not be used as a 

revenue offset in any tax plan moving forward. I hope their message is clear. 

Mr. Chairman, lastly I would like to conclude that the bill is very 

personal to me. Under the leadership of Chairman Brady, the 

House just last year passed H.R. 1105, a bill that would repeal the 

estate tax. I would like to take a moment to tell Members of this 

Committee a quick story. 

In 1939 a young man started a car dealership to realize the 

American Dream. When he died that dealership was passed to his 


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son, along with a death tax liability. A mere 3 days after the father’s death, the IRS came to collect and wanted 55 percent of the 

value of the business. His son nearly declared bankruptcy, but was 

fortunate to gather enough resources to keep the business afloat 

and save hundreds of jobs. The son still runs his dealership and 

employs over 100 people. Mr. Chairman, that son is me. 

My story, unfortunately, is not uncommon, as many farmers and 

ranchers in my district have similar stories. Let’s end this tax once 

and for all. And I appreciate your continued support. 

So, in closing, Mr. Chairman, I spent the last 2 years talking 

about this tax reform plan. And although my staff might be tired 

of it, I hope you can tell that I am very passionate about it. 

Jumpstart has the support of Douglas Holtz-Eakin, the former Director of the Congressional Budget Office, and former FDIC Chairman, Don Powell, who said the plan was a thoughtful, commonsense approach to one of the most important issues facing America. 

Last month I was honored to have Grover Norquist’s Americans 

for Tax Reform call my plan a model for pro-growth tax reform. I 

encourage the Committee to consider cash-flow, pro-growth, probusiness-friendly tax reform ideas when considering tax reform in 

the future. 

I want to again thank you for allowing me this time this afternoon, and I welcome any questions you may have. Thank you. 

[The submissions of The Honorable Roger Williams follow:] 


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114'1'11 00):GUES8 H R 2842 1ST SEsSIOK 

• • 

To ;~m nd the lntem al J!e,·emul Uode of 1986 to simplifY individual income 

lnx nttes. 

IN THE HOUSE OF REPRESENTATIVES 

J U:-1£ 18, 2015 

Mr. Wn.I,l;\)!S iJllroduccd tltc followiug bill; which was •·cfct·t·c.:d to the 

Committee on Ways and Means 

A BILL 

To amend the I11te111al Hcvenue Code of 1986 to simpli{)r 

individual income tax rates. 

1 Be it c!nacted l}.y the Senate and /J(ruse qf Representar 

2 tives ojthe United States of Ame1-ica in Cony1-ess assembled, 

3 SECTION I. SHORT TITLE. 

4 'l'his Act may be cited as the "Individual Rate Sim5 plification Act of 2015". 

6 SEC. 2. SIMPLIFIED INDIVIDUAL INCOME TAX RATES. 

7 (a) IN GENERAL.- SI:!ction 1 (i) of thl:! I nternal Rev8 enue Code of 1986 is amended by skiking pm·agraphs (2) 

9 and (3), by redesignating paragraph (4) as paragraph (3), 
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2 

and by inse•·ting after paragraph Cl) the follo,,ing new 

2 parag1·aph: 

3 "(2) 0- A:'\0 30· PERCEJ''P RA'rE BR..!\GKETS.-

4 "(A) I:'\ OEC\ERAl,.-In the case of taxable 

5 ,\'CCII'S ucg-inning- after Dec.:embcr 31, 2015, t.hc 

6 rate of ta:x under subsections {a), (b), (c), and 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

(d) 011 taxaule income which would (without regard to this paragraph) be ta.xed at a rale ovet· 

15 pe•·ccnt shnll be-

" (i) 20 pe•·cent on taxable income not 

over $1,000,000, and 

" (ii) 30 percent on taxable income 

over $1,000,000. 

"(B) l !.\'l•'LA'l'ION ADJ IJt;T~IENT.-In preScribing the tables under subsection (f) which 

apply with respect to taxable years beginning 

after 20] 6, the $1,000,000 cliOOll!lt in sul.Jpaeagraph (A) shall be increased by an amount 

equal to-

•HR 2842 lH 

" (i) such dollar amount, multiplied by 

" (ii) the cost-of-living adjustmeJ• t detcrmin<X1 under subsection (1)(3) fo1· the 

calcnclill' year i11 which the taxable year begins rlctcrmined by substitnt.ing 'calendar 
16 

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8 

.vear 2015' for 'e;1lcndar .'·ear 1992' in sub2 pnragr11ph (B) thereof. 

3 If any acljustmm1t under the preceding sentence 

4 is not a multiple of $100, sn ch amount shall be 

5 I'Otmdcd to the next lowest multiple of $100.". 

6 (b) EFFECTIVE DATE.- The amendments made by 

7 this section shall apply to t.axablc years beginning after 

8 December 31, 2015. 

0 

·RR 2842 m 
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114TH CONORESS H R 2946 1 S'l' SES.'~TOK 

• • 

To Rtnend t.hc Intcrnnl Revenue Code of 1986 to o·cdm:e the uo.,xwate income 

ta.'< o·ate to 20 pertcnt. 

IN THE HOUSE 01<, REPRESEN'l'ATIVES 

JGKE 25, 2015 

,\1r. WJu,o"IMS introduced the t'ollowing bill; which wns refe,.,.ed to the 

C<>onm ~Lec on Wn~'S nnd sfeans 

A BILL 

'l'o amend the Internal ReYenue Code of 1986 to reduce 

the cot·poratc income tax rate to 20 percent. 

Be it enacted by the Senate and Houfie of Represtsnta2 tives of the United States of Amel'!'ca in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the "Inccntivize Corpoo·ate 

5 America Act of 2015". 

6 SEC. 2. 20-PERCENT CORPORATE TAX RATE. 

7 (a) bl GEKERAL.- Subsection (b) of section 11 of the 

8 Internal R{lvcnue Code of 1986 is amended to read as fo l9 lows: 
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"(b) _\JJOt:XT OF TAX.-'l'hr amount of the tnx im2 posed by subsection {a) shall br 20 percent of taxahl<' in3 rome.". 

4 {h) OXVOH~IIX(I i\ .. m:::-<om;X'fS.-

5 (1) Prn·agmphs (2)(13) and (6)(A)(ii) of section 

6 860E(c) of sucl1 Code a i'C C<H.:h amended sttiking 

7 "scctim1 11 (b)(1 )" and inse1·ting- "section ll(b)". 

8 (2)(A) Section 1-Wi(c)(l) of such Code is 

9 amended10 (i) br stt·iking :~ 5 pc1·cent" and inserting 

J 1 " the rnt.c of tllx in effect f(ll' the taxable year 

12 under section l l(h)", nnd 

13 (ii) by striking "of the gain" and inscd.ing 

14 lllul~iplicu h,v thC' gnin" . 

15 (B) Section 1445(e)(2) of such C<Jdc is amcnd16 eel by striking ''35 JX!l'CCnt of the amount" ami in17 se1·ting "the rate of tax in effect for the ta: ... able yem· 

18 under sectiou 11 {b) multiplied b~· the amotmt". 

19 (C) Scctio11 1445(c)(6) of such Code is amcnd20 ed2 1 (i) hy stJ· il<in ~ '·35 percent" aud iru;crting 

22 " the rAte of Ulx in effect f'or the ta.'illble ycm· 

23 tulder seC'tion 11 (h)", and 

24 (ii) b~- !;t1-iking "of the amOtmt" ami in25 scrtiug- " nmltipliC'd h,v tlw nn1ou nt". 

• fiR 29-16 IH 
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(D) Section 1446(b)(2)(B) of such Code is 

2 amended by striki ng "sectiou ll(b)(1)" and insert3 ing '·section 11 (b)". 

4 (3) Section 852(b)(l) of' such Code is urnelllled 

5 b.v striking the last sentence. 

6 (4) Section 7874(e)(1 )(B) of such Code is 

7 amended by striking " section 11 (b)(1)" and insert8 ing "section 11 (b)". 

10 (l) IN ~t\E H.JU Except liS otherwise proIt ,;ded in this subsection, the amendments made by 

12 this section shall apply to taxable years beginning 

13 after December 31, 2015. 

14 (2) Wrnu-rOLOJNG.- Thc am()ndmcnt.<> made by 

15 ~;;ubsection (b)(2) shall apply to <tistributions made 

16 after December 31, 2015. 

0 

•HR 2946 1H 
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114mUO:-IGRESS H R 3017 1 s·r SESSIO:-< 

• • 

'l'o amc11d the lntcnlal l{evellne Uxlc ot H)8(i to make the maxi11nml capital 

gni 11s mlc fot· individuals 15 percent. 

IN THE HOUSE OF REPRESENTATIVES 

JUL.I' 9, 2015 

Mt·. Wn.r.IA)Ii:; introduced the following bill; which was refct·J·ed to the 

Commil.te<' on Ways and MeatlS 

A BILL 

To amend the Internal Revenue Code of 1986 to make 

the maximum capital gains rate for individuals 15 percent. 

1 Be it enacted by the Sena.te and House of Re·P'resentl£-

2 tiues of the Unitecl Stutes of Americct in CongTess assembled, 

3 SECTION 1. SHORT TITLE. 

4 'fhis Act may be cited as the " Invest in Amer·ica Act 

5 of2015". 

6 SEC. 2. 15 PERCENT MAXIMUM CAP11'AL GAINS RATE. 

7 (a) I:-< GB:'\EH.AI •. -Sectiuu ] (h) ur e I ulem ul Rev8 enue Cone of 1986 is amended by sb·iking subparagraphs 

9 (C) and (D), by redesignating subparagraphs (E) and (F) 

10 as subparagrapl1s {D) and (E), respectively, and by insert-
21 

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ing after subparagraph (B) the follo11ing new subpa ra2 graph: 

3 "(C) 15 percent of the adjusted net capital 

4 gain (or, if less, ta.'Xilhle income) in excess of the 

5 amount on which n tax is determined under 

6 subparag1·aph (B),". 

7 (b) EFFEC'l'IVE DATE.-Thc amendments made by 

8 this section shall apply to ta-.,;ablc years begiru1ing after 

9 December 31, 2014. 

0 

•.HU 3017 fB 
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114Til CONGRESS H R 3083 1ST SESJ>IOl' 

• • 

'l'o amend the lntel'llal He,-enue Code or 1986 t.o make permanent the clividcnds •-eccivcd clccluclion fo•· I' p~!l·illted fOI'Cil,"11 eal'llillf,'S, and f'cJI' othe•· 

pmvoses. 

IN THE HOUSE OF H.EPH.ESEN'l'A'l'IVES 

JtJL\' 15, 2015 

~Jr. Wn,L!AMS inb·oduced the following bill; which was •-efcl'l·ed to the 

Committee on Wa,1'S nnd Means 

A BILL 

'l'o amend the Internal Revenue Code of 1986 to make 

permanent the dividends received deduction for repatJ·iated f'oreign earnings, and for other purposes. 

Be it enacted &y the Sellate and IIouse qf R&presenta2 tives oftlte United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 'l'his Act may be cited as the "Bring Jobs Back to 

5 America Act of 2015". 
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2 

SEC. 2. MODL~lCA fiON AND PERMANENT EXTENSION OF 

2 

3 

THE INCENTIVES TO REINVEST FOREIGN 

EARNINGS IN THE UNITED STATES. 

4 (a) REPA1'RIA'L'I0:\ ScBJECT '1'0 5 PEHCE:-<1' 'l'Ax 

5 RATE.-Scction 965(a)(1) of the Internal Renmue Code 

6 of 1986 is amended by striking "85 percent" and inserting 

7 "85. 7 percent". 

8 (b) PERliANB:\"1' EXTE::\SION TO ELECT HEPA'l'Rl9 Nl'IOI\".-Sectiou 965(t) of such Code is amended to read 

10 as follows: 

11 "(f) ELEC'L'lON.-'l'he ta.:xpayer m<ty elect to apply 

12 this section to any taxable yem· only il' made on or before 

13 the (lue elate (including e:~.-tens s) fo1· filing the return 

'14 of tox for such toxoblc ycor.". 

15 (c) R~PATRL<\1 ION I>:CLUDI~S CuRREN1' AKl> Accu16 ~11JLA'I'EO FOH.ElO:'\ EARNI:'\OS.-

17 {1) b· OE:-ffiRAL.- Section 965(b)(l) of such 

18 Code is amended to read as follows: 

19 "(1) L' GENt~RAL. 'l'h e amount of dividends 

20 taken into account unuer subsecti011 (a) sh<tll not e..-..-

21 cced the sum of the current, and <tccunmlated Ca1"11-

22 ings and JWofits described in section 959(c)(3) fo1 · 

23 lhc yea •· a decluction is claimed 1mrle1· subsection (a), 

24 without diminu tion by reason of any dist1·ibutions 

25 made duriug the election 'car, for all controlled f'or26 cign c01·poration>; of the United Stntcs sharcholde1·.". 

•IIR 3083 J1J 
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(2) CO)\FOR~! L' G .UJ£ )\Di\lE)\TS.-

2 (A) Section 965(b) of such Code it; amend· 

3 ed b~· st1·iking )Jaragraph (2) and by redesig· 

4 nating pa rag1·aplus (3) and ( 4) as pa ragraphs 

5 (2) and (3), J'CSpcctivel,\·. 

6 (B) Section 965(c) of such Code is ameml· 

7 ed by striking paragt·aphs (1) and (2) and by 

8 redesignating pa1·agraphs (3), (4), and (5) as 

9 pa1·agmphs (1 ), (2), ami (3), I'CSpectivel.v. 

lO (C) Section 965(c)(3) of such Code, as re· 

11 designated hy subparagraph (R), is amended to 

12 read as follows: 

13 "(3) CO:-<'t'ROLr,rm tlltOlJ PS.-All United States 

14 shar<'holders which arc members of a.n affiliated 

15 group filing a consolidated return under section 

16 1501 shall be treated as one United States share· 

17 holder.". 

18 (d) CLERICAL A.\IENm'lEK'l'S.-

19 (1) 'l'he heading for section 965 of such Code 

20 is <llliCnded by striking "TEMPORARY". 

21 (2) 'l'hc table of section!:> for subpmt li' of pa1t 

22 III of suhchaptm· N of chapter J of such Code is 

23 amended by striking '"Pemponwy cl ivjdeuds" and in· 

24 serting "Dividends". 

•liR soS!l m 
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(e) ]!}PF8C'rf\'B DA'l'E.-'l'he amendmcut·s mnde by 

2 this section shall npply lo t~txahle ycnt-::; ending after the 

3 elate of the enactment of this Act. 

0 

•lffi 3083 U! 
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114Til CONGRESS H R 3213 l S'l' SESSI0:-1 

• • 

1'o amend the lntental ltm·enue l'Ofle of l9SG Lo make 100 pet-cent bonus 

depreciation pennanenl. 

IN TilE HOUSE OF REPRESEN'rATIVES 

J ULY 23, 20~5 

:)k WILI-!A)!S inLrwuccd tbc following bill; which witS t'CfCrt't'<.l to the 

Committee on Way!> and Means 

A BILL 

'l'o amend the Internal Revenue Code of 1 986 to make 

100 percent bonus depreciation permanent. 

1 Be it enacted by the Senate and Ilouse of Rep?·esenta2 lives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the "Fixed Asset Relief Act 

5 of2015". 

6 SEC. 2. BONUS DEPRECIATION INCREASED TO 100 PER7 CENT AND MADE PERMANENT. 

8 (a) lNCI11<:ASE.-Sectim1 168(k)(l)(A) of the Internal 

9 Heve1me Code of 1986 is amended by striking "50 perI 0 cent" 1md insc1t ing "1 00 percent". 
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2 

(b) ~L\DE PEIUIA:'\E:\'1'.- \.'<:lion 16 (k)(2) of the 

2 I merna I ReYcnuc Code of 1 9 6 is H meruled to 1-e<t<l cts l'ol3 lows: 

4 "(2) Qt-M ,JFII-:1> I'IIOI'Jo:lrl'Y.- For· purposes of 

5 l itis suiJsc<:tion6 "(A) l :\ ogt\EH.1\L.-'J'he term 'qmrlifird 

7 propert~ · uwans prope•t.v8 "{i)(I) to which this section applies 

9 which has a CCO\'CI~· pc1iod of 20 yell!'!'> o•· 

10 less, 

II "{11) which is <:Omputer software (us 

12 de fined in secl.iou 167{t)(l)(B)) for whieh 

J 3 a rlcdnction i~ allowable u11der section 

14 167(11) without regard to Uris subsectiou, 

15 "(III) which is water utility pl'OJ>l'l'l~·. 

16 or 

17 "(IV) which is qtllllificd leasehold im18 provement p•·opcr-t;:.·, and 

19 "(ii) the original usc of which eom20 lllCIICCS wi lh the t<L'1.1)H~'C '. 

21 "{B) BXC8PTIOK OR ALTERXJ\TlVE DE22 l'HI~CI.\'1'10:'\ PROPERTY.-Thc term 'qualified 

23 property' shall not, include an~· propcrt~· to 

24 which the allcruati\'(! dep•·c<:iation S~'::;tcm under 

25 snhscct,ion (g) Hpplics, dctc•·mined-

•HR 3213 m 
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•HR 3213 m 

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"(i) without rcg<)rd to paragraph (7) 

of subsection (g) (relating to election to 

have system apply), and 

"(i'i) after application of section 

280F(b) (relating to listed propcrt)' ,,;th 

limited business usc). 

"(C) SPECL\L Rl_;l_,£S.-

"(i) S;\LE-LEASEBACKS.- For purposes of clause (ii) and subpara{:_naph 

(A)(ii), if property is-

" (I) o•·iginally placed in sen~ce 

by a person, <mel 

"(H) sold ami lea.<;ed back by 

such pet·son within 3 months afle•· the 

date such p•·ope•-Ly was ot-iginally 

placed in scnicc, 

such propmty shall be trct~tcd as 01·iginally 

placed in n~ cc not earlier than the date 

on which such property is used under the 

leaseback refen·ed to in subclause (II). 

"(ii) SYSDICA'I'IO:--<.-For purposes of 

subparagraph (A)(ii), if-

"(I) property is originally placed 

111 sen~cc by the lessor of such property, 
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"(TI) snc·h proprtty is sold by 

such lessor ot· any subsequent purch ase~· \lithin 3 months aftet· the date 

such properLy \HIS orig-inally placed in 

scn ·ice (or, in the ease of ltlult.iplc 

unit.':> of pt·opea·Ly subject to the SClll tO 

lem;e, within 3 lllonLhs af'Lca· Lhe dat.e 

tJa e !imtl unit ~:> placed in sen•iee, so 

on~ as lhe period between the time 

the first unit is placed in service and 

the time the last tlllit is placed in 

senicc docs not exceed 12 months). 

and 

"(ITT) the u. rt· of . urh p1·oprt'Q' 

after the last sale dttring such 3-

month pcl'iod t·cmains the same as 

whe11 such propet"ty \\'aS 01iginnlly 

plaeed iu ::;erviee, 

sm:h pt·opct·t.y sJaall bu treated as ol'iginall~· 

placed in service not. em·licr tlaun t.ho d<tLc 

of such last sale. 

"(D) Cootml:>:,\'l'lo:-; \\'1'1'11 ~C"'' O:>: 

2SOP.-For J)lll'poscs of . ect ion :lSO Ji'-

•HR 3213 lH 

"(i) ,\rTO)tOrm,l•;:->.-ln the case of a 

passenger nutoltlohilr (as clrlitwcl in sC'(•t ion 
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•llK 3213 lH 

5 

280F'(d)(5)) which 1s qmllif'icd l)l"Opert_,., 

the Sccrctf11 y sh11 ll-incrcasc the limitation 

under section 280F(a)(l )(A)(i) by $8,000. 

"(ii) LIS'l'Jm PJWI'J J{ 'Y -' e deduction allowable under pOl'tlgTnph (1) shall he 

taken into account in computing any recapture amount under section 280F(h)(2). 

"(iii) IN l•'J,A'l'ION ADJ US ~fEI"T. ln 

the case of any ta.."able year beginning in 

a calenda r year after 2015, the $8,000 

amount in clause (i) shall be increased b~· 

an amotmt equal to-

"(I) such dolla•· amount, multiplied LJ.v 

"(II) the automobile price inflation adjustment determined under sectim, 280F(d)(7)(B)(i) for the calendm· 

year in which such taxable yea•· begins 

by substit.utiug '2014' for '1987' in 

subclause (11) U1e1·cof. 

If any incrc11sc under the preceding sentence is not a multiple of $100, such increase shall be ronndcd to the nearest nmltiplc of $100. 
31 

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6 

"(E) DgDL:CT IO:'\ ALLOWED 1:'\ ('()~IPC'I'II\t; 

2 m:---r~IU:\1 TA.'(.- For ptwposcs of determining 

3 alternati\·e minimum taxable income under scc4 tion 55, Lhc dcductiou nndct· section 167 for 

5 qualified propCity shall be determined \\ithout 

6 rcgat·cl to any a<\justmeut under section 56.". 

7 (c) EPFEC'riVE DA1'E.-'l'he amendments matle by 

8 this section shall apply to pt·opetty placed in senrice after 

9 Decemue•· 31,2014. 

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•HR 3213 IH 
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1141'11 CO:'\ORESS H R 3267 1S1' SESSIOI\ 

• • 

'l'o ll i1\Cild lhc Internal R CI'CilllC Code of 19$6 lo reduce the 1'1\le or payl'Oll 

and sclf-emplo,,·mcnt hLxes, and for othet· puqlOSCS. 

IN TilE HOUSE OF REPRESENTATIVES 

J t:L\' 2S, 2015 

It ·. WtLLJA)l$ introduced the f'ollowing bill; wh ich was efe r~xl to the 

Committee on W;l,I'S and :\leans 

A BILL 

To ame11cl t he Internal Revenue Code of 1986 to reduce 

the rate of payroll and self-employment taxes, and for 

other pm·poses. 

l Be it enacted by the Senate anti ]{(ruse of Re-p?·esenta2 l'iue.s of the United States ofAmerica in Cong·ress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the "Paycheck Helief Act 

5 of2015". 

6 SEC. 2. FICA TAX RATF. RF.DUC1'TONS. 

7 (a) 0LD-AOli:, Suttvl VOBS, AND DISABIIJI'I'Y INSUR8 ANCE.-Sections 310] (a) and 31ll(a) of t he Intemal 

9 RcYenue Code of 1 986 nrc each Amended-
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2 

(1) · stt·iking all that l'olloll's "section 

2 312J(IJ))" and inserting 11 period, nnd 

3 (2) by striking "the follo11in g percent~'lges of t he 

4 wag-e~" and n~crting "3.1 pct·ccnt of the w11ges". 

5 (lJ) HOSPl'l'.\L l>: t"IU\N

6 (1) ]!i)!PLOYEES.- Scction 3101(b) of such 

7 Code is amended8 (A) by striJ<ing "1.45 percent" in para9 g.·aph (1) and inset'ting " 0.725 percent", and 

I 0 (B) b.v striking "0.9 percent" iu pat·agnlph 

I l (2) and insetting "0.45 percent". 

12 (2) E~IPWYERS. Se tion 3111 (b) of' such 

13 Code is amcndecl14 (A) b~· striking all that f'o llows "section 

15 3121(b))" and inserting a period, and 

16 (B) by striking "the fo llo\\ing perccntllges 

17 of the wages" and inserting "0.725 percent of 

18 the wages". 

19 (c) EFFECTI'\'E DJ\1'E.- 'l'hc amendments made b,v 

20 this section shall apply remuuerat ion paid after December 

21 31' 2015. 

22 SEC. 3. TAX ON SELF-EMPLOYMENT INCOME. 

23 (a) Or.n-Am.;, S-uRvrvons, A.\:D DTS1\BILlTY l>:SGR· 

24 AN ~. -Secti on 140l(a) of the lnternal Revenue Code of 

25 198G is nmended-

•Hit 3267 ill 
34 

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(1) by striking aiJ that follows " f01· such taxable 

2 year" and inserting a pt:riod, <tnd 

3 (2) b.v str·il< ing ' ·Lhe following- percent" and in4 st:rting "6.2 percent". 

5 (b) llOSPI'rAL li':SURA.'iCE.- Section 1401(1.>) of such 

6 Code is amencled7 (1) by skiking all that follows "for such t<rxable 

8 year" in paragraph (1) and inserting a period, 

9 (2) by str·ik ing "the following percent" in para10 graph (1) and insmting "1.45 per·cent", and 

11 (3) by striking "0.9 pm·ccnt" in pa ragraph 

12 (2)(A) and insmtiJ1g " 0.45". 

13 (c) EFFECTIVE DA'l't.;.-'l'hc nmcnflments mncle by 

14 this section shall apply with 1·cspcct to rcmnncmtion rc15 cei\·ed after December 31, 2015. 

0 

•HR 326'1 U1 
35 

Chairman BOUSTANY. Well, we thank—I want to thank both 

our colleagues for bringing these important ideas forward. And to 

my friend from Texas, I would say that you—thanks for sharing 

your personal story with us. I think it is important to understand 

the real-life consequences of our tax policies, so I want to thank 

you for that. And I thank you for bringing these pro-growth ideas 

forward. They are very important, and should be incorporated in 

what we do. 

And to my friend from Virginia, clearly you are trying to impart 

a sense of urgency with Congress to move forward. And I was having that conversation with my colleague here, the Ranking Member 

of the Subcommittee, about the need for urgency to do something, 

because the problems are mounting rapidly. Whether it is a small 

business here in the United States or a U.S.-headquartered company with subsidiaries around the world, U.S. business is under 

assault, and U.S. business needs tax relief. 

So I just want to thank both of you. 

And with that, Mr. Neal, if you have a few comments or questions? 

Mr. NEAL. Thanks, Mr. Chairman. I thought that the way that 

we acted on incremental tax reform at the end of the year is probably not the best way to do it. But nonetheless, it provided some 

momentum. And I think that it was actually a pretty skilled bipartisan piece of legislation, and I think there is an opportunity here 

to go forward. Whether or not the lesson of incrementalism or a 

much broader tax package can be accomplished I think is something we are going to have to continue to discuss and debate. 

And—but I did think that, at the end of the year, we found a way 

forward with, really, minimal controversy. 

Chairman BOUSTANY. Mr. Reichert. 

Mr. REICHERT. Thank you, Mr. Chairman. I just have a comment. I was going to ask a question, but your testimony answered 

it for me from both of you. Thank you for your hard work. 

To me, tax reform is really about—it is a pro-growth effort that 

creates an environment where businesses can grow and, obviously, 

create jobs. Your ideas and thoughts that you shared with us 

today, I think, fall directly in line with what I envision tax reform 

to be. And I look forward to working with both of you and thank 

you for your hard work and thank you for your testimony today. 

Chairman BOUSTANY. Mr. Thompson. You have nothing? Okay. 

Mr. Kelly. No? Mr. Renacci. 

Mr. RENACCI. A question. 

Chairman BOUSTANY. Yes. 

Mr. RENACCI. Thank you, Mr. Chairman, and thank you for 

holding the hearing. 

I want to re-emphasize how important it is to understand who 

bears the burden of high corporate tax rates. I mean I have said 

it before, I will say it again: The burden of corporate tax does not 

ultimately fall on the corporations, it is borne by the people, either 

customers, investors, or workers. Larry Kudlow re-emphasized this 

point in a column he authored just last week: ‘‘Companies don’t 

just pay corporate taxes out of their own pockets. They pass it 

along in the form of lower wages and benefits to workforce, higher 

prices for consumers, and low stock valuations for investors.’’ 


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So, with that, I have often said we have to look at our corporate 

tax rate, and I am a big believer we have to reduce that, just to 

be competitive, worldwide. 

I have sensed some Members here today understand this, and I 

am grateful they are here, really, to discuss their ideas. 

Mr. Goodlatte, urgency, I agree with you. We have to have reasons and be forced—you know, forcing Congress and the Administration to act on tax reform. We have been talking about it, we 

need to get it done. It is nearly impossible to defend the status quo, 

the problem. 

However, when you want to talk about the importance of taxpayers having some level of certainty and predictability, I would be 

extremely concerned that we have a deadline and we don’t have an 

answer, and we bring uncertainty and unpredictability really to the 

taxpayer. We saw that in the extenders. Every 2 years we extended, we brought uncertainty, we had unpredictability, we had 

deadlines, we forced deadlines, and all we did was extend, extend, 

extend, until most recently, when we had the PATH Act and had 

some permanency to it. 

So, I guess I would just ask you. What are your thoughts there? 

Because I am not big on deadlines. In fact, I had a bill last year 

in—as far as the user fee gas tax. It said we had—Congress had 

2 years, and if they didn’t come up with an answer, that the gas 

tax would go up. And everybody got upset that—nobody wanted to 

have a deadline. So explain to me your thoughts on, you know, the 

downside of forcing a deadline when we have to make sure we have 

an answer. 

Mr. GOODLATTE. Well, this deadline is quite a ways into the 

future, and it is really designed to move tax reform to the front 

burner. We don’t have to wait anywhere near that deadline if we 

come up with—and, you know, it can be any kind of tax reform. 

We don’t specify whether it is a flat income tax or a consumptionbased tax, or a major overhaul of our current tax structure like the 

excellent one just described by my colleague from Texas. But the 

problem is everybody here agrees that our current Tax Code really 

stinks, but nobody has anywhere close to the consensus on how to 

do substantial tax reform. 

I agree with the gentleman from Massachusetts, that a small 

amount of progress was made at the end of last year. But compared 

to what needs to be done, not just with regard to our corporate 

rates but the complexity of the Tax Code, the disincentives to invest in this country and so on, we need to move it to the front 

burner. 

And so, I think the only way you are going to get that kind of 

focus and put it on the front burner is to say to folks, ‘‘This is our 

top priority.’’ Because as soon as you say we are ending the current 

Tax Code by a certain date, you are going to accomplish that goal. 

And that is going to focus everybody on, well, what are you going 

to do to avoid that uncertainty 3, 4 years down the road from now? 

And that is why I think it is important for us to take this stand 

now, to move it to the front burner and deal with it now, so we 

don’t get to the point that you are making well, and that is that 

what if you get right up to the end of 2019 and you didn’t have 

anything done? You would have created greater uncertainty. 


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Mr. RENACCI. I agree with you. And again, the only issue I continue to go back to is we extended the highway bill, we extended 

a highway infrastructure bill 33 times. So that is the problem—— 

Mr. GOODLATTE. This will require a super-majority to extend 

it beyond 2019. 

Mr. RENACCI. I understand. 

Mr. GOODLATTE. I think it will focus the mind. That is the 

goal. 

Mr. RENACCI. I understand. Mr. Williams, I also agree with 

some of the concepts you put forward in your package of bills. I do 

have a couple of questions. 

I have also had a couple of ideas for tax reform. And as soon as 

you get it scored either conventionally or using dynamic scoring, 

you realize that there are some serious issues with it. Have you 

ever had your proposal scored to see what the effects are of the 

dynamic—or even a conventional? 

Mr. WILLIAMS. We have had it unofficially dynamic scored. 

That is—and basically, what we see is that for 2 years your revenue may go down, but after that it climbs because you are putting 

more people to work, you are heading toward your 5 percent unemployment, 4 percent growth. 

And, I mean, that is the last thing we have to do. We have tried 

a lot of things that haven’t worked, zero percent and stimulus. Job 

creators are the ones left to rely on getting people back to work 

again and on creating more revenue. And we can put this plan to 

use and it will generate more income and hopefully reduce some 

debt along the way. 

Mr. RENACCI. Well, I am a big believer we have to lower taxes. 

I just want to make sure we get it scored and see what the score 

is. 

One other thing. You have in your bill, the Paycheck Relief Act, 

the bill reduces payroll taxes by 2 percent. That is—is that 2 percent for both employers and employees? But the other thing I want 

to bring up is the Social Security Trust Fund is projected to be insolvent in less than 20 years. Do you have the data detailing the 

impact of cutting the payroll taxes and the amount that it would 

have on the solvency of the Social Security Trust Fund? 

Mr. GOODLATTE. Well, we have to fix those accounts, but I will 

tell you this. I believe that we can have more people paying in the 

system if we get more people to work. And the employee is going 

to have more money in their pocket, we know that. And the employer is going to have more money, because he doesn’t have to 

match that. And when we have more money, most businesses don’t 

save. They spend, they hire people, they create jobs. 

And, you know, eventually, you have one person paying, I guess. 

But we have—this gives you more customers buying into the system, generating more revenue. 

Mr. RENACCI. Thank you. I yield back. 

Chairman BOUSTANY. Mr. Holding. 

Mr. HOLDING. Thank you. I want to thank my colleagues, 

Chairman Goodlatte and Mr. Williams, for being here today and 

discussing their income-based proposals for reforming the Tax 

Code. I also want to thank Chairman Boustany for holding this 

hearing. You know, we really need to encourage the kind of bold 


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thinking, innovative proposals we have discussed over the past two 

hearings that we have had now. 

As has been made clear today, and in the numerous other hearings we have had, our Tax Code has become overly complicated and 

uncompetitive, compared to foreign jurisdictions. We have seen 

other jurisdictions lower their rate. In some cases, like the United 

Kingdom, over and over again. I think they just lowered it in the 

last budget to 17 percent. And foreign jurisdictions have increased 

incentives to draw businesses to their shores. And yet we have 

failed to act to keep pace. 

So, Chairman Goodlatte, I applaud your efforts to lock Congress 

into a deadline and drive action on overhauling the Tax Code. 

Thank you. 

And Chairman Goodlatte, I would like to direct a question to you. 

Earlier this morning we held a markup here in the Ways and 

Means Committee on a number of IRS oversight bills. And in your 

proposal you specifically single out the need for the Tax Code to 

protect the rights of taxpayers and reduce collection abuses, which 

is definitely an important goal, I think, of all of us. 

In your role as Chairman of the Judiciary Committee what 

issues or concerns have you seen with regard to these abuses? And 

how do you think we should shape the Tax Code to adequately protect our citizens? 

Mr. GOODLATTE. Well, I think it is very important that the 

Congress maintain very active oversight over the Internal Revenue 

Service. Other branches of the agency, as well. But the trust of the 

public in the tax system to be fair is of paramount importance. And 

I think some of that has been lost in recent years, particularly with 

regard to scandals such as the targeting by the IRS of certain types 

of organizations as to whether or not they could qualify for certain 

tax statuses. And the evidence, I think, is quite strong that that 

took place and, therefore, engenders a sense of unfairness on the 

part of the public as to how our Tax Code, which is extraordinarily 

complex to begin with, is being administered, isn’t being fairly administered with regard to each and every citizen, each and every 

taxpayer of our country. 

So, we take that very seriously in the Judiciary Committee, and 

we hope that the same thing will be true here in the Ways and 

Means Committee, where I know you have investigated some of the 

same matters. 

Mr. HOLDING. Thank you. Thank you, Mr. Chairman, and 

thank you, Mr. Chairman. I yield back. 

Chairman BOUSTANY. Mr. Tiberi. 

Mr. TIBERI. Thank you, Mr. Chairman. I apologize for being 

late. I had some constituents here. 

I appreciate both of you testifying. I really don’t have any questions. But, Mr. Williams, I was excited to see 3213, the expensing 

provisions. As you know, we passed a bill out of this Committee 

onto the House floor that became law, expanding 179 and making 

it permanent. And 50 percent bonus depreciation for 5 years. And 

I was excited to see your proposal about expensing, as well. So good 

luck with that. 

Mr. WILLIAMS. Thank you. 

Mr. TIBERI. I think you are on the wrong—right track. 


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Mr. WILLIAMS. Let’s make it work. 

Mr. TIBERI. Yes, thank you. Thank you both. 

Chairman BOUSTANY. I thank the gentleman. 

Well, I want to thank both of our colleagues for bringing these 

ideas forward. And rest assured we are going to take these under 

consideration as we move forward. And I do appreciate, Mr. Goodlatte, your sense of urgency. I think those of us on the Committee 

share that, and are hopeful that we can continue to move the needle forward with regard to getting tax reform done. 

So, with that, we will move on to the second panel, and we thank 

you. I should also say be advised that over the next 2 weeks Members may have some additional questions they may submit in writing to you, and we ask that you make those answers promptly so 

we can make them part of the record. We thank you. 

[Pause.] 

Now we will hear from our second panel in the person of the 

Chief of Staff of the Joint Committee on Taxation, Mr. Thomas 

Barthold. Mr. Barthold will discuss considerations in broad-based 

income tax reform using former Ways and Means Chairman Dave 

Camp’s Tax Reform Act of 2014 for illustration. The Committee has 

received your written statement, and it will be made part of the 

formal record. And so you will have 5 minutes to proceed, as is customary. 

And I know you have been with us pretty much all day, Mr. 

Barthold, so we appreciate you returning for this Subcommittee 

hearing. 

STATEMENT OF THOMAS A. BARTHOLD, 

CHIEF OF STAFF, JOINT COMMITTEE ON TAXATION 

Mr. BARTHOLD. Well, thank you very much, Chairman Boustany and Mr. Neal, Members of the Subcommittee. 

The Chairman and Ranking Member asked me if I could just— 

if I could use former Chairman Camp’s H.R. 1 as an example of 

broad-based income tax reform. I think it is a good example that 

highlights a number of the important questions that face the Members in considering any tax reform proposal. 

Just in analyzing any tax system or any reform there is really 

kind of four key questions that we are always asking: Does the tax 

system or reform promote economic efficiency; does it promote 

growth; is the system fair; is the tax system administrable, both for 

the taxpayer and the tax administrator, the Internal Revenue Service. 

In crafting any tax reform proposal, there are tradeoffs because, 

often, a proposal that promotes efficiency we might determine isn’t 

as fair as we would like. And so we are always trading off one goal 

against another. 

Now, another factor that was dealt with by former Chairman 

Camp, in crafting his proposal, is he added on additional constraints. He wanted his proposal to be revenue neutral, as conventionally estimated. He wanted to maintain approximately the distribution of tax burdens. He wanted to not have a shift in business 

taxes between flow-through businesses, C corporations, and from 

domestic C corporations to multinational enterprises. So there is a 

number of different constraints, and I think you can see a lot of 


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the tradeoffs if we just tick through, as my testimony does, the outcomes as expressed in H.R. 1. 

On the individual side, H.R. 1 achieved a rate reduction. It reduced effective marginal tax rates on individual income tax to 10 

percent, 15 percent, and 35 percent, while maintaining a 40 percent deduction for dividends and capital gains. So that produced effective tax rates commensurately of 6 percent, 15 percent, and 21 

percent. 

Well, reducing rates generally costs the Treasury revenues. How 

is that achieved—how was that offset? Base broadening. H.R. 1 repealed all deductions for State and local taxes, modified a number 

of other deductions, such as the charitable deduction, mortgage interest deduction, deduction for moving expenses. Repealed the dependent care credit. Repealed all of the non-business energy personal credits, repealed or modified a number of other exclusions, 

such as some of the exclusions for employee fringe benefits. 

Now, in addition to broadening the base to achieve lower rates, 

a number of these decisions also had the effect of increasing the 

simplicity of the individual income tax. Repealing a number of different credits and deductions means there is less paperwork required. We are not choosing between different possibilities. That 

promotes economic efficiency. But explicitly to improve simplification, H.R. 1 also repealed the individual income tax. It consolidated 

the American Opportunity Tax Credit. 

On the business side, H.R. 1 again reduced the corporate income 

tax rate to 25 percent, further reduced the tax rate for a number 

of corporate taxpayers by repealing the Alternative Minimum Tax 

while maintaining a fairly strong research credit. Again, rate reductions tend to cost money. How was this achieved? Well, the base 

broadening. 

The H.R. 1 repealed bonus—allowed bonus depreciation to expire 

and required straight-line depreciation over the ADS recovery periods. It required amortization at 50 percent of advertising expenses 

over a 10-year period. It required amortization of research expenses. It repealed LIFO, which was just noted on the last panel. 

It phased out the present law deduction for our domestic manufacturing under Section 199. 

Now again, base broadening in this context served multiple purposes. To the extent that certain activities are favored and these 

distinctions were repealed, that improved economic efficiency and 

neutrality. 

In cross-border taxation, again, you see H.R. 1 established a 

95 percent participation exemption system. That has the effect of 

reducing the residual U.S. tax liability on foreign source income 

earned through CFCs, effectively again lowering the rate of tax applicable for repatriated foreign source income. 

However, the bill achieved this in part by establishing a new 

category of subpart F income, foreign based company intangible income, that, while taxed at a reduced rate of 15 percent, had the effect of broadening the amount of tax base currently subject to U.S. 

tax. 

If I may take an extra 30 seconds? Well, what was the overall 

effect? Did H.R. 1 meet its goals? H.R. 1 was roughly revenue neutral, raising $3 billion over the budget period. I think that it is imVerDate Sep 11 2014 15:17 May 11, 2017 Jkt 022336 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\22336\22336.XXX 22336

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portant to note that in context that is out of over a 10-year budget 

estimate of over $20 billion in—$20 trillion, excuse me, in individual income tax receipts and $4 trillion in corporate tax receipts. 

Distributionally, the average tax rates under present law, and as 

we estimated them for H.R. 1, were roughly the same. And to refer 

to the note that Mr. Renacci had made, our analysis does assume 

that the corporate tax burden is borne by individuals, that corporations are not entities of themselves in terms of a tax burden. 

And on the growth front, you—I am sure you remember from the 

materials that we put out that we estimated that H.R. 1 would be 

likely to increase real gross domestic product by between a tenth 

of a percent and 1.6 percent by the end of the budget period. 

I would be happy to answer any more detailed questions that the 

Members have. And I think what you see in H.R. 1 was a lot of 

tradeoffs in base broadening, tradeoffs between simplicity, tradeoffs 

between neutrality. Thank you. 

[The prepared statement of Mr. Barthold follows:] 


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JOINT COMMITTEE ON TAXATION 

April 13, 2016 

JCX-26-16 

TESTTh'IONY OF THE STAFF OF THE JOINT COMMITTEE ON TAXATION 

BEFORE THE BOUSE WAYS AND MEANS TAX POLICY SUBCOMMITTEE 

BEARING ON FUNDAMENTAL TAX REFORM PROPOSALS' 

APRIL 13, 2016 

My name is Thomas Barthold. I am the Chief of Staff of the Joint Committee on 

Taxation. The purpose oftoday's hearing is to discuss issues arising in attempting to reform the 

Federal tax system. Beginning I 00 years ago, the Congress has relied primarily on the income 

tax to f1md the Federal government. While considering alternatives,2 in the Tax Reforn1 Act of 

1986 tbe Congress and President Reagan decided to refom1 the existing Federal income tax 

generally by broadening the base of income tax and lowering statutory tax rates. 

In this subcommittee's bearing on March 22, 20 16, Members of Congress presented 

proposals that would refonn the Federal tax system by shifting the tax base from an income tax 

base to what economists refer to as a consumption tax base. For today's bearing, Chairman 

Boustany and Ranking Member Neal have asked me to briefly review the legislation introduced 

by forn1er Ways and Means Committee Chairman Dave Camp in the 11 3'h Congress, H.R. I, the 

"Tax Reforn1 Act of2014."3 That legislation, like the Tax Refonn Act of 1986, proposed 

broadening the base of income tax while lowering statutory tax rates. 

1 This docmnem may be cited as follows: Joim Conuninee on Taxation, Testimony of the Staff of the Joint 

Commillecon Taxation Before the House JYays and ft1oons Tax Policy Subcommittee Hearing on Fundamental fax 

Refonn Proposals (JCX-26-t6), April t3, 20t6. This docmnent can also be found on the Joint Conllllinee on 

Taxation website at hnp://www.jct.gov. 

' Oepartmeor of the Treasury, Tax Reform for Fairness, Simplicity, and Economic Growth. t984, vols. 1-3. 

' H.R. I (113'"Cong.), introduced December 10, 2014, by then Chairman Dave Camp. Additional Joint 

Conuuinee on Taxation staff analysis of H.R. I can be found in Technical Explanation, Estimated Revenue Effects, 

Distribution Analysis, and Macroeconomic Analysis of the Tax Reform Act o/2014, A Discussion Draft of the 

Chairman of the House Commillee on Ways and Means to Refomithelnternal Revenue Code (JCS-1-14), 

September 2014. Tlus documem can also be fow1d on the Joint Comntinee on Taxation website at 

lmp:llwww.jct.gov. 
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In assessing any tax system or reform, policymakers make their assessment across four 

dimensions. 

1. Does the tax system promote economic efficiency? That is, is the tax system 

neutral or does it create biases in favor of or against certain economic activities 

when compared to choices taxpayers would make in the absence of taxes? 

2. Does the tax system promote economic growth? How does the tax system affect 

the potential for citizens to be better off in the future than they are today? 

3. Is the tax system fair? Are similarly situated individuals treated similarly? Are 

tax burdens assessed recognizing that different taxpayers have different abilities 

to pay? 

4. Is the tax system administrable for both th e taxpayer and the [ntemal Revenue 

Service? Does the tax system economize on compliance costs by taxpayers and 

administrative costs of the tax administrator? 

There may, of course, be other important policy considerations. 

How one addresses these questions shapes the refonn. It is invariably the case tbat these 

different policy goals are in conflict. Policy design to promote economic neutrality may conflict 

with goals of fairness. Policy design to promote fairness may lead to complexity and increased 

compliance costs. Among the goals former Chainnan Camp set as additional constraints were 

maintaining budget neutrality as conventionally estimated, maintaining the current distribution of 

tax burdens across income groups, and not achieving low tax rates on C co1porate business 

income at the expense of higher taxes on pass through business income. There are always 

tradeoffs. Fonner Chairman Camp's introduced legislation is the result of such tradeoffs. 

Taxation of Individual Income 

H.R. I reduces the top effective marg1nal tax rate on individual income to 35 percent, 

broadens the tax base by repealing a number of itemized deductions and credits, and simplifies 

tax filing by increasing the standard deduction. 

Rate reduction 

• Reduces effective marginal tax rates on individual income to I 0, 25, and 35 percent. 

a. 40 percent deduction for individuals' dividends and capital gains (creating 

effective marginal tax rates of 6, 15, and 21 percent). 

Base broadening 

• Repeals deduction for all State and local taxes. 

Modifications of other deductions (e.g., charitable deduction, mortgage interest 

deduction, moving expense deduction). 

Repeals dependent care credit. 

2 
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• Repeals non-business energy propeity credit, credits for energy-efficient property, 

and credits for alternative fuel vehicles. 

Repeals or modifies certain other exclusions (e.g., exclusions for employee fringe 

benefits). 

Simplification 

• Increases the standard deduction and repeals deduction for personal exemptions. 

Repeals the individual alternative minimum tax ("AMT"). 

• Consolidates tax incentives for education. 

a. Repeals seven different tax incentives for education. 

b. Modifies and makes pennanent the American Oppornmity Tax Credit. 

Reducing income tax rates and broadening the tax base may promote growth by 

increasing labor supply and eliminating distotiions that create non-neutralities in the 

marketplace. However, these measures also have distributional consequences, and H.R. 1 

maintains distributional neutrality by increasing the child tax credit, modifying the earned 

income tax credit, and increasing the standard deduction (among other measures). 

Taxation of Business Income 

H.R. I promotes investment by reducing the corporate income tax rate to 25 percent, but 

at the same time increases the cost of capital through several base-broadening measures. 

Rate reduction 

• Reduces corporate income tax rate to 25 percent. 

Repeals corporate AMT. 

• Modifies and makes permanent the research credit. 

a. Repeals the traditional 20 percent research credit and energy research credit. 

b. Makes pennanent the alternative simplified method (increases rate to 15 percent) 

and basic research credit (reduces rate to 15 percent and changes the base period 

from a fixed period to a three-year rolling average). 

c. Eliminates the research credit for c-omputer software, removes supplies from 

definition of qualified research expenses, and eliminates ability to claim a reduced 

research credit in lieu of reducing research and development costs otherwise 

allowed. 

Base broadening 

Changes depreciation rules. 

a. Expands expensing pennitted under section 179. 

3 
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b. Allows bonus depreciation to expire. 

c. Requires straight-line method of cost rec.overy over applicable rec.overy period. 

d. Makes available election to index basis to chained consumer price index for all 

urban consumers ("CPI-U"). 

• Requires amortization of 50 percent of advertising expenditures over I 0 years. 

• Requires amortization of research and experimentation expenditures over five years. 

• Repeals last-in, first-out ("LIFO") and lower of cost or market ("LCM") methods of 

acc.ounting. 

Phases out section 199 domestic production activities deduction. 

• Repeals 23 energy-related tax incentives. 

• Repeals other business credits (e.g., FICA tip credit, rehabilitation credit, Work 

Opportunity Tax Credit ("WOTC"), railroad track maintenance credit). 

• Limits net operating loss ("NOL") deduction to 90 percent of taxable income. 

• Repeals private activity bonds. 

Simplification 

• Repeals corporate AMT. 

While the base-broadening measures of H.R. I increase the cost of capital, they can lead 

to a more efficient pattem of investment by eliminating non-neutralities created by tax incentives 

that benefit specific types of investment. 

Taxation of Cr·oss-Border Income 

H.R. I establishes a 95 percent participation exemption system that reduces residual U.S. 

income tax liability on foreign-source income earned through controlled foreign corporations, 

effectively lowering the rate of tax applicable for repatriated foreign-source income to 1.25 

percent. However, the bill also establishes a new category of subpart F income-foreign base 

company intangible income-that, while taxed at a reduced rate of 15 percent, broadens the 

income base that is subject to current taxation by the United States. 

Joint Committee on Taxation Staff Analvsis of R.R. 1 (FY 2014-2023) 

Revenue estimate 

H.R. I is roughly revenue neutral, raising $3 billion over tbe budget period. 

4 
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• For reference, the Congressional Budget Office projects individual income tax 

receipts of $2 1.7 trillion and corporate income tax receipts of $4.0 trillion over FY 

2017-2026 under present law.4 

Distributional analysis 

• Average tax rates under present law and H.R. 1 are estimated to be similar across the 

income distribution over the budget period. 

a. JCT staff analysis distributes the corporate tax burden. 

Macroeconomic analysis 

• H.R. 1 is estimated to result in the following changes in aggregate economic activity 

(depending on the macroeconomic model used): 

a. Increase in real gross domestic product ("GOP'') by between 0.1 percent and 1.6 

percent by the end of the budget period. 

b. Change in private business investment between -0.6 percent and 0.1 percent. 

c. Increase in labor force participation between 0.3 percent and 1.5 percent. 

d. Increase in private sector employment between 0.4 percent and 1.5 perc·ent. 

e. Increase in household consumption between 0.4 percent and 2.1 percent. 

• Congressional Budgel Office, Updmed Budget Projections: 2016-2026. March 2016, p. 2. 

5 
47 

Chairman BOUSTANY. Well, we thank you for that very succinct analysis of H.R. 1, Chairman Camp’s draft. 

And one of the things we hear over and over from our constituents, especially small business owners, is about the complexity of 

the Tax Code, how mind-numbingly complicated it is. And of 

course, that adds cost with compliance and so forth. 

One of the challenges I think we are struggling with a little bit 

is if you look at how to measure—how do you measure simplification, which is—you know, it is not as—it is not like revenue, where 

you have a clear estimate, both in a static or dynamic sense of 

where your revenue is going to fall in a tax bill. How do you—from 

your perspective, how do you look at simplification and the economic and financial benefits that ensue from simplification? How 

do you model that in tax reform? 

Mr. BARTHOLD. Well, with difficulty, for one, Mr. Chairman. 

There is a number of different ways that economists and other analysts have looked at the complexity of the Internal Revenue Code 

and simplification. 

One way in which we have is we have required the Internal Revenue Service to make estimates of the amount of time and effort 

it takes to complete certain forms. So if we wanted to target certain 

simplifications, we could look at how much effort goes into compliance with certain aspects of the Code. And we have estimates provided by the Internal Revenue Service and others in terms of dollars, of time. 

Another area in which we try to assess simplification to assist 

the Members is from the 1998 IRS Reform and Restructuring Act. 

My colleagues and I are required to report, as part of a committee 

report to this Committee and the Finance Committee, a complexity 

analysis if there is a provision that is in a bill that would have 

widespread applicability. To do that we talk about the number of 

taxpayers affected, the amount of additional record-keeping that 

might be required, the number of new forms. We seek an assessment from the Internal Revenue Service on what they think it 

would take. And so this is information that we try to gather to enable the Members to make judgments to get back to the tradeoff 

point that I made. 

Sometimes, to reach your—to reach a goal of fairness, you might 

say we want to preclude a benefit to certain upper-income taxpayers. Well, to do that, we have to define who, and then we have 

to have a test. And that leads to a more complex form than if we 

just said, ‘‘Here is a benefit, everyone can have it.’’ And that is a 

tradeoff between simplicity and other policy goals that the Committee Members may have. 

Chairman BOUSTANY. And in looking at pro-growth tax reform, 

you know, what will spur economic growth and job creation, which 

is something we are all concerned about right now, what areas of 

the Code do you think we ought to focus on? 

Mr. BARTHOLD. Well, it is not my place to pick and choose different areas. I can talk about work that we have done in the past. 

And I think H.R. 1, again, demonstrates some of the possibilities 

and some of the tradeoffs. 

To go back to base-broadening, in the corporate and business 

area a goal of H.R. 1 was to reduce tax rates. Reducing tax rates 


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increases the after-tax return to your business investment. That is 

obviously pro-growth. On the other hand, in H.R. 1, part of how we 

achieved increasing—I mean reducing tax rates was to slow cost recovery, slow cost recovery somewhat on research, on intangibles in 

terms of advertising, and in terms of tangible property. We lengthened the depreciation recovery periods. 

In classic economic analysis, the after-tax return, the profitability of an investment, depends not just on the top-line tax rate, 

but also on the cost recovery schedule. It is always better if we can 

recover costs faster. That is one reason the Committee in the past 

has enacted bonus depreciation, to try to encourage additional investment. So the tradeoff made in H.R. 1 was to slow the cost recovery but reduce the rate. Those two things work in opposite directions. Of course, if we did both in the same direction, then there 

is a bigger revenue loss during the budget period, which may lead 

to another policy concern that the Members would have. 

Chairman BOUSTANY. I thank you. Mr. Neal. 

Mr. NEAL. Thank you, Mr. Chairman. 

Mr. Barthold, I think the dilemma was highlighted by the last 

panel. And essentially, Mr. Williams’ proposal didn’t do any basebroadening. And the second part of it was that he highlighted his 

disagreement with Chairman Camp’s proposal. And that is one of 

the reasons it is so difficult to do reform, because people will take 

one part today, rather than taking a look for the longer term, in 

talking about what has to be done with fundamental tax reform. 

And I must tell you I think Camp gets plaudits for putting out a 

model. I think, on a bipartisan basis, he did a terrific job of including Democrats. And there was really a free-wheeling conversation 

about the need to make some major changes in the tax system. 

And I—the day before I think it is fair to say now the two of us 

carefully rehearsed what he was going to say about my Alternative 

Minimum Tax efforts, and he couldn’t have been any better about 

it. He said, ‘‘I am going to finish off Alternative Minimum Tax tomorrow and I am going to give you the credit for it in public.’’ And, 

I mean, I think that is kind of the basis of what you need to do 

with tax reform. 

And I think, as we have discussed this—and I think the four criteria that you laid out were right on target. I would add one more, 

by the way. What improves the quality of life for all Americans? 

That’s kind of the fifth one. But I thought the four that you laid 

out were terrific challenges and goals for all of us. 

But I must tell you, based on long service on this Committee, I 

think that what we ended up doing at the end of last year is more 

likely where we are headed, unless we put something out that is 

bold, and ask Members to refrain from commenting on it immediately, and digesting it for a couple of days. Before Dave Camp’s 

proposal had been in the hands of Democrats, his own party 

pounced. And it is—an example is you lay out all of these issues 

about broadening the base, and I listen very carefully, because I 

think that you are right on target as you described it. But you also 

described just how hard it is to do, without specifically mentioning 

it. 

So, I was very happy with many parts of the Camp proposal, and 

others I think we could have worked to improve. But in the end, 


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if you really want tax reform, you are going to have to swallow 

some things you don’t like. Thank you, Mr. Chairman. 

Chairman BOUSTANY. I thank the gentleman. Mr. Reichert. 

Mr. REICHERT. Thank you, Mr. Chairman. 

Mr. Barthold, you mentioned in your testimony some of the challenges we have had, as a Committee, and that we—some of the 

challenges we faced, some difficult questions that we were presented with in pursuit of comprehensive tax reform. 

But since the release of former Chairman Camp’s draft, there 

have been some significant changes. First, we have increased the 

information available to Members about the economic impact of 

major tax changes by requiring dynamic scoring. Second, we passed 

and the President signed into law the Protecting Americans from 

Tax Hikes legislation that made key provisions in a Tax Code permanent. 

I was hoping that you might be able to give us your impression 

of the potential impact of these changes as we move forward and 

examine comprehensive reform. 

Mr. BARTHOLD. Well, at—thank you, Mr. Reichert. Let me 

note, as I did at the very end, we had provided a macro-economic 

analysis of H.R. 1. And under House rules, we have, for bills reported by the Ways and Means Committee, been providing macroeconomic analysis since 2003. 

So, trying to provide that extra information to help the Members 

make assessments of what direction they want to take policy is not 

new for us. The change you just noted is that, rather than provide 

a range of outcomes, what economists refer to in economic jargon 

as ‘‘sensitivity analysis,’’ you have asked us to provide essentially 

a point estimate, which is what we do on conventional estimates. But I wanted to note that the capability is there, and we 

have been trying to dutifully provide that information to the Members. 

Also, you are correct. There are a number of things that Congress did last year, which were different, or reflected pieces of what 

may have been in H.R. 1. As noted in my testimony that I submitted, H.R. 1 would have modified expensing under Section 179. 

The PATH Act at the end of last year actually went beyond the levels that were proposed in H.R. 1. 

I had noted that H.R. 1 would have let bonus depreciation expire. 

The PATH Act extended it and put it on a longer term footing. As 

I just discussed with the Chairman, as a general matter costs— 

more rapid cost recovery is seen as a pro-growth initiative. 

Another pro-growth aspect of the PATH Act which is roughly in 

line with part of what was in H.R. 1 was a permanent research 

credit, based on the alternative simplified research credit model. 

Again, that is another pro-growth initiative. 

Mr. REICHERT. Okay. You have described the changes and 

some of the benefits. How do you see that helping us in getting to 

a—— 

Mr. BARTHOLD. In getting to tax reform? 

Mr. REICHERT. Yes. Can you answer that one? 

Mr. BARTHOLD. It is really not for me to—— 

Mr. REICHERT. If we help ourselves? 

[Laughter.] 


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Mr. BARTHOLD. The difficult job is handled on your side of the 

dais. 

Mr. REICHERT. All right. I will talk to you away from the dais 

here for a little bit. Thank you. I yield back. 

Chairman BOUSTANY. Mr. Renacci. 

Mr. RENACCI. Thank you, Mr. Chairman. Thank you, Mr. 

Barthold, for being here with us so long today. 

You mentioned what I said earlier. Do you agree that corporations really do not ultimately pay the burden of the corporate tax, 

but they pass it on to the customers or, actually, it ends up being 

lower wages or benefits to the workforce, lower stock valuations? 

Do you agree with that? 

Mr. BARTHOLD. I have been an economist for a long time, and 

it is longstanding economic dogma that individuals bear taxes. In 

our analysis—and if you want to read it in its—all its guts and 

glory, we have a description of how we distribute business tax burdens. But we assess the incidents of these taxes as affecting both 

the owners of the capital investment and, over the longer term, 

labor. And that is because, if you diminish capital investment, that 

diminishes the future possibility of productivity growth from 

having more and better capital. And productivity growth is a key 

driver of wage growth. 

So, we see the incidents and we think the empirical economic literature supports that the incidents are borne by owners of capital 

and by labor. 

Mr. RENACCI. So actually dropping the corporate tax rate—— 

Mr. BARTHOLD. So the short answer to your question is yes. 

Mr. RENACCI. Yes. So dropping the corporate rate would actually be one way of having some pro-growth out of corporations, because they would reinvest it back in employees, growth in their 

business. 

Mr. BARTHOLD. As I noted in answer to the Chairman’s question, lower tax rates always increase the return to investment, and 

that means we should see more investment, more growth. 

Mr. RENACCI. Do you have an idea what the total percentage 

of corporate tax receipts are, compared to the overall receipts of the 

U.S. Treasury? 

Mr. BARTHOLD. Well, off the top of my head, since I didn’t look 

up the payroll tax projections, no. But I did note in the testimony 

that I submitted that over the next 10 years the Congressional 

Budget Office is estimating that corporate income tax receipts will 

be $4 trillion. Individual income tax receipts will be over $21 trillion. 

So, if you think of the income tax as a whole, corporate tax receipts themselves are really barely 15 percent of the total income 

tax pie. Our biggest source, as you are aware, of funding the Federal Government is the individual income tax, followed by payroll 

taxes. 

Mr. RENACCI. So, has anybody ever asked the question if you 

eliminated the corporate income tax and eliminated the cost to the 

IRS to—if you eliminated the revenues from the corporate income 

tax and eliminated the costs to do all the receipts and collections 

and followup, what the net cost would be to the Federal Government? 


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Mr. BARTHOLD. Not recently, to my knowledge. And if a Member had made a request, you know that we treat any Member request as confidential, so I couldn’t comment on that, but—— 

Mr. RENACCI. I just wondered, because it is—when it is such 

a small amount, I wonder if there has been some thought to—— 

Mr. BARTHOLD. Well—although, Mr. Renacci, I should point 

out—and this was a point that was made by the prior panel and 

is reflected in the estimates that I cited—there is a substantial 

amount of business income, as you are aware, that is taxed through 

the individual income tax. 

Mr. RENACCI. Right. 

Mr. BARTHOLD. And so, when you say just repeal the corporate 

income tax, it is—how do you want to treat the income that is 

earned at the corporate level then becomes a question. So it is kind 

of like what to do—— 

Mr. RENACCI. Right. 

Mr. BARTHOLD. What to do next? 

Mr. RENACCI. That is why I asked the question. I was just wondering if anybody had ever gone in that direction. 

Mr. BARTHOLD. People are thinking—people talk about that, 

and we talk with Members about that. 

Mr. RENACCI. Yes. When you—you were here for Mr. Goodlatte’s proposal. Do you think setting a drop-dead date would bring 

uncertainty and unpredictability to long-term business planning, 

and really could disrupt business activity, going forward? 

Mr. BARTHOLD. Really, not—it’s probably really not appropriate for me to make a judgement on that, at least without a lot 

further study. So I wouldn’t want to shoot from the hip. 

[Laughter.] 

Mr. RENACCI. In your testimony you said that H.R. 1 was 

roughly revenue neutral compared to the 10-year baseline revenue 

projections. We have done some things since H.R. 1. We did the 

PATH Act and other things. Do you know what the—how much the 

baseline has changed since some of the things have passed? 

Mr. BARTHOLD. I do not have with me how the baseline has 

changed. The baseline, as reported by the Congressional Budget 

Office, which, you know, we can look up, reflects two factors: One, 

the PATH Act, in terms of receipts; but also the underlying macroeconomics, some of which are independent of the PATH Act. The 

projection of interest rates, you know, Fed policy, other policies, all 

of that goes into the projections of receipts. 

I don’t think I’m answering your question. 

Mr. RENACCI. No, but I just know we are probably a little bit 

off of the revenue neutral—— 

Mr. BARTHOLD. Well, if your question was if we were to reestimate H.R. 1 today—— 

Mr. RENACCI. Right, that is—— 

Mr. BARTHOLD [continuing]. What would it be, again—well, 

one, I have not done that. There would be some questions that I 

would want to ask someone who would make that request, and it 

would go back to the points that—one of the points that I just 

made. We—the Congress, in the PATH Act, was more expansive in 

terms of its extension of Section 179. Would we want to go back 

to H.R. 1’s level, which would mean pare back on that? So would 


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you want to do just a pure let’s look at H.R. 1 compared to where 

we are, or is it kind of an H.R. 1 modified? 

If that were of interest to the Committee, certainly that is part 

of the reason my colleagues and I are here. We could work on that. 

Mr. RENACCI. All right. Thank you, Mr. Barthold. I yield back. 

Chairman BOUSTANY. I thank the gentleman. Mr. Holding. 

Mr. HOLDING. Thank you, Mr. Chairman. Mr. Barthold, thank 

you again for being here. You testified twice in one day. 

Chairman Camp introduced his proposal formally in December of 

2014. And even in that short period since the bill’s introduction, we 

have seen a huge change in the international tax base. So, as other 

countries have enacted lower tax rates and favorable business incentives, we have seen a large rise in base erosion here at home. 

So, as we look to overhaul the Tax Code, to lower the rate and 

broaden the base, and remain competitive internationally, how 

does this increase in base erosion impact our tax reform proposals? 

And does JCT take this increase into account when scoring comprehensive packages? 

Mr. BARTHOLD. Let me start, Mr. Holding, with your last question. Do we take into account what is going on in terms of trends 

in base erosion and receipts? The simple answer is yes. I mean we 

have consulted with our colleagues at the Congressional Budget Office in what to think about activities that have been happening 

abroad or in this country, what trends have been over the past several years, which we hope have helped them in making their projections of corporate receipts. 

If you look in detail at their corporate receipts, they do show a 

modest decline in corporate receipts, or at least no growth, although they project the overall economy to be growing. So they are 

reflecting something missing from the corporate tax base if the 

economy is growing and corporate receipts aren’t growing. That 

baseline is the fundamental against which we measure any change 

that the Members might propose in terms of changing corporate 

taxation. 

So the short answer is yes, we take into account those trends as 

best we can. We try to stay abreast of possibilities and what might 

be happening, both in terms of assessing what the baseline is, but 

also how U.S. taxpayers respond to a proposed change that the 

Members might have. My colleagues meet regularly when we can 

with taxpayers to discuss partly how they see things, how they 

play things, how they respond, what their planned responses are 

to some of the actions that are being taken by foreign governments. 

Mr. HOLDING. Thank you. So, in Chairman Camp’s plan, what 

steps did he take to address base erosion? And, given the increase 

in base erosion, would these steps that he took still be as effective 

today? 

Mr. BARTHOLD. That is an interesting and difficult question, 

Mr. Holding. The primary base erosion aspect of H.R. 1 related to 

the—one of the last points that I highlighted, and that was establishing this new category of subpart F income that was referred to 

as foreign base company intangible income. 

What a number of you and your colleagues have identified and 

other analysts have identified is that intangible property, be it, you 

know, brand naming or be it ownership of patents, is sometimes 


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transferred abroad to lower income tax jurisdictions. And then the 

income, much of the income, may be properly attributable to, you 

know, this brilliant idea, this patent. And so that is a form of base 

erosion, even if a lot of the work in developing that patent occurred 

in the United States. 

Well, that is what the notion of foreign based company intangible 

income in H.R. 1 was about. It tried to say a business enterprise 

will have income from its investment activities of two sorts. There 

is investment activities of building a factory, putting machinery in 

place, you know, training the workers, and then some of the investment is in coming up with a brilliant idea and a new product. And 

that is the intangible piece. And H.R. 1 tried to put a measure on 

the intangible piece and tax it at a lower rate, both to encourage 

the intangible piece to stay in the United States, but also to say 

you can’t just have the intangible piece go off to another country 

and have effectively a very low rate of tax. 

Now, as to whether the effectiveness of that prospectively—I 

have to think some more. But that is what the base company intangible income proposal in H.R. 1 was all about. 

Mr. HOLDING. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman BOUSTANY. Mr. Kelly. 

Mr. KELLY. Thank you, Chairman. 

Mr. Barthold, thank you. You have had a pretty full day. I am 

looking at your background. So you came here in 1987. That was 

right after the last major tax reform. So you are coming up on 30 

years. You must be a phenomenal patriot to come in here every day 

and look at this. And I would just imagine, in these 30 years, you 

have probably looked at just about every possible angle of what it 

is that we are trying to do. 

And at the end of the day, the only way this is ever going to 

change—because change only takes place during a time of crisis or 

tragedy. And I would certainly say that where we are today as a 

country, we can continue to debate this—and this goes back to the 

Middle Ages where we are trying to figure out how many angels 

we can fit on the head of a pin and not actually coming up with 

any answers. 

So I am just—I tell you, I am stunned by your devotion to this 

Nation, and running the models on all of these things to tell people 

why it would work or why it wouldn’t work, and watching a decline 

of the greatest Nation the world has ever known because, politically, we can’t move on to save this country. I am absolutely 

stunned. 

And I have heard so many—I am glad Mr. Goodlatte came in. 

And I would just say when you set a deadline there is a reason 

why they call it a deadline. There is just something about this that 

I have watched now—thank God I have only been here for 5 years. 

I had to survive in the private sector, where you could never do 

this stuff and survive. You could talk about when you used to be 

in business and how you didn’t respond to a tragedy or a crisis. 

And see, I can remember the day I went out of business. I knew 

it was coming. But you know what? I just figured, hey, you know 

what? It will work itself out. 


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Really, I don’t have so much a question, other than maybe it is 

just the form of government that we have, or we have this constant 

rotation, and people come and go. You have not. You came and 

stayed. I want to ask you. In your 30-year career have you seen 

anything you would have said, ‘‘If they could have done this right 

now, this would have made a difference?’’ 

I know we are trying to do—the revenue neutral part gets to me 

because it—what the hell, revenue neutral? I don’t want it to be 

revenue neutral. I want to see revenues go up. But the only way 

you get revenues to go up is to look at the field you are playing 

on, and the competition you are playing against. And, my God, I 

would love to be someplace else in the world here, because just 

watch what the United States is doing, and we are so easy to 

game. It is just incredible. We are having our pocket picked every 

day, and we are sitting back and saying, ‘‘It is okay, we just 

haven’t agreed on how we are going to fix it.’’ 

Is there anything in your 30 years that you would look back on 

and say, ‘‘This was a moment in time that something could have 

changed and never changed, and it was because policy always gets 

trumped’’—no pun intended—‘‘by politics?’’ 

[Laughter.] 

Everything here is about a political stance and not about a policy 

stance. So just help me to understand how the heck you have sat 

here for 30 years and listened to all these brilliant minds come up 

with nothing. 

Mr. BARTHOLD. Mr. Kelly, first of all, let me—— 

Mr. KELLY. This is not a gotcha question, by the way. 

[Laughter.] 

Mr. BARTHOLD. Oh, well, let me thank you for your kind 

words. I have been here for a while, but I—in my current position 

I have tremendous support from a lot of really good colleagues, a 

couple of whom are seated behind me. 

Now, if over that period there had been some things where I 

thought they should have done that, it is really not appropriate for 

me in this forum to offer that. 

Mr. KELLY. You should run for office. 

[Laughter.] 

But I am sincere about this, I mean, because everybody I serve 

with—I go back home and people tell me, ‘‘John, how do you stand 

it down there?’’ And I say, ‘‘You know what? I have not run into 

one person who said to me, ‘You know, the reason I got elected was 

to ruin this country.’ ’’ I haven’t seen—everybody says, ‘‘I want to 

come here, I want to help, I want to make it better. Geez, I wish 

it wasn’t an election year.’’ 

So, I really admire you for what you have been able to do, and 

your staff is a tremendous staff. I am telling you, you are truly patriots, and you are truly dedicated to this country. And so is every 

Member sitting here right now today. 

I mean one of the most common talking points when you are running for election is tax reform. But the part we—pro-growth tax reform, why should we ever look for something that is neutral when 

it comes to revenue? We need a hell of a lot—excuse me, you are 

not allowed to say that, right? We need a lot more money than 

what we are generating right now. When you continue to borrow 


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at the rates we are borrowing and saying, ‘‘Geez, even though we 

have a record’’—we—what was it, $3.4 trillion last year in revenues, and we can’t live within that? I mean there are a lot more 

things that we have to tweak. 

But I just want—first of all, I want to thank you for your appearance today at both these things. And in your steadfast commitment 

to this country, to run the traps for people, to let them know the 

pluses and minuses and where we need to go. I just really do. I admire you for sitting and watching this for 30 years, knowing how 

great the Nation could be. 

Mr. BARTHOLD. Well—— 

Mr. KELLY. And it is not because we don’t want it to be great, 

it is just because there are other factors in it. And I really do believe we are at a crisis right now. It is going to be—the change is 

going to have to take place, because we are truly at a point of crisis 

or tragedy. I just would hate to be the one that said, ‘‘I knew it, 

but I didn’t love my kids, my grandkids enough to do anything 

about it. I really wanted to stay in office a little bit longer.’’ 

So thank you so much, Chairman. Thanks for holding the hearing. I really appreciate this, but I think we have kicked this horse 

so long it ain’t going to move. 

Chairman BOUSTANY. Well, Mr. Kelly, I am thankful to you for 

bringing some energy to the hearing this afternoon. 

Secondly, I want to thank you for thanking Mr. Barthold for his 

service. I think we all join you in that. 

And thirdly, you forgot to thank Mr. Neal for 28 years of service 

to this Committee. 

Mr. KELLY. Would the Chairman yield? 

Chairman BOUSTANY. I will yield. 

Mr. KELLY. Mr. Neal, thank you so much. 

[Laughter.] 

From one Irishman to another. So we will go out and have a pint 

or two or three to celebrate it. Thank you. 

Chairman BOUSTANY. Mr. Tiberi. 

Mr. TIBERI. I am not worthy. Wow. Why do I have to go after 

you? Now I know how Renacci feels on a regular basis. 

[Laughter.] 

Mr. Barthold, thanks for your service, as well. You obviously 

know my interest in expensing. You have already spoken very 

clearly about the PATH Act and differences of how Section 179 was 

dealt with in the Camp draft and how we pursued it in the PATH 

Act and bonus depreciation at 50 percent. I wanted to make it permanent. 

You probably also know the Tax Foundation found that permanent 50 percent bonus depreciation, according to their analysis, 

would increase our country’s GDP by over 1 percent, increase 

wages, and create over 200,000 jobs. They also found that full expensing would increase GDP by over 5 percent. As Mr. Kelly said, 

we have kicked this horse around quite a bit in terms of what— 

in terms of making the Tax Code more competitive to businesses 

and individuals, obviously. 

So, back last year, a U.S. manufacturer, auto manufacturer, said 

to us that—said to me that we—that they decided on the basis of 

bonus depreciation to build plants here in America, rather than 


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elsewhere. And now we have this 5-year window that I think is 

going to be quite helpful. 

Your analysis, JCT’s analysis of bonus depreciation, is different 

than the Tax Foundation’s higher growth model. But you did find 

in your analysis of my bonus depreciation bill—you may not remember—that it would raise worker productivity, it would raise 

wages, it would raise employment levels and economic output. 

So, from that basis, as you look forward when we at some point 

do comprehensive tax reform, how do you view expensing as a piece 

of the puzzle to deal with those issues that we talk about we are 

trying to do, whether it is increase wages, increase productivity, increase GDP growth? 

Mr. BARTHOLD. Well, thank you, Mr. Tiberi. Expensing? Again, 

I will use the economic jargon of cost of capital. Rapid cost recovery, expensing, reduces the cost of capital that encourages investment that can be pro-growth. There are issues with expensing, in 

terms of an overall analysis because, just as there are tradeoffs, as 

talking in terms of different tax policy goals, in the macro-economy 

there can be tradeoffs in terms of the government’s cash-flow and 

the need to borrow. 

In very simple terms, if there is expensing, we expense all tangible investments next year, it would dramatically lower business 

tax receipts. Absent other changes that the Congress might choose, 

it would probably run a larger deficit. We would have to finance 

the larger deficit. And depending upon what the monetary policy— 

you know, monetary stance is, that can drive up interest rates, real 

interest costs. 

Real interest costs are a negative in the cost-to-capital calculation. So there can be some tugback against the positive from expensing from what goes on in the broader economy. We try to reflect that in our macro-economic models. 

The cost to capital has a lot of different components in it, so it 

will involve a number of the tradeoffs that you make when you—— 

Mr. TIBERI. How do you model that from this perspective? Let 

me go at it another way. So you have a farmer in Ohio, and expensing is a big deal because of cash-flow purposes. So that farmer 

is not going to move his or her farm to Ireland or Australia. But 

we have seen other types of employers move their employment base 

outside of the United States to, let’s say, Ireland. 

Back to my thought process of competitiveness. And we have 

talked about this a lot. Isn’t there, though, a way to model with respect to what you just said, if there is a company here that makes 

things in America? And we are uncompetitive, our Tax Code is uncompetitive. So expensing will allow them to be more competitive. 

So, rather than go—there is, obviously, other factors to Ireland— 

no disrespect to Mr. Neal or Mr. Kelly—to Ireland to—this company or the headquarters having expensing. Wouldn’t that be a 

pro-growth, but—pro-revenue into the U.S. Treasury, because you 

are losing the revenue because they are putting their facility now 

overseas? And expensing might be a way to make them more competitive here, the cost recovery. 

Mr. BARTHOLD. Oh, I don’t think anything that I had said disagreed with your analysis. I was trying for—— 

Mr. TIBERI. No, no, I am sorry—— 


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Mr. BARTHOLD [continuing]. A broader context. 

Mr. TIBERI. Sorry to interrupt, but let me—I am trying to—I 

understand it creates deficits if the business is static, meaning it 

can’t move. Do you look at it that way, versus one that can move? 

Mr. BARTHOLD. No, sir. We try to look at where tangible and, 

as I was referring to in H.R. 1, where the tangible and the intangible investments occur and are located. 

So we try to look at the macro-economic assessment, both in 

terms of movement of tangible investments abroad, intangible investments abroad. Or tangible investments occurring more frequently in the United States, intangible investments occurring 

more frequently in the United States. It is difficult modeling. The 

empirical work and the economic literature is not hard and fast on 

this, but we tried to account for these differences. 

We also tried—you mentioned a farmer in Ohio. You also have 

a Procter and Gamble in Ohio. We try to distinguish between the 

flow-through, the smaller enterprises would be your farmer, and 

the multinational enterprises, such as your Procter and Gamble. 

And we assign—we essentially are estimating that they have different behavioral responses to what we do—or what you do. 

Chairman BOUSTANY. I thank the gentleman. 

Mrs. Noem. 

Mrs. NOEM. Thank you, Mr. Chairman. And since Mr. Kelly 

asked my question word for word, I will go in a different direction. 

That is exactly what I was going to say. 

But I am sitting here today in Congress, specifically just because 

of the Tax Code. When I was a college student my dad was killed 

in an accident, and I quit school, took over the operation, but got 

a bill in the mail from the IRS that said I owed the Federal Government money because we had a tragedy in our family. And it 

made me mad. I didn’t understand how we could have a law in this 

country that would take a family’s business away, or try to, because all of a sudden we owed it money when we didn’t have 

money in the bank to pay those taxes. We had equity, we had land 

and cattle, but no money to pay the taxes. 

So that is why I am here. And since I have been here, and I have 

been in so many different conversations with people that talk about 

the reason you make changes to the Tax Code or put in exemptions 

or incentives or whatever the provision may be, is to encourage 

people to do the right thing, the favorable behavior, to provide an 

incentive for them to invest or save. But yet, over the years, as we 

have done that over and over again, the Tax Code has become more 

and more complicated, and it has grown. 

And you, have you been at Joint Tax for 30 years? How—what 

was the year you actually came to JCT? 

Mr. BARTHOLD. I started in the summer of 1987, Mrs. Noem. 

Mrs. NOEM. So you have a very interesting perspective on the 

growth that we have seen over the years. And I am curious to see 

if you truly do believe that all these new provisions that we come 

with, pieces of legislation that incentivize good behavior, truly are 

a benefit to the people here in this country. Because cost and compliance and the burden of this complicated Code is—and I am asking you to be a little philosophical, I know. But I also think you 

probably have some facts you can think of where you have seen 


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people bring provisions to change our Tax Code that have actually 

ended up in creating a more burdensome system for them. I was 

wondering if you would speak to that for me. 

Mr. BARTHOLD. Well, in very general terms, Mrs. Noem, the 

role of the Joint Committee staff is we try to provide analysis and 

information to you, the Members, so that you can make the decisions. I mean the job on your side of the dais is more difficult than 

ours, because I can present—if you have a proposal, I can comment 

on, well, how is this in terms of economic efficiency, or is this progrowth, or what it might mean in terms—— 

Mrs. NOEM. What is your definition of pro-growth? 

Mr. BARTHOLD. Pro-growth would be whether it increases the 

rate of growth of gross domestic product of the U.S. economy. 

Mrs. NOEM. But you don’t have any threshold, it is just if it 

does or if it doesn’t. 

Mr. BARTHOLD. It would—is it moving you in the right direction, qualitatively. I mean we would try—if you have a specific proposal, we would try to analyze it quantitatively—— 

Mrs. NOEM. And is cost of compliance—— 

Mr. BARTHOLD. We try to—as I was explaining to Mr. Boustany, we try to talk about compliance effects, we try to point those 

out to Members if something would be difficult to—for the IRS to 

administer, or for taxpayers to comply with. These are all points 

that we try to bring to Members when you craft your proposals. 

Then, talking about what has happened over 30 years, Members 

have made the tradeoff of the sort that I have—you know, that I 

have described. 

Mrs. NOEM. Do you have a formula where you get to a point 

where 10, 15 different provisions add a complication to the Code 

where it then makes the taxpayer hire a professional, have increased costs, just to be able to make sure they are doing something correctly? Do you take that into account, the compounding effect of numerous provisions that may impact an individual trying 

to pay their taxes? 

Mr. BARTHOLD. In terms of—we try to account for that in 

terms of the baseline, to begin with, because if we have developed 

a revenue system that is very complicated, difficult to comply with, 

we may see compliance rates diminish, and that will show up, just 

in terms of baseline receipts. 

As we develop new—or as we—I keep saying ‘‘we,’’ but it is from 

working with Committee Members—as you develop proposals, we 

try to provide you information on how different proposals you have 

might interact with each other. What might it mean in terms of the 

complexity? Are they working in the same direction? Do they require overlapping and different reporting requirements? So that is 

all information that we try to bring to you. 

So the general answer is yes, we try to offer those assessments. 

But there is not a magic modeling of saying, ‘‘If I add up a whole 

bunch of different proposals this way, it leads to, you know, a’’—— 

Mrs. NOEM. But that is the tipping point. 

Mr. BARTHOLD [continuing]. ‘‘Result that I can quantify,’’ and 

that if I add them up a different way or drop one or two, that I 

can—it is difficult to quantify complexity. 


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Mrs. NOEM. We like to talk about the growth of the Tax Code 

each year. You know, this many more provisions, regulations, 

pages added to the Tax Code. Do you know the growth in the time 

that you have been at JCT? 

Mr. BARTHOLD. No one has ever asked me that. And no, I don’t. 

Mrs. NOEM. It would be interesting. Thank you for your time. 

I yield back, Mr. Chairman. 

Chairman BOUSTANY. I thank the gentlelady. Mr. Neal, you 

had a couple of followups? 

Mr. NEAL. Just to wrap up on my isolated side, the—I think one 

of the things to recall here—and it is very difficult sometimes to 

transmit to new Members that the political system right now in 

America is holding back economic growth. It is stunting economic 

growth. It is the uncertainty, it is the ambiguity. And certainly it, 

I think, constitutes a lack of confidence that the American people 

have in many aspects of our political system. 

And I highlight, based on Mrs. Noem’s comments, that in the 

late 1990s we were witnessing growth in some instances north of 

7 percent. Twenty-three million jobs means that Federal revenue 

went through the roof. And as Federal revenue goes through the 

roof, social spending goes through the floor. And what is left out 

of the discussion frequently is to do tax reform you need money. 

And we were staring at enormous surpluses at that time: 1998 was 

the year we could have done tax reform; we spent a year in that 

Congress on impeachment. 

And it stifles confidence that the public has, regardless of what 

party you are from, and many of the theories that are purported, 

when there was a broad opportunity to have enough money to ameliorate some of what would have been deemed losers in tax reform, 

and helping them transition, to build that bridge. And I think that 

this Committee has a special responsibility to try to get it right. 

And I will say once more I think David Camp really tried to get 

it right. And that doesn’t mean we agreed with everything he said 

and did. But I have to tell you he was the first person to put something out since 1986. Plaudits. 

Thank you, Mr. Chairman. 

Chairman BOUSTANY. Well, I agree, and I think the importance 

now is for the Committee to build on what Chairman Camp did, 

and continue to take additional ideas forward. But we have to act. 

We can’t continue just to talk about it. So, in that spirit, hopefully 

we can all work together to get tax reform done. 

Mr. Barthold, thank you for being with us this afternoon on top 

of the long session this morning. We appreciate your insights and 

what you bring to the Committee. Thank you for your service as 

we look forward to building consensus, to move toward comprehensive tax reform, and we certainly will be relying very heavily on 

you and your team. 

Also, please be advised that Members will have 2 weeks to submit additional questions. And your answers will be made part of 

that record. And with that, the Subcommittee stands adjourned. 

[Whereupon, at 4:54 p.m., the Subcommittee was adjourned.] 

[Submissions for the Record follow:] 


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41\..:efen~ing Lib~rty _________________________ _._.Jl" U 'Pursumg justice 

Paulette Brown 

Presidrol 

April 13, 2016 

The Honorable Charles Boustany, Jr. 

Chairman 

Subconunit1ee on Tax Policy 

Couunittee ou Ways and Means 

U.S. House of Representatives 

Washington, D.C. 20515 

AMERICAN BAR ASSOCIATION 321 North Clork S<reel 

Chicago, ll 60654-7598 

(3 I 2) 988·5 I 09 

Fax: (3 12) 988-5 100 

abap.rcsidcnt@amcricanbar.org 

The Honorable Richard E. Neal 

Ranking Member 

Subconunittee on Tax Policy 

Committee ou Ways and Means 

U.S. House of Representatives 

Washington, D.C. 20515 

Re: Today's Hearing on "Fundamental Tax Ref01m Proposals," the Need to Prese1ve Cash 

Accoltlltiug for Law Finns and Other Personal Service Businesses, and Concerns Over 

Burdensome Mandatory Accrual Accotlllting Proposals 

Gentlemen: 

On behalf of the American Bar Association ("ABA"), which has over 400,000 members, I am 

writing to express our views regarding au important aspect of the tax refom1 legislation that yom· 

Subcouunittee, the full House Ways and Means Couunittee, and the House Tax Reform Task Force 

are in the process of developing. In particular, we strongly oppose those proposals-such as Section 

3301 ofH.R. I introduced during the 113'h Congress aud ot11er similar proposals now under 

consideration- that would require personal service businesses with annual gross receipts over $10 

million to switch fi'om the traditional cash receipts and disbursements method of accounting to the 

more complex and costly accrual method. These mandatory accrual accoullling proposals are also 

strongly opposed by over 30 state, local, and specialty bars througllout the cotmlly. We ask that this 

letter be included in the record oftoday's Subcommittee hearing. 

Althouglt we conuueud you and your colleagues for your effot1S to craft legislation aimed at 

simplifying the tax laws-an objective that the ABA aud its Section of Taxation have long 

supported- we are concemed that mandatory accmal accotmting proposals like Section 330 I would 

have the opposite effect and cause other negative unintended cousequences. These far-reaching 

proposals would create tumecessary new complexity in the tax law by disallowing the use of the 

cash method; increase compliance costs and corresponding risk of manipulation; and cause 

substantial hardship to many lawyers, Jaw firms, and other personal service businesses by requiring 

them to pay tax on income long before it is actually received. Therefore, we urge you and yom· 

colleagues not to include these or any other similar mandatory accmal accotmting proposals in the 

new tax reforrnlegislation that is ctul'ently being developed. 

Under current law, businesses are pemlitted to use the simple, straig!Jtforward cash method of 

accouuting- in wllich income is not recognized until cash or other payment is actually received- if 

they are individuals or pass-through entities (e.g., partnerships or Subchapter S corporations) or 

their average annual gross receipts for a three year period are $5 nlillion or less. In addition, all 

personal service businesses- including those engaged in the fields of Jaw, accounting, engineering, 

architecture, health, actuatial science, perfom1ing arts, or consulting- are exempt from the revenue 
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Aplill3, 2016 

Page2 

cap and can use the cash method of accotmtiug regardless of their annual revenues, unless they have 

inventory. Most other businesses are required to use the accmal method, in which income is 

recognized when the right to receive the income arises, not when the income is actually received. 

Mandatory accmal accowuing proposals like Section 330 I would dramatically change cmTent law 

by raising the gross receipts cap to $ 10 million while eliminating the existing exemption for law 

fim1s. other personal se1vice businesses, and other pass-through entities. Although these proposals 

would allow ce11ain small business taxpayers with ammal gross receipts in the $5 million to S I 0 

million range to switch to-and thereby enjoy the benefits of- the cash method of accounting (a 

concept thai the ABA does not oppose), the proposals would significantly complicate tax 

compliance for a far greater number of small business taxpayers, including many law finns and 

other personal se1vice businesses, by forcing them to use the accmalmelhod. 

Partnerships, S corporations, personal se•v ice corporations, and other pass-through entities favor the 

cash method because i1 is siulple and generally correlales with the marmer in which these business 

owners operale their businesses-i.e., on a cash basis. Simplicity is important from a compliance 

perspective because it enables taxpayers to better w1derstand the tax consequences of transactions in 

which they engage or plan 10 engage. In this regard, simplicity helps to mitigale compliance costs, 

which already are significant, and to improve compliance with the tax code. 

If law fmns and other personal service businesses are required to use the more complex accmal 

method of accom1ting, they would be forced to calculate and then pay taxes on multiple types of 

accmed income, including work in progress, other unbilled work, and accotuus receivable (where 

the work has been perfo1med and billed but payment has uot yet been received). To meet these 

requirements, law fums and other affected businesses would need to keep much more detailed work 

and billing records and hire additioual accounting and supp011 staff. This would substantially raise 

compliance costs for many law fi1ms and other personal se1vice businesses while greatly increasing 

ll1e risk of noncompliance with ll1e tax code. 

In addition to creating mmecessary complexity and compliance costs, these mandatory accmal 

accotulting proposals would lead to economic disto11ions that would adversely affect all law £inns 

and other persoual se1vice businesses that cml'Cutly use the cash method of accomlling and their 

clients in several ways. 

First, the proposals would impose substantial new financial burdens on many thousands of pe.rsonal 

se1v ice businesses throughout the CO\Ultly-iocluditlg law fim1s-by forcing them to pay taxes on 

income they have not yet received and may never receive. Requitiug these businesses to pay taxes 

on this "phantom" income--and to bon·ow money or use their scarce capital to do so-would 

inlpose a serious financial burden and l13t·dsb.ip on many of these fmus. The legal profession would 

suffer even greater financial hardship than other professions because many lawyers are not paid by 

the clients mllillong after ll1e work is perfonned. 

Second, mandat01y aocmal accounting would adversely affect clients, interfere with the lawyerclient relationsbip, and reduce the availability of legal se1v ices. If law fim1s are required to pay 

taxes on accrued income they have not yet received, the resuh·ing fmancial pressures could force 

many finns charging on a traditi011al hourly fee basis to collect their fees inunediately after the legal 
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April 13, 2016 

Page3 

services are provided to the client or at least much sooner than they cutTently do. As a result, many 

clients could find it more difficult to afford legal cotmsel. ill addition, many law !inns would no 

longer be able to represent as many accident victims, start-up companies, or other clients on an 

altemative or flexible fee basis as they now do, and many finns would also have to reduce the 

amount of pro bono legal services they currently provide to their poorest clients. 

Third, the proposals would constitute a major, unjustified tax increase on small businesses and 

discourage economic growth. The Joint Committee on Taxation estimated that the accmal 

accounting mandate in Section3301 would generate $23.6 billion in new taxes over ten years by 

forcing many thottSands of small businesses to pay taxes on income up to a year or more before it is 

actually received- if it is ever received. Because this acceleration of a finn's tax liabiJity would be 

permanent and continue year after year, it would constitute a major permanent tax increase for the 

finn, when compared to the taxes the fmu currently pays under the cash method, until the finn 

eventually dissolves, merges with anotl1er finn, or otherwise ceases to exist. 

The proposals would also discourage professional service providers from joining with other 

providers to create or expand a finn, even if it made economic sense and would benefit their clients, 

because it could trigger the costly accmal accotmting requirement. For example, solo practitioner 

lawyers would be discouraged from entering into law firm partnerships-and existing law finns 

would be discouraged from growing or expanding-because once a fmn exceeds $10 miJlion in 

annual gross receipts, it would be required to switch from cash to accmal accounting, thereby 

accelerating its tax payments. Sow1d tax policy should encomage, not discomage, tlte growth of 

small businesses, including those providing legal services, especially in today's difficult economic 

environment. 

For all of these reasons, as discussions on tax reform continue, we mge your Subcommittee, the full 

Counnittee, and the Task Force to prese1ve tlJe ability of law finns and otlter personal se1vice 

businesses to use the simple cash method of accow1ting and not to support any proposals that would 

require these businesses to switch to the more burdensome accmalmethod. 

Thank you for considering tlte ABA's views on this imp011ant issue. lf you have any questions 

regarding our position, please contact ABA Govenunental Affairs Director Thomas Susman at 

(202) 662-1765 or Associate Govenunental Affairs Director Larson F1isby at (202) 662-1098. 

Sincerely, 

Paulette Brown 

President, American Bar Association 

cc: Members of the House Ways and Means Subcommittee on Tax Policy 

Members of tlte House Tax Refo1m Task Force 

TI1e Honorable Mark J. Maztu, Assistant Secreta1y of the Treaswy for Tax Policy 
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American 

Forest & Paper 

Association 

American Forest & Paper Association 

Statement for the Record 

Committee on Ways and Means 

Subcommittee on Tax Policy 

U.S. House of Representatives 

Hearing on Fundamental Tax Reform Proposals 

April 13, 2016 

The American Forest & Paper Association (AF&PA) is the national trade association of 

the forest products industry, representing pulp, paper, packaging, tissue and wood 

products manufacturers. and forest landowners. Our companies make products 

essential for everyday life from renewable and recyclable resources that sustain the 

environment. 

U.S. manufacturers of paper and wood products appreciate the opportunity to provide 

input to the Ways and Means Subcommittee for Tax Policy for the development of 

bipartisan comprehensive tax reform legislation. The industry supports comprehensive 

business tax reform that improves economic growth, job opportunities, capital 

investment, and the competitiveness of U.S. based businesses. Special attention should 

be paid to ensure that the overall impact of federal tax reform does not result in counterproductive tax increases that will be harmful to economic growth, job creation, capital 

investment, and global competitiveness. 

The U.S. forest products industry -made up of both C-corporations and pass-through 

entities- is a significant contributor to the U.S. economy, employing nearly 900,000 

men and women in above-average wage jobs, investing heavily in equipment and 

improvements, and exporting products throughout the world. The U.S. forest products 

industry also supports jobs in other sectors of the U.S. economy. A recent study 

conducted by the Economic Policy Institute found that each paper industry job supports 

3.25 jobs in supplier industries and in local communities as the result of re-spending 

and tax receipts. 

The forest products industry produces more than $200 billion in paper and wood 

products annually and accounts for approximately 4.0 percent of the total U.S. 

manufacturing GDP. The industry employs more than 900,000 people and ranks among 

the top 10 manufacturing sector employers in 47 states. In a typical year, the forest 

products industry transforms approximately 13 billion cubic feet of wood -the majority of 

which is purchased from privately-owned forest land -into value-added paper. 

packaging, lumber and other wood products. 

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We are highly capital intensive and have made significant investments and facility 

upgrades in recent years. In 2014, the most recent year for which data is available, the 

paper and wood products industry invested $8.2 billion in plant and equipment. ~ems 

such as recovery boilers, turbine generators, paper machines, and environmental 

controls are critical to maintaining technologically advanced manufacturing facilities that 

compete in an extremely competitive global marketplace. 

Exports of U.S. pulp and paper result in a net export surplus and exports of paper and 

wood products account for more than 15 percent of the industry's annual total sales. In 

2015, U.S. exports of forest products amounted to $30.3 billion, of which $21.4 billion 

were exports of pulp and paper products, and $8.9 billion exports of wood and wood 

products. 

Our members are longstanding leaders in making substantial investments in renewable 

energy equipment and facilities to generate electricity and other usable forms of energy 

for its operations. On average, about two-thirds of our members' energy needed for 

forest products production comes from the use of carbon-neutral biomass. Paper and 

wood products manufacturing facilities account for 62 percent of the renewable biomass 

energy consumed by all manufacturing sectors. 

The U.S. forest products industry provides excellent employee payroll, retirement, and 

health benefits to its workers. Meeting a payroll of approximately $50 billion, the forest 

products industry employs about the same number of people as the automotive industry 

and more people than the chemical and plastics industries. The industry has a 

generous compensation and benefits structure -earnings of pulp and paper mill 

workers exceed the average for all U.S. private sector workers by about 23 percent. 

We realize that comprehensive tax reform will not be easy. However, the key goals of 

lowering the corporate tax rate and a reformed competitive international tax system will 

help attract and retain business operations and good paying jobs in the United States. 

Ensuring that the resulting tax code provides a level playing field for all business activity 

while deflecting attempts to pick "winners and losers" among economic players should 

be a top priority. 

To this end, our industry priorities for fundamental federal tax reform include: 

• Tax rates. The United States has the highest statutory corporate tax rate among 

OECD countries. This is because most other OECD member countries have 

lowered corporate rates during the past two decades, while U.S. corporate rates 

have remained nearly stagnant. A significant reduction in statutory corporate 

income tax rates to at least 25% or lower, which would be more in line with the 

average among other OECD countries. In fact, a federal rate below 25% may be 

necessary, since the addition of state and local taxes would result in total tax 

liabilities exceeding the OECD average. Such a reduced rate is needed for U.S.-

based companies to be able to compete in the United States and abroad. A tax 

system with the lowest possible tax rates for all businesses is desirable to foster 

capital investment, jobs creation, exports, and economic growth. 

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• Business investment. Business investment is another crucial driver of economic 

growth and jobs. Appropriate treatment of depreciation, interest expenses, and 

research expenditures is important to ensure that capital intensive manufacturers 

- such as paper and wood products companies -continue to upgrade existing 

facilities and invest in new and more efficient equipment. In addition, rules 

reflecting the need for long-term investment in timber by the 22 million family 

forest owners across America are essential to a sustainable supply of forest 

resources for manufactured products and are good for the environment, the 

economy and society. The recent enactment of a permanent research credit and 

an extended "bonus• depreciation timeline were welcome developments. We 

encourage Congress to consider ways to build on these provisions to continue 

bolstering the long-term investment environment in the U.S. 

• International tax rules. The global market place is more competitive than ever 

and home country tax systems can provide a competitive edge as companies 

seek to enter new markets and compete in existing markets. Unfortunately, the 

United States has fallen behind as most OECD countries have moved to 

competitive tax regimes. The U.S. international tax rules should be reformed to 

include a competitive territorial tax system like those of many other countries, 

which would allow U.S.-based companies to compete on a level playing field in 

vital global markets. 

• Employee benefit provisions. The U.S. forest products industry is a leader in 

providing excellent employee payroll, retirement, and health benefits to its 

workers. Existing law treatment of employee health insurance benefits and 

employee retirement contributions are integral to the industry's continued ability 

to provide these benefits to its workforce. 

• Transition relief. A major change in federal tax policy could have a negative 

impact on existing business investment and create considerable uncertainty. 

Appropriate transition relief and protections against retroactive tax law changes 

should be an integral part of any federal tax reform effort. For example, the full 

benefit of net operating losses and unused tax credits should be protected and 

allowed to be carried forward to Mure years. 

We would be pleased to discuss these priorities with the committee and answer any 

questions you may have about our industry. 

For more information, please contact: 

Elizabeth Bartheld 

Vice President, Government Affairs 

American Forest & Paper Association 

1101 KStreet, NW 

Suite 700 

Washington, DC 20005 

Elizabeth Bartheld@afandpa.org 

202-463-2444 

visit AF&PA online at WNN.afandpa.org 

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AMERICAN CITIZENS ABROAD 

EDUCATE, ADVOCATE AND INFORM 

April26, 2016 

American Citizens Abroad, Inc. (ACA) submission for the House Ways and 

Means Committee call for comments on the recent hearing held on tax reform. 

ACA is pleased to see that the House Ways & Means Committee is holding 

hearings on tax reform and encouraging the presentation of a wide range of new 

revenue source proposals. 

The hearing held on March 22, 2016 to examine Cash-Flow and ConsumptionBased Tax Reforms presented compelling proposals for a major shift in tax 

policy; moving away from an income-based approach to taxation and shifting to 

alternate methods oftax revenue generation through cash-flow and consumption 

taxes. 

The hearings held on April131h examined the Jump Start America Act, the Tax 

Code Termination Act, and reviewed the 2014 Camp tax reform proposal; 

investigating the economic efficiency, potential for economic growth, fairness and 

ease of administration of these proposals. 

In the discussion of all these proposed tax reforms, the issue of how new tax 

proposals would affect the community of international taxpayers was not 

addressed. ACA believes that it is critical that all tax reform proposals address 

how these proposals will be applied to and/or will affect the community of 8 

million plus international, overseas American taxpayers. 

See: http://travel.s tate .gov/co ntent/dam/trave VCA %20by%20the%20N umbers-

%20May%202015.pdf 

Some of the proposals presented to date, by definition (i.e. consumption based 

taxation), would appear to alleviate the tax filing burden and double imposition on 

Americans living and working overseas and, would greatly advance the ability of 

Americans to compete on an equal footing in a global environment. However, 

none of the proposals directly address how such modeling would apply to 

Americans living and working overseas. 
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ACA so far has not studied the idea of tax reform based on alternate revenue 

sources such as consumption-based taxation and value added taxes. ACA's 

proposal for residence-based taxation (RBT) rests on the assumption of 

reforming taxation based on the income tax model. 

ACA supports tax reform modeling that simplifies the tax code, empowers 

individuals to compete on an equal footing in a global economy, reduces the 

burden of compliance, paperwork and duplicate reporting. However, these 

proposals must also insure that the tax code eliminates instances of double 

taxation and removes the burdens that the current citizenship-based taxation 

code imposes on Americans who are working overseas. 

ACA continues to advocate for a territorial or residence-based taxation system. 

ACA's RBT proposal ensures that Americans overseas will be put on competitive 

equal footing with both their compatriots stateside and with foreign nationals 

overseas, in order to advance the economic competitiveness of the United 

States. 

ACA's RBT proposal guarantees that the tax code is fair, allows for mobility in an 

ever more global work and social environment, and helps to advance US 

economic interests through facilitating access to new markets for American 

products and, allowing Americans and American companies to partner in new 

businesses and new technologies. 

Americans overseas are living and working in a new global world economy but 

are operating with an old world taxation structure, both from a business and 

personal perspective. If the United States wants to set free the powerhouse of 

economic development that Americans working globally can provide, which will 

create jobs and opportunity for workers in the United States, then the tax 

committees must consider territorial or residence-based taxation as the model for 

income tax reform. 

For a link to ACA's full proposals for RBT please see: 

https:/lwww.americansabroad.org/media/files/files/9960ba5d/ACA RBT proposa 

I for submission to Senate Finance April 2015.pdf 

Summary of ACA's Residence-based taxation proposal 

Individual and corporate tax reform is at the top of the agenda of Congress, on 

both domestic and international levels. ACA looks forward to contributing to this 

debate to advance three key objectives: 

• Fairness - to eliminate double taxation and costly double reporting 
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burdens. 

• Mobility -the exercise of the fundamental right to choose one's place of 

residence, whether for professional, family, educational or other reasons 

should be as frictionless as possible. 

• Advancing U.S. Economic Competitiveness - to empower overseas 

citizens to paly their natural and historic role as vectors of export 

promotion and job creation in the United States. 

To this end, ACA produced and circulated a detailed discussion document in 

political and academic circles as a constructive step in the process. This 

proposal, which was referenced in a 2013 Senate Finance Committee Report 

comprised the following elements: 

Replacement of the present system of taxation of overseas Americans usually 

referred to as Citizenship-Based Taxation (CBT), by a system of ResidenceBased Taxation (RBT): Americans overseas would be taxed by the U.S. on U.S.-

source income. 

• Treatment of bona fide Non-Resident Americans in a manner analogous 

to that of Non-Resident Aliens (NRAs). The system is in place and has 

proven its workability, and include provision for: 

1. withholding taxes at source on unearned income - dividends, 

interest, royalties, etc.; 

2. 1 040NR taxation of earned income "effectively connected" with the 

United States; 

3. taxation of rental income and capital gains on U.S. situs real estate. 

• Anti-abuse provisions would prevent RBT from being used as a loophole 

to avoid U.S. taxes. 

• Residents of designated tax haven countries, overseas military personnel, 

U.S. diplomatic corps and Puerto Rico residents with U.S. income would 

continue to be taxed as U.S. residents. A departure tax based on mark-tomarket valuation of unrealized capital gains at the time of departure may 

be a condition imposed by Congress. ACA has argued against it, on the 

grounds that it would work against, the objectives of fairness, mobility and 

national economic interest. But if a departure tax is included in legislation, 

ACA's position is that: 

1. a "grandfather" clause shielding overseas Americans meeting 

certain residency minima from the departure tax would be an 

essential element of the legislation; 

2. high asset exclusion thresholds for Americans leaving the U.S. and 

measures to help holders of illiquid assets meet the tax obligations 

are needed to maintain international mobility of Americans. 
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In light of our analysis of IRS statistics, ACA is of the considered opinion that, the 

switch from CBT to RBT would be revenue neutral. Under CBT, the U.S. 

currently recognized the first right of taxation of the country of residence, and 

hence, due to crediting of foreign taxes, collects no tax from the vast majority of 

Americans abroad. 

Tax revenue from Americans abroad accounts for less than 0.2% of the total U.S. 

budget Under RBT, the U.S. would be able to claw back, mostly through 

withholding taxes on financial assets and taxes on U.S. effectively connected 

income, revenues which today remain with foreign governments under C BT. 
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April 27,2016 

Submitted electronically to w.ilvsandmeans.submissions@mail.house.gov. 

STATEMENT FOR INCLUSION IN TIIE HEARING RECORD OF 

HEARING ON INCOME TAX REFORM PROPOSALS 

CONGRESS SHOULD STRONGLY CONSIDER POTENTIAL RAMIFICATIONS TIIAT 

TAX REFORM MAY HAVE ON LARGE EMPLOYERS AND THEIR ABILITY TO 

CONTINUE TO OFFER RETIREMENT PLANS FOR MILLIONS OF AMERICA'S 

WORKERS 

ChairuJan Boustany, Ranking Member Nea~ and Members ofthe Subcommittee, thank 

you for the opportwU!y to voice the point of view of major employers ll1<1t directly sponsor 

voluntary retirement benefit plans for millions of Americans. My name is Annette Guarisco 

Fildes and I am President and Chief Executive 0 tlicer of The ERISA Industry Cotm litte e 

(ERIC). 

ERIC is the only oatxllJal trade association advocating solely for the employee benefii 

and compensation interests of the colllltry's largest employers. ERIC supports ilie ability of its 

large employer members to tailor retirement, heahb, and cot~eusation benefits for millions of 

workers, retirees, and llteir tiunilies. ERIC's members provide comprehensive retirement benefits 

to millions of active and retired workers and their fumilies. Preserving and enhancing the 

vohmtary en~loyer-provided retirement system and the tax incentives that support it are key 

policy goals ofERIC and its members. 

TI1e employer-sponsored retirement plan system is helping over 130 million American 

workers get ready for retirement. Congress should protect, support and expand the retirement 

system to allow fi1ture generations to prepare for retirement. We w·ge Congress to proc-eed with 

caution when considering any cutbacks to the tax incentives relating to the current retirement 

system in order to avoid the risk and strong possibility of nJajor unintended adverse 

conseq1tetJCes to the country and the financial and personal secwity of working Americans. Tite 

effects of significant changes for individuals, en~loyers and the system as a whole are sin~ly 

too hamtful and must be avoided. In addition, we encourage Congress and policymakers to take 

this opportlUlity to fitrther strengthen and support the U.S. en~loyer ponsored retirement 

system 

ERIC believes that as tax refonn proposals are developed, this Subcommittee and 

Congress should strongly consider potential ranlifJCa tions lltat cl~anges in current law nJay have 

on large employers and their ability to continue to offer voltutta ry en~loyer-sponsored 

retirement platJS for millions of American workers. I would like to highlight key aspects oftbe 

current n~loyer-sponsored retirement system that suppot1 the ability oflarge ~loyers to 

continue providing retirement benefiis to millions of workers and nJake recommendations 

regarding them 
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ERIC reconm1ends that Congress consider the following with respect to retirenlent plans 

as tax reform plans are developed: 

I) Presen,ation oft he volunta~y nature of employer-sponsored retirement plans. 

l11e voluntary nature of the retirelllCnl plan system is critical to the continued success of 

the employer-sponsored retirenlent system. The voluntary nature of the current retirelllCnt plan 

system provides the tlexibility needed for en:yloyers to tailor plans to their workers. 

Employers establish rctiren1ent plans to con:ycte for and retain quality workers and to 

ensure workers are able to retire with adequate retire111ent savings. The voluntary nature of the 

private-sector retireJllCut system is vital to its success. No two en:yloyers arc identica~ some 

employ thousands of workers, while others employ only a few. En:yloyers are engaged in 

difterent industries, located in different geograpb.ica I regions; solllC operate in the global market, 

while others operate only in their local conununity. A "one-size-fits-all" approach to rules and 

regnlations often will oot address the challenges of every con:yany that wants to ofter retiren1ent 

benefits to their workers. 

FleXIbility is critical in retirenlent plans. It allows employers to design plans that work 

eftectively and efticiently based on dle needs ofd1eir diverse workforces. Rules d1at are too 

onerous or overly restrictive can clull an en:yloyer's commitment to offer and a participant's 

interest to participate in an en:yloyer-sponsored plan 

l11e vohu1tary nature of tile ctuTent en:yloyer-sponsored private retirenlent system and 

the flexibility en:yloyers have in establishing and maintaining retirenlent plans for their workers 

are vital to Alllerica's private retirenx:nt system Congress should ensure the current private 

retirelllCnt system remain~ voluntary and Oexible to encourage continued and new employer 

participation 

2) Prese111ation of C/1/?'ent tax incentives fo1· retirement benefits. 

Tile ctuTent tax incentives for private retirenlent plans drive savings for workers across 

the cotmtry. Removing the current tax incentives for retirement plans will discourage plan 

establishment and maintenance and reduce the participation of en:yloyees contributing to their 

retirelllCnt savings. 

Unlike tax expendirures where tax is con:ylctcly a\'Oided (i.e., deductions), taxes on 

retirelllCnt plan contributions are generally JllCrely deferred until the participant receives a 

distribution oftlle lilnds, which is typically during retirement. In tbe tumsual event a participant 

takes a pre-retire111Cnt distnbution, there is an additional tax penalty, absent a qualifying case of 

l~ardship, which results in additional revenue for the goveClllllCnt. Tax revenue is not c~m:yletely 

lost when workers contribute to their retirement plans- it is n);!rely delayed. 

Whennx:asuring d~e cost of tax deferrals in retireJllCllt plans, StiCh as 40l(k) plans, the 

calculations perfotnled by the Joint Cornnittee on Taxation (JC1) and the Treasury DepartlllCnt 

cannot adequately retlect dlat there is only a defurral of taxatK>n because revenue from most 

2 
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distributions at retirement occur outside of the I 0-year budget window. As a result, the n~jority 

ofthe costs for deferrals is "scored" as lost revenue in the budget window. The approach used by 

the JCT and the Treasury Depmtment gnif~eant y exaggerates the actual cost to the government 

with respect to the tax incentives for retirem:nt plans and ignores the real long-term value oftlJC 

plans to the country and working Americans. Intricacies in the federal budget rules Ullfortunately 

resuh in retirement plan tax deferrals being counted as a revenue loss withotd taking into accoru1t 

the corresponding deferred glliiL 

Continuing to provide tax incentives encourages both enlJloyer and worker participation 

in America's retirement system. Because taxes are m:rely deferred, not excluded, Congress 

shoukl ensure that enlJloyer-sponsored retirement plans continue to receive the long-standing 

protections on which ClllJloyers and workers rely. 

3) Ensuring appropriate defen·al and conlribulion limits thall'eflect wrrenl inflation rates and 

economic circumstances. 

Workers need flexibility to be able to save more wiJCn they are able and less when t!JCy 

are tuxler fioancia l constraints. For exan1Jie, an individual n~y be able to save more when they 

are yOt01ger or once their chiklren become adults, but have less money to contribtde when paying 

for tlteir children's college education or caring for tiJCir elderly parents. 

Under the cturent system, employees are able to ~ke elective deferrals up to $18,000 

atmually. Congress recognized the need for older workers to save nX>re as they are nearing 

retirement As a result, workers age 50 and older can currently save up to $24,000 am1ually. 

Polic~kers have acknowledged that the "savings cycle" can be different depending on an 

individual's unique circumstances. 

Cturent deferral limits have not kept up with inflation. The limit on contribtdions ~de 

on an individual's behalf to a defined contribution plan was set at $25,000 (and indexed to 

inflation) wben ERISA was enacted in 1974. 1 By 1982, tbe limit had increased to $45,475 2 

However, tlJC Tax Equity and Fiscal Responsibility Act of 1982 rednced t!JC limit to $30,000 and 

postponed uxlexation until after 1985. htdexation was again deferred until after 1987 by t!JC 

Deficit Reduction Act of 1984. Then, in 1986, the contribtdion limit was frozen at $30,000 

through 2000 as a resuh of the Tax Rcforn1 Act. Since 200 I tlJC limit has gradt~1lly increased to 

1 26 U.S. C. 4 15(e) 1974. 2 Investment Co~any Instintte, 40/{k) Plans: A 25-Year Retrospective, 12 REsEARCH 

PERSPEcriVE (Nov. 2006), available a/ https:l/www. ici.org/pdt7perl2-02.pdf. 

3 
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$53,000,3 not much above the 19821imit of$45,475, and fur below the ammmt that the 1974 

limit of $25,000 would represent in 2016 dolbrs- $133,673. 4 

Proposals that would limit the amotmt of retircnxnt plan contnbutions, reduce the current 

contribution defi:rrals, or limit the value of the retirenxnt benefits would undermine the success 

of the current euployer-sponsored retirement system by discouraging employers from 

establishing and mainta irUng plans and causing some participants to decrease their contnbutions. 

The resuh would be reduced savings balances at retirell'l!nt by 6 to 22 percent fur workers 

ctUTently age 26-35 witb the greatest reductions for those in the lowest-income quartileS - the 

den¥)graphic that Congress seeks to encourage to save more. 

In the 1980s, we saw the signif~ea nt negative consequences when a weD-intentioned 

Congress set out to limit rctirenxnt contnbutions. When Congress restricted the eligibility 

requirell'l!nts for individual retirell'l!nt accotmts (IRAs), deductible contnbutions declined from 

$37.8 billion in 1986 to only $14.1 billion in 1987 and continued to steadily decline thereafter. 6 

Workers have shown that they will respond to increased restrictions in retirenxnt pL1ns by saving 

less. 

It is critical that Congress recognize the value of the ctUTCnt system t!Jat reflects typical 

lifi:time savings habits and consider increasing the elective deferral limit. We urge the 

Subcommittee to continue to support and expand the ability of individuals to save through their 

workplace retircnxnt plans by continuing COLA increases to deferral limits and reviewing the 

adequacy of the 402(g) limits in the Internal Revenue Code. Any clmnges to retirell'l!llt savings 

incentives nrust focus on policy that will result in bener long-tenn retirenxnt outcomes fur 

Anxricans, rat!Jer than on ra.ising federal revenue. 

We look fonvard to working together to enhaoce employer-provided retirell'l!nt savings 

and to ensure that tax rcfonn is enacted in a way that does not jeopardi2e the retirc!T'l!nt readiness 

of Anxrican workers. 

3 26 U.S.C. 415(b) (1974). See EMP. BB'm'IT REsFARCH lNST., EBRI's Fundamentals of 

Employee Benefit Progr<~nY> 50 (2009), available at 

hnps://www.cbri.org/pdf/publicatiotJSibookslfundamentals/2009/05 RetPlans RETIREMENT Funds 2009 EBRI.pdf. 4 Inflation Calculator with U.S. CPJ Data, http:l/www.calculator.net/intlationcalculator.html?cstartingamountl =25000&cinycar I= 1974&coutyear I =20 16&calctype= l&x=57 

&y=8 (last visited Feb. 2, 20 16). 5 Jack VanDerhe~ Modifying the Federal Tax Treatment o/401 (k) Plan Contributions: Projected 

Impact on ParTicipant Account Balances, 33 EMP. BENEFIT REsFARCH INST. NOTES (Mar. 2012), 

available at https:l/www.ebri.org/pdf7notespdf7EBRI_Notes_ 03 _Mar-12.Ktaxes-PThllhCvgl.pdf 6 Sarah Ho.lden, et al., {nvestnxnt Company Institute, The Individual Retirement Account at Age 

30: A Retrospective, II REsFAROI PERSPECJlVE (Feb. 2005), available at 

https:l/www.ici.org/pd£/peri i-O I. pdf. 

4 
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l 

llli\ 

IIIII I 

NATIONAL CONFEI\.ENCE •f STATE lECISLATUI<.ES 

April 14, 2016 Cuutt 8tJn•btc 

S ,,,, Prtnlut p,, Tt•J•n 

tit•• 

Pntiir•t, SCSL. 

The Honorable Charles Boustany 

Chairman 

The Honorable ltichard Neal 

Ranking Member 

K•d AJo 

o;,,,,,. •I •i•iltr•t;,, 

Dtp~trt•t•t •I LtlJII•ffrt Sr11ito M~t'.]lul Tax Policy Subcommittee 

Ways and Means Committee 

TaxPolicy Subcommittee 

Ways and Means Committee St•ff Chlr, 1"\CSL 

United States House ofRepresentatives 

Washington, DC 20515 

United States House of Representatives 

Washing1on, DC 20515 

Willi.am T. Pou.nd 

s.x,,.,,, Dinrt, 

RE: Healing on Fundamental Tax Reform Pl'opos als 

Dear Chairman Bouslany, Ranking Member Neal and Members of the Tax Policy Subconunittee: 

The National Conference of State Legislatures (NCSL) urges the House Subcommittee on Tax Policy to 

support provisions in the federal tax code that preserve the fiScal viability and sovereignty of state 

govenuuents. Federal and state lax systems are inexlricably linked, and any federal reform will likely 

have serious fiScal and admitlistrarive ramifiCations on states. NCSL believes that federal lax refomt 

should preserve the ability of state and local governmen!S to adopt fair and effective tax systems, and the 

framework should encourage work, savings, equily and simplicity. 

As the subconnuinee considers tax reform proposals, NCSL urges the subconunittee to adhere to the 

lolk>wiug principles: 

D enver 

NCSL asks tbat any refomt provides state legislatu res adequate transition time. 

Stale legislatures must have suflkient time (no less than tbree years) to make an assessment of 

and any necessary changes 1osta1c law. l! is critical thai slate legislat.ive calendars be taken in1o 

considera1iou as this process moves forward. 

Ens ure that all federal tax law changes be prospective: lbis is imporlant so that Stales dono! 

suiTer tmexpec!ed revenue kisses that would emanale from a retroaclive application. 

Pl'otect tbe state and local income tax, sales tax and property tax deductions for fede ral 

income tax purposes: Tbe need to protect and preserve s1a1e and local tax deductibility is even 

more intperative when considering the adverse intpact ils elimination would have on state and 

local govemmeut fiscal conditions. Elimina1ing state and local income and sales tax deductibilily 

could catiSe stales hanu by limiting abilities to ftmd vital programs 10 educale our children, 

mainlaot s1a1e infrastrucnrre and ensme !he heahh and safely of mrr citizens. 

Maintain the tax-exempt status of state and local government bonds for infi·astl'llcture and capital pl'ojects: Stale and local bonds are the most benefiCial and productive instrumem for 

govenuuen!al infrastrucnrre and capital needs purposes. lf !he currenl slai\IS of municipal bonds is 

either modif.ed or eloninated, economic development would be suppressed through increased 

costs and less inveslment activity. 

\Vashi.,gto n. 

710() EPtl First Plt~rt U-1 p,·ortl! Capitol Stml, N.W. $~tilt .StJ 

W•thil•&tu, D.C. lOOOt 

Wt.sitt ••••••.11ul.t1'1. 

Dtllv E11u1U i•J•@•ni.•'Z tr, Colort11ft1 $01JO.J t4J 

Pbu t JOJ.J64.7100 F11.-.: JOJ.J64. l$00 Pho11t 102.624.UOO Ft~ x 202.1 17.1069 
75 

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April14, 2016 

Maintain and improve the Earned Income Ta" Credit (EITC)and the Additional Child Tax 

Credit: NCSL strongly supports the Eamed Income Tax Credit (EITC), which provides needed 

fmancial support to low-income families while encouraging and rewarding work. 

Pre serve unique designs and prote ctions inherent in state pe nsion plans and a'•oid increased 

federal regulation: NCSL believes the exemption of state pension and benefns plans from 

federal taxation is a sound component of federal policy that should continue. Congress should not 

enact any legislation that imposes annual federal reporting and fnnding requirements on state 

govenunents regarding aspects of their public employee pension plans. 

NCSL welcomes the opportunity to work collaboratively with you to ensure that tax reform benefits not 

only the national economy but our states' economies as well 

Respectfully. 

William T. Polmd 

Executive Director 

National Conference of State Legislatures