[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                    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
         
         
 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
 
 
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
22-336                     WASHINGTON : 2017                     
          
----------------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, 
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). 
E-mail, gpo@custhelp.com.  
 
 
 


                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
DEVIN NUNES, California              CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio              JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana  RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois            XAVIER BECERRA, California
TOM PRICE, Georgia                   LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida               MIKE THOMPSON, California
ADRIAN SMITH, Nebraska               JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas                 EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota              RON KIND, Wisconsin
KENNY MARCHANT, Texas                BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee               JOSEPH CROWLEY, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TODD YOUNG, Indiana                  LINDA SANCHEZ, California
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

                     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        RICHARD E. NEAL, Massachusetts
PATRICK J. TIBERI, Ohio              JOHN B. LARSON, Connecticut
TOM REED, New York                   LINDA SANCHEZ, California
TODD YOUNG, Indiana                  MIKE THOMPSON, California
MIKE KELLY, Pennsylvania             LLOYD DOGGETT, Texas
JIM RENACCI, Ohio
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina


                            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

 
                      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:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                       SUBCOMMITTEE ON TAX POLICY

                                                CONTACT: (202) 225-3625
FOR IMMEDIATE RELEASE
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.

    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/.

                                 --------

    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 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.

 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.
    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:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    

                                 --------
    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.
    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 
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, 
common-sense 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, pro-business-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:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                 ------
    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.''
    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 
consumption-based 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.
    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 
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.
    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 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 important 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:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                 ------
    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 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 base-broadening. 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, 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 macro-economic 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 esti- 
mates. 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.]
    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?
    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 macro-economics, 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 re-
estimate 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 
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 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.
    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 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 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----
    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 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 pro-growth, 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.
    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:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


                                 [all]