people in columbus, ohio and cincinnati, ohio who depend upon the strength of that business for their jobs and we take that very, very seriously. >> is it fair to say and others have said this to me, cfos and tax accountants, that if we are proactive here in the united states with respect to tax policy and competitiveness, even though procter & gamble, for instance, has been in ohio for 100 years, you don't have to be headquartered in ohio or the united states? other countries about to have you. is that a fair statement? ..

>> cutting corporate tax rates increase tax revenues. sounds a lot to me like tax cuts pay for themselves. i think tax reform is a worthy pursuit and sensitive to the international arguments that are being made here today, but in some measure, didn't america get into trouble based on that notion that tax cuts pay for themselves? >> certainly the idea that tax cuts pay for themselves is very

attractive politically, and it's very easy, for example, in the 1980s that that notion was popular. there are some dynamic aspects to the revenue estimates, but to think that tax cuts pay for themselves except in very extraordinary circumstances is very wishful thinking. if you look at the 1980s reform act, we broadened the base, and immediately after that, there was a set of hearings in the senate finance about where did the corporate revenue go? there was less corporate revenue collected than expected, so i think there -- and also if you follow the efforts of the joint committee and the treasury department, the official revenue estimators, i don't think they would ever score it that way. >> part of the problem is the fact we're fighting two wars, and we've cut taxes by $2.3

trillion, and that's been a drain on the federal treasury. in the course of this conversation based upon what you've said, would you argue that tax cuts pay for themselves? >> no, certainly not -- no, i would not argue that corporate tax cuts pay for themselves. >> so that invites the next question as we go forward. how do we devise a system as mr. mcdonald said that can be revenue neutral at the same time keep our companies competitive in a global economy? mr. mcdonald, do you want to weigh in on that as well? >> well, i think that is the challenge, and what we've said is let's prioritize the competitive system in a fiscally responsive way. i'm not sure we'll be revenue neutral, but let's do it in a fiscally responsible way. >> i appreciate your good work. time is running out, but i do thank you for your parallel

pursuit of my career, something on alternative minimum tax. >> thank you, sir. >> thank you, mr. chairman. thank you very much. mr. davis is recognized. >> thank you, mr. chairman. when we talk about international business and reach and its impact domestically, i harken back to being deployed in the middle east and secondary born division and a rapper blew up to my feet and it was a arab labeled pampers package, and i began to understand the reach of our economy. it's 1300 employees, 1200 live in our district creating $138 million in wages and your company purchased $60 million in good from 260 suppliers in our region in kentucky. those are real numbers, real jobs that impact a lot of lives in a much broader supply chain

multiplied in the economy. at a time when the economy is struggling, we looked at job creatorrings, small businesses, but also very much so large businesses like p and g can put americans back to work. americans want to work in the united states with but the tax structure encourages them to do otherwise. you continue to invest in american markets. do you factor tax liability into your decisions, and if you do, how do you -- do you look more at the marginal corporate tax rate, the overall effective tax rate, and why? >> we certainly do look at tax rate, congressman davis. whenever we sight and operation in the world, we look at tax rates as i -- as i said earlier because we sell to 4 billion people around the world, we have to invest

everywhere, and normally what happens when we invest in the united states, it becomes a decision of where to put the operation in the united states. now we are building a factory in utah. it's a $300 million investment employing about 300 people. we did that because it's a paper factory and we need those more efficiently on the west coast. one of the things that you see today going on which is very different than it was in the 1980s. in the 1908s when i joined proctor and gamble, the manufacturing expense was more important than thely gistics cost, but because of the cost of fuel today and other reasons, the logsitics cost are more expensive. it's difficult to produce a product in the united states, for example, particularly something as low cost as a diaper and ship it somewhere overseas, but what we have in

cincinnati, kentucky, are high-paying technical jobs. our research and development operations are there, corporate head quarters are there, and there's a lot of highly skilled people who are running our businesses around the world. >> do you have a sense just to in closing when you create or open a new market or expand in an overseas market, what the moment plier effect is back home on jobs generally? >> it can be six to ten depending upon the supply chain. we work very hard to develop suppliers who can be global spriers for us. in fact, today we're recognized as one of the top companies in the united states for developing minority owned suppliers. we'll take a minority owned supplier and work to develop them into a global sprier. today it's $2 billion a year with minority suppliers in the united states. many are located in kentucky or

ohio. >> thank you. >> thank you very much. >> thank you, mr. chairman. i want to thank mr. camp for holding this hearing, and i think all of us in this room all have recognized for many years that the tax code is complicated and that's an understatement. i think the testimony we heard today, it's a patchwork, there's no logical connections, it's confusion, and it creates mistrust, i mean, these are words that all of you and the panel have used over and over again. i hope we can come together in a bipartisan way to begin to address some of these issues and yesterday we had the opportunity to meet some -- some of us did, with mr. balmer from microsoft

and they said some of the same things about the corporate structure. one of the things yesterday is he urged us to think not only about a corporate tax rate, but a competitive tax system as the point that all of you have been making today, and, of course, one of our big concerns or at least one of mine is the small businesses and so my question is in what challenges does the amount of business income taxed at the individual level present for reforming the tax code in a way that helps american businesses grow and create jobs and compete? >> well, 70% of small businesses are passed through companies and taxed at the individual rate, so

taxing anything beyond what business owner is due as wages for his work is really tax capital formation. it's really hitting on his ability to invest, create jobs. certainly everybody should be subject to the full force of employment taxes for the value of their work, but beyond that, the cost of the corporation structure of the small business when you tax beyond that, you're really hitting on the small business owners' ability to form capital, dream dreams, invest, innovate, and that's a very important point. >> i appreciate the answer. i yield back. thank you, mr. chairman. >> thank you. >> thank you, mr. chairman, let it be remembered that congress began this debate on whether or

not to reduce corporate tax revenues to pay for our national security on the same day that our committee leadership like our president is meeting with the chinese because the first question that needs to be answered in this debate is how much more america borrows from the chinese so that some corporations can pay less. to say as the representative at the business round table has done here that "revenue neutral di should be off the table may be consistent with the holiday tax deal that added another trillion dollars to the national debt, but it is just an another way of saying go borrow from the chinese. of course, there may be merit to lowering the standard corporate tax rate. all of our witnesses are suggesting that there is. one should realize, of course, that to the extent that we lower

the statutory rate if all corporations were paying that, that represents a substantial tax increase for our multinationals. you noted general electric for one paying many times the effective rate if they paid the lower statutory rate that's being proposed. to call for a pure tear tore your system is just another way of saying we want a permanent profits holiday like the one that didn't produce more jobs for americans last time. it is a way to continue the continued export of more american jobs. i would ask you, dr. sullivan, when we talk about competitive, which all of us are for, shouldn't we be concerned about promoting a level playing field so that our smaller american corporations, the ones who are the real engine for economic growth who don't have sub sigh yarrs and tax havens and

lobbyists haven't come here to add hundreds if not thousands of pages to the tax codes and legislations that chairman camp showed at the beginning was meeting and to make it so complex, so that they have a level playing field and not at a disadvantage against their larger multinational competitors? >> thank you, mr. doggett. yes, the most important thing that we can do to improve the competitiveness of our tax system is to make the system neutral across companies. we need to look for pockets of oversubsidyization and that's what we find ma areas of the tax law. we want it uniform across the economy, particularly when our deficit problem is at these incredible levels. >> thank you. the gentleman's i'm expired.

>> thank you, mr. chairman. mr. mcdonald, an observation and a question. i'm from suburban chicago, and i'm amazed at conversations i'll have with folks in the chicagoland area working for worldwide american companies who have not had a sense of clarity about the fact that their very employment is dependent upon the success of that company in overseas markets, and so my statement is to you as the leadership of the business round table, i think that there's a lot of advocacy that is left on the table because businesses are somehow reluctant to engage in substantive philosophical conversations because they feel like they're going to be perceived as dong kyes and elephants when talking about the world view. competition is good, and i'm telling you i'm amazed at the

level of conversation. that's the observation. >> i agree with you. >> okay. glad to hear. >> all our members agree. we have to do a better job. >> terrific. to bring up the point the slogan shipping jobs overseas is a bright and shining bumper sticker that's catchy but the more robust argument is a five paragraph essay which makes sense, but you have to get through all five paragraphs, and if you do, you go, oh, makes sense. i get it. we who -- and many on both sides of the aisle, we've done a very bad job of communicating overseas markets, their relationship to american prosperity, and i was just encouraged we have short time this morning, but encourage you and want to be a part of this conversation with you about how to communicate that more effectively to american citizens that understand and that need to understand prosperity overseas

for u.s. companies means prosperity at home. >> absolutely, congressman. in fact, i wanted to clear up a potentially misrepresentation of a territorial tax system. a territorial tax system says we pay the same tax as a u.s. company in a foreign market that our competitors pay, that our foreign-based competitors pay. it's not a tax break. we're not talking about a tax break. what we're talking about is paying the same as our foreign-based competition. our foreign-based competition doesn't pay incremental tax on the funds to their home market. that's the difference. it's very simple. >> thank you, sir. >> following up on that point, mr. mcdonald and also what mr. neil raised a few moments ago, from your perspective given your domestic business

activities as well as your foreign business activities, from the perspective what it would take from a tax code change to have you consider investing more in domestic job creation rather than foreign job creation, would that then be just a general reduction in the corporate rate itself, tax rate, or should there be more specific targeted language for the repay treeuated dollars to bring back to the united states and invest and not have any jobs created, so from your perspective, is the general tax rate reduction more fair to you in job creation here domestically or language say bringing back the dollars domestically you get a lower rate if you specifically invested that in r and d activities or something specific and targeted that you get that tax benefit by doing that. what, in your mind, would be the better way from a tax code

standpoint to encourage you, proctor and gamble, to up vest more in the united states? >> let's come up with a competitive system and that would be both the rate in moving from a worldwide to a territorial system and let's benchmark other countries we're competing with because we're also not just talking about american companies investing here, but chinese companies. i've met with chinese ceo's who say help me invest in the united states. they are struggling with our tax code as well, and that's part of president hu's visit and why i need to leave too. we need chinese companies to invest here, and if we get to a competitive system like the other oecd countries that improved their systems, then i'm sure we'll succeed. >> thank you. >> thank you, chairman. >> thank you. mr. thompson is recognized. >> thank you for the hearing.

i think it's an important discussion we have to have. we need to simp fie the tax codes, all the tax codes, and i'd like to ask the chairman for his help and cooperation this year on expanding that. i'll reintroduce my bill on a state tax reform. i think it's a sad day when family farms have to be sold in order to pay a state tax on those family farms and hopefully we can create a situation where if you inherit the family farm, you keep farming it, you'll be able to get a postponement if any estate tax. i hope we expand it to that. i don't think the idea of a tax policy that encourages jobs in this country vis-a-vis overseas is a bumper sticker. it shows the number of foreign jobs that were created between

99 and 2008 versus domestic jobs that were lost. i think we need to have a tax code that in fact does encourage job growth here in the united states of america, and i understand that businesses consider all of their investments foreign and domestic and when they figure out their bottom line, but i think we have to pay particular attention to creating jobs here, and then lastly and kind of a statement, but also a question, there's been a lot of talk about deficit neutrality when we work on reform in the tax code. i just don't think you can put that off the table or take care of it later on. i think this is a real, real important issue, not only because of the growing debt but the impact it has on companies like proctor and gamble. there was decision of just this last year of lowering the u.s.

credit rates and because of our big deficit and our big debt, and i think that would impact u.s. competitiveness and u.s. corporate profits if that were to happen, so i don't think this is something that we can ignore, and i'd like to hear from both dr. sullivan and mr. mcdonald on that specific thing. how would that hurt u.s. companies both here and abroad if our credit rating was lowered because we don't pay attention to the deficit of our tax reform? >> we need short answers. >> well, i think congressman thompson, we have seen the impalgt of that looking at europe right now and places like greece and spain and ireland, so we know what will happen. it will be a higher interest rate, harder to get capital. the chart you referenced while a good chart, we have to get into

the detail of that because businesses and the economies are growing much faster in places like asia and africa tan in europe and the united states, so of course any time there's a global business, you here more people in those geographies. we need to get into the details and understand why those jobs were created abroad. >> the time expired, but dr. sullivan, if you'd just answer briefly. >> thank you, mr. chairman. the deficit problems we face is unprecedented. they weaken the economy by staffing capital formation and we risk financial collapse so these are very serious problems for our competitiveness. >> thank you. >> thank you, mr. chairman, and i appreciate you having this hearing. i apologize that i missed some of what was said here this morning because i was on the radio and the timing of it and the discussion had specifically

to do with the tax structure and what's going on here in washington, d.c. and what we're trying to do, and i told them that it's great that we're able to get the republicans and democrats together and actually start talking about tax reform that's long overdue, long overdue tax reform. there's not a small businessman or manufacturer in my district that is not talking about how complicated the taxes are. we have 14.4% unemployment in nevada and i have to believe the current tax structure has something to do about that. i'm pleased to hear the administration talking about their desire and eagerness to look at tax reform. there's commissions out there. there are committees out there. leadership on both sides of the aisle as we're seeing here in this committee meeting, but i think what we're missing and what's important to concentrate on is it's the con constituency out there and these small businesses and manufacturers talking about the need for

fundamental change in our tax code so they can be competitive not only here in the country, but abroad. we are hearing stories after stories, and i don't know if this was brought up microsoft borrowing in the country because they can't bring money back from overseas. there's billions of dollars overseas, but can't bring it to america to create jobs. their only choice is to borrow because that's what's best for the shareholders. those stories we have now are fundamentally flawed with the process we have. mr. chairman, i certainly do appreciate this hearing. we talked about -- i saw a couple charts yesterday talking about deflation now here in this country. i know gasoline prices are going up, food prices are going up, but get passed those two obstacles then there's inflation in goods and services and following wage growth in the country. i believe that has a lot to do with the codes that we have, the

tax codes we have in this country. i guess quickly, and i don't know how much time i have left, but you talked about a simpler code, ms. olson, have we got to the point that our code has run its course? our current tax code has run its course, and are there alternatives out there to the current code opposed to making it simpler? >> well as i said in the testimony, i think you need on the individual side put everything on the table and then go through it, not for a cost benefit, but as a policy to run through the internal revenue code. first, is it a policy we want? second, should we run it through the internal revenue code? if it's a policy you want, think about the burden you put on individual taxpayers to have to document this thing to tie their businesses up into knots in order to meet the requirements

for it, and what are you making the irs do, how will you treat tax pay ors whether individuals or businesses. you heard a testimony about the difficulties taxpayers are facing. >> thank you. >> thank you. dr. price is recognized. >> thank you, and i want to congratulate you for obtaining the gavel for the committee and your passion for fundmenteddal tax reform which is so necessary. i'm struck by the yiewn namety of the panel especially as it relates to the corporate tax rate and the need to decrease the corporate tax rate. i think it's imperative we not punish the job creators and as the charts have shown, a high corporate tax rate punishes job creators because we live in a global economy. i was strack, however, by the comments about the any decrease in corporate taxes not increasing revenue necessarily to the federal government.

i wonder if you would comment on about what many of us believe a decrease in corporate tax rates actually increase as revenue to the federal government. >> thank you very much, mr. price for the question, and mr. neil, welcome the response also to respond to the earlier exchange. the thing is that there's a well-developed literature including, you know, a fairly recent brookings paper, a paper by a germ economist who is not republican or democrat, but it shows that a lot of the lessons in mr. sullivan's testimony are apparent in the data that if you're a high tax praise place, it's easy for companies to move their profits to a low tax place. that's why you saw the lower average rates in the testimony for companies that are adapt of locating activity with lower tax places. reducing the tax here in the u.s., there's less of an incentive to locate activity ablood, and then it's an

empirical question if the change is enough to reduce the rate and get more revenue. it's never the case with taxes in the near term reducing the rate you get more revenue, but in the complete tax space, there's academic papers that find that result. i would say a rough reading of the literature is the revenue maximizing tax rate in the corporate tax space is maybe around 30%, and so if we're above, that we're losing revenue in part because it's so easy to change price to lower jurisdictions. i put a reference in my testimony that inside that reference. >> quick comment as well on something else that's been an area of disagreement which is the dollars that the friends on the other side think that's a bad thing to do to allow that money to come back. the congress of that is if you leave the money over there it's better for the united states. isn't it better for american

workers and the american economy to in some way allow for that repettuation of resources? >> right. we need to allow firms to put money where it's best put to use regardless of taxes and it shouldn't be relevant. i would conflict on contemporary measures, it should be permanent. >> thank you. >> thank you. mr. larson is recognized. >> thank you. i want to thank the chairman and thank you for the opportunity. three quick questions for the panelists. one for ms. olson, if you would expound upon in your testimony if tax compliance were an industry, it would be one of the largest in the united states, consume 6 billion hours of the equivalent of more than 3 million full time workers. that's pretty amazing statistic. i i'd like you to expand upon that noting that it seems to me that our current tax system is

broken. it was antiquated in the last century, a decade into this century, and we still haven't made many gains in straightening it out. with regard to tranls action packages noted on "60 minutes" that more than $60 trillion takes place in transaction over the counter that are unregulated and in terms of revenue that takes place or done algorithmicically or whatever the case may be, it seems to me this is an opportunity worth looking at as opposed to taxes one's labor, and so i'm interested in answers to those questions. >> i think, you know, what those numbers point out, and i must note those include business taxes as well as individual, but i urge this committee to not forget the individual taxpayers, the 132 million individual taxpayers, your constituents,

who are suffering under the current, you know, burden of this code, and as we talk about businesses making decisions about where to place their profits or their activities, that very ability to make those decisions leads to a great distrust of your constituents of the internal revenue code and government, and leads to the sense they are discriminated against by the code and by their government because they can't afford or do not have those kinds of breaks, so that was some of the things we were trying to get across in our testimony. >> over the counter transaction taxes, anyone? dr. sullivan? >> i do think it's important we reevaluate our tax codes in lite of the financial crisis to remove the elements of the code that contributed to it. for example, the deductibility of debt. however, a transaction tax has been tried in many countries around the world, and it's hard to administer and so i think

it's initial appeal wears off the more you look at it. >> i concur with dr. sullivan. >> so there's no way to regulate an over-the-counter trade in a way that it produces $60 trillion of revenue? it just -- >> unless we move to a multilateral where all countries agree to do this, the trading activity -- because it's so mobile, would shift to other countries. sweden tried this and other countries tried it, but they had to repeal it because they couldn't administer it. >> thank you. the gentleman's time is expired. mr. bucanan is recognized. >> thank you. we're having a tax debate and the president of china is in time at the same time. someone who is has been in business for himself for 35

years, i can tell you it's not florida i represent against the alabama mississippi competing for business. the fact of the matter we're competing around the world and one of our biggest competitors by far the 8900 pound gorilla in my mind is china. i've done business overseas as well. when i think about this and the fact we haven't touched a tax code in a material way since 86, it's appropriate to have the discussions today because i believe what makes america special and great is free enterprise. let me jump to mr. mcdonald and quickly to you. when you talk in terms of the business round table, the fact of the matter is and i was a corporation missed and now there's a bunch of ll exrrks' that my family runs, but the bottom line is half the tax revenue i understand is passed through entities. when you look at lowering the tax rate or the discussion of tax rates for corporations, what are you going to do about the

employers who have 100 employees, 50 employees who are llc's? i hope that's taken into consideration. you can't do one without the other because otherwise you have a competitive advantage over someone else what thans to be a large family run business. can you comment on that quickly? >> i agree with you, congressman. you're right ring it's about half. >> what would you suggest when you look in discussing around the business round table, hopefully, are you guys talking about sea corp.s or the llcs and sub s's and partnerships and everything else? >> well, as i suggested earlier and when my comments were about creating a competitive code for everyone, not just our members which tend to be the larger corporations, but we realize that 50% or so are the smaller companies, and we think that the codes have to be competitive for all of them. >> thank you. >> let me ask you quickly.

when you look at in terms of everybody talks about jobs, the fact of the matter 70% of the jobs created in america are small-medium sized businesses, and in the state of florida, tallahassee, 99% of all companies registered in tallahassee whether they are llc's or partnerships are small to medium sized businesses. what's the biggest one or two things as you primarily work with small businesses we can do or should consider to help small businesses in terms of cost and complexity? what do you think are the two biggest things we can do in terms of having an impact? >> simplification on all levels of the tax code, for instance, sole proprior tore. take the home office that's 13 times and something you shouldn't do is the 1099 provisionment right now as a tax practitioner, i feel like a paper pusher. i don't know who is collecting all the w-9s, by we don't have

the staff to do it. >> thank you. i yield back. >> thank you. mr. shock is recognized. >> thank you, mr. chairman, and thank you for hosting this very important first hearing. mr. mcdonald, has you group study, approximately how much money in your member companies and companies at large could be repetuated if allowed to act for permanent or permanent at 0 or some small amount? >> i don't have that number, but we can get back to you with that number. we chose as a group to prioritize the whole discussion of getting to a competitive system and a system which is territorial rather than worldwide allowing for the repet traition, and since that's your focus, what's the rate you decided would be necessary here in the united states that would

not insent vise the sources of a multinational from a foreign source? >> right. we haven't chosen a single rate. again, i think the exercise we all need to do together to be fiscally responsible is to look at those countries that we're competing with and see what effective rate we would need in order to compete effectively with them, but we haven't chosen a number yet. we look forward to working with you to do that. >> yeah. i think this is a very important action that we can take sooner rather than later and doesn't have to be a part of the larger discussion of tax simplification. some colleagues think no jobs will be created. we met with a ceo of a large publicly traded company yesterday estimating 30-40 billion just in that company alone. i would have to think it's in

the trillion of dollars with all the companies and that no jobs would be created here if they money came to our economy seems a bit crazy. dr. sullivan, in your estimation, in your opinion which varies a little bit from the rest of the panel, do you have a number in mind in terms of what you think the corporate rate in america needs to be to decent vice foreign sourcing? >> thank you for the question. obviously, you want the rate as low as possible. let's talk about what can happen. if we just do revenue -- based on treasury estimates, get rid of most of the major incentives, research credit, production credit, deaccelerated appreciation, full throttle, we're lucky to get to 30% to revenue knew federal. -- neutral. >> if we want to go below that --

>> are you making the assumption that the level of investment would remain static regardless of what the rate would be? >> no, no i'm not. i think investment would increase as a result of the lower rate. >> you stated earlier there's risk-reward based on that. do you have a number in mind? >> number for? >> what the rate should be. >> as low as possible. >> 0%? [laughter] >> thank you. >> thank you, mr. chairman. let me begin by expressing as a number of our colleagues have an appreciation for your starting our deliberations dealing with the tax code. i think you've taken the right direction and i will say the right tone. i have appreciated that and look forward to working with you on it because this is clearly a unique opportunity. part of the opportunity is just

simply the value that is wasted, that you've documented, ms. olson, part of our difficulty in having a productive conversation about the tax code is that it is so hopelessly complex that everybody's right, every generalization, every complaint, right, left, center, they are right. they can find an example. i am a tax junky. as a revenue committee chair and a state legislature ions ago, i went to law school and took tax classes, because i wanted to learn more about the job. i could not do my taxes today under torture with weeks. [laughter] i'm not warren buffet. it is a scandal, and it's

approaching a crisis point. the cost of compliance, the disconnection from tax provisions with what they were inclined to do, the alternative minimum tax, the tax on millionaires who avaded taxes has mar offed into a tax on the near rich who pay their taxes and no billionaire hedge fund is ever touched by it. i hope, mr. chairman, that we can move forward with this fast because i think it's a symbol of whether or not government itself can respond to something that is universally agreed is in need of fixing, but whether we can follow that path. in that connection, i guess i just have one question that i would offer to ms. olson and mr. mcdonald. can we do this successfully if

we disconnect the individual tax provisions from business or do they need to be done con currently? >> well, i think that although the business and individual, they present different questions, but i do not think you can do them separately in part because so many businesses are pass through entities, and you still have to deal with the individual side. >> mr. mcdonald? >> yes, i agree with that as well. many of those pass through entities are suppliers of yours, and they will critical to our business all overred world, so it has to be done together. >> thank you. >> in an effort to continue the tints, mr. rangel and i had a discussion and moving to two minutes per member. mr. lee is recognized. >> thank you, mr. chairman.

in shortness of time, i'll make a brief statement. what i've heard here today and as a former businessman and what we hear from taxes and for businesses to invest in the country with all things being equal, with regard to labor, building the facility, when you have to differential in the tax code, it's mind boggling. she talked about 6.1 billion hours with regards to come pliebs cost. the only area of the economy where we spent more time is debating health care. that is a frightening number because that is is cost that is an impediment on job growth in this country. some of the recent status fibbings, "wall street journal" literally $2 trillion in liquid assets are on the sideline primarily because of the fault we do not have enough certainty. our tax code over the last decade literally 10 years ago

there were few pieces of tax legislation considered temporary. today, that number has grown exponentially therefore making decisions on long term investment on capital. we want to attract businesses to the united states. the fortune 500 and we look to corporations and other countries around the world, we want those jobs here and unless we do something about the tax code, we won't see the job growth that all americans frankly deserve to have. we appreciate you being here and look forward to moving forward on the subject. >> thank you. >> thank you, mr. chairman, and thank you for holing this hearing. i think i join my colleagues in hag a passion for this particular topic. in particular, i have a keen interest i've spent in my real life many years practicing

public accounting in the tax side of things and i recall the last time congress discussed tax simplification was a wonderful time in my career because it was job security, and so every time congress begins a discussion about job security, i think every cpa from in the tax department holds a party that day, and so with that in mind, i know we don't have enough time, i could spend hours with you folks, but does anybody want to try to prioritize for us if you could change three things, what they might be? keep in miebd, i guess, priority would be job creation and economic, you know, growth if anybody wants to tee that up, and i'd love to know your 2 second thoughts an flat payer tax. >> i would certainly prioritize

getting to a competitive tax system. as you saw, we're uncompetitive with the foreign competition today. >> i think that the main thing is the corporate rate just has to come down to make us competitive, and that's all three of my things. >> just to add to that is this tax reform has to take into account our true credible deficit problems which i think this congress has not fully come to grips yet. thank you. >> all right. thank you, thank you very much. mr. kind is recognized. >> thank you, mr. chairman. thank you for holding this hearing which i hope is the beginning of many hearings we'll have in the session, and one is getting the fiscal commissions on which you and others served to testify with the recommendations with respect to the tax code and deficit reduction. ms. olson, thank you for the work the national taxpayer advocate group does and the

recommendations you submit to us from time to time. i happy we heed your administration that we don't lose sight of the tax implications because you're right, there's unfairness for average working families, small business owners, individuals, who kneel that unless they have their team of accountants and tax lawyers, they are not able to tax advantage of the great complexity and loopholes that exist. i think this does affect the compliance issue of tax filing and the underreporting and the cheating and the tax gap that has grown giving the complexity of this code. as we move forward, i hope that we can marry the issues of corporate reduction along with the individual rate which i think is em pertive. most of the folks in the audience are focused on the corporate rate and not the individual right. back to issues raised in your testimony and written testimony, most of the businesses in this country are passed through

entities. they are sole proprietors, partnerships, and that's why getting to the individual rate is so important for most of the job growth that occurs in our individual districts which are small business oriented rather than the larger multinational businesses and the implications, but i also agree with the rest of your testimony that as we get into the corporate tax rate, this should be done through the price m of issues. in light of the changes that have happened with the tax code in other countries, and makes us as competitive as we need to be. why there's been legislation and the modernization bill to simplify and make easier the compliance and get at the built in gains issue to work on. working with you and others hopefully we have a chance to get into that. thank you, mr. chairman. >> thank you, mr. paulson is recognized. >> thank you, i know when tax reform is brought up it's around simplicity, fairness, the argtses we --

arguments we heard today, but the conversation today is about economic growth and competitiveness without a doubt. i'm wondering if you can just expand a little bit and talk about debt versus equity and the concept of encourage businesses and individuals to borrow and finance their operations through debt rather than asset creation or capital formation and why that's important to focus on. >> i understand that steve was here yesterday talking about the amount of money that my cro soft has overseas, and obviously with that money overseas and the inability to repatriot it without paying more tax, again, i want to again underscore the fact that we all pay tax in overseas markets. the difference with the united states and a very few companies on the chart, you pay an additional tax when you repatriot the money to your country. there's few countries that do

that, the united states is one, causes them to borrow money >> i am looking forward to all the topics presented and an issue like this is critical. i'm a small businessman, it's good to hear my colleagues both republicans and democrats have the same frustrations with taxes like i do.

i don't want to take more time, but thank you for being here, and i thank the chairman. >> thank you. mr. pascrell is recognized. >> thank you for bringing us together on this issue. it's an honor and a pleasure to listen to you because you make sense, ms. olson. you are a true advocate. i'm glad you brought up the subject of the average taxpayer because previously as this happened, frequently, that person's forgotten, so while we are maybe trying to prioritize, the cutting of corporate taxes which i think is important, and we need to address and it will be addressed, you cannot, and i want to know if you disagree with me, you can want address, for instance, that issue in a vacuum without talking about what the trials and try

bylations are of folks making $25,000-$35,000. do you agree with me? >> absolutely. >> do you think then that systemic change is doable? >> yes. i think it is entirely possible, and it will take great courage and dedication, and i think you have to educate publicly. talking about educating publicly businesses, but the public what they get as benefits through the code and what will happen if we get rid of some of those benefits, but lower rates. >> and educating the public is critical. >> absolutely. >> and ourselves. >> absolutely. >> take for instance, and i don't make this is centerpiece. take for instance, do you think most americans know that most of the great folks on the panel with you that federal, state, and local taxes -- income taxes, i'm sorry, consumed 9.2% of all personal

income in 2009 which is the lowest rate since 1951? >> probably -- >> yes or no? >> no. >> do you think that's important -- >> yes. >> in looking at this thing in context? >> absolutely. >> do we know what we're talking about on this side of the aisle? on this side of the barrier here about taxes? >> do you know what you're -- >> yes. >> absolutely. [laughter] >> thank you. >> you're welcome. >> the gentleman's time expired. ms. black is recognized. >> thank you, mr. chairman, and like wise as been said, this is a very important topic. i know in consideration of time we don't have time to answer the two questions i have and perhaps more in writeing. ms. olson for you, looking at individuals, i'm curious as if we were to simplify the system because you testified that people don't trust and they try to evade, has there been any

study done to show that if there were more simplified systems we could collect more revenue because of so much evasion, and that would be one question that i would have. >> it dependses on how you structure the system. we know when people have with holdings and the income is reported to the irs that 99% of the taxes of the income is reported and the taxes are paid on that income. when you don't have that kind of a reporting and you have lots of opportunity to take deductions and claim special benefits, then that increases the opportunity to, you know, avoid and under report, and so if you structure the system right, you can minimize noncompliance. the more complexity in a system, the more opportunity you have to have noncome prions. -- compliance. >> thank you. mr. chairman, my understanding is we can submit questions to be answered separately? >> yes. members are able to submit

questions for the record, and if they do, i hope the panel responds promptly. >> okay. thank you. >> thank you, and mu ms. burkely is recognized. >> thank you, and i want to thank you, mr. chairman. it's a wonderful hearing and just the beginning of a wonderful process. i want to submit for the record my opening statement which i wasn't able to make. i'm very glad, ms. olson, that you talked about what we need to do with the individual reforms and corporate reforms. in my family growing up, my father was a waiter and the way we did the taxes was my uncle from new york came once a year to do the taxes for us, an i don't think that's a good process for any american family, and i'm sure least of all my own. we just passed a massive tax package last month, and in it it had all the tax extenders, every one i supported, and i felt that i had friends in the race car

track world and the taxy companies that use propane gas, they camped out in my office and explained how important all of these tax credits and tax breaks were to their business and how much they created jobs. now, let me ask you something, if we lower the tax rates for corporations, and companies throughout the united states, is that going to be enough, or are they willing to give up all these individual tax credits and breaks that are in our tax code, or are they still coming to me explaning how they still can't make ends meet, they are going under, and they need to have additional tax breaks because that's going to kill us when it comes to our deficit. there has to be revenue coming in somehow to support this country. >> can i make a point about that? i think that that goes to the need for education so that people understand that at least

on average maybe their bill won't increase, but on the other hand, i think it's very important that we will never get rid of everything, and so when you decide to put something in the internal revenue code, you have to make sure that you all have the information to be able to evaluate. >> the witnesses can submit answers in writing. >> one other question. >> your time has expired. >> it's about repatriation. >> mr. mcdeer mote and others would like to question. >> okay. >> thank you, mr. chairman. i submit an article by david k. johnson called john son's take. >> without objection. >> it talks about the history of taxation and that we establish progressive taxation along the lines because we realize people at the top got most of the benefits, so they have to pay most of the taxes, and the republicans when they took over the congress last week passed a

rule which was no ripple in the press and nobody even mentioned it. they said if we cut taxes, we don't have to replace the money. it's not a loss to the budget. now, i find is very hard when we have been operating under these rules to think that we're going to do any kind of reduction in corporate taxation and not replace the money unless this is simply a hearing on cutting sending, how do we cut spending in higher education, in infrastructure. i'd like to hear from you, mr. sullivan. do i understand correctly what that rule means? >> if i i understand what it means is that tax cuts don't have to be paid for which i think is, again, in this fiscal environment, it's absolutely outrageous and it's dangerous to the long term health of the

economy. >> it's saying we're making the tax cut and the only place we get the money is by borrowing it internationally to continue the level of services that we have in this country, otherwise we're going to reduce the level of services. >> obviously the choice whether it should be tax increases or spending cuts is a political decision, but i think the rules should be neutral, and these rules are not neutral. >> thank you, i yield back the balance of my time.

>> well, let's talk about it another time. i want us to proceed on a rational bipartisan basis. when i saw your article, i just wanted to say to you, i think that is not accurate. there's no excess, there's a concern, and there's no nationalization, sir. we've met with the ceos, and the last thing they would say is that they have been nationalized. go out and buy one of their cards. >> if dr. hess, if you wanted to comment, you don't need to. we look forward to having the express. >> absolutely. this hearing was about the burdens of the federal tax system, the compliance, administrative problems, difficulties for families, small problems under the current

systems, the international tax system being out of step with the rest of the world. i want to thank our witnesses for the rest of the world. the schedule has been a difficult one for us. thank you for bearing with us for that. again, members can submit questions to you and i hope you will respond. and obviously, you've made it very clear that our code is a complex mess. it's frustrating to families, businesses big and small, it encourages inefficient behavior. these points were actually made in an opinion piece published today. while i don't necessarily subscribe to everything, his comments about the need to act on the bipartisan basis to perform the tax code, we're right on point. i look forward to continuing this dialogue at future hearings. for now, the committee is adjourned. [gavel] [inaudible conversations] >> tuesday, president obama delivers the state of the union address to a joint session of

coverage. c-span's live coverage at 8 p.m. eastern, the review and peach at 9. then the republican response, plus your phone calls, and online at c-span.org. you can also watch the president's address on c-span2, followed by reactions from members of congress from statuary hall. >> now a discussion on how u.s. courts might deal with future cases on gun rights. we'll hear about recent supreme court decisions on the individual's right to bear arms, and local governments restricting that right. the cato institute of washington hosted this event. it's an hour and a half. >> hello, thank you for being here today. i want to extent a special welcome to c-span. that's always a welcome edition. i'm dean reuter, vice president of the practice groups of the federalist society.

our program today on the future of the right to keep and bear arms is so sponsored by the federalist society and cato institute after being conceived by the federal practice group. i want to thank our four panelist in advance for their remarks and times today. we are expected to hear sharply contrasting views. i also want to thank cato, and dr. roger of cato. they have made this collaboration easy. i thank them. in addition, dr. pilon is going to be the moderator today. he's frequent at student events and chapter events around the issues. again, thank you, roger, for making this program possible today. [applause]

[applause] >> well, thank you very much, dean, for introducing me. i want to also join dean in welcoming all of you to the event this afternoon and to the cato institute, and to thank dean and the federalist society for co-sponsoring this forum. let me welcome those of you who are watching the forum through cato simulcast, or later c-span. when dean called me a couple of weeks, a couple of months ago actually about doing the forum on the right to keep and bear arms, we had no way of knowing, of course, the issue would soon become salient once again as it has in the aftermath of the tragic shootings in arizona, less than two weeks ago. gun control is a perennial issue in american politics, of course, but at times like this, the debate becomes especially

intense. our concern today, however, will be less on the politics of the issue much less on the prospects of enacting new federal legislation which seems unlikely as the new 112th congress focuses as it's already doing on such basic questions as whether they have the constitutional authority to do so much that congress is doing today. rather than we're going to focus on the local issues and events that underpin the current debate. i say current debate, because, of course, much has changed in the gun control debate over the last couple of years. in 2008, in district of columbia v heller, the supreme court found for the first time in our history that the second amendment protected an individual right to have a gun in the home for self-defense, and not simply as a member of the militia. let me pay tribute to cato's own bob lee, the chairman of the cato institute who was

instrumental in developing the strategy for that litigation, and supporting the case all the way through to the supreme court. then just last year in mcdonald v. city of chicago, the court found that the right was good against state and local restrictions as well. but in both cases, the court left open just what kinds of limits on the right to keep and bear arms might be permitted. that's the subject of litigation that's going on across the country today. and the main question, it's before us today as well. but it does bring us back to politics if mainly at the state and local level, because the righted issue, like autorights is -- like all rights is not absolute, but subject to reasonable regulation designed to protect members of the public from a risk, and individuals right to keep and bear arms for self-defense on the other hand. that's a mixed question, one

might say, of law and fact. to discuss, we brought together an exceptional panel of expert who i will introduce before each of them speaks. as the corrallist society and cato institute usually do, we have both sides represented, at least so far as one can speak of the issue. each will address for six to ten minutes and they will respond to each other's comments, and then retire upstairs in the winter garden for lunch. let's begin with alan gura. he began for the eastern judge for the eastern district of north carolina. after that, as a deputy attorney general for the state of california, he defended the state and it's employees from all manner of lawsuits in state and federal courts at time and

on appeal. thereafter, he entered the private practice of law at the washington, d.c. offices of sidley and austin in february of 2000, he left the firm to serve for a year as council to the u.s. senate judiciary committee on criminal oversight. alan is admitted to the bars of the district of columbia, virginia, and california, and admitted to practice before the u.s. supreme court and numerous other federal courts. in 2009, he was named one of washington's top 40 lawyers under 40, and championed of justice by "legal times." he's a graduate of yale university law center, and where he earned his b.a. with distinction of all subjects. please welcome alan gura. >> thank you, roger, i'd like to thank the federal society and cato and all of you for coming to hear us today speak about these very important issues.

it's better than less than six months since the supreme court issued it's decision in mcdonald versus the city of chicago, and gave us the green light to go ahead and see what extent the second amendment applies to state and local government regulations that touch upon the issue of the possession and carrying in use of firearms. although it's been such a short time for the ticket to litigate, many people are already trying to write the second amendment's obituary, crying because no severe restrictions have been overturned and heller and mcdonald itself did not actually involve cases -- involve anything beyond the possession of a handgun in the house. that means the second amendment must be limited to facts, and we must all expect to have a rather limited forum. i think this is not really the appropriate approach to take. imagine if in january of 1955,

brown versus board of education was declared to be a failure because there was still an awful lot of repression. obviously, the federal courts move much slower than some of the rest of the world does today in the age of the internet, and instant analysis, we simply are at a point in time now we have not yet any very many meaningful decisions, certainly not at the court of appeals level and the federal system coming out of strategic litigation. we've had a great deal of decisions in the lower courts coming out of the short of cases that one would expect in the immediate aftermath of a decision like heller or mcdonald. namely, criminal cases which are always in a faster track that involve so much far-fetched claims by people who are desperate to raise constitutional defenses and who's council in fact are required to zealously advocate on their behalf and try to seek

out any sort of grounds to avoid criminal liability. the brady center used to have this page on their web site where they had a long list of cases that explained why the second amendment secured only a collective right. most of those cases were, of course, criminal cases of that ilk. it took some time for well crafted civil litigate to address that topic. to those people that would look at the wider array of quickie criminal litigation in the lower court and say ah-ha, this means the second amendment is of little application of law-abiding people i would say stay tuned. we have many cases winding their way up to the appellate courts. we will then see exactly how far and wide the second amendment does apply. when we get to some of those answers, i will caution advocates of gun rights that we are not going to in every case.

it's not realistic to expect that the court will get every single second amendment case correctly. we don't have that situation in any other area. there's nobody out there that believed every single first amendment case was correctly decided, or every single four amendment case was correctly decided by the supreme court. the second amendment may not suddenly become a font of perfection. nonetheless, i believe that heller and mcdonald and some of the developments in lower court indicate that we are going to see a robust and vigorous right that has a lot of actual applications to people. the first thing to consider in looking at the framework of second amendment analysis is that not every case should be or will be decided as a matter of means and scrutiny. sort of a standard of review. the strategy of the other side is to look at every single second amendment case as one that necessarily calls upon the courts to engage in in balancing

of interest and then to apply what they call reasonable regulation which is another code essentially for rational basis review to that. then, of course, because the courts will always defer to the legislature about how badly we need the regulations. all of those regulations will be of help. that is not really the framework that the supreme court has help us in heller and mcdonald. heller did not announce literally a standard of review. because it was not required by the case. it's a wonderful object lesson in the facts that you don't always need a standard of review. what did heller involve? a handgun ban, which is what classes of arms are protect or not protected. and it deviced a test to address that. it also dealt with the firearms ban. the law that forbid people in washington, d.c. from using functional firearms in

self-defense. that law clearly contradicted the second amendment. there was no need to review any sort of balancing test. it simply was in contradiction to a core aspect of the right. so those are two approach that is we're going to see in future cases. cases that challenge regulations that ban certain weapons or that mandate that arms have certain features in them are going to be adjudicated not on the balancing standard of review, but upon heller's common use of what's a protected arm. some cases will fall by the wayside if they simply ban an exercise of the right of arms or some aspect of it, for example. i'm currently litigating a case in which the city of chicago has banned people from using guns at a firing range. they have banned gun training, they've banned going to the range and practicing. well, we believe that a core aspect of the second amendment, if you have the right to a gun, one of the obvious things, take it to the range and practice.

that doesn't really require a standard of review, necessarily, to resolve that case on appeal. we look forward to that. some jurisdictions ban entirely the caring of arms in public. now that activity can be regulated, but not banned entirely. again, that's a matter that doesn't -- isn't going to require a balancing test. and to the extent that some of these jurisdictions impose licensing requirements, they are applied in arbitrary and capricious fashion, that's not balancing. that calls into play the supreme court long standing teachings about prior strength doctrines. since we've had a number of federal courts already adopt essentially first amendment framework for the second amendment, we've seen the third and fourth circuit do that. is shouldn't be difficult for us to restrain the doctrine into the world of the second amendment. again, standards of review are

going to solve everything. to the extent that some cases will have to be adjudicated on the basis of a means and standard review. the standard review is not rachial basis. heller made that clear. we've already had the fourth circuit fined it's intermediate or scrutiny, depending on who is asserting the right, and i expect other courts will take mcdonald's instructions seriously. this is a fundamental right, they are not afforded rational or reasonable review, they are taken seriously. the government will have to show some burden that the law serves narrowly a substantial or compelling interest. the future is bright. we haven't had too many decisions. we're looking forward to the outcomes in a number of these cases. we'll see how it goes. i would like to briefly mention if i have time, roger, in my initial comments. one minute. two challenges that we do face that are quite serious in this field, the first challenge we do sadly have a number of people

out there who have taken upon themselves to litigate the cases in a pro se basis. we have a lot of armchair constitutionalist, people who are bringing cases, perhaps not the best conceived or well considered. the meeting, of course, the sort of results that one would expect. this is an area of law upon which many people are deeply impassioned, and when people read on the internet some theory of the second amendment and they feel excited about this, they go plunk down. $300 at the federal courthouse to file a lawsuit, sometimes the results are not going to be great for securing this right in a meaningful way. the second problem is something that we will touch upon. when i go into a courthouse and i'm representing someone who's claiming, for example, the right to carry a gun. often times, the judge may not

be familiar with gun owners and firearms and the clerk may not will familiar. for us to show that this is a normal right that normal people exercise and can be done in a safe and responsible manner, that mission is not helped with -- it is not helped by a lot of the more extreme rhetoric which is out there sometimes which we see some people espouse on the internet and other places. we live in the a world that the camera will gravitate towards the most insane and extreme rhetoric that someone might speak. when some fringe people become the face of gun ownership and the use of firearms, that is sort of a challenge for the rest of us to try to overcome. so that is something that, of course, weighs on our minds. of course, in america, you have the right to be anti-social and say crazy things.

no one would challenge that. but it is one the head wins as we face as we do try to establish and secure a right which normal people safely enjoy. thanks. [applause] [applause] >> thank you, alan. now for something completely different. dennis henigan will speak next. he's vice president of the brady center to prevent gun violence, and founder of it's league action project. he's the author of "lethal logic: exploding the myth that parallel american gun policy". for over 20 years, he's been an advocate for stronger gun laws, appearing on national television, radio, includes "60 minutes," "today" show, "nightline" and so forth. he's written and spoken on constitutionality relating to gun laws and gun violence,

including testifying before several congressional committees. he's a regular contributor to the "huffington post." under him, they have recovered millions of dollars for gun violence victims as well as precedent setting decisions on the reliability of gun sellers. in 2004, he was named one of top 10 lawyers of the year. his work as a public interest lawyer has profiled in "the new yorker." he received his b.a. from oberland college, and prior to joining, he was a partner in the foley, and lardner. [applause] >> thank you. thank you for being here. i noticed a generational difference between alan and myself. when he came up, he brought a

laptop computer. i bring a notebook. what can i say? certainly the tragic shotting in tucson has made this program even more timely. but i think it also demands that we put our constitutional discussion in a broader context. because our topic today really can't be confined to constitutional theory. the scope of the second amendment has profound, real world consequences. it has life and death consequences. and as i see it, much of the debate about the second amendment is really a debate about two visions of america. one vision is literally guns in every corner of american society. more guns in more american homes, more guns on the streets, more guns in restaurants, in coffee houses, in front of grocery stores, in educational institutions, maybe even in the cato institute. and i think a lot of the litigation that we see out here

is an effort to achieve through the courts that vision of america. this is, however, a competing vision and that is the vision which allows responsible citizens to have guns in the home for self-defense, but allows government to impose reasonable restrictions to try to prevent those guns from being accessed by dangerous individuals. and the real world consequences of those competing visions were made starkly clear by the tragedy in tucson. the state of arizona has largely realized the vision of guns everywhere. some years ago, it eliminated all law enforcement discretion who gets a permit, and it became the third state to require no concealed carry permit. arizona's gun laws were so weak that if the shooters community college officials had reported to the tucson police his dangerous behavior, the police

under arizona law would have had no power to prevent him from carrying a concealed weapon. and the sidewalk in front of that safeway was not a gun-free zone. indeed, the shooter himself was a law-abiding citizen. he had passed a background check, he was a legal carrying of a concealed weapon up until the time he pulled the trigger. on the other hand, if the alternative vision of reasonable restrictions had been in place, there would have been at least been a law on the books limiting the capacity of the ammunition magazine that the shooter used. and he would not have been able to fire 32 rounds in 15 seconds without having to pause to reload. only when he had to pause to reload was he subdued. there is no question that the abscess of such a law led to

greater death and serious injury in that shooting. now i believe that the supreme court rulings in heller and mcdonald are far more consistent with the reasonable restrictions vision of america than with the guns everywhere vision. first of all, the right announced in heller is quite narrow in scope. it is, according to justice scalia, the right of law-abiding, responsible citizens to have arms in defense of heart and home. it suggests that laws that make it harder for irresponsible people to get guns should not run a foul the second amendment, and it recognizes no right to have a gun outside the home. and as a matter of fact, federal and state courts so far in seven states in the district of columbia have rejected the proposition that heller implies the right to have a gun outside the home. this is implicit that clearly the governments interest in

regulating guns is even greater when they are carried outside the home. there are substantial risks associated with guns in the home when the gun owner takes those risk out into the community, governments interest are even stronger. in addition to narrowly defining the right, scalia's opinion went out of it's way to make clear the right is not absolute, and includes extraordinary language, actually discussing gun laws not even at issue in the heller case. justice scalia wrote that nothing in our opinion should be taken to cast doubt on several broad categories of gun laws, includes laws places conditions on the sale of gun, laws completely banning concealed weapons, not just licensing them, banning, laws regulating the storage to prevent accidents, and several other categories were mentioned.

he said those categories were not exclusive. now in the wake of tucson, we have seen support for one reasonable and constitutional restrictions come from a very unlikely source. bob levy, the chair of the cato, and kind of the god father of the heller case has said he doesn't think a restriction on high-capacity magazine would violate the second amendment. so when i can agree with bob levy on anything having to do with guns, maybe it's a new day. [laughter] >> we estimate there have been so far about 300 second amendment challenges filed since heller. and so far, heller and mcdonald have proved to be much more pop guns than assault weapons as weapons against gun laws. a wide variety of laws has been upheld. bans on possession of guns by

felons, bans on possession, by persons under restraining orders, bans on machine guns, bans on semiautomatic assault, restrictions on carry, restrictions on college campuses, the lists goes on and on. in fact, probably the most far reaching decision is the decision by a federal judge in the district of columbia to uphold the laws in this community that were enacted after heller. laws that allow law-abiding citizens to have guns in the home, but are still the most restrictive laws in the country upheld in their entirety by a federal judge. generally speaking, courts have taken their insurances about the presumptive legality about the gun laws very, very seriously. and the vast majority of courts have been deferential to decision making. they have found that scalia.

created categories are safe harbors. if a law falls within the category or analogous to it, they are upheld. if they upheld the section of the heller is inconsistent with the idea of strict scrutiny and has used a much more deferential immediate scrutiny test. i think alan is going to talk about review more. the one comment i would make about review is this: there's a tendency to kind of jump to a first amendment analogy here. i think it should be restricted. i think the first amendment has some things to teach us about the second amendment. but i don't think that we should be locked into the first amendment categories simply because frankly the second amendment is a very different kind of right. the right to have a gun in the home for self-defense increases the risk of physical injury in a way that no other provision in

the bill of rights does. a gun in the home increases the risk of homicide in the home by threefold, the risk of suicide in the home by fivefold. in addition, it's been shown that communities that have a higher incidence of -- highest incidence of gun ownership have far higher homicide rates than communities and states with the lowest rates of gun ownership. so there is a correction here. the more people who exercise this right, the greater the hazard to the individual, the family, and the community. that simply has to be recognized. you simply cannot say that about the first amendment. what i think that means is the second amendment should be regarded as to some extent sue generous. it is like no other right. it is in my view, the most dangerous right. i think it demands it's own unique constitutional jurisprudence, that's highly

deferential to the difficult judgments that our elected officials have to make as they seek to form late -- formulate policies that will prevent tucson, and gun violence in this country that takes 80 of our fellow citizens live's every day. thank you very much. [applause] [applause] >> thank you, dennis. i want to thank our first two speakers for coming in on time. i say that in light of the fact that now we turn to the academics. >> i have 50 minutes, don't i? [laughter] >> we're going to hear next from professor nelson lund who is the patrick henry professor at george mason university law school. he's written widely in the field of constitutional law, including articles on constitutional interpretation, the second amendment, the commerce clause,

the speech or debate clause, equal protection clause, uniformity clause. in addition, he's published in the field of employment, ethical, appfully indication to legal institutions and legal ethics. professor lund left the law school where he served as executive educator of the university of chicago law review, and charter chairman, chapter chairman of the public law school. he held positions in the office of solicitor general and law counsel. he coursed for the court of appeals and 5th circuit, and sandra day o'connor, he served for the president from 1989 to

1992. please welcome professor nelson lund. [applause] [applause] >> thank you very much, roger. it's an honor to be here. my talk is going to be academic. i'll try not to go over my time by too long, though. after the heller decision was announce the, there was a lot of celebrating my gun rights advocates and by proponents of the interpretive theory. that was understandable. heller was the first significant victory for gun rights in the history of supreme court, and the majority opinion is still to the brim with the rhetoric of originalism and with detailed historicallism. i just wish it were all true. i'm afraid this reminds me a little bit of the celebrations of the courts commerce clause decisions in lopez and morrison. heller was an important test case. there was virtually no supreme

court precedences, certainly none that could be considered dispositive, and originalism, because the second amendment poses genuine puzzles. it's text combines the preface and command. what it says is a well regulated militia being necessary to the security of free state, the right of the people to keep and bear arms shall not be infringed. what is the pream buy already reference have to do the right of the people to keep and bear arms? it's not immediately evident tottereds, how this right of the people would contribute to the establishment of regulation or well regulated militia.

it arises from changes in the world. the militia organizations extolled by the founding generation have withered away, and the advances in the technology of weaponry has produced arms that are far more dangerous than anything in the available in the founding era. how do these developments affect the applicablability to modern society? heller was a good test case for originalism for yet another reason. the opinion was assigned to the courts most prominent expotential of original jurisprudence, justice scalia. written over the last 30 years, scalia made a powerful case for two important propositions. first, it's a individual private right, not a right of the states to organize militias. second, the purpose of the right is to enable individuals to exercise their inherit, or natural right of self-defense,

including the right to defend themselves against criminal violence. but that's not enough to resolve the initial textual puzzle about the relationship between the second amendment and it's clause. scalia tries to do it as any originalist must. but his analyst is full of fallacies and obscurities. he provides no explanation of the meaning to the reference in the militia in the constitutional text, and he provides no evidence of any kind about the proper scope of the people's right to keep and bear arms. the most difficult textual question with scalia never addresses is how codifying the right to arms could have been expected to preserve, promote, or prevent the elimination of a well regulated militia. i believe there's a perfectly good answer to that question. but no answer of any kind will be found in scalia's opinion. and that is a very, very serious short coming in a judicial

opinion that proports to rely as heavily as scalia's does on analysis and original interpretive principals. scalia's failure to identify any textual or historical evidence about the scope of the second amendment right has spectacular effects when he addresses the principal question at stake in the heller case itself. namely what other d.c. handgun ban was unconstitutional. the court concluded, of course, it was unconstitutional. but the only reason scalia offers are that handguns are popular weapons today. he thinks there are good reasons why handguns are popular. that is not an historical or originalist argument. if it's any kind of argument at all, it's probably a disguise and imcomplete form of the quasi living institution that scalia destainfully dismisses elsewhere

in his opinion. it's striking that scalia abandons any pretense of the originalism when he addresses the question actually presented in the case. what's even more striking is that he also includes a series of astounding and unnecessary comments endorsing various forms of gun control that were not at issue in the case. he does not provide a shred of evidence to support any of these conclusions to the extent that he gives any reasons at a all. they are based on mischaracterizations of the historical evidence on plainly inapplicable decisions and one case of interpreting the prior supreme court decision to mean the opposite of what it says. in a narrow sense, the constitution was vindicated in heller because the court reached an easily, dedefensible, originalist result. the court reasons is a critical point so defactive and transparently nonoriginnal that

i think heller should be seen as an embarrassment for every justice who joins a majority decision. now heller, of course, applies only to federal laws like the one in the district of columbia. in mcdonald, the courts decision held that the principal apply to state and local governments. mcdonald presented the court with a more difficult question than it faced in heller. it could follow it's due process in corporation precedence which have absolutely no basis in the text, or go back to first principals and examine the decisions under the privileges or amenities clause. put that in a slightly larger framework, the 14th amendment, which if anything, applies the second amendment to the state. it has to be the 14th amendment, in applying other provisions and the state and court has relied on the due process which has no

text, and it has ignored the privileges or immunities clause. it was clear when they were headed. the challengers of the chicago law represented by alan gura. he started out by arguing it violates the original meaning of the privileges or immunities. who do you think interpreted him to ridicule him? none other than mr. original meaning himself, anthony scalia. here's what he said. why are you asking us to overrule 150, 140 years of prior law when you can reach your result under substive due process, unless you are ducking for some place on a law school property. nastiest thing you can say to a lawyer. if that wasn't enough. he folded up with this mocking comment. what you argue is the darling of the prof sore yours truly for sure. but it's also contrary to 140

years of our jurisprudence. why do you want to argue that? which i think is wrong, even i have ask we -- acquiesced in it. and when i've acquiesced, it's time for everybody to stop wasting their time. [laughter] >> great. in the end, they applied the due process, and straightforward and respectable way. oddly, the plurality opinion makes a serious of arguments to show the courts decision is consistent with the original meaning of the 14th amendment. those arguments are all bogus, and in some cases just

shockingly bogus. justice thomas write a concurring opinion that tried to take originalism seriously and apply the privileges or immunities clause. he got exactly zero support from anybody else. but perhaps the worst aspect of the alito opinion, it's gratuitous reaffirmation of the gun control that were not in any either. what can we expect in the future? my own guess is that we'll see a great many poorly reasoned, lower court decisions, largely upholding various kinds of gun control regulations. and we'll see an occasional intelligence effort to apply a sound legal analysis within the limits imposed by heller and mcdonald. there will probably be some victories for second amendment rights in the lower courts and maybe we'll see some eventually in the supreme court as well. what i do expect, however, are any victories for the originalist approach to the

constitutional interpretation, at least in the supreme court. if the jurisprudence in the second amendment goes in the direction that i hope it will go, it'll have to be at least because five justices recognized the social value of the free citizens right to keep and bear arms. if they get to liking this right as much as they like the right of free speech, the second amendment will be in good shape. i don't think there are an awful lot of encouraging signs in the heller and mcdonald opinions. thank you. [applause] [applause] >> thank you, alan, i think. nelson, i mean. we're going to now hear from alan morrison to wrap things up in the first round. alan is the learner family and

professor lecturer in law at the george washington university law school. he received his undergraduate degree from yale college and his law degree from harvard. in between his studied he served as a commissioned officer in the u.s. navy. his early legal career includes working as an attorney of cleary, and as an assistant u.s. attorney in the southern district of new york. in 2004, alan retired from public citizen to work at stanford law school as a senior lecturer. he's taught at several law schools includes harvard, new york, tulane, and china's fudan university. alan teamed up with a ralph nader to form the litigate of the consumer advocacy group. other the span of his career, he has argued 20 cases before the

united states supreme court. please welcome alan morrison. [applause] [applause] >> thank you. couple of preliminary matters. i first came to the program at cato institute in somewhat less adjust surroundings as this. i recall the institute was in the basement of a small town hall on second street southeast. i was there because i, like the people at cato institute, believed that many of the restrictions then and still today as unauthorized practice of law harmed consumers by creating artificial barriers to the delivery of low cost services to people that would not afford to have lawyers. i was proud to be there then, and i'm pleased to be here today. second point, why am i here? besides the fact that i was invited. i'm here because for a brief period of time after i left

stanford, i worked at the attorney generals office and i was scheduled to argue the heller case. i had been significantly involved in writing the brief in the heller case, and my boss and the mayor and the mayor's council had a difference of opinion as the respective roles of the mayor, counselor, and attorney general. she resigned and i got fired the day the brief was supposed to be file. i didn't get to argue the case. all of my friends say, alan, if you had only argued that case, you would have won. i say to them, dream on. there was no chance that that case was going to be won. justice scalia had made up his mind. he had five votes no matter who said what. the one thing that i did when i was drafting the brief, this brief was largely the work of others who came before me and worked with me on drafting the brief. the one word that i would not allow, and i won this battle, to appear any place was the word

clear. as in the second amendment history clearly says this, the text clearly says that. i said it would be a derision of all of the trees that had fallen as a result of second amendment scholarship for anybody to think the answer was clear. yet, justice scalia thought the answer was clear. so it justice stevens. they both said it was clear. if there's one thing that's clear about it, it's not clear. all right. now there is one argument that we made that on the basic second amendment doesn't apply to the militia as opposed to does it apply to individual right to bear arms? i don't intent to rehearse that issue here today. but there was an argument that we made which i don't think we made as fully as i would have wanted to have made it. that is people would say, well, it's in the bill of rights. therefore, it must be like all of the rest of the parts of the bill of rights.

and there is an answer to that. why was it in the bill of rights, and the answer is because i think this is pretty clear, that madison who was in the charge of the bill of rights said one thing, we are not going to touch the body of the constitution. we are not going to do it because that would reopen all of the compromises that have come before it. while i agreed to allow editions to the constitution, nobody is going to go back and touch it. that's the reason that the second amendment was not put back into article one, sections 15 and 16 which do talk about militias. so there's a good, solid explanation for that as to why itst not streeted like the bill of rights. now am i talking about that just to make an argument here today that the decision was wrong? no, because i think that fact has continuing validity as we go

forward. this is like the first amendment. it's not like, because for the reason i give you. and second to repeat a phrase that my mother told me many times when i was a boy growing up, sticks and stones can break your bones, but names will never hurt you. first amendment is not equal to the second amendment. guns can hurt people. first amendment words may annoy you, antagonize you, but they cannot you in the same ways guns can. i disagree with justice scalia's determination. it's not unreasonable that the second amendment applies to greater -- to something else other than the militias. my biggest objection to his opinion is what followed afterwards. now would it such that as alan

gura said earlier, you had a right to operative gun in your home. one the problems with the district of columbia's law, that didn't get played out, not simply did it forbid you from having a handgun in your home, which would have been one thing. they had the stranged interlock no load law and nobody, i mean load in the district government or police had ever focused on what it was supposed to mean, and how it was supposed to operate in the real world. because the problem was that that part of the law applied not just to handguns, but it also applied to all forms of firearms. meaning you wouldn't have a loaded rifle in your home. well, we conceded that rifles were protected, that was an alternative to handguns, therefore, it was appropriate as opposed to handguns, which were not appropriate.

they had all of the negative things rifles and handguns did not have. the view of rifle and handguns was not my idea or anybody in the district. we found this idea in a debate in a magazine that i normal do not read called "guns and ammo" in which the fight was about whether the shotgun or rifle was the better means of defending yourself at home. we thought just because the gun people thought it was appropriate debate, by definition, having a handgun was okay, and certainly within the realm of legislative reasonableness. we wrong about that. if narrowly defined, that is, if a court wanted to reach the narrowest possible grounds, it could have said the right to an operative weapon in the home, including a handgun, is all all- is what's protected by the first amendment. they could have done that.

there would have been none of the examples. why didn't the court do that? why didn't the court follow what it always says as we decide the case before us, we can ask all of the lawyers all of the nasty hypotheticals that we want in oral argument. we don't have to put them in our opinion. we write about this case. we can think about the next case, we don't have to decide it. what it justice scalia do, he put in a series of laws that presumptively constitutional. why did he do that? did he violate his premise that we don't put it in there, i don't think so. i think he did it for one reason, that's how he got five votes. some of the members of the court would have been uneasy with not saying anything else about it. as it was, the victors in the case, and i do congratulate the victors in the case, they were

able to say we haven't recked complete havoc. all of the laws are protected. okay. it dicta is terribly serious as the problem for the reason i'm about to come to. how does he decide these laws are okay. he doesn't tell us. he just simply announces his conclusion. usually what we do is we can tell whether the law is okay because we have a standard of review. how strictly are we going to construe the constitutional right in this particular case? indeed, this standard review which sounds like some lawyers language is one of the rules that the federal courts of appeal require in every brief. you have to state the standard of review applicable to the decision below that you are seeking review of before the court can decide the merits of the case. what is justice scalia say about the standard of review? he says it doesn't matter. well, it may not matter with respect to the right actual

issue in this case. but it surely matters if you are going to define the rest of the rights. so, for example, suppose we have strict scrutiny apply, many people here in this room and some on the podium would support strict scrutiny. well, if we have strict scrutiny, just takes the laws about fellows. fellow unable to have firearms. martha stewart is a convicted felon. so is scooter libby, and al capone. all of them were nonviolent terms. if trick scrutiny, why doesn't that have an answer? i didn't -- if somebody is convicted of domestic silence, and they plead to a misdemeanor, why should the label misdemeanor as opposed to label felon take

it from one side of the equation to another. i suggest that unless we get the standard of review right, we cannot substantially answer the questions that are going to come up in the laws that are being litigated now. just two final words, then i will sit down. one is, i sympathize with the problem that alan is facing, trying to control all of these out-of-control people who are arm controlled constitutionalist. it was a wonderful thing, perhaps not wonderful, when brown versus board of education, nobody else was out there looking for cases to litigation. there were no lawyers who were willing to take on these cases, let alone any funding. and the pro pro sees were, of course, not around at that time in any way that they are now. and the second is he has lost

control, defense cases have a legal obligation to raise the second amendment any time it comes up. for proponents of the second amendment, that's the wrong context. as a legal strategist, and he and i are in the same category for that, i applaud his decision to go after the restriction on testing a firearms and i don't know anything else about the law because that's obviously the case. if you have a firearm, learn to use it safely. but he's going to lose the strategic battles along the way. it will be very interesting to see what happens and if we get the standard review, then we'll have a better idea of which laws will stand and which laws will fall. thank you very much. [applause] [applause]

>> host: thank you. now we'll have the second round brief. i would ask the panelist to keep the remarks very brief. let's go in the order in which we spoke. alan from your seat there. >> sure. very briefly to respond to what dennis said. we see a lot of this argument from dennis' group and others, decision from heller must be limited to facts. that's not exactly how the system works. the course decision in marbury versus madison was not limited to the president's judicial commissions. it had a broader principal. likewise in the heller and mcdonald, there was an announcement by the court that second amendment secures a fundamental right and moreover this right is to be explored and defined in the way which it was understood by the people that framed it. there's no argument that i have

seen or heard from anyone that americans in 1791 or 1868 understood it to expand no further than the home. it's true that heller and mcdonald didn't have those applications. it's clear that heller and mcdonald decided that the right to keep and bear arms was a right to keep and carry arms as the heller case says. this is something that voiced upon the court and heller. because district of columbia insisted that bear arms had this exclusive military meaning, meaning to soldier to go ahead and participate in some kind of state-sanctioned military activity. the supreme court ejected that. it gave a different interpretation. no bear meant to carry. lower court have found that language useful in some cases. i don't see the right is going to be cabined to the home any

more than the fact that heller and mcdonald involved handgun means that shotguns are not protected. i think they will wind up a protected class of arms. we don't read them as limited to the facts, but broader constitutional principals. and we're going to see an meaningful right evolve from that. >> thank you, alan. dennis? >> well, i guess my point on the question of guns outside the home is that there really is nothing in heller to suggest that the right extends beyond the home and formulation of the right in heller clearly is confined to the home. the right to keep and carry guns within the home. and for those who may argue that to say bear means carry, therefore besides the issue of

whether there is a right outside the home, i would just remind them that when the heller court granted relief to mr. heller, towards the end of scalia's opinion, it said the district of columbia must allow mr. heller to register his gun and then issue him a license to carry this within his home. the heller decision itself, contemplates the possibility that the right to keep and bear arms is a right to have and carry a gun within the home. i think it is in terms of original intent, i think it is very telling that -- actually the only category of presumptively legal laws which the court and heller actually commented was established by the historical record was the ban on concealed carry. : the ban on concealed carry. that was the one that