18-years-old from oslo. [speaking in native tongue] 16-years-old from oslo 18-years-old from oslo 18-years-old. [speaking in native tongue] thirty-two years of age from oslo. [speaking in native tongue] thirty-four years of age from oslo. [speaking in native tongue] 30-years-old from oslo. [speaking in native tongue] i wish piece on the deceased and ask for silence.

[moment of silence] >> thank you.

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>> that figure that's moving the vail of ignorance from human understanding. that's an american invention. that's not a classical statue, but classical for what it's all about. >> if you missed the latest documentary, the library of congress, there's a preview on the youtube channel. be a subscriber for free and watch the entire library documentary and hundreds of

other timely videos online at youtube.com/cellc-span. >> ceos expressed unanimous support for tax reforms that lower the corporate tax rate and eliminate special loopholes known as tax expendtures.

an agreement passed by the house today, a committee would be created with assigning deficit reductions, some of which could come in the form of tax reform. [inaudible conversations] >> this hearing will come to order. benjamin franklin wrote, and i quote, "when men are employed, they are best contented." today, too many men and women are unemployed. these are americans who have worked,ment to work, and will work again. our economy rests on the foundation of businesses big and small providing the goods and services that the market demands. many americans' livelihoods rest on businesses providing jobs which are currently in short supply. the unemployment rate is hovers

around 9%, 14% of americans live in poverty including more than one-fifth of all u.s. children. many were unemployed have been searching for work for more than a year. these americans need a job, and the certainty that comes with going to work every day. in this environment, the business community has an opportunity and an obligation to help get americans back to work. businesses need to step up to the plate by having good paying jobs. this means not waiting for demand to fully recover, but giving americans a chance including the long-term unemployed. we want to make sure our tax code supports efforts to create jobs. our ultimate goal is not simply economic growth for growth's sake or profit the for business owners alone, but job creation

cannot occur without this growth. we know the american businesses face obstacles of achieving growth. the economy is slowly recovering from the most significant recession since the great depression. consumers are saving more, spending less, banks are cautious in lending practices; at the same time, competition is tougher and increasingly globalizing economy. amazing new players are emerging in developing countries. in 1960, eximportants accounted for 3.6% of american's gdp. today, they account for nearly 12.5% and sales are growing faster in sales outside the u.s. than they are here at home in most industries. today's global economy we simply cannot afford to hamper business' ability to create and compete for jobs here at home. we need a corporate tax rule, a

rule that encourages job creation and widespread economic growth. last year began a comprehensive review to understand how the tax code became so come complex. we held hearings addressing the need for tax reform. these hearings looked at the goals we want our tax system to accomplish and whether it effectively meets those objectives. of course, the tax code should raise the revenue knees -- necessary to enhance the operations of the federal government, but also spur long-term economic growth that benefits more folks in montana and across the country, and we want to promote fairness and certainty. america needs a tax bill to help them get back to work. today's witnesses can help us understand the effect it has on u.s. businesses and their hiring practices.

they represent some of the largest employers in our country. i'm grateful they are here with us today to discuss whether the tax code poses burdens on businesses or what ideas they have to help improve investment, foreign investment in the u.s. as well as domestic investment here in the u.s.. we are looking forward to hearing what factors drive their decisions about whether to hire new employees. we need to identify the policies most effective in helping these business leaders create more jobs. do we need to support innovation more effectively? do we need to develop a more highly developed work force? how can we level the playing field for companies competing overseas? how do we reduce incentives to reduce jobs abroad rather than here at home? ask each the wngses to take off your hat as advocate of for company and tell us your experience as a ceo taught you

about what is best for our country. this focus on how the code helps businesses create good paying jobs today, work together to improve the tax system to ensure widespread prosperity for all americans. i want to turn to senator hatch. >> thank you. i want to thank senator baucus for calling this hearing today, and i want to welcome the ceo's here to participate in the committee's continuing dialogue about tax reform, and with so many of our fellow americans out of work and struggling to find a job, it's refreshing to see your companies employee 1.6 million people, americans. 1.6 million americans, that's good from your four folks. today, we're here to learn how corporate taxes affect your businesses. corporate income taxes or

revenues, corporate income tax revenues is a percentage of total federal revenues have steadily declined since the 1940s and 50s. during the 1990s, corporate tax revenues averaged about 11% of federal revenues. last year, corporate tax revenues were less than 9% of our total federal revenues. the corporate tax is generally considered the most efficient of all taxes and who bears the burden of the corporate tax? we know corporations cut a check to to the irs, atheapt pay the taxes, people do, but which people? is it the shareholders or the employees of the corporation or the consumers? the most recent research seems to indicate that a substantial percentage of the burden of the corporate tax is born by employing in the form of lower wages. in addition to inquiries about where the burden of the corporate tax falls, i think

it's important for this committee to focus on how the corporate tax system encourages the use of debt rather than equity. if a corporation is in need of additional funds, our tax -- our current tax system encourages the corporation to borrow money rather than raising money by raising their issuing stock. now, how is that? by making any interest payments on the borrowing deductible whereas any dividends paid are not deductible. from a business stand point, the increased use of debt by corporations make the corporation more vulnerable to the risk of bankruptcy and other downturns in the economy. other dividends not deductible means corporate profits are taxed twice at the corporation level and again at the shareholder level. as a result of this tax treatment, we have seen a decline in the use of traditional corporations. in 1980s, 75% of all business

income was earned by traditional corporations. in 2007, that figure was only 36%. 75% to 36%. equalizing the debt and equity would reduce or eliminate distortions in at least four ways. number one -- the incentive to invest in non-corporate businesses rather than corporate business. two, the debt rather than equity. three, the incentive to maintain or distribute earnings depending object relationship of the corporation, the shareholder, and capital gain tax rates, and four, the distributing tax rates to avoid a second level of tax. we need to consider -- reconsider -- consider again the issue of repatriation. many u.s. multinational corporations earn money overseas and want to bring that money back home in the united states. however, our corporate tax

system discourages or penalizes u.s. multinational corporations from repay -- repatriation tax at the time. as a result, several high profile u.s. multinational corporations sit on large piles of cash earned from corporations if the same corporations are borrowing money. one of the reasons is that their cash is trapped offshore, and these corporations will be subject to a 35% u.s. tax and repatriation back to the united states. as a result, these corporations keep their cash offshore and borrow money here in the united states. one way of alleviating the problem of cash trapped offshore is for the u.s. to reform the corporate tax and international tax roles by, for example, adopting a territorial tax

system. finally, no discussion of corporate tax reform can conclude without consideration of the corporate tax rates. our corporate tax system has a top rate of 35%. when coupled with a state corporate tax, the tax is 39%. as a result, the u.s. has one of the highest corporate tax rates in the world. our tax system is in the need of reform and the high corporate tax rate needs to be a major part of this discussion. now, i'm very interested to hear what our witnesses have to say today with regard to the corporate tax system and how it affects hiring businesses and economic growth. again, chairman baucus, thank you very much for scheduling this important hearing, and i'm certain one of those -- >> thank you, senator, very much. i want to introduce the witnesses. first a mr. michael duke, presidency of the walmart, the

largest retail employer of about 2.1 million people. second is mr. thomas falk, chairman and ceo of kimberly clark, maker of paper products. next is gregory lang, the present ceo of semimanufacturing conductor company, and finally, larry merlo, ceo of the leading drugstore chain and provider. gentleman, you probably know the rules, custom practice here. statements automatically included in the record and encourage you to summarize your statements, about five to six minutes and encourage you to be candid. you know, life's short. [laughter] okay. [laughter] all right, richard duke, why don't you begin. >> i appreciate the opportunity

to testify today. we urgently need to modernize our tax code, and i thank you for taking on this issue. the ultimate outcome must be a strong vibrant job creating u.s. economy. i hope all of you know your local wal-mart store back in your home state, but let me start with a few words about the company that we run out of bentonville, arkansas. every week, we serve 106 million unique customers, about one-third of the u.s. population. the business model that earned our customers' trust is simple. we give them every day low prices by passing on savings from our every day low cost operations. last year, wal-mart paid $4.7 billion in corporate taxes in the united states which was 3 #%

of all corporate income taxes collected by the u.s. treasury. our effective corporate tax rate was 32.2%. many companies will testify before you theoretically facing similar tax rates, but we actually pay them. l we're not here to ask for sympathy and the question is not whether wal-mart can get buy under the current tax structure, but the question is is this structure the best for the country? we believe it's not. as we begin this discussion, it's important to understand how wal-mart's operations at home and around the world contribute to the u.s. economy. in the u.s., we operate over 4400 stores and clubs and employee almost 1.4 million sorts in the united states -- associates in the united states. i'm happy to say that the domestic business is still growing. every store that we build means

new jobs, construction jobs, and expanded local tax base, and more opportunities for u.s. suppliers. wal-mart is also growing around the world, good for the u.s. economy as well. our international growth allows wal-mart to source more goods from u.s. companies to sell in our stores around the world. 70% of our top international suppliers are u.s. companies which creates an sustains american jobs. we're also one of the largest purchasers of american agricultural products. last year, we directly exported nearly $40 million worth of washington apples, california asparagus, grape fruits, and other crops. likewise, we look for opportunities for american products as we build stores.

like the led parking lots, mainly manufactured in north carolina. the best way i can say is that when wal-mart goes overseas, we bring american companies with us. when we grow, they grow. how do we reform the tax code to drive growth here at home and encourage america's competitiveness abroad? my advice is straightforward. lower the corporate rate as much as you can, make the tax base as broad as you can, and move to a territorial system as quickly as you can. without any of these three components, it'll be impossible to achieve a fiscally responsible, simplified, and competitive tax system. we need comprehensive solutions, not piecemeal attempts to fix this or that incentive. we'll give up the existing

incentives that benefits us if it means getting rid of them in a reformed system. taking these steps will help american companies compete abroad, and i believe wal-mart is more likely to export washington apples or california asparagus than our foreign competitors. yet, these foreign competitors have an advantage because they pay less in corporate income tax. for example, we compete in china against tesco from the u.s.. when the u.k. territorial system of taxation, they pay 29% to china on their business profits there and no additional tax when they bring money back to the u.k.. in our case, we pay 25% to china plus an additional 25% to cover the differential between the u.s. statutory rate and the chinese rate when we bring that

money home. the result is that we are often outbid for retail sites because companies would lower overall tax rates, have a lower cost of capital. when we do wipe, we pay more overall. the keys to reform are to lower the corporate rate, get rid of existing incentives that benefit some industries over others, and level the international playing field with a territorial system. if we take these steps, we will drive the vir choose cycle i described. with more u.s. exports, more investment, and more job creation at home. thank you, and i look forward to your questions. >> thank you very much, mr. duke. mr. falk, you're next. >> good morning distinguished members of the committee. thank you for the opportunity to share my views on the need for changes in our tax systems. i want to share an overview of

kimberly clark and then three reasons we believe the current u.s. tax system hinders growth and puts american companies and workers at a competitive disadvantage. kimberly clark will be 140 years old in 2012. we've been around through lots of tax systems and grown our company through the years. through the years, we provided consumers with the essentials for a better life with brands like kleenex, poise, and depend, we estimate one in four people use our products every day. they buy some at wal-mart as well. i expect everyone in the room used a kleenex or changed a diaper at some point in their lives. not asking for a show of hands here, but -- [laughter] you may not know we're a leading provider of safety protects to protect workers in the environments they work.

if you were a patient in the hospital, medical professionals count on kimberly clark for products essential to the health and hygiene of the patients and staff including gloves and pain management products. our economy touches people's lives in many parts of the economy. our consumers live in more than 150 countries, so we have to have a global presence to serve them, and because many of the products we sell are lightweight, bulky, and costly to ship, we manufacture the products close to where the manufactures live and work. it's the largest market, but the category is there and mature growing at the rate of population growth. like many companies, the developing and emerging markets represent the biggest growth opportunities. for example, moms in the u.s. use about five diapers a day to care for their babies and developing emerging markets, moms only use five diapers a week. thpp