responsive to civilian control and to professional standards. security assistance and proficient professional military education are not simply rewards to partner countries, as some view such programs. they are tools with which we advance our foreign policy objectives. helping the burmese military to reform is in our interest, but it cannot be done through mere exhortation, it needs to be done through training and regular contact with the highest professional military standards. only then i believe will the burmese military see that being under civilian control is not inemmiccable to its interests. this realization coupled with a successful 2015 election that is open to all otherwise qualified presidential aspirants will

greatly enhance the cause for reform and peaceful reconciliation in burma. madam president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. reid: ahmadinejad? the presiding officer: the majority leader. mr. reid: i ask unanimous consent the -- mr. reid: madam president? the presiding officer: the majority leader. mr. reid: i ask unanimous consent very vitiate the quorum call. the presiding officer: without objection. mr. reid: i ask the senate proceed to a period of morning business. the presiding officer: without objection. mr. reid: i ask unanimous consent the senate proceed to s. res. 462. the presiding officer: the clerk will report. the clerk: calendar number 441, senate resolution 462, recognizing the kami and laomung freedom fighters and so forth. the presiding officer: is there objection to proceeding to the measure? without objection. mr. reid: i ask unanimous consent the resolution be agreed to, the rubio amendment to the preamble be agreed to, the preamble be agreed to, the amendment to the title be agreed to and the motion to reconsider be made and laid on the table. the presiding officer: without objection. mr. reid: i ask unanimous consent the senate proceed to s. res. 519. the presiding officer: the clerk will report. the clerk: senate resolution 5

519, designating august 16, 20 2014, as national airborne day. the presiding officer: is there objection to proceeding to the measure? without objection. mr. reid: i ask unanimous consent the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid on the table with no intervening action or debate. the presiding officer: without objection. mr. reid: there's a bill at the desk due for its first reading, madam president. the presiding officer: the clerk will read the title of the bill for the first time. the clerk: s. 2666, a bill to prohibit future consideration of deferred action for childhood arrivals or work authorization for aliens who are not in lawful status and so forth. mr. reid: madam president, i ask for a second reading in order to place the bill on the calendar

under the provisions of rule 14 but i object to my own request. the presiding officer: objection having been heard, the bill will be read for the second time on the next legislative day. mr. reid: i ask unanimous consent the senate resume executive session. the presiding officer: without objection. mr. reid: i ask unanimous consent that when the senate completes its business today, it adjourn until 2:00 p.m. monday, july 28. that following the prayer and pledge, the morning hour be deemed expired, the journal of proceedings be approved to date, the time for the two leaders be reserved for their use later in the day. following any leader remarks, the senate proceed to executive session and resume consideration of calendar number 929 with the time until 5:30 p.m. equally divided between the two leaders or their designees. that at 5:30, all postcloture time be deemed expired and the senate proceed to vote on confirmation of the nomination and then immediately upon disposition of the harris nomination, the senate execute the previous order with respect to calendars numbers 915, 916,

913 and 744. the presiding officer: without objection. mr. reid: so on monday at 5:30, the senate will vote on confirmation of harris and mckewon nominations. there could be up to five votes on monday but we expect some of them to be confirmed by voice. so if there's no further business to come before the senate, i ask it adjourn under preeft order. preeft order.

called in opportunity grant to consolidate 11 federal programs and funding are dissipating state. it would be different ways of providing aid. in the short tori, more flexibility for exchange account link. i think basically get rid of these are your credit formula and participation would be voluntary. no state would be forced to join a new would not in the program. the plan is you don't just hope for the best. if you've got an idea, let's try it. let testing.

they made promise after promise. here's how it would work. the state to want to participate would submit a plan and that would lay out in detail. everything pass muster the federal government and the state would give more flex ability to combine 11 different programs and things like housing, child care, this new simplified stream of funding will become the opportunity. the state would get the same amount of money and one under current law and not a penny less. any sites, the federal government was -- poor conditions. first, we have to spend the money on people in need. we can put it in with bridges. every person who can work should

work. third, you've got to give people basic choices. the state while for each he can't be the only game in town. people must have another option mother nonprofit or for-profit. you've got to test the results. the federal government in this date need a mutual third-party. it was approved a state could use the money to dance grand. another right, citizens would have a choice. it would just be a federal agent viewers deviation the. we are talking nonprofit, for-profit click america works. these groups would work with people and provide a personalized. think of it this way. right now you've got to go to a bunch of different paths is to

enroll in the budget for programs, each all with a different rule. under the opportunity plan can you go to one office, one person. that person would give you financial us listed what else to act as a person of resource. maybe you're struggling with addiction and need counseling. he needed networkers were. the point is you would work together. from where you are to where you want to be.

>> earlier this week, this senate finance committee heard from economists and professors on the u.s. tax code and the current system of international text edition. deputy assistant treasury secretary for her national tax is, was among those testifying. senator ron wyden of oregon shared the meeting. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] of finance committee will come to order. the u.s. tax code is infested

with chronic use of loopholes and inefficient use. these are actions are hobbling america's drive to create more good wage rat, white and blue job at homes. they are a significant drag on our economy and our harming u.s. competitors. the latest outbreak is the growing wave of corporate inversion where american companies move their headquarters out of the united state in pursuit of forward tax rate. the inversion by race now seems to be multiplying every few days. mellon crowd and many more either occurred recently or are currently in work.

they are trying to propose $42 billion merger was record-breaking when it was announced in june. but the inks in the record account nearly dried when they announced it the intention on friday to require shy up almost $55 billion. according to the 15th addition marketplace and i'm going to quote here, what is going on now is a feeding frenzy. every investment thinker are now taking to any possible come to me and saying you have to do a corporate verge now because your competitors will. the congress has been aware for a long time. in fact come in the past

legislation is to solve the problem a decade ago. lawyers than softback artist looking for tax shelters feed off him. this mess is driving american estimate dollar servers the. and according to the joint committee on taxation, it is costing the american tax payers elegans. on a bipartisan basis, the finance committee must respond now. first, let's work together, colleagues, to immediately cooled down the inversion. the inversion loophole needs to be plugged now.

sakai, let used the space created by the media starts to apply the indisputable alternate care, comprehensive tax reform. now i've got nine long years of sweat equity in the form of tax reform. former senator gregg andersen utters begich and co-have reduced what still is the fact that only bipartisan federal income tax overhaul in almost 30 years. now i would be the first to say that senators here have differing views about how to go about enacting tax reform. let's however recognize that what really counts is the finance committee is in fact year when taken discussing inversion a decade from now. comprehend the tax reform has to happen to. the outbreak of inversions show

that without jury did is not and for all, the illness is going to keep plaguing the american economy. it is going to get tougher to create those good wage, red white and blue american jobs. our tax base is going to keep her rotating. piles trapped overseas will grow. investment will be driven elsewhere. the finance committee invited the numbers he is remembered in companies to join our discussion today. none accepted our invitation. i hope these executives will change their mind and be willing to the other question to finance committee members have about this issue. the fact is without immediate comprehensive tax reform, an antidote to the inversion viruses needed now to protect the american economy. this wave of inversions may be good for shareholders and

investment bankers and private equity firms, yet the barrage is that for america. america's free enterprise system is at its best when there is a level playing field, an aversion to bestow tax payers and some parties have further distort the free market. absent tax reform be enacted immediately, colleagues, what happened the inversion virus leads to 20 more conversions over the summer? many versions of this point have not been in the medical field. "the wall street journal" just reported there is evidence of inversions spreading to manufacturing and retail. how many were in action can america's economic body endure? robo markets are being made. fileservers these corporate rebuttals. foreign competitors get more address a been chomping at the

bit to get a deal on the backs of the american tax payer. the time for action is now. our committee needs to move on a bipartisan aphid to close the loopholes that are filling the growth of the inversion virus. and the finance committee needs to cure the disease once and for all with comprehensive tax reform. i want our colleagues to know that i am going to be working with each of you on a bipartisan race is to accomplish both of these tasks. you may recognize my colleague and friend, senator hatch. >> thank you, mr. chairman. i appreciate you holding today's hearing. i think we can all agree that investing the shortcomings of our international taxes is the critical death on the road to comprehend the tax reform. as we consider reforms directx code, our primary goal should be to make the u.s. a better place to do business. and to allow american companies to effectively compete with counterparts in the world

marketplace. sadly when it comes to our international tax system, much of the tension gets placed elsewhere. for example in 2013 the oecd launched the erosion project. while we appreciate the oecd suffers to bring a tax authorities together to discuss the issues, many of us have asked raskin and that the budget could be used by other countries as a way to increase taxes on american taxpayers. the issues under negotiation that the project are complex, and cannot far-reaching negative consequences. i think we should be willing to work through these issues until an international can think this is reached, we should not be rushed into accepting a bad deal. just for the sake of reaching agreement. i think we write to ask if the treasury department will aggressively represent american employers and their workers in the negotiation while responsibly can alternate congress is the discussion.

hopefully in the end to focus of these discussions will return to base version print both instead of ways foreign countries can read the treasury or american businesses. of course while the negotiations are important, the most high-profile international tax issue today happened to be corporate inversions. it seems almost every day we are hearing about a u.s. multinational team to invert to a foreign tourist section. pacific levaquin multiple occasions i am greatly concerned about corporate inversions. ultimately, the best we saw the problem would be to reform our equipment and international tax system in a manner that will make her multinationals can edit it against their foreign counterparts. don't mean among other things significant reduction in the corporate tax rate and major changes to make the tax system more competitive. over the past few months we've seen a handful of legislative proposals to address the issue of inversions.

most of them are punitive and richer right. rather than incentivizing american companies to remain in the u.s., these bills would almost invite you corporations in order to keep them from inverting. i think that is not only, i mean it is going to result in result that nobody wants. this approach in my view completely misses the mark. while it may put a stop to traditional inversion, it could actually lead to more reverse inversions of their multi-u.s. nationals with under this approach become more attractive acquisition targets for foreign corporations. whether his traditional inversion or a reverse acquisition of version, the result is the same continued stripping of the u.s. tax base. in fact, the virgin and propose to maintain version letters nation is on the guided, it reminds me of an old joke.

a drunk is looking for some in under a streetlight. a police officer walks up to him and not, what are they looking for? the drunk said my keys. the police officer helps the drunk look for a few minutes about six and finally asks, did you lose your keys here? he said how i lost them across the street. the opposite response and why are looking for them on this side of the street. the drunk replies because the light is better over there -- over here. once again the ultimate answer to this problem and the only way to completely address the issue of version is to reform the tax code. however, as i've also said publicly, their maybes that congress can take to at least partially addressed the issue in the interim. why don't support the anti-inversion does thus far, i personally am open to the doing alternative approaches although i do have a few stipulations as to what proposals consider. for example, whatever approach we take, he should not be

retroactive where punitive and it should be revenue neutral. our approach of nervous towards or at least not away from the territorial tax system and should not enhance the bias of foreign stations. most importantly, should not impede our overall progress for comprehensive tax reform. towards that end, it should not be a good distance with our house approach. i think there is a growing chorus out there among some of my friends on the other side of the aisle to use corporate inversion as a political wedge issue in this election year. in fact, i was responders sipping a very politically tone letter from secretary lu on this issue. i hope that is not the direction we take if we actually want to accomplish something on this issue. we are going have to work together. as you can be, mr. chairman, we have a lot to discuss today. i want to thank thank you rollea hearing and i look forward to hearing from you. was it all.

>> thank you very much, senator hatch. let me reread the right much interested in working with you and our colleagues on both sides of the aisle to address both of these issues. the media challenge we face with the growing inversion virus and of course the ultimate cure. i look forward to working with you and our colleagues. we now have six witnesses. our first witness is mr. robert stack and the deputy assistant attorney for international tax affairs at the treasury department. our next witness will be mr. pascal saint- amans, director of the center for tax policy and administration's organization for economic cooperation and development. our third witness will be dr. mihir desai come professor at harvard business school and professor of law. i'm ube dr. peter merrill, national economic and statistic group of price waterhouse. perfect witness will be dr. leslie robin, professor of

business ration at the tuck school of business at dartmouth. our final witness will mr. allan sloan comiskey editor at large for fortune. our thanks to all of you for coming. it is archived that your prepaid statements will be made a part of the hearing record in their entirety. if you could use your five minute summarized, that would be very help old. the senators have many questions. we're going to have both the 10:45, this would be a juggling act and we will try to handle this as well as the chaotic senate agile allows. or stack are welcome. >> thank you, senators. thank you senators. distinguished members of the committee come i appreciate the opportunity to appear today to discuss port international tax issues to richer committee devoted santa letter. i'd like to begin by driving the

work we're doing the g20 oecd baser version of profit shifting and then link the discussion to consideration of the need for international tax reform as well as measures outlined in the frustration fy 2015 budget proposals to address u.s. stripping including through so-called inversion transactions. in june 2012 at the g20 summit in los cabos, mexico, leaders of the world largest economies identified as a sick advocate or in the ability of multinational companies to reduce their tax bills in high tax countries by shifting and come in to bow and no tax jurisdictions. the result was the g20 oecd project and the tax action plan endorsed by g20 liters last september in st. petersburg. the action plan outlined 15 specific areas where government need to work to change the tax rose that encourage companies to shift there and come at the

expense of the global tax base. the bep project of the wreckage released its first set of recommendations this blog and to conclude its work with final recommendations at the end of 2015. the united states has agreed deal at stake and a strong interest in it access. our active participation is crucial to protecting our tax base for multinational companies. because the united states provides the foreign tax credit to u.s. companies for taxes they pay overseas, the united states also has a strong interest in rules and enjoy a broad international can fences. in addition to some of the world's most successful vibrant multinationals, we have a stake in ensuring that companies and countries play by rules that are clear and demonstrable and can avoid double taxation as well as time he mimics the disputes.

failure in the beps project could take unilateral and can this inaction thereby increasing double taxation, the cost of the treasury at the number and an attack. i am happy to report the oecd beps project had a promising beginning and our areas were commendable work is being done to resolve gaps in existing international rules. i've outlined areas in everett the mission. as the work moves into 15, there is more that can be achieved in also several areas where we must guard that outcomes and echoing another hatch, does that outcomes would include international norms and increased tax dispute because they are big and easily manipulated by tax authorities were international norms that could erode for increased double taxation. the united states is remain deeply engaged in moving the beps project a successful conclusion between now and the

end of 2015. while the discussion over beps's ongoing come is worth looking at steps you can take to former attack and to improve competitiveness and secure tax rate and reduce the chances for profit should for u.s. firms. as the president has opposed the motion reform ss taxes on by reducing the rate, broadening the base and imposing a minimum tax on foreign earnings. such reform would only be a start because even with lower u.s. rates communis multinationals would continue to aggressively seek ways to lower tax bills by shifting income that united states. so what tools do we have at our disposal? the admin is nation's fy 2015 budget contained a series of common sense proposed oath to protect your u.s. tax rates which can be enacted if part of the reform or in the context of her current system. they are outlined in some detail in our budget and in my written

testimony. let me highlight to hear. one proposal would strengthen her interest rules and level the playing field by limiting the ability of u.s. subsidiaries of a foreign national to deduct a disproportionate amount of the group's global interest expense of the united states. it is this actually does concerning to observe that among the foreign ultranationalist that can most aggressively take it vintage of the deficiencies in our interest or funerals or so-called inverted company that inspired parented companies over previous u.s. parented. a second proposal in our budget would do with the version. as underscored his secretary lose letter to congress, i want to emphasize serious need for the united taste to directly address the laws of federal tax revenue from corporate inversion taxation and the need to enact a proposal or a miller one aimed at curbing them. once companies convert the permanent loss of the missing contact base that is safe to assume these companies are not coming back to the united

states. these transactions are on the increase and indeed we are aware of many more versions in the works right now, letting our corporate tax rates of return versions will worsen our fiscal challenges over the coming years and will reward countries that is raised to the bottom type competition in an effort to lower away by large u.s. multinationals. the secretary indicated you can't letter, congress should pass it to inversion legislation immediately with an effective date of may 2014. thank you for the opportunity to speak today. i look forward to answering your questions. >> thank you very much, mr. stack. it's very helpful. our next with this will be mr. pascal saint- amans. we welcome you. >> thank you good ranking member hatch, distinguished members of the committee coming thank you for the opportunity to testify today here. the oecd was founded in world war ii under the leadership of the united states.

it's a country driven organization with 34 countries, usb the largest number and playing a key role by consensus. it does a lot of work on tax and in the tax area we can both on the project related and we have consulted to the society, businesses can take older feminist project they've issued more than 3500 pages were scared we have webcast, which have been looked at by more than 10,000 viewers. in the area of tax among the oecd has a cooperation between its member countries. as you know, it is at the core of countries sovereignty in each country is ready to speed up its

corporate taxes in the way chooses. but as a result, there are risks of double tax nation. in 1920, the standard has been agreed and the oecd has debated this works in the 1950s. in particular with come up with a model tax convention and pricing guidelines. these rules have worked well but they have false though the economy changes in governance should. as a result they have been good at eliminating double taxation, but they have also facilitated unintended double non-taxation. this is an issue for most government across the world for many things. the taxation and health is not a problem in the country the oecd favors local corporate tax, low rate and broad-based is. this is an issue because as long

as countries decide to have them contact, the corporate income tax is the paypal text payers. there is a need now to make sure the rules make sense. the rules are no more adapted to govern a station and again are artificial setting. there is a divorce now between the location of the activity and the location of the profits which can be both dangerous diction are absolutely nothing is happening. as a result, the sovereign right of countries is undermined. this is a global issue would not issue targeted to company. u.s. companies account for less than a quarter of the fortune global 500 companies. so it is a global issue concerning u.s. and non-us companies. second, there is the need to level the playing field. even the playing field between companies is not just to the right location of capital.

companies must be at the domestic level or at the competitive disadvantage because you can excuse the loopholes in the tax framer. really, there is the need to reduce uncertainty. the certainty of god for companies. it is bad for investment. there is increased uncertainty because of these rules not making honest. the number of tax administration are trying to dispute companies which are legal and the number of countries are walking away from the can and says an interpretation of the rules that result in a coordinated measures to protect the tax base and increases uncertainty. therefore we need to address this serious businesses. the response from government has taken place in the context of the g20 which has called to address the issue.

we have all the g20 oecd countries on the footing to find ways to address the issue of the tax framer like tenses. in two years time prince of us can be agreed quickly. we need the principled approach, cost effective person limit the compliance for come needs and reduce controversy. this is not a revenue exercise and should not be used for consensual exercise for the common principles to be more accepted by sharing their environments, increasing in promoting transparent way. the object is to secure the consent is therefore reduced to urgency and improve the way we can all disputes. we have come up with an action plan of 15 measures which i will describe in my written

testimony. some of them are but neutralizing mismatches, or improve transfer pricing rules. at the conclusion i was made that the issue of peace erosion of profit shifting is widely shared across countries and here in the u.s. in particular we are aware you are planning to address u.s. texas and we hope that the work we are doing at the international level with the engagement of the u.s. treasury can be useful to promote growth and jobs in the u.s. with some of the issues that the u.s. texas. the work of the oecd and the context we hope this particularly timely and we hope that will inform you of your debate. we of course are fully available to us on to your question and further assist us. >> thank you, mr. saint-amans. now let's go to dr. desai. welcome. >> thank you good ranking member hatch, members of the committee, it's a pleasure to this

international tax reform. under professor of finance and law at harvard law school. transactions in the u.s. corporate tax of a particular with her to international provisions. my comments outlined the origins of the transaction, the range of alternative solution, guidelines for evaluating reform and some reforms should be avoided. last but not witnessed a wave of merger trend action, the facility in the repatriation of u.s. corporations. as trey jackson affect policy in the changing structure of multinational firms from a policy but acted to train action highlight the increasing cost of employing the worldwide taxed the same in most other large x or countries no longer maintain regimes in the corporate tax rate by other oecd countries from a firm pointed to the transactions highlight the tv in today's economy to grow in firms where they had orders have been split up in the growing importance of non-us markets

from u.s. firms. rather than questioning motive executives it's critical to wonders in these forces. these naturally attract growing attention on the version of the most visible menaces tatian of these development. in the new inversions, force give rise to a corporation is dispatched canoeists anticipate burton beanie was corporation, merger patterns that reflect the penalties domiciled in the united states an important basher cash and investment patterns by u.s. and foreign companies are profit shifting the hebrides not value creating and the negative impact of all of these distortions on u.s. labor force. while it attempts to limit sensational effect and characterized them as tax avoiding paper shuffling, this would effectively be missing the forest and the trees. reform should focus its discipline of the u.s. welfare with particular attention on reforms to improve u.s. wages. the schools are mistakenly thought to be cheap but limiting foreign committees.

a fun activities committee against averting economic dignity away from the u.s. in fact, the evidence suggests the opposite. they also asked and domestically. american welfare can be advanced by ensuring investment in the u.s. and abroad are owned by the most productive honoring american firms flourish abroad. it was meant by the regime in most countries are by the development described above have chris blythe for tax reform and increased attention to a territorial regime, they're still variation proposed those. some including those of an alternative in the tax are tantamount to a back or worldwide regime is even more complexity than today's system. revenue consideration should figure largely in tax reform today they should be accorded secondaries data is given the limited revenue by current international tax euros and remarkable complexity for any such revenue. additionally it is not clear the policy should prioritize other countries.

more broadly the corporate tax is ripe for reform. in addition to reforms in the reproduction number one should address the major developed the tax arena. the growing prominence of non-c. corporate income and the dysfunction between capital markets and tax authorities and a blueprint for reform would include a regime unencumbered by excessive to become a considerably lower rate in the range of 18% to 20%, that elena corporate profit and buy some taxation not the corporation business income. the changes in revenue neutral array double advanced u.s. welfare. most everyplace attacked our preferred is feasible. legislation focused on specific transactions runs the risk of being counterproductive. these are nested in a broader set of corporate decisions leading to several consequent. for example, rules that increased the size of a target to ensure the tax is set up an

inversion can deter the transactions for most elite two more sets the transactions. more transactions are likely to involve youth activity that american firms will have larger choirs that demand the relocation of more activity abroad, including headquarter functions. similarly, specifically inverted firms really to foreign firms for some transactions. was attempting broader reform it is to recall it will likely spurred the transaction and reduce reform in the intervening years. i admire your foresight and addressing these issues from a highly visible manifestations of problems in corporate tax providing significant opportunity for genuine reform. i do delighted to answer any questions. >> thank you very much, professor. we welcome dr. peter merrill and i look forward to your comments. >> thank you, thank you.

chairman wyden, ranking member hatch, members of the committee from the thank you for the opportunity to testify today. my name is peter merrill, spoke price waterhouse coopers. my practice is economic effects of tax policy. i'm appearing today on my own behalf. i've been asked to compare how the u.s. rose for tax and international income compare with the rules of other countries. my testimony i will feature a focus on two features of the u.s. corporate taxes that fall for a ride international norms are the high corporate rate in the world would system of taxation. these features of the taxes to make it more difficult for u.s. companies to compete in global markets. the multinational court petition from abroad for the last 15 years a number of u.s. companies in the "forbes" global 500 list has dropped by a weird from 200

to 135. alaska photo market share biggest companies is due to a bright effect or is. the oddest fus vexes and is seen by many as a hindering rather than a help. the top u.s. corporate statutory rate including state taxes 39.1%. this is the highest rate among major economies, more than 14 points above the average for the other oecd countries and almost 10 points higher than the average for the other g7 countries. after the tax reform act of 86, the u.s. had a relatively low corporate tax rate. however, since then the other oecd countries have reduced their rates by a collective average of 19 points, while the u.s. federal corporate tax rate was increased in 1993 to 354 it has remained tense. while it is widely recognized that are statutory corporate tax rate is high, studies show our effective tax rate also is tied by it or national standards.

in addition, the u.s. is a worldwide system as foreign income by foreign subsidiaries of u.s. countries companies are subject to attacks of mercy received by the u.s. parent. unlike the united states and all other g7 countries and unlike 28 of the other 33 oecd countries, they have adopted territorial tax systems. as a result of these trends, u.s. multinationals increasingly face foreign competitors by attacks that are territorial systems within the oecd 93% of the foreign competitors on the global top 500 list were based in countries use territorial tax structures. significance of this is foreign competitors of the u.s. multinationals can invest their foreign profits at home without an added home country tax. turning to recent reforms in

2009, three oecd countries adopted territorial tax system. the u.k., japan and new zealand. the u.k. adoption of a territorial system is the first step in a multi-reform package from which also includes lowering the corporate income tax rate from 28 to 21 with a further reduction to 20 scheduled next year. the british government articulated rationale or reforms in my list. zero, the government wants to send out the no loud and clear that written is open for business. in recent years, to many businesses have left the u.k. amid concern that tax competitiveness. it's time to reverse the trend. that is why the government is protecting corporate tax reform, close quote. japan's adoption of the 95% dividend exemption system had been advocated by the ministry of economy trade and industry to encourage the repatriation of foreign earnings. in addition to 2012, japan's corporate tax rate has cut

5.235.6% and prime minister ahmed cabinet has approved the face reduction to below 30%. also in 2009 companies to switch back to a territorial taxes do not drink 21 year. in which it operated under a worldwide system without deferral. thereby bringing new zealand's tax system that can alignment with international norms. in closing, the combination of high corporate rate a worldwide system creates an incentive for you multinationals to reinvest foreign earnings outside the united states. according to a recent that he co-authored by laura tyson, former chair of the clintons council of economic advisers switching to a territorial and even without reducing the u.s. tax rate would on a ongoing basis increased in the repatriations by over 100 billion here and create 150,000 new jobs per year. reforming the u.s. is to align with international norms would

enhance the ability of the u.s. can use to compete at a and create jobs at home. thank you and i'd be happy to answer questions. we met dr. merrill, thank you very much. iran then. >> chairman wyden, ranking member hatch and his anguish members of the committee. it is an honor to appear today to testify on the import topic of international corporate taxation. i am an associate professor at the tuck school at as if it were at college. i teach financial accounting and taxation in my research centers on multinational corporations. it is clear reform is needed. the international and is one of the most quick complex areas of the u.s. tax code, the racist little revenue. my testimony summarizes in my view with the academic literature is an economic finance and accounting collectively offer in terms of evaluating the range of alternatives solutions. the top u.s. federal corporate

income tax rate is 35%. this is the highest rate of all oecd countries and far exceeds the 23.5% average. proponents of the document territorial system in the u.s. often a competitiveness issues. a common assertion is that u.s. firms are at a competitive disadvantage because they face larger tax written operating under a worldwide system than their competitors operating under territorial systems. generally speaking, this is because u.s. firms face a high hope coming tax of for-profit price competitors face no home country tax on profit. yet no country operate either worldwide or a territorial system. the loopholes exist to facilitate the indefinite deferral of the home country tax on foreign profits under worldwide system, the pendulum swings back to a pure territorial system. likewise, as eligibility for the

foreign dividend exemption under territorial system is superb really restrict it, the pendulum swings back to a worldwide system. this means it is possible for a ballot design territorial system to be at least, if not more as burdensome than the poorly designed u.s. worldwide system that we have today. evidence suggests that the u.s. firms are adept at indefinite deferral. one study finds financially unconstrained u.s. firms shift as much in ms firms operating under territorial students. also there is no evidence that the global tax version of a farm depend on how for profits are taxed in the home can really parent. there is some evidence certain location decisions differentially impact firms global tax burden depending on the home country. for example, a firm residence at home country acts realizes a larger reduction in the global tax burden by operating in horse country a been a firm residence

in home country why, also operating the first countrya. these two firms they operated first country b. the burden of an international taxes and when it debuts with respect to specific locations rather than whether the texas is territorial. other research shows that decision might headquarter relocation, tax haven operations and ownership structures depend on the distant and strength of anti-abuse such as lucian. maintaining our current worldwide system with deferral or introducing a territorial families need for anti-abuse provisions that are difficult to administer and force. another consideration is eliminated as the cost. ..

foreign profits under our current system prompts firms to allocate economic resources in an inefficient manner. examples include making value decreasing foreign acquisitions or the inability to respond to domestic investment opportunities. maintaining a worldwide system, but eliminating deferral, would greatly reduce these costs. adopting a territorial system may not. firms operating under territorial systems face implicit costs when attempting to on foreign profits that have not been subject to robust tax system abroad. to my knowledge there is no estimate of these costs but my expectation is that they would be greater than under a worldwide system without deferral. my overall assessment is their international tax system can be adequately reformed. we need not entirely abandon our current system of a

fundamentally different system. limiting deferral and lowering the statutory rate would generally reduce incentives to shifting,, eliminating plus the cost of avoiding repatriation and reduce complexity and uncertainties for firms. thank you and i would be happy to answer any questions. >> dr. robinson thank you. our final witness is mr. allan sloan. >> chairman wyden wing commander hatch members of the committee i am flattered to be here and i am honored and especially pleased to be hitting cleanup which is my normal role in journalism. before i proceed i have to say i'm speaking for myself alone. i'm not speaking for "fortune" magazine, my employer. i'm not speaking for fortune zoner time incorporated or the "washington post" which is running my material for more than 20 years.

i like senator hatch am appalled to see that versions are becoming a partisan wedge issue. i don't like this. now at fortune several weeks ago we put an american flag on the cover are called inversions positively un-american but we weren't being paris and -- partisan. we were being americans. fortune is decide divided between republicans and democrats. we were acting collectively in a societal sense. this isn't a republican problem. it's not a democratic problem. it's a problem for everybody. it's for all of us and if you don't stop at versions now with some sort of band-aid, by the time you get around to doing it there will be tens of billions of dollars of taxes that will never be recovered. now i am familiar, i've been

writing and researching it for months and i have heard the argument that well at versions are sometime. you can't deal with them unless you deal with the whole problem and you deal with the problem you deal with at versions. i happen to have a daughter who is an emergency room doctor and when someone shows up in the er bleeding the first thing they do is they put on eterna kit, they stabilize the patient and then they try to deal with the underlying problem. they don't say what gee we have to deal with the underlying problem. you have an emergency here. it may not seem that way but you have got the beginning of i thank and massive flood of its versions unless you stop this. now i know very little about tax. i know very little about law but i do know something about wall street and medias and i look at this the subversion thing and it

reminds me of the dot.com bubb bubble, where people did things that were just crazy that everyone was doing them and all these people with degrees and a lot of money in fancy suits whispering you have to do this so people did it. i have written about wall street for years. they gave us the internet bubble. they gave us toxic sub-prime securities and now they give us a versions. it's a product. it's the latest thing that's good for wall street this whole rationale that surrounds it but i don't think it's good for society. it just doesn't work and since i don't pretend to understand anything about international tax system, it's not that i don't

understand it and i'm a simple person, i'm a recovering english major. i am not a legal person. i mean to me if i were you which will probably never happen because i'd have to be nice to people and i don't do that well, i would adopt one of 11 bills and sandy levin will probably be angry with me that i would adopt the carl levin version, the one that has an expiration in it because if you can stop these things for a while you can buy time to fix the system. if you sit around and say well in a few years we will do this and we will be fine, by then the patient will have lost so much blood it's going to be very hard to do anything where mali revenue-neutral and tax reform. the other complaint i have heard endlessly is oh it's so unfair to make this may 8 which is the

date of the 11 transaction which also i believe happens to be the date that senator wyden published his op-ed in "the wall street journal" which messed me up because he wrote what i was going to write so i was furious but i came here anyway. so the may 8 deadline was known. okay, if you look at the contracts of some of these deals there are provisions in their that takes the anti-aversion thing changes so it's not as if this is unprepared or unfair. everybody knows this. you change rules retroactively in 2004 and as best i could tell there was not earthquakes or brimstone or fire from the sky. so please, if you can act like americans which i know you can instead of squabbling and you get the senate to go along and deal with the house we can put on the turn and get.

we will stop the patient from bleeding out and then we fix the system and that's what i hope you will do. thank you for your time. i'm happy to answer the questions. >> mr. sloan thank you and colleagues will stick to five minutes because we will get and as many as the campaign i'm going to ask one question of quality and i'm going to start with you mr. stack. i have been about as big a flag waiver for conference of tax reform as anybody around here and i'm going to continue to keep pushing for bipartisan tax reform as aggressively as possible. the reality is nobody believes that you can get comprehensive tax reform passed a this ear. with the investment bankers and that in version three -- feeding frenzy there may be 25 more inversions during that time. so i'm going to go down the road here this morning and ask each of you will that be a bad thing

for america? mr. stack? >> yes senator that's a bad thing for america. that money is not a one-time hit. that is a hit we take the company budget window. in addition i just want to add companies not only reduce the u.s. tax bill on day one when they inverts but they also adopts techniques to keep stripping out of the u.s. each of the next 10 years as well so we get hit with a double whammy. it has a long-term effect that's permanence of the cost of waiting i think is very high. >> mr. saint-amans. >> that's one of the challenges of the u.s. tax code today or you will result in inversions meaning that you lose the control of these companies which invert in another country and

that is overall a bad symptom of an issue in the tax code. >> dr. desai. >> in the short term it will feel good to do something and in the long run a country where there it will help the country and the reason for it is it will have all these consequences. there are medical analogies we can turn around it too which is helpful. rather than a target we may have a bleeding patient in these things just may anesthetize the patient. >> i think i like to take that as a no. dr. merrill. >> on this one i must agree with the comments of pascal which is these transactions are symptom of a very broken system and certainly i can understand the desire to provide the tourniquet but if you leave it on too long without resolving the underlying problem you get gangrene. so i can understand the desire to do something in the short-term but there is the risk of unintended consequences. so fixing the system is ultimately the only answer to

stop the problem. >> so you are in the middle of all this. we will put you down in that way. my concern about that position for both of you is that tax reform is moving slowly. in inversions are moving rapidly and that is a prescription for chaos, and that is why i want to see us draft both of the issues in a bipartisan way. dr. robinson. >> i don't have any data on this but i do remember reading about inversions, companies leaving other countries such as the u.k. and then when the system is reformed they have come back. so i don't have any data on that but my sense is that these companies may not be lost forever. i also think as far as i understand in version transactions it only affects the attacks on the future income. it doesn't impact the tax on the

accumulated earnings so in that respect i don't think we run the risk of waiting to solve the real problem in letting the markets play out as they do. >> so you think it would be a bad thing? mr. sloan? >> i think putting -- leading 25 companies invert and then fixing the tax code is a recipe for disaster. i know a little bit about how inversion works and mr. stack is absolutely right. the problem is not so much what happens to foreign profits but it gets much much easier to move out of the united states. you have to stop this. at some point when we are not on the clock i will bandy medical analogies with my colleagues that this is not the time so i

will just let that go. >> let me see if i can get one other question and i will make this for you dr. desai given what you have said. let's take walgreens. walgreens is an american icon. it's located in the heart of our country and they are talking about in birding right now. should americans be concerned about the prospect that if walgreens inverts they will strip profits out of the united states and put them into tax havens? is that something americans up to be concerned about? >> without question, absolutely. a secondary question is what we do about it but absolutely we should be concerned about it. >> very good. senator hatch. >> thank you mr. chairman. this.this question is for dr. robinson and dr. merrill. in your testimony right there quote there's no evidence to support the assertion that u.s. multinational corporations are at a competitive disadvantage

because they face larger corporate tax burden from their competitors worldwide rather than a territorial tax system unquote. you then cite three studies in supporting your statement including one study that finds u.s. multinationals have effective tax rates that are 4% lower than multinationals based in new york and union. but aren't there numerous studies that show u.s. multinationals are subject to higher effective tax rates than foreign-based faulty nationals and that seems to indicate that the u.s. well, let me put it this way. let me give you an example. dr. merrill cites numerous studies showing in his written testimony to congressional research service released a report earlier this year studying effective tax rates. one part of the report see our notes that the effective

corporate tax rate in the united states is 27.1% as compared to the rest of the oecd countries that have been unweighted average of 23.3%. that seems to indicate that the u.s. corporate effective tax rate is almost four percentage points higher than the other oecd countries at least by one measure. now would you please comment on this and i would also like dr. merrill to comment to u.s. multinationals as compared to foreign-based multinationals. >> all right, so the studies that i quote in my written testimony measure counting effective tax rate from financial statements so i'm not sure what dr. merrill is going to follow-up in terms of the study. it may be a different and account rates or measures within the accounting literature there

have been a number of studies published and unpublished that have searched extensively for differences in the accounting effective tax rates resident and worldwide versus territorial countries and also looked at as i mentioned the effect on these effective tax rates based on specific location decisions. and there isn't, at least to my knowledge in the accounting literature as measured by an accounting effective tax rate any evidence to suggest that u.s. firms have higher rates. >> dr. merrill. >> so in my written statement there is a comparison about six different studies that compare effective tax rates in u.s. and foreign companies. none of the studies are specifically focused on the foreign income of multinational

companies and perhaps this is what dr. robinson's comment is referring to. the studies i refer to look at the u.s. versus foreign companies including accounting data trade one of the studies they are was published by the business roundtable and the financial statement accounting tax rate of companies and 58 different countries. the u.s. had a higher than average effective tax rate than the other multinationals in that study. one bank does the study. we help them with that and compare taxes a 183 countries looking at charlie domestic companies and there are several other studies that i cited their dad had a focused primarily on domestic investment. and so there are a range of studies. i must say that looking at a broad range of studies almost every study i have seen has shown that when you do an

international comparison of u.s. effective tax rates versus foreign weather is financial statements, whether it's marginal or average effective tax rates accounting studies in the u.s. consistently comes up above average. so i put that in my testimony because it is commonly thought that effective tax rates in u.s. companies are low but by international standards according to all the studies i have seen except for actually the ones in leslie's testimony the u.s. comes up in the top quartile. >> do i have time to ask one more question to ask this question is for dr. desai. it seems a discussion of international tax reform can at times export capital neutrality versus capital import utility. such a discussion is helpful in my opinion and typically ends up going nowhere. you have developed an interesting new theory of capital taxation. capital ownership neutrality the

idea being that a tax system should not distort the ownership of assets and impact capital ownership neutrality seems to fit in nicely with the acquisition in versions that we are seeing today in which a u.s. corporation requires a smaller foreign corporation and is part of the acquisition. my question is this. if a u.s. corporation wants to acquire a foreign corporation it seems the u.s. corporation is at a disadvantage if it is completing against a foreign reparation based in the country with a territorial type tax system. as we know most developed countries have developed territorial types of tax systems and in 28 of 34 oecd countries have territorial type tax systems. is it that accurate the u.s. corporation is at a disadvanta disadvantage? >> doctor if you could a brief answer because i want to recognize senator grassley.

>> yes capital ownership neutrality. it matters not where the dollars go but who owns what in the context we are talking about its manifestations of the fact that u.s. firms include owners because of tax provisions of assets around the world and it's better to be domiciled someone else. if he gets a clear manifestation of the patterns that give rise to white territory -- territory would make sense. >> thank you. mr. grassley. >> here's what i'd like to do with my five minutes. i'd like to ask mr. stack a question and let them think about it for four and half minutes and i want to read a statement and stop city can answer my question. >> colleagues at this point we have had a vote called and i think it's the consensus of the members that we will have to break since there are three so we will get as far as we possibly can. >> mr. sack this is a question i would like to think about. treasury recently informed informed me this when they began work on a report mandated by the

american jobs creation act to study the 2004 anti-inversion provisions. when does the treasury department expect the finished study of the 2004 in versions legislation and before enacting such important legislation shouldn't treasury at least complete the report mandated to study the issue? like most of my colleagues here today i have deep concerns about the practice of companies moving overseas for the primary purpose of avoiding u.s. taxes. average americans and companies have remained in america are rightfully outraged when companies leave the united states leaving the rest of us to foot the bill. that is why in early 2000 led an effort to prevent companies from simply setting up a filing cabinet in the mailbox overseas to escape millions of dollars in federal taxes. in 2004 when i was chairman i was successful in enacting reforms that establish rules

governing versions for the first time. under these reforms in the inverted company continues to be treated as a domestic company until there's a significant change in ownership for substandard business activities are located in a foreign country. a second feature these reforms prevents an inverted company from skipping town without first paying taxes on on tax earnings. prior to these changes all the company had to do was move attacks, the united states and file papers with a tax haven. there were no rules or standards for determining whether a transaction had substandard or was barely a tax avoidance scheme rated number of companies took advantage of a lack of rules and standards to move to the cayman islands or bermuda as examples. these inversions were purely paper with no substantive change

occurring in operation. in 2004 provisions have successfully curtailed abuses targeted by the legislation as a nonpartisan congressional research service said. these reforms quote effectively ended shifts to tax havens where no real business activity took place. now this is not to say that inversions no longer take place. the 2004 reforms were never intended to establish a berlin wall that forever trapped companies in the united states regardless of business. these reforms were targeted ads and put an end to egregious abuses epitomized by -- which serves as mailbox headquarters for thousands of corporations. the inversions currently in the news mainly involve a large u.s. multinational merging with a significant though smaller

foreign company, usually european. these are not the traditional tax haven countries with little or no corporate tax that major u.s. trading partners with competitive tax systems and rates. there is little question that lowering one's tax bill continues to be a factor in companies deciding to invert however unlike transactions in the early 2000 users of stan of transactions that come with both risks and benefits for companies involved as a result of factors other than taxes likely play a role in deciding to invert. i do not condone that behavior. one area that should be studied further is the role of tax rules that are allowed allowing stripping money out of the u.s. place in the companies decision to invert. i'm going to stop and ask for mr. stack to answer my question

on the study asked for. >> as we mention our letter last week now the way of guidance out in various areas of inversions we are working on the study. i apologize i can give a specific timeframe for answering it but i would say that given the pace of inversions that picked up recently we would not think we would need to await the study to bring back our full attention to this issue which is happening before our eyes. >> thank you mr. chairman. >> thank you senator grassley. senator brown. >> thank you and this is a question for you mr. stack about earnings stripping. companies are using intercompany debt to deduct interest of up to 50% of pre-tax issues as you know shifting to a lower tax country. the second element of this tax

arbitrage is shifting intellectual property in the attributed profits to tax havens. my question is what do we do right now to create the kind of temporary tripwire that will allow legitimate mergers that prevent those arbitrage driven inversions? >> thank you senator. one of the reasons we singled out these anti-stripping proposals in our budget was because even without reform these things are going on now and they are going on particularly in cases where we have inversions. so whether the interests or think baking it hard to take intangibles out of the united states, changing the treatment of instruments that you can take in at the dutch and year and have no income inclusion some articles, we think these are all urgent needs that would protect their face even before we do tax reform and will also protect your base while they inversion way this happening and they are very important. >> thank you. mr. chairman i want to ask a

question of mr. sloan and i want to make one comment. the more we read about this and i appreciate the chairman has brought this out more effectively than anybody in the senate, people in this country increasingly think the system is rigged. people increasingly see large companies find ways of avoiding taxes. people struggle to pay their own taxes. people see these large companies having benefited from the manufacturing tax credit or infrastructure in our country and then using legal means someone is arguing, most of us are not arguing they are not using legal means finding a way to avoid taxes. i think this committee aides to take this charge very seriously that the public loses, increasingly loses confidence in the tax system causing others perhaps to cheat and increasingly loses confidence in this whole legislative body's inability to do anything.

if we can't narrowly follow mr. stack's advice and senator wyden's ideas and do something narrowly now about inversions we clearly have not lived the two are public charge. let me ask a question mr. sloan. we were seeing increasingly more and more stories from senator levin's work on the subcommittee that had investment banks that are big drivers of these deals than in the case of the short-term focus on stock pricing their rewards to wall street are as mr. sloan said premiums are shareholders of foreign companies of the inverted companies may avoid u.s. taxes. if you would answer a couple of questions if you would mr. sloan. what will in your mind would equity funds and private equity funds hedge funds play in encouraging companies to avoid taxes by completing an inversion and is there any counterweight to this pressure that companies

receive from short-term focused investors? >> all of these players are in business to make money. they are in a competitive business. they want to show a higher rate of return than other people so they can continue to attract more money and get more fees and as long as something is not illegal they will do it. if you talk to them socially, they are not bad people. they are human beings. even like senators and journalists they are regular people but they have these forces that drive them and i think they are perfectly fine corporate ceos to a few people which is protect them and get rid of the of inversion temptation they are not -- they are happy not to infer and everyone is scared. it's becoming a mania and by the time it waves, it fades away its

select. >> thank you senator brown. senator schumer is next and i'm going to try even after the first boat to run over and vote because we have colleagues who feel very strongly about it. >> thank you mr. chairman i want to thank you and ranking member had for holding this hearing today. it's actually critical we develop and processor proposal to combat this growing trend by some u.s. corporations to leave our borders to tax avoidance purposes. there has been a significant uptick in the number of inversions over the past 10 years. 47 u.s. corporations have reincorporated overseas do these conversions. during that period there were a dozen prospective deals. many of my colleagues particular on the other side of the aisle argue we shouldn't be looking at this issue in a vacuum right now. they said we should instead be focused on corporate tax reform. i would ask those arguing that we wait for tax reform just how soon do you think that's going

to be possible? chairman can't tried patch of form on the republican side. even speaker boehner didn't give it much credence so if we wait for tax reform we will have lots more inversions and it's going to take far too long if we ever get to tax reform at all. saying that they should wait for tax reform to deal with inversions is a green light to allow many more inversions to occur. for some to make it frankly it's an excuse to keep this loophole in place for the foreseeable future. the tax reductions achieved in inversions as you know happen in a couple of different ways mr. chairman. first by moving our domicile offshores these companies are no longer subject to u.s. taxes on any of their international operations and this is an appealing to types of businesses that operate in a global supply chain mike pharmaceutical companies. today we are seeing an uptick in more traditional brick and

mortar companies. walgreens francis is doing the same thing. why is that? is the second piece of the tax avoidance equation. not only can these companies avoid paying taxes on their international operations when they invert and incorporate abroad, they can also avoid paying taxes on their businesses that remain in the united states. one way they do this is through a mechanism in the tax code of interest expense deduction. it's a five step process. they set up a u.s. subsidiary to operate their u.s. business. when that subsidiary use those u.s. taxes they transfer the corporate funds between the payer and subsidiary and call it a loan to the subsidiary. that one triggers a u.s. tax deduction. the interest expense deduction for the subsidiary which then largely offset their u.s. tax liability. the loan is repaid to the profits of u.s. tax subsidiary to the foreign parent and u.s.

taxes have been been avoided through as a result they paid little or no tax in the u.s. profits as well. we have attempted to limit this type of behavior in the past. they put a cap on the debt to equity ratio of the u.s. subsidiary that the current law still provides very lucrative tax benefit benefits for intercompany benefits in fact mr. sloan your magazine or your web site did an op-ed on this talking about the risks and rewards of inversions which mentions the interest expense deduction. so as we work together to put a proposal to combat this growing challenge we have to look at it from every angle. i support the proposal that senator levin in the ministries have been working on on a two-year moratorium and increasing foreign shareholders to implement inversion from 20 to 50 make you more difficult to happen. i do have concerns of the part of the proposal because we want

to keep jobs here at home and the management and control proposal may encourage jobs to go for a ride -- abroad. we should also include a proposal that further limits or disallows the interest expense deduction to deal with u.s. profits that they are also trying to avoid. doing so will be a deterrent for those considering an inversion that they will no longer see the opportunity to avoid u.s. taxation and it will deal with the problem because you eliminate the prospectively any company that did an inversion six months ago, a year ago or five years ago while still you lose years ago will still use blues fest adoption. my question is a prospective policy action to counter past and future inversion activity. it would ensure we don't leave those inverters who started the trend with a competitive disadvantage. mr. stack on the question in my

time is running out. does the of agreed that we should consider measures to further limit or disallow the current interest expense deduction and any legislative package we pursue to combat inversions this year. >> senator we fully agree and we think you have shown the light on a very dangerous part of the inversion craze which is the ability the day after the inversion transaction to continue to strip the u.s. tax base. we'll budget proposal to that effect but we think you are pointing to a critical aspect. >> i just want to say the companies doing inversions if you want to operate anyone ask us to this market and the workforce, access to the economy understand is here today. to continue to have that access you are going to have to pay your fair share of u.s. taxes. things are changing. >> thank you senator schumer. the time for the vote is expired and we will go with senators stabenow. senator toomey is going to try

to come back as quickly as i can. >> senator stabenow. >> i wanted very much to be here even though i'm going to have to run out. first i want to say to my colleagues we have a place to start tomorrow which is the bring jobs home act. i'm pleased to be working with senator on that. it takes a simple first step on what needs to be a series of steps and will simply say if you want to move the company overseas where not paying for the move. if you want to come back we will be happy to let you write that often give you an additional 20% tax credit but if you leave you are on your own. we know that's not enough because we allow folks to only leave so they are not picking up the plant in leaving. i will say mr. sloan i couldn't agree with you more. this is not a partisan issue. this is an american issue. i think the american public is going to be watching very

closely to see companies that need consumers who are doing this. i think they underestimate the reaction of consumers and other businesses and going forward i do think if we can move forward and overcome a filibuster to bring jobs home we did add carl levin's and i'm with you even though i served with both of my dear colleague sandy and carl in michigan i think carl's approach of a two-year effort to get us to tax reform is the right way to go. we could add that certainly to bring jobs home act and i believe we need to do that and we need to get started on this. i also think it's important dr. merrill certainly all of you are saying we need tax reform and we need to do that or we know we need to do that and we know we are in a global economy, we have to address this but we also do know that i don't know of any sector paying 35%

corporate rate. the reality is we allow incentives they relate to manufacturing or r&d or other things but when i look at the list, from medical devices at 18.8% for financial services 16.5 or petroleum production 11.3 or down to public-private equity which is paying .8% effective rate, a large disparity and a number of issues that need to be addressed. here's what i want to comment on and that is the issue, we have two issues. corporate tax reform, global economy, how do we address this and incentivize innovation in america. and we have folks that just plain don't want to pay their fair share and benefit from america. so you have got folks on inversions who they don't want to brief beijing's air.

they want to breathe american air. they don't want water from third world countries. they want to be able to drink the water. they don't want the rule of law of other countries. in haiti as you pull up a cargo ship you can't get the products off the ship because without paying a whole bunch of bribes. they want our rule of law. they want our innovation, education come infrastructure, breathe the air, drink the water. they just don't want to contribute. it doesn't sound like normal american values to me and what it does is create a rush to the bottom where we are not going to have customers and then we are really not going to have businesses as we go forward. this is of deep concern to all of us. i guess mr. stack i would ask when you look at competitors -- competitiveness internationally from your perspective certainly the rate is important that going

to 20% means eliminating r&d tax credit section 199 for small businesses. it means eliminating depreciation which is so critical in a state like mine with manufacturing. there's got to be more to it than just tax breaks in terms of investing in america and i would ask you if we are going to stay competitive internationally what are some of the other priorities of tax reform besides just lowering the rate? >> thank you senator. first on the rates i would also add the point that a lot of the discussion about rates ignores the fact that there'll always be a country with lower rates than ours where people may want to go and there's this tax competition going on. in terms of other things we could be doing the first thing i would want to point out is our effective rates as you are pointing out very widely so we don't have a level playing field across industries. number two copper don't have a level playing field for

countries that can take ip and put it offshore or have to broaden the market of sure to take advantage of some of these international provisions. in addition to lowering the rates we think it's very important to broaden the base for these taxes so we can create some equality of eliminating winners and losers everybody has the advantage of this lower effective rate as we go forward. as you also point out maintaining incentives for research and development so that we remain the premier country in terms of this type of activity is also of critical concern. >> thank you. i believe at this moment i better get over to vote or i'm going to miss the boat. thank you very much. are we in recess? we are in recess of the call of the chair. thank you very much. [inaudible conversations]

[inaudible conversations] >> if you are in government you are dealing with the daily tyranny. you are focused on the crisis of the day and part of my responsibility as undersecretary of defense was representing the secretary of defense on the so-called deputies committee which is sort of the senior-level group that is working to the issues, developing options for the principles and the president. a lot of crisis management focus. when you're in a think tank or real utility is not trying to second-guess the policymaker on issues of the day but help do

more to raise their gaze to help them look over the horizon to see what are the issues i'm going to confront a year from now, five years from now, 10 years from now and how do i think more strategically about america's role in the world? >> 40 years ago the watergate scandal led to the only resignation of an american president. american history tv revisits 1974 in the final weeks of the knicks administration. this week in the house judiciary committee considers the charge of abuse of power. >> what you have your here are questions about what the framers had in mind, questions about whether the activities that have been found out by the committee

and by the senate were indeed impeachable and thirdly can we prove that richard nixon knew about them and authorize them? >> a bipartisan group of senators is introducing a senate resolution concerning a cease-fire in the middle east to hault the fighting in gaza. it contains provisions that would not leave israel vulnerable to market threats from hamas. among the speakers at the capitol news conference for democratic senator chuck schumer of new york and republican lindsey graham of south carolina. this is about 15 minutes.

>> okay, you next. >> thank you for coming. bipartisanship still reigns when it comes to the u.s. israel relationship. i'm so pleased that the senate in particular has kept a bipartisan focus on our efforts to secure our own nation and the threats in israel so we will be unveiling a resolution that i think is an important statement that an important time. everybody would like the violence to stop but we want the violence to end forever. our belief is that there is no moral equivalency between lots happening between hamas and israel. hamas is doing everything it can to put civilians at risk, hoping that israel will attack a target and civilian casualties

casualties will ensue for political purposes and they are doing everything they can to kill israeli children. the best way to protect palestinian children is to stop trying to kill israeli children. at the end of the day the cease-fire that leads -- leaves hamas and places dooming everybody in the palestinian world who lives under the hamas yelled and put israel at risk so we are calling on a cease-fire that gets to the heart of the problem. i believe the heart of the problem is hamas wants to destroy israel and there is no manner of negotiating that's going to get that out of their system. so we hope the cease-fire would be done not to repeat the mistakes of the past, that a cease-fire will be demonstrated a fashion that israel can deal with the tonnelle threat which is new and lethal effectively and permanently they can deal with the rocket sites that are being positioned, the hospitals, schools and apartment complexes that when the cease-fire is done

israel will have had an opportunity through diplomacy or military action to deal with the threat that faces the israeli people and finally win a cease-fire is done we hope the palestinian people will have the chance to live in peace. that means hamas has to go as a governing entity. there is no way to get there from here. we can leave and hamas at in place. we have had to see cease-fires in four years in the same thing happens over and over again. they rearm and they attacked again because of one thing they want is the one thing we are not going to get them, the destruction of the state of israel. without i will turn it over to senator jim wright. >> thank you lindsey my partner on so many different issues and all of my colleagues here today. we all mourn the loss of innocent life on the israeli and gaza side of the border. there is one word that describes the reason, one word that explains the reason there is

such a loss of innocent life, hamas. if hamas had agreed to a cease-fire with egypt a muslim arab country propose, there wouldn't be such a loss of life but hamas doesn't want to do that. when the last time they agree to a cease-fire it lasted about five hours. hamas than continue to launch rockets so the cease-fire was virtually useless. the only way to have a cease-fire that's going to make a difference is to make sure that hamas no longer has the capability of launching rockets into israel or sending killers through tunnels into israel. so you need a cease-fire that's going to work and be permanent and long-term, and that cease-fire should occur only after hamas is denuded of the missiles and only after the tamils are no longer used.

it amazes me and typical of hamas, they have got a limited amount of concrete into gaza. they said they needed to construct schools and homes and what do they use it for? tunnels, all these tunnels are lined with concrete in an effort to kill israeli civilians along the gaza border. many of us are just frustrated with the double standard. we see it on the news. we see it among the commentators. we see it among average folks too sometimes which is oh both sides are equally to blame. that is just not true. hamas doesn't recognize israel's right to exist. hamas is sworn to the destruction of israeli citizens and its prime minister netanyahu said afterwards, israel uses missiles to shield and protect

its people. hamas uses people to protect its missiles. >> thank you. let's just call hamas we know as a terrorist organization and what we see happening at this point, there is no moral equivalency between what israel is doing to defend itself and its people and what hamas is doing often using the civilian population in palestine as shields and that is the marke market -- the mark of terrorism. israel has to have the right to defend itself and to address the means that these terrorists have not not only the tom old but we have seen instances where they have actually put in you in school missiles that they have directed towards israel and the israeli people. so this cease-fire, a cease-fire for the sake of the cease-fire that leaves it in terrorist

hands to continue to terrorize the israeli people to terrorize and many instances the palestinians by using civilians were shields, that is not nature's cease-fire that will lead to peace. so we need to make sure that hamas no longer has the means to be able to terrorize not only the israeli people for what it has done to lob rockets towards israel but also the palestinian people as they are used as shields and really used completely by hamas for their means to try to terrorize israel. >> first let me thank my colleagues for being here. this is clearly a nonpartisan support for what is right, what is fair. last thursday i was proud of the united states senate. we passed unanimously a resolution that recognized israel's right to defend itself and recognized the violence has

been caused by hamas terrorist groups. you recognize hamas can now be part of the governing structure the palestinian authority. that was passed unanimously last thursday. since that time senator schumer pointed out the egyptians have brought forward a cease-fire. israel was prepared to move forward on it and hamas said no. we have a short time now for humanitarian aid. israel comply with an hamas did not. it's very clear at the world now knows that hamas is embedded in its missiles and schools and hospitals. it has used to shield and hide itself its own network underneath hospitals and schools in order to protect themselves. that is known. it's clear now what hamas is strategy is all about. we all want to see a future between israel and the palestinians. that has been our dream. that is than our goal but it's also clear to us that a cease-fire cannot occur until

israel is protected against the missiles entering the country aimed at the innocent civilian populations and i can't and until these comments are brought to them. these are not the time of that were on the egyptian border that were used to bring missiles into gaza. these are tamils being used to terrorize israelis, to try to capture israelis for kidnapping purposes and trying to terrorize the country. that also needs to end. our message is pretty clear. we want to see a cease-fire. we want to see peace. the missiles from hamas must end of the tamils must also end. >> i just want to echo the comments made by my colleagues and just add i think this is the most systematic use of a human shield in modern history. it's interesting there's a video of leaders of hamas going on television and gaza telling people to go to their rooftops

and stand up against israel. this is an effective means of resistance. meanwhile they are hiding in bunkers. some of these command centers are underneath hospitals and what is more outrageous is not just the reaction by hamas but the reaction of the international community. yesterday the so-called united nations human rights council made up of the listers members as cuba and china and others condemning israel and calling for an investigation. a 700 word report without a mention of hamas, grave mention of rockets and no mention of the use of human shields. we have never seen in the modern history of the world and the organization use human shields the way hamas is using human shields in gaza. it's an outrage and as with the international community should be condemning. to leave these people in a position of power in the aftermath of the conflict means we will have another one and another one. here's the bottom line. as long as hamas is in gaza there will be no peace in israel. >> well i think at a time of

partisan differences, this moment is a rare and profoundly important time for us to come together and express our nations moral goal. it's more than just a political sentiment, more than just a sense of what is tactically right but a moment of deep moral triple gem. that's the sense of outrage that her entire world community should have at this moment when children are used as human shields. that is a systematic practice that is unprecedented in the annals of war are you it is the essence of terrorism to destroy innocent lives. that is why they rouse's terror and that is what hamas is doing here.

so, a cease-fire will and this conflict for the moment but it will not resolve, as of the moral responsibility and record engine for these desperate despicable tactics. >> questions? >> do believe israel went too far shooting at a school where the refugees were health? >> no. i don't believe israel has gone too far at all. just put yourself in israel shoes. how far would we go? what would we do if we were attacked by neighboring country, missiles coming into our country, tunnels dug under our borders, people popping up in cities of the united states to kill our citizens and the enemy puts missiles and uses civilian holy sites, uses schools read the press report that they found

rockets in the school and the u.n. gave them back to hamas. that was pretty so no, i don't find israel going to par. i find the international community going too far. there is no love equivalency is senator ayotte said. the ukrainian rebels are thuggish, they are birds, these guys are boy scouts compared to hamas. >> i don't know of any country that is going to try to protect the civilian population. everything we have done is to get innocent people out of harm's way but with the obligation that israel has to protect its own citizens from missiles coming into its population center. i give israel a great deal of credit for the manner in which they have tried to warn palestinians and obviously they are faced with an unprecedented

situation when you have the missiles and control centers embedded into civilian facilities such as schools and hospitals and mosques. >> i would just say first the loss of life at the school was over credible. the blame falls on hamas's shoulders because they repeatedly use civilian sites including schools to hide missiles. hamas is the group that urged palestinians not to flee. why? the only logical answers they wanted them to be killed so they could use them in their propaganda war. we regret the loss of life. it's horrible. the reason is happening is hamas. that's the problem here. hamas is using people as shiel shields, shooting missiles at israel storing those missiles and schools holy sites in civilian areas. >> i think all of us have visited israel and some of us

together. we have talked to israeli leaders about not only this latest situation but about others they have faced which perhaps with fewer extremes have involved the same tactics on the part of hamas. i can tell you having seen their faces, listen to their voices, the leaders of israel share the pain and grief. and they go to every possible length with great emotion, not just intellect but it's deep and sincere -- sincere emotion to avoid these kinds of casualties. so you know none of this is done lightly. it is survival. israel is fighting for survival. as senator graham said so well, if the united states or any other country faced the onslaught, the attack, the aggression and sought to defend

itself as carefully, with such calibration is israel has done it would be -. >> thank you all. [inaudible conversations] [inaudible conversations] colon not ..