certain expenditures are going to be more important towards growth and that will equal jobs and want to retain those. others we can look at and throw away. i think everything should be on the table. we have to have a very serious conversation about which ones we want to take out and which ones we want to keep. >> thank you, mr. chairman. >> mr. riker is recognized. >> thank you, mr. chairman. i want to try and get three quick questions in so i'll just no speeches, i'll just start with the questions. focused on try to think of these questions in terms of jobs. we all want tax reform and we want to energyize the economy, but we want it to equal jobs here in the united states. so there are numerous provisions in the tax code that have the effect of providing preferential

treatments to particular sectors of the economy. do you agree that primary objective of tax reform should be to address these kinds of distortions in tax laws? >> i think tax reform really should have the goal of trying to make our tax system much more progrowth, simpler and fairer. and in 2010, the house as part of the expiring provisions included a provision that is not ultimately inacted that required the joint committee on taxation to look at all the expiring tax provisions and do analysis in terms of the cost benefit analysis who is beneficiaries were. i think it's that type of analysis that really is important in terms of looking at all these provisions that congress has previously enacted.

some of them very well maybe worth keeping as part of tax reform. others if a thorough analysis has been done may be outdated and should be limited. >> thank you. >> i agree with tom. i think the fair simpler approach would be the best approach to take. whey hear most companies saying is that they are willing to make trade offs. they're willing to put things on the table. they'd rather not, but they're willing to do it if it will get them to a lower rate. we oughted a survey of tax kpextives and asked them point-blank, the u.s. corporate tax rate hinder your competitiveness and 80 person of them said yes. i think these things are very important. a predictable tax structure that's the best way to go. >> so the cost benefit analysis a thorough review of progrowth policies, simpler tax code and fairer tax code equals jobs.

would that be accurate? i see nodding of heads. i see miss hanlon hesitating. >> i'm not hesitating. >> just say yes. >> it certainly wouldn't hurt job creation that's for sure. >> the second question, according to mr. fritz' written testimony since 95% of the world's population and 70% of its purchasing power is today outside the united states, it goes without saying that global markets are critical component of the future growth and success of united states' businesses. how does the success of u.s. global businesses impact jobs in the united states? >> i think we're a great example of that, mr. reichert. in my written testimony i included some statistics about our growth since 1989 when we first got into the

international -- started growing our global network in earnest. our u.s. team member count has grown from 56,000 members to 290,000 members today. it's symbiotic. our global growth and u.s. growth have increased in tandem as our global network is gone. we've seen that with our customers as well. as you point out, 75% of the world's purchasing power is outside the united states today. that's a huge market. and it's increasing. and that seems to me to be something that we need to tap into very effectively in this country to address even some of our revenue issues. >> anyone else like to comment? >> i'd reiterate those comments. we had mentioned earlier our headquarters in dan burry, connecticut, our r. and d is in new york. when we win projects globely, we

get jobs here. those folks are working on those projects. it's not -- it's not as good as a project here in the u.s. in terms of how many more jobs, but it is adding jobs. global competitiveness is important. >> one of the things we struggle here with this committee and congress, we want to see the united states trade. 95% of our market is outside this country. we can't all buy american here in the united states. we want other countries to buy american. my time is is up, but i want to ask your help. please deliver the message that trade is good for global economy. global economy good for the united states economy equals jobs. thank you. i yield back. >> more basani is recognized. >> thank you mr. chairman, i want to clarify something that came up during dr. mcdermott's line of questioning. that is the joint tax analysis

that was done. we pointed a couple things out. i think this bears emphasis -- reemphasizing these facts about that specific report. first and foremost, the estimates are not complete and secondly, they're not comprehensive. in fact, only 60 out of 150 measures have been scored. those are preliminary. that gets us to a rate of 28%. i'm optimistic that we can get to a lower rate once we have a full analysis of all these measures. so i think we need to keep that in mind that the joint tax analysis is not comprehensive at this stage and incomplete. our committee will have to continue to work to get to that point. professor hanlon, we've all been considered about the uncertainty of the tax code. oftentimes things get renewed retroactively. it creates a lot of problems

from a compliance standpoint. i would like you to elaborate on how do you deal from a financial accounting standpoint with these and talk about some of the problems that therein lie with temporary measures? >> the temporary provisions i think cause similar difficulties on the tax side and the book side in a way that they ever just unpredictable. it's hard for companies to plan. it's hard for them to make long-term investments given these fits and starts in the tax code. and the accounting just will fall out in a sense accounting just accounts for whatever happened. it's hard for them to predict that what effective tax rate will be and they're benchmarked on that tax rate to other companies. i think it's just unpredictable for them. it's hard to make investment decisions when things are in flux like that. >> thank you. and gentlemen, you all are look

at this from the private sector. you have to deal with this. could you comment on investment decisions. just the general uncertainty that arises as a result of these temporary provisions. >> uncertainty is definitely a huge impediment to investment into i think rational growth and overall development of the economy. it's very difficult for my boss the cfo and for our coo and ceo to figure out what we're going to do over the long-term and try and figure out how to analyze the impact of tax policy from both a book and tax perspective much less explain it to our investors and our analysts and so it is always an issue that is brought up each quarter on our earnings calls and it is always brought up by the analysts when our investment relation folks are meeting with them.

>> okay. will the gentleman yield? >> i'll yield to you. >> my understanding that the joint tax study that i talked about and that you responded to, the chairman said that they should only analyze domestic tax expenditures not international ones because he intended to use the international ones for reform of international tax structure. i don't know there's a single domestic tax expenditure still left on the table. unless you do. >> we need to recognize that we have incomplete information at this time. and just to proceed cautiously based on that. >> thank you. >> in your testimony you pointed out the growth of intangible assets. we've seen this is clearly a new area or an expanding area that we need to be looking at as we go forward. and clearly lowering the corporate tax rate would bring

down effective rates for both classes of assets tangible and intangible. elaborate a little bit on the difficulties in applying appropriate tax policies to intangible assets? can you further elaborate on that? >> i think the economy is clearly changed from 1986. in addition to globalization what we've seen is a very significant increase in the amount of not property plant and equipment, but the intangibles in terms of the programming, the copyrights, the patents, the r and d. and recent federal reserve board economist study showed that investments in intangible assets was as large as the investments in the property plant and equipment. and you look at the companies they are concerned about both intangible investments and their tangible. so a lower corporate tax rate is

a positive effect for both of those investments. in fact, if the really high returns that are earned by the u.s. companies that are doing that type of r and d they will benefit significantly from a lower corporate tax rate. it has also the benefit of trying to keep those intangibles in the u.s. versus offshore. >> thank you. anybody else want to comment on that issue? >> the gentleman's time has expired. >> thank you. mr. neil is recognized. >> thank you very much, mr. chairman. the common theme this morning of the testimony is twofold. you're certainly asking for a lore rate. just as importantly you're asking for greater certainty. and how we go forward. i've been reading bruce bartlett's book. i always find how liberating it is for former staffers to leave the hill and then to write what they deem to be a more truthful version of events. and david stockman as we all

know has taken the same position divorcing himself from what commonly happens here in terms of embracing theology as opposed to the reality of trying to administer government. you indicated that the u.s. has lost 46 fortune global 500 headquarters between 2000 and 2011. why do you think those companies specifically moved outside of the united states? and perhaps just as importantly, were tax considerations the only reason for those companies leaving? >> i don't think taxes are the only factor, the only driver. i do believe that lower tax jurisdictions and the ability to produce greater returns for their shareholders have played a huge role in driving a lot of companies overseas. >> the other panelists would

you -- >> i guess congressman neil, i was the author of that analysis, the fortune global 500. i don't think we found any u.s. companies actually leaving the u.s. that is talking about the number of companies that happened to be in the top 500 around the globe. and what we are seeing is there are an awful lot of large companies from the bri krirks countries that are now among the top 500. they are now larger than a number of former u.s. companies. so it wasn't that companies were actually leaving, at least in terms of this particular study. it's that we are definitely in a global environment where u.s. dpaens are competing much more with companies from other countries not only in europe, but also in china, brazil and india. >> production can happen anywhere now. how about the other panelists?

>> mr. neil i know there have been other instances daimler benz driven in part by tax considerations. that was one company that did end up with headquarters overseas. certainly in the 1990s, early 2000's we saw some expay treuations. some of that was kendry by tax considerations. perhaps not all of it. i do think it was a major consideration. >> i echo the comments. the rules now in terms of leaving the united states are pretty harsh. i think congress has taken care of that movement for tax purposes offshore and it's more as he said, just have offshore companies getting bigger is what you're seeing. >> all right. >> i would agree with all these

thins. i think tax is one factor. the research is quite clear that investment is attracted to lore tax rates. it is only one factor. there's a lot of other thins that companies consider. acquisitions do happen generally where the foreign acquirer will acquire the u.s. company oftentimes because of the tax considerations you wouldn't want to acquire a u.s. company, you want to acquire -- it would be hard for them to acquire a foreign company and then pull that foreign company into the u.s. tax system. and this also depends on the type of business whether investment, how much tax drives, where the investment goes based on the tax rates. some companies have to go where their customers are. more intangible base companies can move around more easily. taxes are more important driver for those types of companies. >> maybe you could speak to the phenomenon of japan in the sense that stagnation has paralyzed that economy for decades. if we were sitting here 15 years ago the argument that we're currently making about china

would have been the argument we were making about japan. are you arguing that it's their tax rates that have kept them from growth? >> there are a lot of similarities. in the 1980s, congress was facing not only intense competition from japan, but also large deficits. leading up to the 1986 tax reform act, congress did address the deficits. it did show that there could be some tax increases, which set up i think the right dynamic for a revenue neutral corporate and individual tax reform in 1986. clearly japan's high corporate tax rate which is going to fall below the u.s.' was a factor in

japan not being a factor in the world markets in addition to all the problems that occurred to their lost decade. i think a lore corporate tax rate can be helpful in terms of economic growth. when i look at the top 50 economies in the world, the u.s. as of april 1st will have the highest combined corporate tax rate. >> the gentleman's time has expired. >> thank you. >> mr. price is recognized. >> thank you mr. chairman. we're all interested in getting the economy growing and get people back to work and realize their own dream. i would suggest that the deficit spending at the current level is a huge drag on the economy, but that's not the topic for the discussion today. today the topic is tax policy. i want to focus on hopefully three issues very quickly.

one is the rate. two, is the cost of compliance, and three on a potential alternative. that's a disincentive to create a business here. i'm not so certain that getting to 28% or 25% isn't just a break even. it's just a wash. if folks are looking at their balance sheet and they're saying if it's 25%, 28% that's the average of oecd countries and sbrilized nations, then everything else being equal doesn't make a lot of difference. wouldn't it be better for us to have a much lower rate than the average of the oecd countries?

>> the most destructive tax is the corporate incomes tax. the oecd has a good study on that. in an ideal state you take it to zero. you get rid of it. make the business community more productive. to your point of 25% if that's what it was, you have to add to that the state rate as well. 3% to 4%. your at 28%, 29%. at least it's a lot closer than where we are today. it is a fair point. >> i've got great faith in emergency ingenuity if we don't stifle it from here. that's one of the concerns i have. isn't 0% the greatest progrowth rate for business and job creation? >> i would argue it is. >> i agree. >> come on down. >> yes, i think the lower the

better. >> and 0% would be the most progrowth policy we could have as it relates to business. >> yes. >> i think there are important government services -- >> without a doubt. >> the highways, the airports, defense, and soim not sure a zero rate is what would necessarily be the best. >> but for progrowth policies as it relates to businesses isn't 0% the best? >> i think businesses are look at more than just the tax rate. they're looking at all the factors that will make the american economy successful. i guess i'm not convinced tha t azero rate is the optimal rat. >> the cost of compliance of our current code, do you have any sense about what that is and how that challenges you in your business? >> it clearly is very significant. in addition to the 39.1% marginal statutory rate you've

also got to factor in the very high cost of compliance and the cost of uncertainty in our current u.s. tax system. i don't have the exact figures. i know some other academics have made those estimates. you clearly have a benefit by simple plyfying and making more certain the code that in combination with a lower corporate tax rate and simplifications could be more significant. >> do you have a sense of the magnitude of the cost of compliance? is it 10%? >> i have seen some estimates that the efficiency costs including compliance costs could be as large as the entire corporate income tax. >> as large as the tax itself. astounding. which brings me to the alternative. what would a consumption tax doing away with the business tax, what would a consumption tax do for your businesses?

>> from a very high level i think a consumption tax is probably preferred to corporate income tax because the corporate income tax in effect penalizes work productivity. consumption tax penalizes consumption. whether it's realistic or not is a different -- >> or incentivizes savings and allows consumers to make their own choices things like that. >> i agree with mike's overall statement. i think it does require a great deal of study and analysis because of the impact on prices and on consumers, consumers that have limited discretionary income to buy our services as well as others. also, there is an element of regresivity that would need to be addressed. >> sure. >> overall it should be something that's considered. >> thank you. thank you, mr. chairman. >> mr. smith is recognized. >> thank you, mr. chairman. thank you to our panel today.

it's always interesting i don't think anyone is pretending it's simple or we have an easy answer here. i do want to reflect a little bit on the interrelated nature of a lot of these businesses. i won't ask whether time warner uses fedex or ups. that's not what i'm getting at here. is there any concern that maybe the products or services that you use within your own companies and outside your own companies would have an adverse impact if we don't get this

right? >> absolutely mr. smith. you put your finger on one of the pressure points. our tax code has so many different provisions that attempt to direct economic ac other. my personal affinity is we leave it up to the economy and the business community and try to minimize that as much as possible. you mentioned about 199 in effect, fedex is part of the manufacturing business as well. but we're not generatellrized a. we're in the distribution chain for a lot of manufacturers. we don't qualify for 199. why did that line get drawn quite that way. it's those kinds of issues you're exactly right. >> anyone else? >> i think you're right. all of our businesses are interconnected in one fashion or another it depends on the degree

of separation. that being said, i brie with mike here as far as the complexity and the inability to predict what's going to come from all these various different tax policies. and also a very real concern as far as fairness. you have a situation if you can move away from this level of complexity and all these different provisions. you can have a situation where fairness really fits in nicely with the overall free enterprise market. and let the economy decide. let markets decide where things should go. >> okay. >> i think our sole focus should be about growth and how do we get growth and jobs. so i think sometimes there's a difference between equal and fair. and we should be focussing on growth. and so while i think a lower tax rate certainly for us would put

more cash in our pocket to spend on new investments, some of the targeted tax expenditures may have a bit more leverage than a lower tax rate. we have to look at that very closely. we ought to do it. what's right i think is what promotes growth and jobs. and that might not be equal, but it's probably fair for the country overall. >> okay. thank you. i yield back. >> plb kind is recognized. thank you, i want to thank the panelists for your testimony today. always interesting. let me raise a couple of concerns and get your reaction. sometimes we're not comparing apples to apples. everyone's in agreement that the goal should be to try to lower the base, simplify, expand the base, lower the rates and simplify the tax code. if the goal is 25%, according to the oecd countries, that doesn't take into consideration the vat

system that they have in place right now to sump element loss revenue from the lower corporate rates. there's no discussion about a possible vat in this country in order to attain that lower level. if we're going to do this in a deficit neutral fashion, we need a way to pay for it as well. here's one of the concerns i've been raising consistentsy, the best we can do on the corporate side eliminating every tax credit is moving from 35 to 28% rate. would that be sufficient? >> yopg it would. >> small business owners,

individuals to pay higher tax rate in order to pay for lower corporate tax rates in this country. that ain't going to sell politically in this country. so we're going to have to find a different revenue source in order to get to the 25% rate. if the goal is to make this deficit neutral. that's where it's going to get difficult. that's why you don't have a detailed plan from the majority on what specifically they're proposing because they know they have to get into those weeds immediately overnight and the political push back is going to be tremendous. i wanted to pick up what mr. price was addressing. it's very intriguing. here are the numbers from last year. the federal government collected total revenue of roughly $2.3 trillion from all orevenue source. of that $181 billion was on the corporation side. roughly 7% of federal revenue was collected on the c side. that's roughly 1.2% of gdp. we're tying ours up into knots trying to figure out a way to lower the rates. we're talking about roughly 7%

of total federal revenue to begin with. maybe we should explore forward just eliminating the corporate rate entirely, but we're going to have to pay for it. that again is going to be the rub of how we do it. mr. price talked about the consumption tax. i don't want to do it in a regression fashion. my fear is a consumption tax is regressive. it's going to hurt low income families that have to spend every dollar that they earn through that consumption tax. maybe there's a different way that we could maintain progressivity and main it it through a wealth tax. i don't know how many of you had a chance to see "the new york times" op-ed page. david miller wrote an interesting article. did anyone see the article today? it's called the sukerman tax. zukerman is going to get about $28 billion worth of shares. most of which he'll never pay a dime of texas on. what mr. miller is saying why not market those shares in a given year and have him pay taxes on it rather