the result was the g-20 oecd betts project. and the betts action plan endorsed by g-20 leaders last september in st. petersburg. the betts action plan outlines 15 specific areas where governments need to work to change the tax rules that encourage companies to shift their income at the expense of the tax base and our own tax base. the betts project is expected to release the first set of recommendations this fall and is set to conclude its work with final recommendations at the end of 2015. the united states has a great deal at stake in the betts project and a strong interest in its success. our active participation is crucial to protecting our own tax base by stripping by multinational companies. because the united states provides a foreign tax credit to u.s. companies for taxes they pay overseas, the united states also has a strong interest in rules that enjoy a broad international consensus. in addition, as home of some of the world's most successful and vibrant multinationals, we have a stake in insuring that companies play

and we are far below the oecd average talking about fiscal deficit. so that is the lesson we learn from the past, from the past mexican crisis, in the '70s, in the '80s, in the '90s. we need to preserve fiscal deficit under control. and actually, we are reducing even more the fiscal deficit in the country. i'm talking about public debt. you can see the nafrnlg oecd -- i made a mistake a few minutes ago. but the average is 62.5% of gdp. mexico has 32% of gdp. we are in good shape in macroeconomic stability, in public finances. that is a very important point on infrastructure in the country. on average we're spending like 3% of gdp, which is actually very close to the average of oecd countries. in the oecd the average investment in infrastructure is 3.4% of gdp. we increase the investment in mexico from 3% to 5% of gdp a year, which implies to invest roughly more than $50 billion a year in infrastructure in mexico, public and private. and with that we are increasing in a very important manner the capabilities of the country and the competitiveness of th

for individuals and the average in the oecd is 43%. united states is actually punishing country for high earners. oecd country a number of years ago found we have the most progressive tax system amongst all their member countries. that's not a good thing. the top 10% in the united states pay 45% of all income and social security taxes. so 45% the average in the oecd is just 32% so for a country supposed to be a haven for entrepreneurship and opportunity, i think our punishing taxation at the high end is bad economics. let me talk about the gop framework, alex touched on the business provisions. for individuals the main thrust is to drop our current seven tax brackets down to three lower brackets. that's good stuff. the republicans would also double the standard deduction and increase the child tax credit. those provisions won't do anything for growth because they don't change an individual worker's sort of marginal behavior to increase their work effort. it is true doubling the standard deduction would be a big simfully indication. i'm

forces outside the oecd. initially politicians welcomed the report. it was endorsed by there g-20 repeatedly. and they have increasingly become involved in ways we would have never imagined back in the lubic area the number of g-20 reports that include tax. those political forces, though, not surprisingly, the political forces that led to beps and had the oecd attempting to mitigate the direction it was going, are also surprising -- not surprisingly leading to some of the outcomes that we're seeing from the project. and have made it very difficult for the oecd to maintain control of where it's going. the increasing rhetoric has continued in terms of looking to what multinationals are doing. we've seen the source versus residence country taxation has been reopened. and unilateral action has not been stopped. so i'll just conclude by saying, the relevance of that observation and the impact on reform is understanding as we look through -- to what extent we should consider the initiative in pursuing u.s. tax refo

the result was the g-20 oecd beps project. and the beps action plan endorsed by g-20 leaders last the beps action plan outlines 15 specific areas where governments need to work to change the tax rules that encourage companies to shift their income at the expense of the global tax base and our own tax base. the beps project is expected to release the first set of recommendations this fall and is set to conclude its work with final recommendations at the end of 2015. the united states has a great deal at stake in the beps project and a strong interest in its success. our active participation is crucial to protecting our own tax base by stripping by multinational companies. because the united states provides a foreign tax credit to u.s. companies for taxes they pay overseas, the united states also has a strong interest in rules that enjoy a broad international consensus. in addition, as home of some of the world's most successful and vibrant multinationals, we have a stake in insuring that companies play by tax rules that are cle

i think the oecd is the wrong forum for us to be making progress in. the oecd has the urge to admit to the table -- said. >> it's a rich men's club. >> so what? it isn't anymore. the lowest common denominator is getting lower and lower. i think we ought to be forming collisions of likeminded countries to talk about these problems on a one-by-one bay. i think-day-old -- we do have -- >> we have things in common with market companies -- with countries as well. >> we have both. >> i think that's an important point. i think it's sort of a false choice for the u.s., when we are both a source and residence country and we want to continue to be both. >> right, but we've overemphasized residence to the exclusion of source for too long. >> as a knew eve economist, i learned that there were some -- a form of coordinated system in the source country got the first bite of tax, whether there was a residual tax afc, countries could decide. so the question then, when you have i want p being a main driver of value, where is it appropriate to tax those ip profits? that

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

fourth, the administration should vigorously work to ensure that all parties to the oecd anti-bribery convention, including russia fully carry out their commitments under the convention to prevent overseas business bribery by their nationals. fifth, russia and the united states should intensify work th administration, and judiciary are freer of corruption. sixth, russia and the united states should cooperate to expand the scope for civil society organizations such as transparency international to monitor, investigate, and report on suspected incidents of corruption. i believe the executive branch i would urge the execut presen plan to implement all of these measures to strengthen the rule of law. i would urge the congress to exert active and continuing oversight to make sure it implements the plan vigorously and makes progress for business in putting it into place, all three sides of the rule of law triangle -- the trade side, the investment side, and the institutional integrity side. thank you. >> thank you very much, mr. larson. some american businessmen tell me they don't want to d

now it's about 14 points higher than the oecd average. it is only -- i mean, this is what you're going to get when you have these kinds of rules. we need to change the rules. we need to reform the tax code. so i guess it seems to me, at least, that the system is basically the worst of all worlds. because we've got -- if you're asking your businesses to compete in the foreign marketplace, not only do we have the highest corporate income tax rate among oecd nations, we're also one of the few nations that has a worldwide system of taxing income. so dr. merrill, i guess i would ask you, could you elaborate a little on your testimony in term of what this means for a u.s.-based company competing in foreign markets against companies that are based in nations with more modern and favorable tax systems. >> yes, thank you. so what we're seeing is a world where a u.s. company that operates abroad is now generally competing with foreign competitors in the same market but facing a very different home country tax system. they all face the same rules in

the result was the g-20 oecd betts project. and the betts action plan endorsed by g-20 leaders last september in st. petersburg. the betts action plan outlines 15 specific areas where governments need to work to change the tax rules that encourage companies to shift their income at the expense of the tax base and our own tax base. the betts project is expected to release the first set of recommendations this fall and is set to conclude its work with final recommendations at the end of 2015. the united states has a great deal at stake in the betts project and a strong interest in its success. our active participation is crucial to protecting our own tax base by stripping by multinational companies. because the united states provides a foreign tax credit to u.s. companies for taxes they pay overseas, the united states also has a strong interest in rules that enjoy a broad international consensus. in addition, as home of some of the world's most successful and vibrant multinationals, we have a stake in insuring that companies play

corporate tax rate, statutory rate which was 35% in 2017 was the highest statutory tax rate in the oecd, we have not changed that statutory tax rate since george h. w. bush raised it. it's been the same since 1992 to the present, in the year 2000 with the same tax rate we were seventh highest in the oecd, all of the oecd members in the world have reduced their corporate statutory tax rate since 2000, with the exception the hungary and they raised it from 18% to 19%, look at the united states, we had a global tax system rather than a territorial system. the united states is the only country with a global system rather than a territorial system. if a united states company is competing with a german company in ireland and both companies make $100 in profit, both companies were obligated to pay the irish government 19%, for the german company, they had no more tax liability. for the united states company, they were required to pay an additional 22% to the united states government in addition to the 12 and a half percent, this bill gets rid of the goabl tax system and -- global tax system an

we consider oecd membership and the succession process to the oecd is an opportunity for continuing and introducing forms and best practices, implementing social and economic policies, improving services to all our citizens. and hopefully, we will finish our technical discussions by the end of 2015 and join oecd in 2016. i would like to mention also energy policy and energy policy is of high significance on the latvia and transatlantic agenda. and we believe it has an essential role in foreign policy, taking into account the close links between energy policy and geopolitics. the new eu energy union calls for increased cooperation and the dialogue with strategically important energy providers in transit countries. and besides energy security, latvia would adopt the new strategy improving governance and transparency which empowers consumers, increase energy efficiency, enhances regional cooperation, and facilitates access to finance for energy projects. it is latvia's intention to further develop regional infrastructure and create fully functioning liberal transparent and competitive regi

at 25% that's close to the oecd average which is about 25% right now. given our international competition that's about where we need to be at a minimum. you talk about base-broadeners and the trade justify and there certainly is as i mentioned in my prepared remarks. that's something we take into consideration. the cash-flow effects are detrimental, no question. but lowering the tax rate overall to something around 25%, i think, would be well received. >> mr. schetel? >> i agree with mike. resounding, "yes." i think if we can get to a 25% rate or something like that that's in line with the rest of the developed world you'll find the vast majority of the business community coming out in support of it. i know it's a challenge to get there. from our perspective as a company, our health and growth is tide inextricably to the growth and health of the overall economy. no question about it. that's the biggest driving factor in how well we do over the long run. our view is that it's significantly lower rate and simpler tax code will come down to the benefit of

so here's an oecd chart. those show income inequalities and the upward arrows show that income inequality has been increasing. you can see the u.s. is i think second in that chart. here's a graph from fred. this is oecd growth rates from 1960 through to 2014. and of course these jump around a lot from year to year. we know about the business cycle and everything else. but what you immediately see quh y when you look at this picture is the downward trend. and it's not just -- the great recession was obviously a bad thing but this is apparent long before the great recession. so you've got decade -- each decade economic growth in per capita income has been lower throughout the rich world than it was in the previous dedicate. decade. so that to me is one of the serious villains of the piece. so you've got slow growth. you've got rising inequality. and that of course means that some people get left behind. i just want to say some very obvious things. but they're very obviously important too, which is if there's hi

now it's about 14 points higher than the oecd average. it is only -- i mean, this is what you're going to get when you have these kinds of rules. we need to change the rules. we need to reform the tax code. so i guess it seems to me, at least, that the system is basically the worst of all worlds. because we've got -- if you're asking your businesses to compete in the foreign marketplace, not only do we have the highest corporate income tax rate among oecd nations, we're also one of the few nations that has a worldwide system of taxing income. so dr. merrill, i guess i would ask you, could you elaborate a little on your testimony in term of what this means for a u.s.-based company competing in foreign markets against companies that are based in nations with more modern and favorable tax systems. >> yes, thank you. so what we're seeing is a world where a u.s. company that operates abroad is now generally competing with foreign competitors in the same market but facing a very different home country tax system. they all face the same rules in

has proposed a 15% global minimum tax at the oecd. however the administration's domestic tax agenda includes raising our current global minimum tax, the guilty tax, effective rate to more than 26%. and the administration appears to be pushing for changes to u.s. law before any other country has even enacted a global minimum tax. a number of countries have pushed back on the idea, including ireland, hungary, and india. and most notably, china. in fact, there are reports that china will not sign a global minimum tax without carveouts for its companies and tax policies. so my first question is, is the administration's position that the u.s. should increase its global minimum tax, the guilty, or its minimum tax to an effected rate of 26% before others, including china, enact a minimum tax themselves? >> we have proposed a global minimum tax effective rate of 21%, not 26%. and what we're working toward internationally is a global minimum tax that is at least 15%, and hopefully higher than that. what the g7 agreed to in london last week was

back in the mid '80s, the average top oecd individual rate was 64%. back then our top individual rate was 55%. so we had -- we had an advantage on that for a while. so we cut our individual rate back in '86, but other countries started cutting, as well, but we kept our advantage in individual income tax rates for most of the last three decades up until 2013. the deal that ended part of the bush tax cuts pushed our top individual rate back up again, and our rate now with state taxes is about 46%, which is above the oecd average. we're a high income tax country. this is a problem. high rates at the top end really matter, because they punish the most productive people in the u.s. economy. entrepreneurs and brain surgeons and venture capitalists, people like that, are very responsive to tax rates. also a large amount of business income flows through the top brackets in the tax system, so high tax rates means less investment and less work effort by the most skilled people in our economy. so that's the overview today, and i'm going to introduce our three sp

and have made it very difficult for the oecd to maintain control of where it's going. the increasing rhetoric has continued in terms of looking to what multinationals are doing. we've seen the source versus residence country taxation has been reopened. and unilateral action has not been stopped. so i'll just conclude by saying, the relevance of that observation and the impact on reform is understanding as we look through -- to what extent we should consider the initiative in pursuing u.s. tax reform. it's important to understand it isn't just about the oecd and we shouldn't have to worry about it. but it's broader than that. to the extent that the goal of u.s. tax reform is to preserve the interest of the u.s. government and u.s. companies and residents or u.s. interests, those interests are clearly impacted by the behavior of other countries. and the u.s. tax base can be eroded not only by the behaviors of multinationals but by behavior of other governments. >> thank you and thank you for the opportunity. good to be here, don, thank you very much for this opportunity

fourth the administration should vigorously work to ensure that all parties to the oecd anti-bribely convention including russia fully carry out their -- business bribery by their nationals. fifth, russia and the united states should intensify work to ensure that russia's customs, tax administration and judiciary are freer of corruption. sixth, russia and the united states should correspondent to expand the scope for civil society organizations such as transparency international to monitor, investigate and report on suspected corruption. i believe the executive branch and the congress can be and should be partners in this work. i would urge the executive branch of the congress a plan to implement all of measures to strengthen the rule of law. i would urge the congress to exert active and continuing oversight to ensure that the executive branch presents a plan, implements that plan vigorously and presents a problem for business and puts into place all three sides of the rule of law triangle. the trade side, the investment side and the institutional thank you. >> thank you very much mr

in the oecd, the average investment in infrastructure is 3.4% of gdp. we increase the investment in mexico from 3% to almost 5% of gdp a year, which implies to invest roughly like more than $50 billion a year in infrastructure in mexico, public and private. and with that, we are increasing in a very important manner the capabilities of the country and the competitiveness of the industry. let me tell you, for instance, this figure that is to january, but probably we are building or rebuilding almost 20,000 kilometers of highways, country roads and roads in mexico. which is more than the whole railroads, highways or country roads built in the last administrations combined. probably we will increase, because we are expecting to finish my administration with 22,000 kilometers of new highways or rebuilding highways and roads, which is the highest effort in infrastructure in several decades in mexico. but it is not only highways. for instance, in some cases in terms of airports, some new airports we are building in sonora or rebuilding others in the country.

the imf, the world bank, the wto, the oecd. and finally we are coming together in one task force to try to see if we can put all our energies together, develop a common methodology or framework. we know that not every country is going to have a carbon price or tax. the u.s. will never do it. they will approach it to regulation subsidies and other means but once we have a common framework we can all measure what were doing against that. more importantly we can transfer some of the resources raised to a finance the green transition period so thank you for raising that. >> dr. ngozi i know he have to leave in a couple minutes because an important meeting. why has it been so slow? is a because were distracted with of the crisis and are you confident that all of this is going in the right direction? >> well, it's social because i mean when to talk of raising taxes of price, it's never a popular. as someone said jeff so many former, present finance ministers on the panel. we know what this means. it's politically difficult to talk ab

would be some rate close to the oecd rate with 100% expensing and i think you'd see tremendous new investment, additional global expansion, u.s. expansion and job growth. absolutely. and even if you went with a base-broadeners you talked about chairman camp, if you got down to a rate of 25%, no doubt that would also increase growth. >> i would love to keep our tax incentives like accelerated depreciation. i would love to see expensing extended as part of an overall tax reform that lowered the rates to 25%. but i don't see how that's possible in a revenue-neutral fashion. i think for the short term, until we have corporate tax reform, i think expensing, extending bonus depreciation is tremendously important and impactful. certainly from our vantage point and the vantage point, it's tremendously important. that being said, if we all put everything on the table and we start working toward a targeted and a simpler code, i think we'll see more growth and for us, that will definitely result in more jobs and more investment. >> all right. >> i've got a question for ms. hanlan and mr. neubig. in cong

at the time the oecd's bep's initiative. limit the ways that countries can shift their funds out of high tax countries into low-tax countries, but american multinationals, many american multinationals feel that beps is aimed at them. in the wake of beps some countries are now enacting new diverted profit taxes that target multinationals. we'll talk about all of these issues this afternoon. we're focusing on what happens in other countries, how that affects american workers, american consumers, american businesses. our keynote speak certificate bob stack. we're delighted to have him here. you have a bio in your packet. bob is the deputy assistant secretary for international tax affairs in the office of tax policy at the u.s. department of the treasury. and that capacity, he's responsible among other things for the conduct of legal and economic tax policy, including having the honor and the burden of representing the united states in bilateral and multilateral interactions with other countries. before joining the government, m

and according to an a oecd report, the u.s. has the most progressive personal income tax system of any industrialized country. we rely more heavily on the top 10% than any other industrialized country. our poor people have the lowest income tax burden of any industrialized country. in fact, last year we had a record, record number of americans who paid no income taxes since 1940. and yet at the same time, the top 1%, 2% pays roughly 51% of all the income taxes. so i'd like to ask the panel what do we consider to be least fair, more unjust, the fact that we have roughly half of all americans who pay no income taxes, or the fact that we are the top 1 or 2% that pay 51% of all the income taxes? >> i'm going to let bob go first. but let me point out scott brought along some handouts from the tax foundation, and you should all have them. if you don't, we'll figure out how to get you some. thanks. >> so i'm really happy that scott made the point about the comparisons here to the european economies. this oecd study has been popularize

something at least close to the average oecd rate, along with capital vimt incentives like 100 percent expensing. we've said, however, if tax reform must be revenue neutral, so be it. we're willing to put all base broadeners including expensing or accelerated depreciation on the table in exchange for a materially lower tax rate. doing so, however, would come with a cost. both macroeconomically and to our company. strong capital costs incentives like expensing generate new investment and new productive assets in the united states. and it's reflected in the chart i attached to my written testimony. there's an almost perfect correlation between new investment and jobs in this country. the from our company's perspective, we would generally expect is lower tax rate to increase our tax flow, bottom-line earnings and earnings-per-share and to the contrary, reducing capital incentives would have a generally greater adverse affect on our cash flow. this is important because as is often said, cash is the life blood of any business. our investors paid close attention to our cash flow as well as t

colombia's desire and ambition to become a part of oecd and become a community of nations that believe in normative standards and are willing to pruf that they're capable of it is a great sign that they are prepared to move forward. our trade relationship with them now has as its framework a trade cooperation agreement which has resulted in a trade, a fairly good trade balance and it's one of the best in the world. a trade in goods of about -- sorry, $23 billion a year and it varies depending upon a number of factors, but also that trade agreement and the desire to join oecd has provided an impetus for a continuation in progress on standards, on labor standards and on resolving conflicts that exist that have to do with protection of intellectual property and the access to the market of u.s. companies. u.s. companies have expressed, and continue to a great desire to invest in colombia. colombia is a country of 48 million people. it has a prominent role in the region and has ready access to other marks and it is really at a point where it should be developing in a very expansive way in t

they're going to suffer a lot if we don't get some agreement through -- i can't -- the european -- >> oecd. >> thank you. she said it for me. see, we've got to push those negotiations. we shouldn't be putting these i mean, we shouldn't have to put these tariffs on. we shouldn't have 20 different countries in 20 different ways working with our digital platforms to have a complicated system of taxation. that's probably very unrealistic to what business they do in that country. and an agreement, a global agreement is the only thing that's going to satisfy it.

but i also think it has benefit for the oecd. it can easy by be viewed as a northern hemisphere kind of thing. i think it's really important that southern countries around the world also find their own places in organizations like this. and so i would encourage you in that way. >> thank you. >> ms. royce, let me just put a pet issue of mine on the table for your new job, and that is in the area of education exchanges. of course we have a crown jewel education system, fulbright scholarships. i worry when we talk about education we dis career and technical education. i think there is an opportunity for exchanges in this case. if you apply for a pell grant in this country, you can use it on a college campus but you can't use it as an apprenticeship or career in a technical. if you're in the military like any son, you get a tuition assistance benefit. you can use it as a college campus. you can't use it to take a welding certification exam if you're an ordinance officer. we had a presidential scholars program for 50 years that recogn

thatcher, and now it's a little unclear where it stands, but a month ago the chief economist of the oecd made a presentation on the state of the world, and he said countries are doing everything right. now, understand, this guy's ideas of right are orthodox economics. countries are doing everything right and still going off the cliff. now one of the reasons i like working for rich trumpka, he was on the panel responding to that, and he said back and said if you think you're doing everything right and you're going off the cliff, maybe you're not doing everything right. [ applause ] i've got one graph for you. bad policy choices over a generation produced this truly bizarre outcome which is at the heart of everything that's gone wrong. the blue line on this chart is personal consumption as a percentage of our economy in the united states, and can you see that from 1990 and to 2010 it keeps going up and up and up. you go back to 1980, it moves up a full 10% of gdp, a gargantuan number. now, would you think that if personal consumption was rising as a percentage of gdp, that that would mean

that's the oecd, not me. and the united kingdom, another country a few weeks ago this committee was debating they are somehow stealing our ipos, they have a 42% higher tax burden than the united states. greece has a tax burden of 25% higher than the united states. even turkey's tax burden is higher. the only two countries that have a lower tax burden than ours are chile and mexico on this list. so i'd like to submit that for the record. i ask this mr. secretary because we heard if europe is somehow doing a good job dealing with their issues, and all they are doing is one side of the ledger which is the austerity measure which is fine, am i wrong to think that the u.s. made significant cuts in the last years through budgets? >> yes. congress reached agreement last summer to cut more than $1 trillion in spending over the next 10 years and if you look at what cbo said for example about what the impact of the president's proposed policies they would reduce our deficits dramatic where where the debt would stop goi

we urge that you continue your efforts to lower the corporate tax rate to be consistent with the oecd average and to simplify. we need to get back to the basics where businesses compete on the basis of the merits of their products and services, not on the basis of what the tax code says. thank you. >> thank you very much, mr. fryt. mr. schichtel, you have five minutes. >> thaupg. chairman camp, ranking member levin and members of the committee, thank you very much for inviting me to share our views on corporate tax reform. i'm the senior vice president and chief tax officer for time warner cable. i'd like to first tell you about our business and the impact of taxes and tax policy on time warner cable. then i'll explain why we believe that less complexity and a lower rate will benefit our investors, employees and customers as well as the overall economy and americans at large. time warner cable is a fortune 150 capital intensive domestic company that provides high speed data, video and voice services to over 14.5 million customers. we have over 48,000 employees in 29 states. we offer o

so here's an oecd chart. those show income inequalities and upper arrows show income inequality has been increasing. you can see the u.s. is i think second on the chart. here's a graph showing oecd growth rates from 1960 through 2014 and of course, these jump around a lot from year to year. we know about the business cycle and everything else, but what you immediately see when you look at this picture is the downward trend. it's not just the great recession which obviously was a very bad thing but this is apparent long before the great recession. so you go each decade, economic growth and per capita income has been lower throughout the rich world than it was in the previous decade. so that to me is one of the serious villains with the piece. so you have got slow growth, have yyou have rising inequality and that of course means some people get left behind. i just want to say some very obvious things but they are very obviously important, too. which is if there's high growth, everyone can have something. people

there might be other approaches, but many oecd countries do permit expensing of r&d. this is something we would want to work with you on and find a way to be supportive of more tech support for r&d. i would mention the president's budget proposes to repeal the foreign derived and tangible income feature of the tax law. >> madame secretary, can i interject? >> -- finance this. >> why is our proposal not in the president's green book? >> i think the president -- the president has proposed to repeal the fdii exemption, and to use the money for supportive r&d, but wants to work with congress to decide on what is the best approach to doing that. certainly open to this strategy. >> okay. well in consultation with other eminent economists and learned individuals, policy experts and colleagues alike, they believe that we would get a lot more bang for the buck through the american innovation and jobs act with senator hassan than we would through the fdii manipulation that you mentioned, and the two are not entirely equivalent. i'm going to move on in light of time limitations