mr. merlo, i want to follow on what my colleague was referring to in terms of the repatriation of foreign profits. i understand that c.v.s. care mark is not necessarily in that category. you are paying at almost a 35% rate. in essence, by paying a high effective rate, it seems to me that your company and others similarly situated is basically paying for the burden of loopholes and avoidance behaviors of other companies. so, do you believe that aggressive use of avoidance methods by competitors or the ability of companies to be able to take their overseas earnings and convert them into tax benefits here at home that ultimately provide them with a much lower effective rate, and you still paying a higher effective rate is a fair set of competitive standards? >> well, i think it certainly does create some competitive challenges for us. acknowledging that we compete with domestic companies as well as foreign nationals that have the opportunity to have a lower tax rate, and i think that it goes back

duke or mr. merlo, because your companies are in the retail business, you boat have high effective tax rates. what does it mean when you compete abroad against companies that are not u.s. based and i guess comes back more specifically to the question that when -- who are your major competitors? and where are they headquartered? what challenges does the tax system present for you as you seek to expand new markets around the world? >> senator, i could quickly name three large multinational retailers that we compete against around the world. tusco from the u.k., car 4 from france, and metro from germany. and it's interesting because we aring often competing for specific real estate sites to build new stores in markets around the world. that means there is an advantage in the calculation of return on investment. their return would be a lower rate, an example tesco in china we would compete against frequently, and the 25% rate of tax in china would be all that they would pay. we would pay the 25% and then t

duke or mr. merlo. what does it mean when you compete abroad with companies that are not u.s.-based? it comes back to the question that -- who are your major competitors and where are they headquartered and what challenges to the tax system present for you as you seek to expand markets around? >> senator, i could quickly named three large multinational retailer is that we compete against around the world. tesko from the u.k. and metro from germany. we often compete for specific real estate sites to build new stores in markets around the world. that means there is an advantage in the calculation of return on investment. their return would be at a lower rate. an example of tesko in china, we would compete against recently. we would pay the 25% tax rate and an additional 10% as far as the u.s. rate. all sell, and it comes into play when even acquiring the business, and then, as i mentioned, tesco is now building stores and growing in the u.s. we are actually opening the door for foreign retailers to have an easier entry to compete in the united states against u.s.-based retailer'

. >> thank you, mr. merlo. i think there is a feeling in the congress that we need to form the appropriate tax code, and individual, as well. it is different than years ago. lower the rate, broaden the base, move to territorial, and so forth. et -- that is sorted in the abstract of what needs to be done. -- that is sort of in the abstract of what needs to be done. more job growth in the u.s., rather than more job growth overseas. if the corporate rate is lower and the base is broad and, -- broadened, presumably, you have more flexibility with where you locate your plants, etc. what assurance do we americans have that as a consequence of this change, more jobs will be in the u.s. rather than more jobs overseas? we will start with mr. duke, if you could briefly touch on that. >> thank you, mr. chairman. first of all, i would say in the growth overseas, when wal-mart rose overseas, we bring american companies with us, and i would welcome any members of the committee to let us show you a wal-mart store in countries