Kevin Brady on the Business of America
By Rep. Kevin Brady, Special for USABR.
House Ways and Means Committee Chairman Kevin Brady(R-TX) today delivered a speech at the U.S. Chamber of Commerce. In his speech, the Chairman discussed the Committee’s pro-growth agenda in 2017 for tax reform, health care, and trade.
Remarks as prepared for delivery:
“Thank you, Tom, for inviting me today to speak about our ambitious pro-growth agenda. I’m honored to have been elected to Congress the same year you were named President and CEO of the U.S. Chamber.
“Throughout these years you’ve been a tireless champion of American business large and small, and continue to steer this dynamic organization through uncertain U.S. and global economic waters. Thank you for your outspoken and outstanding leadership.
“As a former Chamber of Commerce executive I was fortunate to devote most of my adult life to helping start small businesses, creating positive business climates, and recruiting new industry to our communities.
“I know firsthand how critical the Chamber’s work is here in Washington and around the world to creating jobs and growing opportunity.
“Today, after eight years of sluggish, subpar growth and runaway Washington regulation, the American people are eager for pro-growth solutions to get our economy moving again. The Chamber’s growth agenda, President Trump’s focus on job creation in America and House Republican’s Better Way Agenda create, as Tom Donahue stated in his recent State of American Business address, ‘a once-in-a-generation opportunity to enact major reforms that could transform the American economy from a low-growth to a high-growth economy.’
“On the Ways and Means Committee we’re incredibly excited and prepared for the opportunity before us. With jurisdiction over taxes, health care, trade, and key entitlement programs, the work of our Committee will be front and center in President Trump’s pro-growth agenda.
“Today, I want to share with all of you a few of our priorities for the year ahead and the actions we’re planning to take to get America’s economy moving again.
“First, as many of you know, repealing the Affordable Care Act is a top priority for both President Trump and Congressional Republicans.
“While the Affordable Care Act has helped some in our nation, it has also inflicted tremendous harm on millions of families, patients and small businesses. Each year, the damage grows larger, more widespread, and even more difficult to repair.
“Health insurance premiums are skyrocketing – often to more than $10,000 a year for individuals and families. The costs are often double or even triple that amount for small businesses struggling to provide affordable coverage to their employees.
“Choices have disappeared along with competition. Over the last year alone, we’ve seen a remarkable decrease in the number of insurers offering coverage on the ACA exchanges. They have been forced to exit countless marketplaces after suffering unsustainable losses.
“Along with rising costs, the significant decrease in choice is one of the top concerns we hear from our constituents. Take it from Kathy in Missouri, a small business owner in Ways and Means Member Jason Smith’s district. In a recent email to Jason, she said:
‘As a small business owner, I recall the days before the ACA when we would receive a 2-inch notebook that contained multiple quotes from different health insurance companies. Now, our options are listed on a single legal sized sheet of paper.’
“In a growing number of regions, people and families would be lucky to have a list of choices that fills an entire sheet of paper. For over a million people, there is only one insurer left on the local ACA exchange. For these Americans, there is really no choice at all.
“Here’s the good news: Relief is on the way.
“On January 13, the House passed bicameral budget legislation that officially sets the repeal process in motion. In the coming weeks, several Committees in the House and Senate – including Ways and Means – will craft a bill to repeal Obamacare and begin putting in place the careful, thoughtful, step-by-step reforms that offer Americans more choices, greater access, and higher-quality care – at lower costs.
“While existing Affordable Care Act plans will stay in place until the transition is fully complete and the free market restored, Congress will act this year to enact these reforms.
“In our Committee, we will be responsible for dismantling the poorly designed subsidies as well as repealing the damaging taxes and mandates that have driven up costs, driven down quality, and driven out competition.
“From there, Ways and Means Republicans will remain focused on advancing thoughtful, step-by-step legislative solutions to deliver the 21st century health care system Americans deserve. A system based on what patients and families want and need, not what Washington thinks is best.
“And while health care will continue to be a major focus for our Committee, you all know that we are also moving forward aggressively on pro-growth tax reform this year.
“Tax reform is truly one of those once-in-a-generation opportunities. We are committed to seizing it in a bold way.
“If we are serious about transforming America from a low-growth economy to a high-growth economy, we must move America away from its costly, complex, and unfair tax code.
“Last April, I had the honor to speak at the Chamber on Tax Day about our approach on tax reform and the path forward. At that point, we were just a couple months into developing our Better Way tax reform Blueprint.
“That day, I was excited to announce that we were working together to design a tax system that is built for growth and would leapfrog America back into the lead of the most pro-growth tax systems in the world for new jobs and new investment. And, I said then, we would enact that system into law in 2017.
“Very few predicted President Trump’s election with Republican majorities in both the House and Senate would move us to closer to pro-growth tax reform than at any point in the last 30 years.
“Right now, our Members and staff are hard at work turning the ideas of our Blueprint into tax reform legislation that delivers the 21st century tax code our nation needs. A tax code that is built for growth—the growth of families’ paychecks, the growth of local businesses, and the growth of our economy as a whole.
“In developing our Blueprint, we made a purposeful decision to consider and incorporate some of the boldest, most pro-growth policies available.
“These are solutions that will not only transform America’s tax code but completely reframe the tax discussion in our nation. It’s time for this discussion and we welcome it.
“By focusing on three crucial goals – growth, simplicity, and service – we deliver the modern, competitive tax code America needs to be a global economic leader.
“When it comes to growth, we go all in with the lowest tax rates on American job creators in modern history. Businesses large and small will all see their tax burden reduced dramatically. Washington will take less so local businesses can invest more in their workers, their community, and their future.
“In addition to lowering rates, we take bold action to unleash investment in America.
“For the first time in our nation’s history, businesses of all sizes will be able to immediately write off the full cost of new capital investments. This creates a tax-free return on purchases of new software, buildings, equipment, machinery and technology that businesses need to produce and compete at a higher level. These are key to increased productivity that drives higher wages and higher economic growth.
“And, for the first time in our nation’s history, we will finally end the ‘Made in America’ tax on U.S. exports—a completely backwards feature of our current tax code that makes it harder for U.S. businesses to compete globally and create jobs here at home.
“This policy—sometimes referred to as ‘border adjustability’—is very simple, but it’s also very powerful. It will be a game-changer for our businesses and our economy as a whole.
“For decades American companies, large and small, have been competing with one hand tied behind their backs thanks to our unfair, outdated tax code. American jobs are being lost to foreign countries and U.S. companies are urged to move their manufacturing plants, new technologies, and headquarters overseas. Whole communities have been devastated as good-paying jobs continue to leave the U.S.
“Today ‘Made in America’ products and services are at a tax disadvantage here in America and around the globe. That’s because foreign competitors like China, Europe, Mexico, and Canada all adjust their taxes at their borders—adding taxes to American-made products and taking taxes off their own.
“Because America doesn’t border adjust, we lose both here and abroad.
“This means today Chinese steel is cheaper here in the U.S. than American steel. Mexican beef and autos are cheaper than American beef and autos. Foreign oil is cheaper than American oil.
“This tax disadvantage on ‘Made in America’ products and services destroys true competition. Worse, it often means the best location for a U.S. company to sell to America is overseas. Why accept such an unfair and job-killing tax code?
“The House GOP tax reform blueprint finally ends the ‘Made in America’ tax. By border adjusting our taxes like our foreign competitors do, we level the playing field. For the first time in U.S. history, foreign imports and American-made products and services will be taxed at exactly the same rate here in America. No more tax advantages for foreign products or services. No more incentives for U.S. companies to move overseas. Everything taxed at exactly the same rate in the U.S. —what can be more fair?
“More importantly, border adjusting our taxes helps eliminate all tax incentives for U.S. companies to move their manufacturing, technology, headquarters, and jobs overseas. Coupled with the new lower GOP tax rates on local businesses and ending the double-taxation of U.S. earnings overseas, this establishes America as a 21st century magnet for new jobs, technology breakthroughs, and headquarters.
“The GOP tax plan is already driving companies to ask themselves ‘How soon can we bring our suppliers back to the U.S.?’
“And while it’s new to America, border-adjustability is used throughout the world to give our foreign competitors a big advantage over the U.S. We match them, not with a hidden VAT, but with a simpler, smarter cash-flow tax based on where a product is consumed rather than today’s business income tax based on where products are produced or profits booked.
“This border-adjusted tax is stunningly simple and based on a pro-growth principle: if your product or service is consumed in the United States it is taxed equally. It will bear the same rate of U.S. tax regardless of where it is produced, regardless of whether you’re a foreign company or a domestic one.
“In tandem, if your product, service, or intellectual property is developed here and sold abroad, then your ‘Made in America’ export will no longer be subject to U.S. tax. This change immediately levels the playing field with our global competitors.
“Many of our international companies already deal with border adjustable taxes in the more than 100 countries that currently impose them.
“At the end of the year businesses will add up export sales and disregard them—they aren’t taxable. And at the same time you’ll add up import costs and disregard them—they aren’t counted as deductible expenses. Naturally, businesses are already doing these basic calculations anyway.
“In the end, eliminating the ‘Made in America’ tax is a simple, but powerful action we can take that will dramatically simplify our international tax system and level the playing field for American businesses and workers.
“But make no mistake, there are severe consequences for America if special interests succeed in blocking this provision. Foreign products would continue their tax advantage over ‘Made in America’ products—undercutting President Trump’s focus on American jobs and growth. Tax rates on businesses would have to increase significantly from the proposed 15% and 20% rates, undercutting our ability to make America competitive again.
“But perhaps most importantly, Congress and the White House would have voluntarily left in place the damaging incentives for U.S. companies to move their jobs, research, and headquarters overseas. We cannot let that happen.
“Our goal is not simply to eliminate all tax incentives to move overseas, our goal is to establish America as a magnet for 21st century investment and job creation.
“Understandably, some companies that import a lot of foreign products have concerns. Taxing both foreign and ‘Made in America’ products at the same rate is a big change. We are listening to their concerns and we welcome their feedback.
“We continue to invite CEOs to engage constructively on the design and transition of this critically important provision so that imports and exports continue to contribute to our local economies.
“And while the focus in Washington today is on business taxation, when it comes to simplicity for individuals and families, we are proposing to end the maze of special interest provisions that increase confusion and keep rates artificially high for everyone.
“By taking this action, our Blueprint flattens out tax brackets and brings down rates for all taxpayers. And, come Tax Day next year, we will have a tax system so fair and so simple that the vast majority of Americans will be able to file their taxes on a form as straightforward as a postcard.
“Finally, we know that a simpler, fairer tax code demands a simpler, fairer tax collector. So we are proposing to bust up the IRS—redesign it into an agency with a singular mission—Service First.
“Instead of the unresponsive and unaccountable agency that exists today, the 21st century IRS will be streamlined and centered around three distinct service units. Each will be trained to provide top-quality customer service to individuals, families, and businesses.
“Our Committee will be working closely with President Trump to deliver the bold reforms our nation needs. And we absolutely welcome our colleagues on the other side of the aisle to this process.
“We’re going to consider every good idea—from both sides of the aisle—about how to unleash investment, job creation, and economic growth here in America.
“Finally, we are asking all of you in the business community to be a partner in this crucial effort to grow our economy and improve the lives of all Americans.
“We need your partnership and we greatly value your vision and expertise.
“As we take the next steps on tax reform, I’m asking all of you to consider our proposal as a whole and how its provisions—working together—will help your companies compete and succeed here in America and throughout the world.
“We have already received outstanding feedback on our proposal from many of the companies and industry leaders represented in the audience today. With your continued participation, I am confident we can get the details right and seize this once-in-a-generation opportunity for pro-growth tax reform.
“Along with pro-growth tax reform, our Committee is also focused on advancing a pro-growth trade agenda—one that opens up new opportunities and enforces our rights so American businesses and workers can compete and win around the world.
“With 96 percent of the world’s consumers located outside the United States, the growth of our economy depends on our ability to access and sell to customers worldwide.
“And because we have some of the best workers and products anywhere in the world, we know that if we can reach these consumers, we will be successful.
“As President Trump considers the path forward on trade, my recommendation is simple:
“Let’s maintain what works for the American people, fix what is not delivering results, and keep America in those fast-growing world regions fighting to win new customers and sales for our businesses and workers.
“To support lasting economic growth, it’s not enough to just buy American products and services—we have to sell American too, and we have to do so throughout the world.
“The Ways and Means Committee is incredibly excited for the year ahead, and we are eager to work with all of you as we move forward with our pro-growth agenda.
“From health care, to tax, to trade, and to regulatory reform, we want to hear your ideas to grow the economy. We are dedicated to creating an environment where all of our local job creators have a greater opportunity to think big and take bold actions of their own.
“Because, only when American businesses and workers succeed can our economy reach its full potential.
“Thank you again for having me. I am happy to take your questions now.”
