Ways & Means Members Criticize Complexity of the Tax Code and Tout Tax Reform as a Way to Spark Economic Growth

 WASHINGTON, DC – The Ripon Society held a policy breakfast yesterday morning with Chairman Dave Camp (MI-4) and nine new Members of the Ways and Means Committee, who criticized the complexity of the current tax code and touted tax reform as a way to spark economic growth. The new Members included Representatives Lynn Jenkins (KS-2), Jim Gerlach (PA-6), Tom Price (GA-6), Adrian Smith (NE-3), Erik Paulsen (MN-3), Kenny Marchant (TX-24), Rick Berg (ND-AL), Diane Black (TN-6), and Tom Reed (NY-24).

After introductory remarks by Chairman Camp, Congresswoman Jenkins took to the podium, introducing her fellow members of the tax writing panel and offering her own views on tax reform as well. “I am a CPA by profession,” Jenkins stated. “I came to Congress with one goal being to turn the tax code upside down, and see some major reforms to simplify it, broaden the base, and flatten it out a bit. Chairman Camp likes to say that the code is ‘twice the size as the Bible, but with no good news.’ I will die a happy woman if we can achieve tax reform during my short tenure in Congress.

“I know there are many Kansans that want to see this goal achieved, from our aircraft manufacturers who are trying to compete internationally and are very much concerned about moving to a territorial system, to the small business men and women who still cannot figure out why they are paying the alternative minimum tax, to our farm and rural folks who are concerned about being able to pass their farms on to the next generation and are worried about what the death tax might do to them. We’ve got some heavy lifting to do in the years ahead.”

In his comments, Gerlach echoed Jenkin’s remarks and discussed what he has heard from the people he represents. “My District is one with a lot of biotech, biomed, medical devices, and pharmaceutical companies, but also steel and agriculture,” the Pennsylvania Congressman stated. “It’s a really diverse economy. And as Lynn mentioned, just talking to our constituents, they talk over and over again about the things they have to face with the tax code, regulatory burdens, healthcare costs — all that is preventing growth in business. I have a simple formula that came together in my head which demonstrates that we must be on the right track — it’s 1.4 million, 3.8 million, 9=70.

“What that means is that we had a tax code with 1.4 million words in it in 2001. We now have a tax code with 3.8 million words as of this year. We also have a 9 percent unemployment rate that seems to just be stagnant at that level. And when I did a tele-townhall meeting in my District the other day, I asked if people thought we ought a have tax reform generally. It was a very positive ‘Yes!’ Then I did a survey question, asking, ‘How many people thought we ought to reduce the corporate rate from 35 percent to 25 percent?’ People pushed one or two on their telephone key pad to vote. It came back 70 percent that we ought to reduce our tax rate from 35 to 25 percent in order to create jobs.”

In his remarks, Georgia Congressman Price praised Camp for his leadership of the Ways & Means Committee, and offered a legislative preview of the coming weeks and months, as well. “If you look at what this Congress has done this year – what it has accomplished and sent to the President’s desk — the vast majority of bills have come from this Committee. The 1099 that the Chairman talked about, the three percent withholding repeal that was just passed and will head to the President’s desk, the trade bills. These are substantive issues, and they are coming out of the Ways and Means Committee. I would say they are coming out, not just because of jurisdiction, but because of the leadership of Dave Camp.”

Looking ahead to the possible recommendations of the deficit supercommittee, Price – who also serves as Chairman of the House Republican Policy Committee — offered some perspective on the panel’s timetable and the role of the Administration in the debate. “I think it is important to appreciate that November 23rd is a deadline, but it’s not the deadline. December 23rd is the deadline, and I think that regardless of what happens by November 23rd — and it’s looking less likely rather than more likely as you all can tell if you read the tea leaves — I think it is wholly possible that by December 23rd, the sense of responsibility and the dire situation that we find ourselves in from an economics standpoint will hopefully knock on some people’s craniums and wake them up and allow them to recognize that we have to get a working product to the floor of the House and the Senate and then to the President’s desk. I don’t think the calamity of November 23rd is what some people have described.”

“Secondly, let me just suggest to you that if the President’s numbers continue to be where they have been for the last 18 months, it is my sense that the Administration is going to be looking at the same numbers, and they are going to try and put something in their basket that says ‘business friendly.’ They think they are very business friendly. I’m not sure how they come to that conclusion, but they do.”

In comments that followed Congressman Price, Nebraska Congressman Smith discussed what ‘business friendly’ means in his District and how tax reform would help the families and businesses he represents. “When you talk about the corporate tax code and the need to reform it,” he said, “I tell people that my constituents’ most common request is to be left alone. And I tell them that I am all over that. We often hear about the effort to try to protect the family farm. I’d prefer to take that a step further and try to strengthen the family farm and have it become competitive. When you see the innovation that comes from agriculture, certainly we could see more of that with a more straightforward tax code.”

Smith’s views about tax reform’s impact on his constituents was shared by Congressman Paulsen, who discussed the number of companies that are located in his district and how reforming the tax code would help them. “I am blessed to come from a District with a high number of headquartered companies and the employees of these companies,” the Minnesota Congressman said. “If you think of 3M, Medtronic, a heavy presence of Boston Scientific, Target, Cargill — all those employees are coming from my District. They are well educated, they are globally connected, and they are aware of why the tax code makes it more challenging for them to compete internationally. I am a strong advocate for having a pro-growth tax code. The foundation that is being laid by the Committee membership and from the Chairman’s leadership perspective is so critical, because it’s not just about fairness or simplicity or reducing complexity. It is also about competiveness, and I think that is really critical.”

“I would like to see a tax code that promotes savings, investments, hard work, achievement, productivity and risk-taking, so we can get our economy back on track. I really am hopeful that the Committee’s efforts are going to go on in that direction. Probably the best hour of the week — and I tell people this — is Dave Camp’s one hour Ways and Means luncheon that we have with the Members only. We learn more about politics and policy in that hour than at any other time. It really is a good leadership tool to keep us talking and to keep us on the same page and to keep moving forward. I think that’s why we’ve got some strength on the committee, and why I think we’ve got good direction on the committee.”

In his remarks, Congressman Berg also brought the debate back to the people he represents. “About ten years ago in North Dakota,” he stated, “we were in a financial shortfall like many other states. So we said, ‘You know, what we’re going to do is tighten our belt, we’re going to tighten our budget, and we are going to encourage the private sector.’ And it transformed our state. We are at three and a half percent unemployment today. North Dakota’s economy grew at seven percent last year. Now, what we did was we took those areas that we knew industries were going to grow — like energy and agriculture — and we removed the barriers and encouraged that growth.”

“Government doesn’t create jobs — the private sector creates jobs. It’s as simple as that. If the government is going to take a dollar to go out and create a job, where does it get that dollar? It’s taking out of the economy, it’s taking out of small business, and it’s taking out of our pocket so we can’t create those jobs. From my perspective it’s simple. It’s not easy, but it’s simple. We need to create some certainty. We need to have stability in our tax code that is fair and encourages capital investment. We are going to have a hearing today on the territorial system that I think is key. This is a big battle; we need to have stability so you know that if you’re going to make an investment, the rules aren’t going to change next month.”

Congresswoman Black also talked about the business-friendly climate in her home state – a climate, she said, that would be made even better if the tax code were to be reformed. “I’m proud to hail from the state of Tennessee. We are a right-to-work state. We are a pro-business, pro-growth environment there. I’m proud to say we are the lowest per capita tax burden in the entire country. We are also the lowest utility cost overall in the entire country. We have no self-tax on industrial equipment. We have no state income tax, and we have been named the 13th friendliest state for small businesses by the Small Business and Entrepreneurship Council. So you can see why I’m so proud to hail from such a state. But despite all that, we still have a 9.8 percent unemployment rate in our state.

“I’ve spent the last 11 months since being elected going out and speaking to our businesses — small, medium, and large. I ask them, ‘what can I do for you?’ And just like Adrian, most of them say, ‘Just get the heck out of my way. Stop putting mandates and additional taxes and more burdens on us. We know how to grow our business if you all in Washington would just leave us alone.’ But one thing they do tell me is that if I was to do anything for them, reforming the tax code would be very, very helpful. To make it something that is simpler, fairer, and flatter. I applaud our chairman. Over the last 11 months that we have been here, which has already been said, we have meetings once a week, and those meetings are informative. The Chairman believes we should know what the current tax code says before we reform it. And I think that when we do get that opportunity, that we will be well prepared.”

New York Congressman Tom Reed concluded the event by, like his colleagues, praising the leadership of his Chairman and talking about the impact this year’s freshman class has had on the debate. “It’s an honor to be on Ways and Means,” he stated. “It is a great group of people who are dedicated to the issues and dedicated to the work necessary to get this right. That all starts at the top with Chairman Camp’s leadership. He truly is a gentleman, and truly is a guy that I look up to and can rely on. What I try to do everyday is to not engage in tax politics, but engage in tax policy. And I think you are seeing that in the freshman class. I think it’s more about policy and getting the substance right before we worry about politics. I think that cultural shift is good, and I think the freshman class has been a big part of that. I’m only optimistic moving forward that that culture will become ingrained in Washington, and we’ll continue to do our part.”

The Ripon Society is a public policy organization that was founded in 1962 and takes its name from the town where the Republican Party was born in 1854 – Ripon, Wisconsin. One of the main goals of The Ripon Society is to promote the ideas and principles that have made America great and contributed to the GOP’s success. These ideas include keeping our nation secure, keeping taxes low and having a federal government that is smaller, smarter and more accountable to the people.