Transcripts For CSPAN Trump Administration Tax Policies 20170419

Development and the Trump Administration. Are tax cuts,d budget reform, and how reforms might be affected by voters. It is one of the most polarizing issues in washington and one of the most difficult, and that is tax reform. As we heard in the last panel, it has been over three decades since we didnt copperheads of reform since then comprehensive tax reform. Unfortunately, as a essult, the United States tax have become less competitive. At ced, we came out with a bipartisan blueprints which you should have in front of you somewhere. The recommendation featured in the report level the Playing Field in making American Companies more competitive while not adding more to the debt. What we said in the report is that if you a limited if you things we have an expert panel and we to have jean as the moderator. Andcovers taxes, spending, other issues. Scott wheeler who is the chairman of signal hill. Pat mckay was a partner with appleton and company. We also have the cfo of many Public Companies including gnc welcome all and take it away. Is it on and can you hear me . Thank you for coming and i love the name of the panel. We will tell you whats reform is coming. Apparently nobody knows yet. Where working on it and the clock is ticking down for 2017. One of the major questions is what we get anything done and if so, what . We all have different opinions about that. I will let scott start as he has different opinions of where we are at. Are we ok . And iuess the answer, will put a stake out, the answer is yes. Lets not what you would expect. Back to the last panels and think about what we have witnessed so far in washington with the Trump Administration. We have an isolationist president who has a redline. We have china, who now is a friend and not a currency manipulator. , where peopleare had run for seven years against it and we dont have revealed. Planwe dont have a tax that anyone wants to go against. I think people have said the border tax approach in the ryan plan is affectively d. O. A. For all of us thats like to have certainty in our life, it is hard to think about what that all means. My message is for all of us is that step back is to step and have patience. If you thought about the previous things, you wouldnt and,expected any of them quite frankly, the Trump Administration seems to be moving. And moving into a more normal zone. For a lot of people in this country. My guess is not comprehensive tax reform as we talked about, because copperheads of tax reform, just like fixing health care and creating a permanent solution, really requires bipartisan effort. Bipartisans no conversation going on. Not to that im aware of relative to tax reform. Or health care. I think what youre are going to have with trump, the progrowth, projob guy, he needs to have small victories, and i think what we are going to see is small ball tax reform with a little r. This year or as late as next year. The stock market has rallied materially on tax reform and we are going to slip and a slight until we see something that it brings clarity around what businesses and individuals are going to be living with overtime. Thatt and mike are people have realworld experience working with Real Companies on the retail side and also multinationals and domestic market companies. They can both speak to the issue of what we can happen what we can expect it we get nothing. I think travesty. I want to know what would happen , with the markets tank and what is the leak amount we should do by december . Thank you. To have opportunity a couple of times to work through restructuring driven by tax motivators situations and companies that i was with, it has the ultimate benefit derived and anticipated, which was to reduce the tax burden of the companies that i was a part of. Ultimatelyate, driving cash offshore two. A lot of the things we are seeing, and the global marketplace with the cash that is parked offshore and the anxiety with that, i have experienced. As we had cash parked offshore, the next thought was, what do we do with the lovely cash parked offshore. Liked tos we wouldve deploy it doing deals, the reality is that when you start amassing that volume, there arent enough the to get to thats done. Broader example i have is that there are on exit unexpected consequences that, perhaps at one time were wellintentioned, but the ultimate consequence is not so good. I think the travesty is, if we were to continue down a path of allowing that to happen over, and over again, i think many attribution for that phrase. I think we have to figure out a different way to solve for this. On the global side, i would expect that the multinationals will expect how to be adaptive and overcome, and change the dynamics of what their structures would be if there were changes to move to a territorial system of some sort. When you look at the small and mediumsize businesses, they get lost in the conversation because there are so many that can lobby for the large companies, but the small companies, those are lost. That is 50 of the gdp for the u. S. I think we need to also address that. The travesty is that the opportunity where missing in the is making sure that the folks have been that e been burdened the cost so you have global companies, the largest of the fortune 500 are paying somewhere along 19 for federal income tax buried you look at the partnerships, and they are effectively paying about 30 . At the state income taxes and other taxes, and you have a huge imbalance. I think we need to set thats right and i think there are opportunities to make Something Different happen in this country if we are able to do that. Like . Mike . And iind it interesting think our taxes are over and we should go for simple. As we look for simple, some of the things like border adjustment tax, where we are going to start taxing the imports and calling out to the profitability associated with like somethings for Tax Accountants Going Forward and increasing complexity. To start with the great intentions of simplifying and trying to eliminate the incentives for businesses to and ofoduction offshore the solution is a further complexity, it is what i think that the solution has come down to be. Basically, dead on arrival. Tough road for us to be looking at, but i do think that the challenge that we have is the complexity that exists in the current tax code favors the large corporations. Complexity favors the prepared and the prepared are the ones who have access to all of the consultants. The use there is these people that figure out how to move money back and forth, but it is complicated. Do not havesinesses that same capability. I think it is significantly disadvantages i think it significantly disadvantages and i think anything that involves tax reform should involve corporate as well as the individual. One of the best things i heard about the border he said the noneconomist shouldnt be able to understand nine intuitively. And i said, that is good because i dont. Our president is a noneconomist that relies on his gut above all else. Saying this is not an awesome tax. It is kind of dead on arrival, but im wondering if anyone here thinks it is salvageable. Are there any tweaks that can be made whether it is the transition. , excluding certain products from the import tax, and then secondly, the president wants an import tax. Complexity or not, thats maybe coming down if he calls for that. Hear if you to think that is salvageable. As it stands, no. I spent a fair amount of time in the retail space. If you look at retail, they are really struggling. Intermediate there ring about every retailer they have been very tepid at best. I think youre going to have the retailers stepping up and saying, not here, not now and with concern about what will ultimately happen to pressure on pricing, their margins great some of thats might be passed on to consumers as well. Maybe its a form of selective taxation like imports. I dont see a broad range adjustment for an export. So being selective on which products. Ok. I think the challenge of the problem around the border around taxing currency adjustments is that it is not intuitive nor simple. In terms of message and why we are trying to do it. What it really is about is incremental revenue. How do i find taxes and revenues to allow me to do something else. The easiest one that is out there that everyone knows about, whether we tend to believe dollars are spoken for, are repatriating dollars over seas in some form or another. Everyone assumed the deal there is around Infrastructure Spending in utilization. Lets not give ourselves all these dollars in the context of what they are and how they work. I think theres a lot higher probability of an infrastructure repatriation or a tax dollarstion of foreign and a territorial system being so the border tax, for it to work, you would need to have a corresponding offset in the u. S. Dollar. The u. S. Dollar would need to appreciate roughly 20 , which magically some people believe is going to happen because you are going to create these cheaper exports and therefore, these companies and countries will be buying dollars and magically driveup. Ability tolieve the move the most liquid Foreign Exchange market that exists is somewhere between slim and none. So, without that, you are going to wind up with this being incredibly burdensome on the average individual. The consumers really going to take this on the chin. Anytime someone hits me with a bat, i know it hurts and this would hurt. Everyone is saying you want to do corporate reforms and pass through reforms for the middlemarket businesses that are paying the individual code. It is mid april. We heard from all the other panelists how many things are on the legislative agenda and are not being completed and its hard to see when they will be or how they will be. What has to happen by december . Dubious you can do even comprehensive business tax reform, but disagree with me. Tell me why it is possible. A bit into this discussion of what means tax reform . Companies across the country, tax reform means what is my tax bill going to be . If theres a component that talks about how complex, how long does it take me or how many people do i need to hire, you thought the press card and you are done with your individual , at the end of the day, the overarching factor here is the companys pass through, that maybe down what we what we are down to in terms of an opportunity to do something. If you look at the consumer sentiment, Small Businesses have had market increases in terms of overall sentiment. Theres a huge spike post election for whatever you think of our current president , Small Businesses have stepped in and said we are enthusiastic about this. However, they have not stepped up and started doing anything in terms of employment, dialing that apple were doing any kind of investment spending. They are optimistic, but it is not with real force behind the optimism. Expecting tolly get the economy moving and make America Great again, this president is going to figure out how hes going to do that and hes got to get the tax rate and bring money into some of those coffers. You said it was getting rid of tax breaks and thats the hardest thing. Everyones always happy to cut tax rates but they can never figure out how to pay for it. Sitsm not somebody who around in washington dc, but it occurs to me that it has to get done and if there is a deficit, my conservative roots are not showing at this moment. I think we have to do and we will have to figure out how to absorb some of that if we have to. Democrat inhe President Trump will remove or not care about the constraint of deficit neutral and i think all of us are thinking about naturally because we have been hearing about it for years. I think thats one more negotiable topic and quite frankly, for the growth president , the only way he has a chance of stimulating incrementally the economy before the Midterm Election is having some win around tax reduction for individuals and corporations to be able to say he got them something and that is going to translate into higher economic activity. I dont see how you do it without incremental deficits and i think that was part of the Faustian Bargain of getting donald trump as our president. Anyone who has ever done budgeting knows the one thing that cures everything is growth. We know that from corporate and the same is true in government. I think if in fact this administration can get some wins that can be parlayed i wont use the word transformational tax reform, but the flipside is if in fact this administration can eliminate a lot of these tax preference items and eliminate the picking of winners and losers and reduce tax rates corporate as well as the personal and pass through once, if a lot of these economists are half light on what it could do for gdp, growth cures all. It doesnt quite sure all, but it is helpful. The issue of getting rid of all of those tax preferences, those are all lobbybacked somerences and unless for reason paul ryan and donald trump and Mitch Mcconnell and nancy pelosi and Chuck Schumer hold hands and say yes, we are getting rid of all of them and everyone can not reelect us, to do. Ght be hard i think its the cleanest way to do but max baucus gave Committee Members 50 years of confidentiality if they would just write a letter and say which tax breaks are you willing to give up. Years of confidentiality because they are also afraid to say lets get of mortgage reduction or net interest expense the duction. A drop to 28 in terms of bargains, if i were in trumps shoes, one would think hes got to get something to show he is accomplishing and moving some programs forward. That may be they beginning of something he could get a little traction on. Everyone talks about this in absolute terms but yet they dont talk about it in public. Lets try this with a show of hands. How many people would agree to a on the duction of all expenses, state and local taxes and insurance, charitable deductions, etc. How many people would agree to a cap of 200,000 right now. Brazier hands. That is more than 60 of the group. And i think that was the trump plan. Actually been a romney plan also. It is interesting. People dont hear that or ask the question or listen to the response because truth he told, the people who can pay the most in taxes will be more than ifling to do what is right there was actually a solution to some of the problems that we have relative to the budget. Always weal here is will raise your taxes or reduce your taxes, but we are not really going to fix the problem and we will come back to you later. Fundamental tax reform is going to take more than six months. Its probably going to take more than his first two years, especially if you try to do on a bipartisan basis. But i think there is plenty consensus in the market that people would agree to caps and do things to find revenue to be able to offset and do the right thing. If you just cap deductions, it wont raise nearly enough for the types of rate cuts they want to make. In the paper it estimates if you lower the get rid ofate and all tax breaks for corporations and get passthroughs, then that is revenue neutral. Trump i almost said president bush. President bush President Trump said he wants to lower it to 15 . The other way and, 25 for corporations 20 for passthroughs. 20 be enough to satisfy . He urge people are jones and we are at 35 today, so moving it down seven points would be a step in the right direction. I think people would rally around a movement of some order thatgnitude and i think probably fits the litmus test , that washington is not a completely immovable object. You think about anything, the people i talked to day in and day out is good grief, is washington ever going to be able to do anything . Eight years after the aca and some of the programs to ,elp fix the finance problems there has been nothing that has occurred in washington, nothing. I think some movement would be some form of gratification. Why do we elect these folks to come to washington to just watch them continue to do nothing . For all of those elected office, if for nothing else, some reason to move the ball forward in that regard. Some of the things where i have seen some start with bipartisan thoughts around small to mediumsize businesses, there are a couple of items in bills floating around that talk about to to address small mediumsize businesses, so maybe there is something that could occur. I think it was coming out of lorna, some of the legislation proposed. I think about highly performing passthrough entities we have seen that are effectively being taxed right , a at 50 plus percent marginal rate in terms of income. With federal, local and state. Then obama incremental taxes to that. What is the stimulative effect on the economy in employment for any of those firms if you suddenly eliminated 15 points of their tax. That is not trivial for anyone in the context of employment growth and investment and opportunity. Get 20 . Be ok to you would have thousands of people jumping up and down saying that would be unbelievably positive to the economy. All at once . Is it 100 . I doubt it, but there are a series of steps you could take incrementally to make demonstrable progress forward. Side, impolitical trying to think about the democratic point of view looking at the rhetoric of we have to cut spending, but donald trump wants nothing to do with cutting Social Security and medicare which is where the bulk of the debt driven spending is going to occur. Theres been a real focus on Discretionary Spending and defense nondiscretionary. So they say were going to cut rates to 28 we are not going to offset because we didnt talk to joe and we are just going to run with the rate cuts, so we are going to do and infrastructure bill and add to the deficit there. There may be a few other things President Trump wants to add to the deficit but at what point does it become too much . I think we will know it when we see it. [laughter] have a crisis to actually have to do something about it. One of the previous panelists said exactly that. It is a crisis that will create our focus on it and it needs to be a focus. We have a 20 trillion debt problem. We dont have a because we didnt collect enough taxes. We have to do something about spending. I want to try it a different way and go back to infrastructure because i think its one of the only topics republicans and democrats generally agree about other than what the project actually are and how much we can pay for, which are no small issues, but the notion of a national reinvestment in physical infrastructure around the , we have a number of places in major cities that look and feel like a third world. The notion of doing that on a prioritized basis and distributed from some of the major cities such as other parts of the country are able to that is something that resonates and shows progress. It is jobs and employment and its going to happen in one form or another. Its hard to say you should not on fiftyyear projects or 100 year projects which are going to make a big benefit to the economy. You would not have had that with a normal republican ofinistration because physical restraint. You have the opportunity to do something everyone is talking about. I just dont understand why we are not on the and wagon and i think would make a big difference. Does it matter if they do it publicevenue or a public you put forth the tax credits and leverage it for private investment . It seems like the president has moved back to just spend a trillion dollars. Its hard to tell. I think like anything, its going to evolve and we will see where it is but there are a whole set of projects that could be done with a better Regulatory Environment with permitting and accessing and around building do people really care whether it is tax credits that are partially used to fund and finance this versus going big and spending more . I think people would rather probably roll it out and do it , but get0 billion now going and start doing it as opposed to talking about it. To be the advice to washington at all times. Turn it over to the audience. I know taxes are not interesting to anyone and you probably dont have any questions. But if you do, i will be passing a microphone around. Thank you for a very interesting talk. Here and thank you for a very interesting discussion. You made a point in responding to scotts. 2 say weve got everysts who represent one of these special favors reflecting special interests, we have a transformative potentially president here. If you think there thise an opportunity for bipartisan Business Organization justd the ced to speak to taxtax reform or infrastructure issue. I know there are bipartisan groups in the no labels group that has talked about such a bargain and im just wondering if it is time for us to elevate cedsmmunicate once again position because we do not represent any special interest. Is it fair to say ceds position should be revenue neutral . Week came from the point of view that the driver for revenue is reality. When you start to make massive change in the tax structure, bite definition, you are moving things around. Things like a border adjustment tax sounds great but in essence, im not sure you get anything out of it. Anber two, you could do incredible damage to Certain Industries while favoring others. It gets back to the crony capitalism issue. Our view as it relates to Corporate Tax reform, we have thetaken issues on individual side. Speaking as joe minner it, which is difficult to do without a beard, the simplest way is to try to level the Playing Field and approach the objectives of what was accomplished in 1986, which was a bipartisan agreement that simplified the structure, lowered rates and ignited what both sides i think would agree was a great growth europe. The question is how do you do that today in a different political environment . That is why i think the paper we have just written says eliminate preferences come a lower the rates as far as they would go, which would be 28 , which puts us in the average cannot declare victory and go home but at least show some progress and get some growth going and you can go from there. So thank you for asking. Role ced can uniquely play, but it has to be all of us that play the role organically as members and friends of ed. Hands see a show of i assume youre all involved in businesses of different sizes. Rate and topate rate was passed for passthroughs was 28 , would that work for your business is . That is weird. Ok. Is that because 28 is too high or you just dont even that . Should it be higher . No. Lower. Much lower. Is 25 the goal . Lawmakers need to know this. They are not anywhere where they need to be. I think youre not getting the response because you are offering the goodies without the cost. You are asking us what rate would we like to have as a lower rate but youre not saying what. S the tradeoff what are we giving up by the way of closing loopholes. Thats why i would not raise my hand without hearing cost. Because you believe it should be paid for. Does everyone here believe tax cuts should be paid for at least in large part . That is the majority of the people in the room. The with individual. How do you bundle those things in an efficient and timely way if you cannot do a Global Solution because the clock is ticking. Points on the board means you have to do easier things than the big solution that really fixes all problems, i think. Let me pull the audience. If Congress Passes a rate that of some kind for businesses and corporations but doesnt offset it or do any of the hard stuff, is that a plus or minus in your book . Who is in favor of that happening at the very least. If you have been promised a bunch of things that may not happen. Two people. Do something. Keep the momentum going. Everyone thinks we should do something to offset the rate cut if we are going to do something this year. As a Significant Shareholder in one of those passthrough organizations, ive spent the last decade creating more jobs and supporting other enterprises , i would say it would make a germanic difference in our prospects for hiring and investment, almost immediately if that happened. Feels thewn pocket friendly, the Playing Field we would be operating on would change and that is why i would be for that. I had read President Trumps original tax proposal did not thatthe clause passthrough shareholders had to have reasonable income. That was one of the concerns that everyone would end up being a dollar for your contractor. Im happy to hear that. Thats one of the concerns i had about that proposal. Im talking about the original one, preelection. We dont know that will stand and twice he has promised it, so we have to wait and see. Please join me in the panel