Morning, everybody. Welcome to todays event sponsored by the Tax Policy Center. My name is mark mazur. Im the director of the tax policy from which is cosponsored by the urban institute and the brookings institution. Ive been at the Tax Policy Center just over a month now and im excited to be part of this fantastic organization. We have a Wonderful Program today covering prospects for corporate or business tax reforms and featuring a number of perspectives. We have senator ron wyden, alan auerbach, who will discuss the destination based cash flow tax as a major step toward reform, followed by a panel of experts to discuss the pros and cons of this approach. Well finish up today with the American Action forum providing his views on the need and prospects for Corporate Tax reform. As we go through the program, i encourage the audience live at urban when commenting on todays event and in addition to those viewing with questions of the speakers, please send those to events at urban. Org. Well have someone monitoring the email box so the questions can be folded into a discussion. For people in the audience, theres comment cards on your chairs and all the other q and a sessions well pass around a microphone. I think thats it for the housekeeping announcements i have. So let me turn to the formal part and introduce the keynote speaker, senator ron wyden, the senior senator from oregon and after distinguished house career. Senator is currently the Ranking Member of the Senate Finance committee. Which oversees federal tax policy, trade policy, social security, medicare, medicaid, many other programs. Senator wyden is well known for work ethic and commitment to developing Bipartisan Solutions to our nations problems including broadbased tax reform. For example, several years ago, senator wyden teamed up with senator gray for a tax reform that analyzed and determined would be approximately revenue neutral as advertised. And subsequently updated and senator wyden looks for Bipartisan Solutions. Senator wyden and i have more in common than a long standing interest in tax and both have degrees from Stanford University and an interest in been. Basketball. Though the senator is by far a more skilled player. Im pleased to get to kick off todays event from senator ron wyden. Thank you. While keeping this basketball analogy in perspective, i think we have the nba allstars here of the tax reform debate here at urban, eric and mark and thank you for the inflationary introduction. Each time, your introduction gets more inflationary. And were now at the point where i can say my parents would have loved it and probably even believed it. So thank you for that and this program could not be more timely. We obviously have the administration saying that theyre going to do tax reform by august and so i want to give you a little bit of a sense and that is a bipartisan approach. Now, everyone remembers the Trump Campaign slogan. Make America Great. Its supposed to be on coffee mugs at the west wing and whenever you bring up a policy issue with the administration, they always say, hey, this is part of were going to make America Great. So i want to start by way of saying when it comes to taxes, as of now, the Trump Administration is not going to make America Great again. Theyre going to make tax shelters great again. And im going to outline some specifics so that we can really frame the discussion. Nothing could be clearer than carried interest. This, of course, is is a favorite of wall street used by Investment Fund managers to find their interest Capital Gains and shrink their tax bills. On the campaign trail, candidate trump singled out carried interest as a loophole that he was going after. And really looked like he and jeb bush were going to race each other to see which one of them could pound the thing into populist turf. In fact, candidate trump said the Hedge Fund Guys are getting away with murder. They pay nothing. Its ridiculous. That pledge, pretty blunt, earned him a lot of plaudit across the spectrum and added to the populist ground swell that helped him get elected. The problem, however, is the trump pledge on carried interest turned out pretty much to be another head fake. Since the election, we havent been able to find a tweet about it. Apparently, Hedge Fund Guys getting away with murder. It wasnt quite enough because when you do the math, instead of the Hedge Fund People paying their fair share, the trump plan actually gives them a 37 tax cut. So juxtapose what was said in the campaign with what you get when you do the math and its not exactly what its cracked up to be. Then, of course, when you couple that with the Capital Gains change, 23a to 16 , if you can find another gimmick which apparently the white house and the Majority Party are looking hard for, you can get on another path to drive your tax rate down by redefining it as a capital gain. This is juxtaposed by the fact that ronald reagan, the well known socialist, the well known lefty, was happy to do tax reform that said income from a wage and income from investment ought to be treated equally. Second example of how we look at making tax shelters great again, at least from the trump side is is the infrastructure proposal. This is an 82 tax credit on the Equity Private investors put up for a project. Now, i want it understood, i dont take a backseat to anybody in terms of investing in infrastructure. And im very proud of the fact that in 2009, i wrote the build america Bonds Program and nobody really has an idea of how it turned out. More than 180 billion where the build america bonds were sold in a year and a half. So theres a way to get private money off the sidelines but not by doing some kind of giveaway to developers and the reality here is, i mean, talk about tax shelters. This is manna from heaven for the uber fortunate investors. 82 tax credit on the equity they put in, no guidelines or restrictions on the kinds of projects youre financing. In effect, this is the american taxpayer just heaving money straight in the pockets of the most fortunate and my sense is that without anything resembling ground rules, youre going to get billions of dollars if you passed it in this way going towards duplicitous projects without taxpayer heaven. In case anybody is curious how this might be paid for, the theory is it would be paid for by tolls on working class families. Talk about two tax systems, breaks for people at the top. Pay for it with working class people, who, by the way, my guess is, some voted for donald trump because they didnt think he would do things like putting tolls on them. So my third example of how tax shelters would be great again is the dynasty trust. Now get beyond the Marie Antoinette type name, and look at how the shelter works. This is a gimmick that allows the most fortunate to avoid paying estate taxes not just for a generation or two, but forever, underline forever. The Obama Administration came forward with a really radical idea. They said, lets limit the loophole to 90 years. 90 years. Not long enough, apparently, for the trump folks and maybe some of that has to do with the fact that the point man on tax reform treasury secretary Steve Mnuchin has a personal interest in this type of tax shelter since he had one of them among the trust. Heres where the tax shelter gets even bigger. In addition to protecting dynastic wealth, there is evidence that members want to repeal the estate tax altogether, were talking about the really, really thin margin of taxpayers at the very peak of the income scale. Were not talking about family farmers, Small Business owners, were not talking about middle income people. Were talking about people at the very, very, very top. A fourth example of how tax shelters are back in business is coming from the most obscure corner of debate but can really show how tax cuts can be and commandeered to make tax shelters great again. This is known as the codification of the economic substance doctrine. I know people arent going to the coffee shops of america and say, lets really dive deep into the economic substance doctrine, not dinner table conversation. But judges developed the doctrine of economic substance over the years as a way to shut down tax shelters. The Affordable Care act included a provision strengthening its application, aiming to shut down more shelters. It has made a difference. Now we see that republicans want to repeal it. So that brings me to the issues that i want to wrap up on and my sense of where things are and then why i continue to believe that there are opportunities if people want to set aside these kinds of policies i just describe and do bipartisan tax reform right which, of course, as a model, that actually, we can look to. My own view is the heart of the tax challenge is dealing what i describe as the tale of the two tax codes. If you are a wage earner, youre a welder in portland, oregon, or a nurse in coos bay, your taxes come right out of your paycheck. Right out. Compulsory. No special deals in the cayman islands. You see your numbers right on your pay stub. So thats one tax system. Then we have another tax system for the well connected. And theyve got this huge array of talent, all these lawyers and accountants and they make it their specialty to do tax gains. So in this second world, you can, to a great extent, pay what you want when you want to and if youre really clever, virtually nothing at all. And when i look at what is now on offer by the Trump Administration and republicans in the congress, i dont see anything that roots out the unfairness that i just described. In fact, it would get a lot worse. The president said the team is working on a phenomenal tax plan, phenomenal tax plan. Its going to be really soon with massive tax relief for the middle class. Now, Steve Mnuchin came to the finance committee and i visited with him early and said, man, i think it sounds pretty good. And he had been talking about how there would be no absolute tax cut for the upper class. And i said, that sounds really good and he talked about it in the office, so when he sat down with the committee and we got the questions, i said, you know, im just really pleased about this. I think were going to call this the mnuchin rule. Said i to the nominee. Heres how Steve Mnuchin responded to me. Quote, senator wyden, by the way, i want to thank you for a now and great esteemed of having the mnuchin rule with both the buffett rule and the volcker rule. I take that as a great compliment, said mr. Mnuchin, the nominee to head the Treasury Department to me. Sounded pretty thrilled by it. He reiterated the mnuchin rule multiple times since the hearing, but heres the problem. The numbers do not add up and im sure weve got press folks in the audience. You can see articles written that go through table after table after table that show how the mnuchin rule is broken giving tax relief to the fortunate by hundreds of billions of dollars, paid for by taking Insurance Coverage and tax cuts for Health Care Away for working families. Im still waiting to see on the Affordable Care act debate what happens to those tax changes, but in the earlier bill in 2015, the republicans in the house took away the medicare tax change. Now, the medicare tax change is particularly important because everybody in america pays a medicare tax with every paycheck. You see it. In 2015, the republicans said the medicare tax is cut for only one group of people, one group. The most fortunate in america, so the one group that least needs release would actually get the relief under the medicare tax change and we all understand the demographics of medicare which is why the change was made in the first place. So the mnuchin rule is really on the ropes. Pretty early on, but with the trump plan slashing rates for the fortunate across the board at a cost of trillions of dollars by eliminating key exemptions and head of household filing status, the Trump Campaign plan actually raises taxes on millions of middle income families. I dont know how theyll explain that one to the working class folks in wisconsin and michigan and pennsylvania who never thought they were going to have their taxes go up. Theres more to talk about it with the border adjustment proposal and what that could mean for working families and i assume well talk about that and questions. I get the high sign in the back and what i want to do is close with why i continue to get up every day and say, i want to be part of a hopeful effort to do bipartisan tax reform right. Now, mr. Mnuchin said that the administration was going to do their bill by august and if they want to do it, they can do this on a strictly partisan basis and bulldoze their way to this. But thats, a, not sustainable and its not going to be good for america because, first of all, youve got to give everybody in america the chance to get ahead with a consumer driving 70 of the american economy, youve got to get a fair shake to the working families and those people who are going to drive much of the economic activity. We can do it a bipartisan plan. Judd gregg was the economics lieutenant when he sat in my office, almost every week for two years and we produced what is still the first and only federal income tax reform bill since 1986 and the reality is mark mentioned both sides have some valid points if you want to do a bipartisan bill. The the tax code has been captured by powerful special interests. Put me down for some striving for that point of view. Republicans say the tax codes a mess. It doesnt bring the certainty and predictability you need to drive Decision Making in the private sector. Put me down as saying i can support that too. And those are sort of the principles that were part of 1986. So i have been part of the bipartisan tax reform bill. I would like nothing more than to be part of writing a third one that becomes law. But the reason i wanted to come today and our bills, by the way, had republicans signing on to making the tax code more progressive, more progressive. You can do bipartisanship, but its not about taking each others bad ideas. Its about taking each others good ideas and in the tax code, its about giving everybody in america, not just the fortunate few, the opportunity to get ahead. Very much appreciate what you all are going to be doing today. Couldnt come at a better time. Understand well have some questions, softball questions especially welcome but thank you very much for having me this morning. [ applause ] sit down . Sure. Lets get started with the q and a portion today. Ill start off with the softball question that you asked for. Build america bonds for a successful innovation and drove a lot of investment. Do you see similar proposes out there that can help with Infrastructure Investment . Heres where we are with infrastructure. First and foremost, we have got to lock down Public Investment in infrastructure. In other words, im a big supporter of a thoughtful bipartisan effort to get additional money from the private sector into infrastructure. Senator schumer has proposed a trillion dollar infrastructure plan in effect and im very much for that. It speaks to the public side, which is what we have always said would be the traditional approach to making sure that we adequately funded bridges and roads and infrastructure. And we look to broaden the definition out. I do believe if we can lock down the public side of the infrastructure debate, i think well have a chance to go on and talk about the private side. Senate john hoeven and i, the former governor of north dakota have for some time worked on a proposal that in effect uses the states to drive a lot of the decisionmaking as it relates to infrastructure. And we call these move america bonds and the goal, again, was to try to have a liquid kind of vehicle on the private sector side, but apropos of marks question, in order to make real bipartisan change on infrastructure, weve got to lock down that there will be robust public funding and im a cosponsor of senator schumers bill. Great, thank you. The question that came in from the audience deals with chairman hatchs plan for cooperate integration. Do you see any receptiveness throughout the rest of the committee on a corporate integration proposal . First of all, senator hatch and i have tried to find ways to cooperate on taxes and by the way, the 2015 tax bill and you can debate what the longterm ramifications are is, again, indication that parties can find Common Ground there are matters that republicans were interested in with respect to business. My caucus said we wanted to make sure the child benefit and American Opportunity act for students to go to college was going to be made permanent. So each side got priorities they were interested in, and my view was that they were also good for the longterm approach to taxes, and we did things like make permanent the research and Development Tax credit. So there is an addition to the bill as i mentioned with senator greg and when he left, senator coats, and senator coats kind of joked at one point, said, ron, the sure way to get people to leave is to get involved with you on taxes. And the 2015 bill is a pretty good model, because both sides got priorities they were interested in, that made sense for the longterm kind of reform that we ought to pursue. Mark, i havent gotten the latest update on chairman hatchs corporate integration, you know, approach. The last i heard they were still working on the scoring. But i made it clear and we had working groups in the last congress, that i will do everything i can to try to find a bipartisan tax reform, i call it principled bipartisanship, where each side gets principles that help to promote a thoughtful reform. Here is a question that came in via email. Is it true that democrats in the senate can stop any reform, tax reform or Health Care Reform with 60 vote budget act point of order . Well, the question is going to be do we want to do this right, which means that you get more than 60 votes and it is not the issue . If you want to bulldoze your way, you can use arguably the most partisan scheme in government. It is called reconciliation. So i could imagine if common sense doesnt prevail, and we dont recognize the value of getting bipartisan tax reform, i could see, for example, the house taking its tax reform proposal and, by the way, there is a real question in my mind whether republicans, particularly senate republicans, are going to accept this border adjustment idea because im watching them on tv. And when your colleagues are on tv, hammering a republican idea, your republican colleagues are on tv hammering a republican idea that usually doesnt promise encouraging in other words, it usually promises the movie is not going to end well. All right. So, yeah, i mean, if you want to bulldoze this thing, you can. And you can do it with a simple majority, using this vehicle known as reconciliation. But my view is, you ought to set that aside on both health care and taxes, ive suggested, for example, to republicans on health care, if you all will drop reconciliation on health care, i think we have got a chance to Work Together to make the Affordable Care act stronger. One of the first things we do on the Affordable Care act, if we could get republicans to drop reconciliation, is we would say, we got to fix the individual Insurance Market. It is only 6 , 7 of the market, but where were having the problem. What you can do is make the insurance pools bigger, so you can spread the cost and risk, drive down the premiums in the individual Insurance Market and get Healthy People back in the game. So this was probably a longer answer than the questioner wanted, but there would be an opportunity, if republicans drop the partisan schemes on both taxes and health, there would be some opportunities to do some good work. Thats a helpful answer. I think it gives a sense of what the politics are that are involved. You mentioned the the republican colleagues being somewhat unhappy with the border adjustment tax. Is there any interest in going to broader based lower rate type proposal, like chairman camp had . Well, i think that my two bills, with judd gregg and dan coats and chairman camps proposal did have some common features. I think, mark, correct me if im not getting all the details right, but i think the camp proposal picked up on what we had done with senator gregg and senator coats increasing the standard deduction for working class people to put money in their pockets. So the question will be if border adjustment tanks, and as i said, ive been watching republicans, what would they do next in the house . And im hearing speculation, well, they just go with some kind of corporate cut and wouldnt pay for it. Now, i dont know how they reconcile that, with the past speeches, about not increasing the deficit, but i come back again to the question about the relationship with dave camp. Dave camp did have a variety of problems that senator gregg and i and senator coats we avoided. They overpromised on cutting individual taxes. And i said, when theyre trying to cut individual taxes, that dramatically, theyre going to have problems, they did, and then they came back and added a surcharge so they ended up where senator gregg and senator coats and i ended up. Lets wrap up here. Thank you very much, senator wyden. To be continued. Thank you, everybody. Thank you. [ applause ] ail hes the director of the burch chenner is Research Associate of the mber, in the tax world hes very well known as the former president of the national tax association, and he was deputy chief of staff at the joint committee on taxation in 92 when they did the landmark study of Corporate Tax incidents. Beyond the economic beyond the nw