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Provide a legislative professor, alan arback to discuss the major step towards reform and a panel of experts to discuss the pros and cons of this approach. And well finish up today with doug holtz with his views on the need for Corporate Tax reform. As we go through the program today, i encourage the audience to use the hashtag live at urban with todays event and on webcast, if you want to ask questions of the speakers, go to events urban. Org. Well have someone mon orriitor the email box so they can be folded into the discussion. For people today, the comment cards on your chairs or senator wieden. All others will pass around a microphone. I think thats it for the housekeeping thouchannouncement have, so let me turn to a formal part and introduce senator ron wyden. Senator wyden is from oregon, served two decades after distinguished house career. Senator wyden is currently the Ranking Member of the Senate Finance committee with several trade policy, medicaid, medicare, many other programs. Well known for his work ethic and commitment to developing Bipartisan Solutions to our nations problems including broad based tax reform. Several years ago, senator wyden teamed up with senator greg with a tax reform that analyzed and determined would be projectionly r approximately revenue neutral. Issues looking for Bipartisan Solutions. Senator wyden and i have more in common than a long standing interest in tax. We both have degrees from Stanford University and an interest in basketball. Though the senators by far a more skilled player. Anyway, very pleased with the kickoff of todays event with remarks from senator ron wyden. Thank you. [ applause ] keeping this basketball analogy perspective, i think we got the nba allstars here of the tax reform debate here of you aurban and eric and mark an pozner. Both a wonderful crowd. Thanks. Your introduction gets more inflationary each time and were now at the point where i can say my parents would have loved it and probably even believed it. We have the administration saying theyll do tax reform by august and so ill give you a little bit of a sense of how i think the debate will play out and then come around full circle with the prerequisite for the approach. 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, that is part of where were going to make America Great. So im going 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 ill outline specifics so we can really frame the discussion. Nothing could be clearer than carried interest. This, of course, is a favorite of wall street used by Investment Fund managers to refine their Capital Gains and their tax gains. Candidate trump singled out carried interest as a loophole that he was going after and it really looked like he and jeb bush were going to race each other to see which one of them could pound the thing into populous turf. He said the Hedge Fund Guys are getting away with murder. Theyre paying nothing. Its ridiculous. That pledge, pretty blunt, earned him a lot of plaudit from across the spectrum. It added to the populous ground swell that helped him get elected. The problem is the trump pledge on carried interest uturned out 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 wasnt quite enough because when you do the math, instead of those hedge fun 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. And 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 just redefining it as a capital gain. And of course, all of this is juxtaposed by the fact that Ronald Reagan that well known socialist, that well known lefty, was happy to do tax reform that set income from a wage and income from an investment ought to be treated equally. A second example of how were looking at making tax shelters great again, at least from the trump side 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. Im very proud of the fact that in 2009, i wrote the build america bonds program, nobody really had an idea of how it turned out. More than 180 billion worth of 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. I mean, this is manna from heaven for the uber fortunate investors. 80 tax on the equity, no guidelines or restrictions on the projects youre financing. In effect, this is the american taxpayer just heaving money straight into the pockets of the most fortunate. Passed it into this duplicitous project that would have gone ahead even with much taxpayer heaven and by the way, in case anybody is curious of how this might be paid for, the theory is it would be paid for by tolls on working class families. It talked about two tax systems and paid for it with tolls on working class people who, by the way, my guess is some of them voted for donald trump because they didnt think hed do thi s things. The next thing is the dynasty trust. 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, underlying trvr. The Obama Administration came forward with a really radical idea. Lets limit the loophole to 90 yea years. Apparently for the trump, you know, folks and maybe some of that has to do with the fact that has a personal interest in the tax shelter since he had one of them among his nine trust. So heres where the tax shelter gets even bigger. In addition to protecting d dynastic wealth, they want to repeal all together. Helping the really peak of the income scale. Not farmers, Small Business owners, not middle income people, were talking about people at the very, very, very top. The fourth example of how tax shelters are back in business is coming from the most obscure corner of debates, but then really show how tax cuts can be commandeered to make tax shelters great again. This one is known as the codification of the economic substance doctrine. Now, i know that people this weekend arent going to be going to the coffee shops of america an s and saying lets dive deep into the economic substance doctrine. Not dinner table conversation, but judges develop the doctrine of economic substance 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 really brings me to the issues that im going to wrap up on an my sense my sense of wher and continue to believe there are opportunities if people want to set aside these kinds of policies i just described and do bipartisan tax reform right which, of course, has a model that actually we can look to. My own view is the heart of the tax challenge is dealing what i call, what i describe as the kale of the two tax codes. If you are a wage earner, youre a welder in Portland Oregon or a nurse in kooz bay oregon, they come out of your paycheck. No special deals in the kaman islands. You see the 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 too 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. An when and what 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 you are 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 thats going to be released soon with massive tax relief for the middle class. Now, steve me knnuchin came to finance committee and said, i think that sounds pretty good. He had been talking about how there would be no absolute tax cut for the upper class. I said, that sounds really good. And he talked about it in the office, so when he sat down, 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, and im going to quote here. Senator wyden, by the way, i want to thank you for a now and great esteemed of having the mnuchin rule with both the buffet rule and the vocar rule, i take that as a great compliment, said mnuchin. 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 that are 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. Now, 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 medicaid tax change. Now, the medicare tax change is particularly important because everybody in america pays the medicare tax in every paycheck. You see it. 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 relief would actually get the relief under the medicare tax change and we understand the demographics of medicare which is why it was made in the first place. So the mnuchin rule is pretty on the ropes, 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 to the working class folks many wisconsin and michigan an p. And pennsylvania who never thought they were going to have their taxes go up. Theres more to talk about with the border adjustment proposal and what that could mean for working families and i assume well talk a little bit about that and questions. I get the high sigh 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 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 a bipartisan plan. Judge greg with Mitch Mcconnells lieutenant when he sat in my Office Almost every week for two years and we produced what is still the first and only bipartisan federal income tax reform bill since 1986 and the reality is, mark mentioned the score. Both sides have some valid points if you want to do a bipartisan bill. My side believes and correctly so that the tax code has been captured by powerful special interests. Put me down for subscribing to that point of view. Republicans say, tax code 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 proposals 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 headway 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 ] the National Review is hosting a day long ideas summit in washington, d. C. And

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