[inaudible] will get started here. Welcome. Im pe peter and i think you all for coming today. This is entitled the homestretch for major tax reform. We crossed a hurdle today and house as they agreed to the Senate Budget proposal which paves the way for reconciliation for tax reform package. The Cato Institute released the eighth edition for our recommendations begin on page 45. Therefore the chapters that deal with fiscal policy. Mark copies please contact me. You can also go to cato. Org. Ryan born occupies the chair. Hes written on Economic Issues including fiscal policy, minimum wages and rent control. Before joining us he was head of Public Policy at the institute of economic affairs. He has extensive broadcast and print media experience and has appeared on bbc news and he also writes weekly columns for both the Daily Telegraph and the london paper. We will leave time at the end for q a. All have a short announcement before he leaves. But for now lets welcome brian form. [applause] good afternoon and thank you for being here today. I think the size of the audience is a testament to the importance of the audience of the quality of our speakers on the panel. The title asked whether this is the homestretch for major tax reform. Feels like momentum has been building particularly with the Senate Budget agreement passing the house today. Major tax reform has been talked about for decades. I think its exciting for ordinary voters, workers and businesses were waited for this. A multitude of questions remain. Factual once we get hammered out the coming weeks. How far will the Corporate Tax rate to cut . What will the top tax rate be . Will happen to berkshires with this data locally good tax reduction . Also contestable ones related to analysis of the plan. What would be the impacts on Economic Growth what about any revenue losses and how far will corporate rate cuts through into higher wages . With the debate still rumbling you wonder whether to quote winston churchill, read the beginning of the under the end of the beginning. Now we have an expert panel to get. Theres one bad argument thats to distinguish between tax cuts on one hand and tax reform is this pure, revenue neutral concept on the other. Economists would say they cut the taxes that make them more economically neutral constitute reform. So eliminating reductions, but when you look around the world that successful tax reform, without net tax cuts form becomes more difficult. If you have no net tax codes to many people identified as losers make it difficult to get changes through. A line that stuck with me a few years ago sums up the sentiment, tax reform without tax cuts is politically suicidal. Tax cuts without reform is a huge missed opportunity. Three great speakers today to discuss issues. First, is the founder president of americas for tax reform. Along with credits without matching tax rates. He has been described as the high priest of taxcutting on the new york times. Alex is a resident fellow. Is the author of numerous before joining he served as the house ways and Means Committee has been on the white house economic advisers and on the Simpson Bowles commission. Chris edwards is the director tax policy before joining cato he was a senior economist and an economist with the Tax Foundation. He is coauthor of global tax revolution. Speakers will speak for about ten minutes and that will leave time for questions. Step one, tax reform, tax cut, the answer is yes. Its both. The people who suggest are two things miss the point. Where were trying to get . Tax reform as outlined no significant progress in going to pass. How do we know it significant progress . We want to get taxing income one time at one rate. You want to move toward taxing income at one rate is not a question of fairness, taxation is taking people from people earned it and given it to people who didnt earn it. Fairness is not the issue. The reason you want to move towards a single right tax is because them politicians have to look everybody in the eye and say i have a good idea and youre all paying for. Prior to coming to the United States i grew up in massachusetts. There we have a constitution a single rate tax. Five times they put on the ballot to go to a graduated income tax. Five times its been voted down on the basis that youre wrong you raise taxes on the kennedy kids but year to three and four youll come to the rest of us. If you dont have a single right tax you have the Richard Specht theory which is if you cant take on everyone in the room it take them out one at a time. And then you take them out and mugged them outside. Taxing income one time you tax it when you earn it, save, invest and Capital Gains. They keep coming back. Part of our doing is taking rates down which gets you towards a single rate tax by not having a death tax and more savings taxfree we move towards taxing income one time. Is this the end of the game . One of the things i found most disappointing about the conversations set this is onceinalifetime, historic event. We havent done fundamental tax reform since 1986. Thats been 30 years. That implies another 30 years. That means everyone who runs a trade Association Says i will be dead by retired by the time we revisit this. Therefore i want to get what matters most to me in the spill or sink it because if i dont get it done now i wont see another opportunity to do it. Its very sharp elbows with those want to get on the plane. Theres a bus every 20 minutes you let the lady in the wheelchair go. Had a dry conversation with paul ryan and chairman brady Vice President pence. Said could we work on not calling this a onceinalifetime thing, in the sense of not again for 30 years. He said will get a tax cut every year, we did under bush. That will be the case now. Think its important for us to make it clear to the american people. So be a significant tax cut in reform the many things left off the table. Well go to a territorial tax system for businesses, we are not going to that first people. Five and half million americans who work overseas. Five have million who work and could vote, i wish my talk about americans with jobs without talk about bringing the american jobs back here, that includes 5 million plus people who happen to be working in hong kong, britain or another country and right now we tax them just as we do with companies. Its a very stupid and destructive thing to do. So stupid to do to people. Companies overseas or hiring people from other countries rather than americans because our tax system makes it more expensive. Why will this pass . Do we just have a big blowup the other day and doesnt that endanger this project . Lake and corker, its not hundred votes with the modern Republican Party, theyre both grownups, theyre committed to tax reform. The beach played a role in the bill and shaping it. I do not believe that shiny thing that attracts folks and Cable Television suggest anything about how people will vote on tax reform. Weve seen it come to the house and senate. Everyone except rand paul then he tweeted im all in for tax reform. That vote was because he wanted something on spending focus on an issue. Get some of what he wanted but not all. It wasnt an effort to hold tax reform hostage. We have 52 votes. Have a solid republican agreement. We saw people who voted today are those who want to get on talk radio and it did solve all the worlds problems i had to vote no. This is not a part that endangers repeal in reform of healthcare. Why are we here . The issue that divides the two parties more than others is the tax issue. Theres not a republican who wont cut your taxes. Theres not a democrat who wont raise your taxes. There are few democrats who wont steal the guns. There note democrats will not reach her taxes every time to have a shot at it. And no republicans against cutting taxes. If somebody was a republican you need he was born north of the masondixon line. Today, the little old lady in mississippi degrees with Ronald Reagan on everything and then voted for mcgovern, those people have moved on, passed away or switch parties. We have two rational parties on questionable size of government. The other thing we helped his we asked all the candidates 90 plus have taken cap the pledge. George Herbert Walker bush for people to agree with him to raise taxes so he could start stop the reagan period of Economic Growth. Reminds us with his tax increase that noahs life is a complete waste, some People Service bad examples. Dont do that, it didnt work. In the modern Republican Party wash. Otherwise he was very successful. Kicked direct out of weight without getting stuck occupy the place. One problem. Tax increase. And he lost the presidency as a result. Since then weve had republicans committing they wont raise taxes. This is progress, moving in the right direction, you have a unified Republican Party will be discussion between nona but the reason things will be settled is not only the unity of the pledge republicans understand their brand of their party is the party that wont raise your taxes, cocacola spends time working on its brand and Quality Control c can go to the store you dont have to read the ingredients or ask what it tastes like, you know whats inside it, but if you got your bottle home and he looked down and when you are two thirds through the bottle you notice there is a redhead you not say thinking i wont finish the rest of this bottle right now. It affected wonder if you buy coke in the future and you take a selfie and cocacola would have a big problem it would damage the brand a republican elected officials who voted for tax increases are redheads. The damage the brand for everyone. They confuse small children both nature of the world. Mom, you said so moving the two parties into separate directions has made it difficult to cut taxes when democrats are in charge. It easier to cut the Republican Party is in charge. We are going to have a tax cut every year the republicans at the house and senate. Anything that doesnt get into this package is not lost for 30 years, makes it easier to print and complete bill that doesnt do enough it doesnt enough to reduce the cost savings and investment make a list of things that are not in the spill. Thats not a list of disappointments. Its a list of things will do next year or the year after. I would suggest to those companies that say i didnt get enough out of this, if you help get this across the finish line you can be at the beginning of the one next year. Host and kick people in your shins here at the end of the line will resolve other peoples problems. That will make it easier for interested parties to be supportive of the bill that does many good things but not everything. The irs is still there. The tremendous step forward in progress politically it will pass because it does not endanger general votes. After all the stuff the other day the senate voted to pass a Congressional Review Act to go after the trial lawyers which they say their anti consumer. You have united Republican Party voting, everybody just after this dustup. The press covered the dustup and miss the dramatic series that overrode the dodd frank regulation we now to get out. Within hours it affected nobody slow. We lost two people because trial lawyers of police on them. Not ownership perhaps you would lose those anyway whether best friends with the president or not. Cheerful news can pass, think some people make a case with all the cool things it will do thank you. [applause] thank you very much. A lot of great insights i would like to associate myself with his optimism. If i cant replicate his passion. Im optimistic will have a tax bill. Im hopeful people are optimistic and thats weather here not just for the. Here because you believe therell be a tax bill and you want to know more about it what it might look like or what it should look like. So i the if you think of how to message 70s issues we have heard when this debate has heated up about folks talking about that concept and oftentimes they say i am for tax reform want to cut taxes and cut tax rates and closed loopholes but that ways sounds pretty good because people are not in favor of tax loopholes. Another way to say the same thing is someone to cut taxes and tax rates and broaden the tax base and they think if you say that to a broader audience of constituents that may go over okay. I think that because to understand tax cuts and lower rates it doesnt really affect them 51 to cut taxes are lower the rates and raise taxes at the same time that doesnt go over well at all and that is the winners and losers problem mentioning in the introduction and that is the challenges. So tax rates a and creating winners the there is plenty of evidence of that. But it is then the of by neary choice to see that play out with a course outline them probative leaders have introduced talk about cutting tax rates like doing some things to of run negative repeal deductions or credits and there are good reasons for that in defense of these repeal of the special provisions because they are a distortion very they make people make choices they wouldnt otherwise make. Using that as a tool that lawmakers are deciding how to go over and over push or pull taxpayers into making different decisions then we end up with the system bowlfuls and some people have high tax rates. So those distortions are often times as well. So it is about taxing everything once tax everything just once but tax everything and move in that direction. With the budget resolution was to reduce taxes over the next decade by 1. 5 trillion budget from the proposals they also talk about a system that is simpler with a broader base. Then read double the standard deduction and repeal state and local Tax Deductions and some fairness then with more tax cuts with those offsets and when you add that together looks like a net tax reduction to afford more tax cuts overall. I want to focus on one aspect of the tax reform which is what is happening on the business side. Those that know them revenues raised from the payroll tax is a huge tax but that ordinary income tax is very get most of our revenue from taxing wages and workers and households. But 10 percent of that comes from corporations and which taxes to cut first war which yield the most benefit we dont know that by looking at where we get the revenue. We know that through economics that is easy to understand because as somebody said yesterday with a milliondollar tax on Airline Flights but we dont know Airline Flights that doesnt mean it is a distortion hillary. So this is the tax saving is the most distortion area that i think everybody who follows tax policy knows two things about the Corporate Tax cut. The highest tax rate in the industrialized world. Everybody else has cut their rate we are 35 and as a consequence our system is not competitive with our competitors. Everybody has heard that over a decade there has been a campaign at least to cut the Corporate Tax rate of those are the arguments. So what . What does that mean . Nobody has made the case why i as a worker should care so much the ceo of four passes it on top of a company where he is the ceo with the system is less competitive bmw. What does it matter to me . We have heard it is the worst but we dont pay that we pay individual income tax. What we havent heard is a strong argument why i should care. It is true but nobody has done a good job as a lie that matters and telex couple weeks ago quite frankly. Then the argument started to shift it became a debate but there is a big argument going on right now why we should care. We know corporations collect tax than broadly speaking he could own the business or work set the business so who is the loser . For a long time there was a consensus or a agreement that goes back decades among liberal and conservative economist the shareholders, the owners bore the brunt of the Corporate Income tax. Then people started to revisit that question to look again at the evidence to recognize the Economy Today is different of 20 or 30 or for your 50 years ago so this burden is different as well. And quite frankly it may have been true but where that came from was the view the economy was simple that the economy is generally closed meaning not open to trade so if you tax capital if you owned it did you bear the brunt of the tax. Other than that it doesnt matter because it is fixed. That is not how the economy works today. Is much more open from 50 years ago. There is an infinite amount of capital lot of really but we do know that when Business Opportunities are good in one country whether france to germany or the netherlands or canada people take their money and go to that place they build factories and hire workers of that is not United States so put people behind Corporate Tax reform it will bring activity here. That is the first thing. Second and bring reported profits here as well and were in a very dynamic globally economy we have not closed as of yet even though we have threatened we have a relatively open economy and when the Corporate Tax rates changed dramatically profits will shift back into the United States with an increase of Real Investment and that consequence of that change will have consequences for the workers in those factories because their wages will benefit. It is not a complicated model to suggest that in we can get those defects so with the it economic advisers it could be 4,000 her household other people have diff