Full Committee Hearing on the Interaction of Tax and Financial Accounting on Tax Reform
Committee on Ways and Means
February 8, 2012Thank you Mr. Chairman. It’s important to have these hearings to discuss these techniques and their impact on tax reform. As we continue to talk about tax reform it is important to keep our eye on the ball. What are the purposes and our needs from tax reform? It is essential not to jump to conclusions or embrace simplified alternatives.
We asked the Joint Committee on Taxation to review the tax code and determine what the impact of lowering the corporate rate would be. Their conclusion was that by eliminating all of the business specific provisions the tax rate could not be lowered to 25 percent. The challenge is now intensified because at long last we’re beginning to understand fully the importance of manufacturing in the American economy. I think we somewhat lost that understanding. And now with the resurgence of the auto industry, with the help of the federal government - not to run the companies but to help them get back on their feet - I think it has helped to highlight that we need to keep our eye on the ball as we proceed.
I want to quote what the President said just a few weeks ago: “If you’re an American manufacturer, you should get a bigger tax cut. If you’re a high-tech manufacturer, we should double the tax deduction you get for making products here. And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers."
The Chairman and I for years have tried to strengthen the R&D tax credit and here we are many months into this new session and the R&D tax credit seems to be in jeopardy. I welcome the testimony from our witnesses.
