As Prepared for Delivery

Thank you, Chairman Casey and Vice-Chairman Brady.  It is an honor to have such distinguished and knowledgeable witnesses with us today.  I am eager to hear each of your thoughts on this important topic. 

I am glad we are discussing this topic today because I believe strongly that our tax system is in great need of reform. Our current tax code is just way too complicated, biased against saving, and distorts economic behavior.  Also, we have the unfortunate distinction of having the highest corporate tax rate in the world.  Not surprisingly, this has not provided incentive for corporations to stay or relocate here – resulting in the flight of jobs and capital away from the U.S.

Moreover, our tax code’s unequal treatment of debt and equity (in a firm’s capital structure) is problematic because double taxation of corporate dividends disincentives their payment to shareholders, while the deductibility of interest expense incentivizes companies to take on excessive debt – increasing the risk of bankruptcy and/or job losses should the business hit a rough patch.

I have also noted that empirical research demonstrates that taxes on consumption (rather than income) would increase economic growth since people would have greater incentive to save and invest in lieu of spend and consume.  In a country with low economic growth and consumer savings at this time, it seems that a consumption oriented tax system, like an income based consumption tax, would be a boon to our nation.

Additionally, I believe that firm’s should be able to expense equipment that improves their productivity and profitability since the current depreciation schedules have the effect of dis-incentivizing capital equipment purchases.  And businesses aren’t the only ones who would benefit from this change since more profitable businesses pay more taxes.

For the sake of our economy and employment outlook, I would like to see our nation transition to tax policies that make sense and do not distort or dis-incentivize economic behavior.   That concludes my remarks.  I look forward to each of your testimonies.