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Hatch: Finance Committee, Senate ‘Remarkably Productive’ in 114th Congress
In Speech on the Senate Floor, Utah Senator Says, “Before the start of the 114th Congress, the Senate had, for years, been languishing in partisan gridlock. Very little got done around here and, far too often, we spent our time fighting out the political soundbites of the day and voting on whatever partisan issue happened to be grabbing headlines. While some of my friends on the other side of the aisle have attempted to argue otherwise, the Senate has been remarkably productive during the 114th Congress. And, that goes far beyond just a list of bills we’ve been able to pass. The Senate has changed in ways that numbers really can’t quantify.”
WASHINGTON – In a speech today on the Senate floor, Finance Committee Chairman Orrin Hatch (R-Utah) highlighted the Committee’s bipartisan leadership and ability to “produce results.”
“The Senate Finance Committee, years, has been able to ride this new wave of bipartisan productivity to a historic degree,” Hatch said. “The success we’ve enjoyed has been due to the work of every Senator on our committee. We’ve found enough common ground that the desire to work together has remained strong throughout this Congress.”
During the 114th Congress, the Finance Committee reported 41 separate bills, all of them bipartisan, and spearheaded a number of legislative products that were later signed into law including permanent and responsible tax relief, bipartisan Trade Promotion Authority (TPA), significant reforms to the Social Security Disability Insurance (SSDI) program and legislation to repeal and replace the Medicare Sustainable Growth Rate (SGR).
Hatch went on to outline priorities of the 115th Congress including efforts to reform our nation’s tax code.
“We are seeing more momentum for comprehensive tax than we’ve seen in a generation or more,” Hatch continued. “We have a real opportunity to make significant changes to our entire tax system in order to encourage growth, create more jobs, and improve the lives of individuals and families around our country. As the chairman of the Senate’s tax-writing committee, I am very excited for this opportunity and I am committed to doing all I can to make sure that we succeed in this endeavor.”
The Chairman also noted the Committee will play a central role in reforming health care and promoting good trade policy.
“I expect that we’ll finally be able to repeal Obamacare and begin a serious process of replacing it with reforms that are more worthy of the American people,” Hatch said. “On top of tax and health care, we need to consider the future of U.S. trade policy. While this was a matter of some fierce discussion during the campaign, I remain committed to doing all I can to ensure that the U.S. continues to lead the world in trade, including the establishment of high-standard free trade agreements.”
The complete speech as prepared for delivery is below:
Mr. President, as we approach the end of the 114th Congress, many here in the Senate have been taking the time to reflect on what we’ve been able to accomplish and, more importantly, plan for what we hope to be able to accomplish in the near future.
This was a tumultuous two years for our country, punctuated by a fierce and unpredictable political campaign and results that were, to some, beyond surprising.
Before the start of the 114th Congress, the Senate had, for years, been languishing in partisan gridlock. Very little got done around here and, far too often, we spent our time fighting out the political soundbites of the day and voting on whatever partisan issue happened to be grabbing headlines.
While some of my friends on the other side of the aisle have attempted to argue otherwise, the Senate has been remarkably productive during the 114th Congress. And, that goes far beyond just a list of bills we’ve been able to pass. The Senate has changed in ways that numbers really can’t quantify.
For example, committees in the Senate have functioned more effectively than in the past.
The debates on the Senate floor have been fuller and fairer than they were before.
And, of course, the focus has returned to actually governing rather than simply adding more noise to the political echo chamber.
Most astonishingly, given the tone of the country’s overall political discourse, most of the Senate’s accomplishments have been bipartisan.
As I’ve noted on a number of occasions, the Senate Finance Committee, which I’ve been privileged to chair for the past two years, has, to a historic degree, been able to ride this new wave of bipartisan productivity.
In this Congress, our committee has reported 41 separate bills, all of them bipartisan. These included priorities throughout the committee’s jurisdiction.
That’s remarkable, Mr. President. And, honestly, I wish I could take credit for it. But, the success we’ve enjoyed has been due to the work of every Senator on our committee. To a member, they have all been committed to working on a bipartisan basis to move ideas forward and produce results. We haven’t agreed on everything, that’s for sure. But, we’ve found enough common ground that the desire to work together has remained strong throughout this Congress.
I want to thank the members of the committee for their efforts this year. They’ve all been exemplary colleagues to work with. Today, I want to particularly thank Senator Coats, who is, as we know, retiring at the end the Congress. We will miss the senior Senator from Indiana’s stalwart presence on the Finance Committee and in the Senate as a whole. I wish him the best of luck.
Now, I want to take a moment to delve deeper into the substance of our committee’s work. Let me just give you the highlights, Mr. President, or else we’ll be here all day.
Early on in the 114th Congress, the Senate and House passed legislation produced in the Finance Committee to repeal and replace the broken Medicare Sustainable Growth Rate, or SGR, formula, putting an end to the periodic ritual of cobbling together SGR patches at the last minute behind closed doors. This bill was one of the most significant bipartisan reforms enacted in the history of the Medicare program.
We made once-in-a-generation advancements in U.S. trade policy by renewing and updating Trade Promotion Authority, reauthorizing vital trade preferences programs, and modernizing our trade enforcement and customs laws. All of these are important strides in the ongoing effort to promote U.S. leadership in the world marketplace in order to benefit our workers, farmers, ranchers, and inventors.
We acted decisively to prevent benefit cuts in Social Security Disability Insurance and put into place the most significant improvements to the Social Security system since the 1980s.
We came up with enough offsets to extend the life of the Highway Trust Fund for five years, the longest such extension in nearly two decades. This was accomplished despite the cries of naysayers who said it couldn’t be done without a massive tax increase.
We also made serious strides to advance a number of the committee’s long-term efforts, including improvements to Medicare benefits for patients dealing with chronic illnesses, overdue reforms to our nation’s foster care system, a series of measures to protect taxpayers from the ever-increasing threat of identity theft and tax refund fraud, and legislation to help more Americans save adequately for retirement.
Not all of these measures have been signed into law, but, in every case, we’ve been able to move the ball significantly forward.
In addition, we continued the Finance Committee’s long tradition of conducting robust and exhaustive oversight. Our bipartisan report on the IRS targeting scandal, which we released last year, was a great example. In addition, the committee’s work to shine a light on the inept implementation of Obamacare was second to none.
And, of course, we made real progress in the ongoing effort to reform our nation’s tax code.
I’d like to talk about tax reform in a little more detail because that has been the focus of so much of our efforts in this Congress, and that’s not likely to change when we gavel in the 115th Congress.
Among other things, the members of the Finance Committee produced a number of bipartisan reports outlining the key challenges we face with our tax code after working together in the Tax Reform Working Groups we established last year.
Also, the Finance Committee, working with our leadership here in the Senate and our colleagues in the House, drafted and facilitated passage of a massive tax bill that made permanent a number of oft-expiring tax provisions, providing real certainty to businesses and job creators and setting the stage for even more significant reforms in the future. That bill also delayed a number of Obamacare’s burdensome healthcare taxes.
In addition, I have spent much of the 114th Congress hard at work developing a tax reform proposal to better integrate the corporate and individual tax systems. Under current law, the U.S. not only has the highest corporate tax rate in the industrialized world, we also subject many of our businesses, and the individuals that invest in them, to multiple levels of tax on what are essentially the same earnings.
This system results in a number of inequities and economic distortions, including undue burdens on U.S. workers and incentives for businesses to finance their operations with debt instead of equity.
These problems have troubled policymakers for years, particularly recently as the combined effects of these misguided policies have resulted in waves of corporate inversions and foreign takeovers of U.S. companies.
My idea to address this problem was relatively simple: Allow corporations to deduct from their taxable earnings any dividend they distribute to shareholders. Currently, our system taxes a business’s earnings once at the company level – at an astronomically high rate, no less – and again when the earnings are distributed to shareholders. My proposal has been to eliminate one level of taxation on these distributed earnings and require only a shareholder-level tax on dividends, which is similar to the way debt is treated.
Forms of this proposal have been put forward by Treasury Departments and congressional tax writers from both parties in the past.
In addition to a dividends-paid deduction, in order to bring more balance to the system and eliminate even more distortions, I have looked for ways to equalize the tax treatment of debt and equity under our system.
Those monitoring the tax world undoubtedly know that I’ve spent quite a long time working on this proposal, including a number of months going over the numbers with the Joint Committee on Taxation. And, at this point, I can say that the feedback I’ve received from JCT on this matter has been very positive.
For example, in its preliminary assessments, JCT indicated that the proposal would increase economic growth and activity relevant to current law.
They found that it would increase wages for U.S. workers through increased productivity.
Their analysis also showed that the proposal would increase capital investment and reduce effective tax rates for American businesses.
Interestingly, JCT also found that the proposal would alleviate some of the pressures that drive corporate inversions and help prevent erosion of the U.S. tax base overall.
These concerns – economic growth, wages, and U.S. companies moving offshore or being acquired by foreign companies – have a real-world impact on American workers and employers and they were at the heart of this year’s campaign debates. Thus far, the feedback we’ve received shows that a dividends paid deduction, combined with equalized tax treatment for debt and equity, would help address these concerns.
And, according to JCT, all of this could be done without adding to the deficit or shifting more of the overall tax burden from those with higher incomes to middle- and lower-income taxpayers.
I know the DC tax community has been speculating on this matter for a while now, and I can attest today that the idea of better integrating the corporate and individual tax systems through a dividends-paid deduction wouldn’t just work, but could actually work very well. Once again, the numbers we’ve seen thus far have been quite favorable.
I will note that we’ve heard some concerns from those in the charitable and non-profit community as well as retirement security stakeholders regarding the potential impact of equalizing the treatment of debt and equity. I think my history in the Senate has demonstrated pretty clearly my commitment to both charitable giving and retirement security. So, I want to make clear that my staff and I are prepared to address these types of concerns when this proposal takes legislative form.
Now, I suppose that, for most of the people who have been monitoring our efforts on corporate integration, their biggest question is about timing: When will we try to move this forward?
After any big election campaign, particularly one as unpredictable as the one we saw in 2016, it is important to take the time to reflect on the results and acknowledge the realities on the ground.
I remain very interested in the concept of corporate integration and continue to believe that it would have a positive impact on our tax system and our economy overall. But, let’s be honest, Mr. President, after this election, the ground has shifted, and, while we don’t know how everything will play out in the coming months, it’s safe to assume that the tax reform discussion is shifting as well.
Right now, we are seeing more momentum for COMPREHENSIVE tax reform – that is reform that deals with both the individual and business tax systems – than we’ve seen in a generation or more. And, if we’re going to do right by our economy and the American people, we need to think in those comprehensive terms.
At the very least, I think it’s fair to say that, with the changing circumstances, the assumptions and parameters that have, for some time now, governed the tax reform debate will have to be modified, if not thrown out entirely.
I believe that corporate integration can and should be part of the comprehensive tax reform discussion that appears to be on the horizon. But, given the current reality, any substantive tax reform proposal will need to be considered and evaluated in the context of what has quickly become a much broader discussion.
Let me be clear: I am not walking away from the idea of corporate integration.
On the contrary, I am excited to see how the debate over comprehensive tax reform plays out in the near future and where this concept might fit in that broader discussion.
Going forward, we have a real opportunity to make significant – perhaps even fundamental – changes to our entire tax system in order to encourage growth, create more jobs, and improve the lives of individuals and families around our country. As the chairman of the Senate’s tax-writing committee, I am very excited for this opportunity and I am committed to doing all I can to make sure that we succeed in this endeavor.
This discussion about comprehensive tax reform promises to be one of the big-ticket items in the coming Congress, and I am excited to be a part of it.
In addition to tax reform, the Senate – and the Senate Finance Committee – will have a number of other tasks to perform in the early days of the 115th Congress.
For example, early on, I expect that we’ll finally be able to repeal Obamacare and begin a serious process of replacing it with reforms that are more worthy of the American people.
We also need to take a serious look at our broken entitlement programs, like Medicare, Medicaid, and Social Security. I’m sure that, simply because I’m a Republican who just happened to mention the names of those programs out loud, I will be scorned and labeled a “privatizer” in certain policy and advocacy corners after this speech. However, reductive labels aside, no one seriously disputes the fact that these programs are in fiscal trouble and we need to work toward finding solutions. I’ve put forward a number of potential solutions to help address the coming entitlement crises. I hope policymakers in Congress, the incoming administration, and elsewhere will take a look at my ideas.
On top of tax and health care, we need to consider the future of U.S. trade policy. While this was a matter of some fierce discussion during the campaign, I remain committed to doing all I can to ensure that the U.S. continues to lead the world in trade, including the establishment of high-standard free trade agreements.
All of these matters, and many others as well, fall within the jurisdiction of the Senate Finance Committee. Fortunately, I am joined on the committee by a host of capable U.S.
Senators from both parties. And, over the past two years, we’ve demonstrated that, by working together, we can overcome some pretty long odds and accomplish a number of difficult tasks.
I hope that continues next year. I’m going to do all that I can to make sure that it does.
With that, Mr. President, I yield the floor.
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