HILLSBORO, OR—Today, House Speaker Paul Ryan (R-WI) delivered remarks on the need for pro-growth tax reform to employees at Intel in Hillsboro, Oregon. Below are Speaker Ryan’s full remarks as delivered:
“One of the most important things we have to do in the United States Congress is reform our tax system. And I want to explain basically why we think that’s really important for us. First off is just competition. We have arguably the worst tax system in the industrialized world. What I mean when I say that is companies and countries compete on a global scale in this 21st century economy. We all know that. It’s a global economy.
“The problem is we haven’t reformed our tax system since the year I got my driver’s license 1986. We haven’t reformed our tax system since 1986. When we did it in 1986, we tripped off sort of a worldwide competition based on tax policies. And here’s our issue: Right now, we tax companies like this at 35 percent. That’s about 20 percent of American businesses. 80 percent of American businesses—many of your suppliers, probably some of your contractors here—they pay their taxes as individuals. We call them pass throughs, like subchapter-s corporations or LLCs. Their top tax rate is 44.6 percent. So our competitors to the north—I come from Wisconsin—our competitors to the north, Canada, they tax their businesses at 15 percent. Ireland—you have a lot of Irish here—12.5 percent. Technology tax rate on companies—I was just informed this morning—in Israel? 6 percent. China 25 percent, but they actually give you a break in the early years. We’re between 35 and 45 percent on how we tax American businesses.
“And so one of the big, great problems we have is we’re basically taxing American businesses out of America. We’re making it really hard for American businesses to compete and succeed in the global economy because of our tax system. What’s worse is if we’re successful like Intel clearly is in being a global company, in making money by selling goods and services overseas, they can’t bring those profits back into this country and reinvest it in jobs, in manufacturing, in America for many reasons, but chief among them is because of our tax code.
“So we have two to three trillion dollars of American profits parked overseas that can’t come back to be reinvested in our communities because of our tax laws. So we’ve got to get these tax rates down. The average tax rate on companies in the world is 22.5 percent. And when we’re taxing American businesses 35 to 45 percent, that makes us very, very uncompetitive. And so we are convinced that if we get our tax rates down on all of our businesses—small businesses, big, and everything in between—then we can be far more globally competitive, and we can make it make more sense to keep our companies based in America. What does that mean? That means our headquarters stay here. And when our headquarters stay here, that means the affinity and the attachment to the community stays here. That means the Boys and Girls Club gets more funding. That means United Way and local churches and charities get more community support like clearly you do here in Portland. And there are lots of reasons why we want to make sure that American companies stay American. But we also want American companies to be able to make things here and export them all around the world.
“And one of the things we think we also have to do in tax reform is create incentives for businesses to expand more plant and equipment. You spend $10 billion a year on capital equipment building these clean-room factories. You spend $12.7 billion a year on R&D. So clearly we think it’s important that more of that occurs here in this country so that we can make things here, have great jobs here, and export them all around the world and be globally competitive. And so that is what we’re trying to achieve when we talk about tax reform with respect to competition.
“Another thing is fairness. And this is what I want to talk to you about just as people, as families, as workers. We don’t really have a system that is very fair, and one of the reasons why our system is not very fair is because it’s really complicated. You can sit next to your next-door neighbor, have the same kind of income, and pay dramatically different taxes because of all the different carve outs and loopholes in the tax code. So we want to clean this thing up. We want to clean up our tax system to make it simple and fair. Condense all these redundant loopholes. Get rid of a lot of these sort of bizarre special-interest carve outs. And just lower people’s tax rates. Cut people’s taxes. Lower people’s tax rates.
“The philosophy on the tax code in Washington today is: Send your money to Washington, and then if you do what we approve of, we’ll let you keep some of it back. That’s ridiculous. It’s paternalistic. It’s actually kind of condescending. What we want to do is just clean this system up—simplify it so much that you can fill out your taxes on a postcard—so thatyou don’t have to hire an accountant to do your taxes, so you don’t have to stress what tax day’s going to look like. How many sort of dread April 15 because you really don’t know what the heck to expect, right? This shouldn’t be a dreaded thing. This should be something where you know what’s going to happen. Where it’s predictable, and it’s simple, and it’s fair. And so we think for families, for workers, for businesses, that’s going to be really, really important—to clean this mess up and simplify it so people can easily comply with our tax system.
“The last part I would say is this: We haven’t had growth in this economy near what we used to have since before this great last recession we had in 2008. What I mean when I say that is, in the old days, as in like 10 years ago, our trend growth rate was 3 percent plus. We’ve been growing between one and two percent in this economy. Now that doesn’t sound like a whole lot just thinking about it—1.2 percent economic growth rate versus a 3.2 percent growth rate—it’s massive, it’s enormous.
“If we can get our economy growing at 3 plus percent, that means workers have more take-home pay. That means we have higher standard of living. That means we are creating more jobs. That means there’s more confidence in our economy, so that board rooms and businesses leaders are actually saying more expansion, build more, do more. That means the next disruptive technology that’s right around the corner, maybe in someone’s garage, is more likely to actually occur and get funded in this country. That’s why we want to have faster economic growth, because what it does is it raises wages, it increases take-home pay, it produces more economic security. And, most of all, it just gets our economy growing. It gets our economy healthier.
“So we really think that in order to have a healthier economy, where people can have good-paying jobs, where we can keep businesses in America, where we can make more things, where people up and down can have good, family-supporting paying jobs, we have to have tax reform.
“So that is one of the biggest achievements we’re hoping to achieve this year, and we feel very confident about this. The reason we feel confident about achieving tax reform is it’s just high time. Everybody agrees. It hasn’t been since 1986 that we’ve reformed this thing. Our current tax code is a junker. It is a jalopy. It is the pre-drone era. It is really something. And the rest of the world’s caught up and surpassed us. So it’s high time, in spite of the drags we’ve had on the tax code, we fix this. And I really believe companies like Intel and others will be really wired for more impressive growth.
“And that’s what’s exciting about this. You turn on the TV and it’s not a pretty sight to see these days because there’s so many things that are happening that are frustrating. There are so many anxiety moments, whether it’s foreign policy challenges or just the acrimony we have in politics these days. But if we can get some of the basics right, if we can fix some of these sort of core, structural problems that most of us agree need to be fixed, we can really rebuild some confidence in our country and in our economy. And that is what we are trying to achieve here.”