Okay, if I could have everybody take their seats and we can kick this off. I'm Josh Bivens, the research director here at the Economic Policy Institute. I'd like to welcome you to this event, which I think is going to be really great. In a few moments, I'm going to introduce our list of speakers today, but first some quick thank yous, and then I'm going to give 30 seconds of context for how I think we should look at today's remarks. Thank yous. First, thank you to all of our speakers for showing up today to talk about this important topic and where applicable. Thank you to their staff for making this happen. We did a lot of last-minute scrambling and changing. People stayed flexible. We really appreciate that. At EPI, I think the people who really worked hard to make this work was our communications team, and particularly our events guru, Margaret Poidock, and our government relations team, yes, hands, and our government relations team was pretty much entirely Samantha Sanders, so thank you to them. In a quick context, I think the issues of taxes and offshoring raise a bunch of questions, but I think, two, I would just like to flag for us to keep in mind as we go through the remarks today. I think the first is, what does the passage of the TCJA say about the Trump administration's commitment to protect American workers from the pressures of globalization? We all remember during the campaign, Donald Trump went around and said he was going to protect Americans from globalization and change the rules of the game in ways that previously disadvantaged them, and he was going to bring production back to the United States. And in office, almost every week, we see the announcement of some proposed small pinprick tariff, and the claim is these tariffs are going to be the thing that turn around the rules of the game governing globalization and protect American workers, and we can debate the tariffs and where they fit into a larger coherent agenda forever. One thing we can agree is they're pretty small. They don't have a lot of oomph when it comes to actually changing the incentives of where production is going to be put in the global economy. Today, our speakers are going to tell us about the incentives embedded in the TCJA, and we can make the decision about whether they're larger or smaller, and I think that's going to be a key thing we should keep an eye on. Another question is, what is the final form of the TCJA say about arguments made in recent years that US corporate tax code needed to be reformed to help American competitiveness? Probably the most cited and most effective talking point during the debate over the TCJA by its proponents was that the American corporate income tax rate in 2017 was the highest in the world, and it made the United States uncompetitive in global markets. I mean, I think our speakers are going to speak to a lot of this, but it's a small spoiler alert. This talking point was mostly facile and wrong. It was empirically misleading. It didn't have a lot of logic or economic theory behind it, but pretend for a second we believe the proponents of the TCJA were sincere in their desire to use tax policy to make setting up shopping in the United States more attractive. We're going to ask ourselves today, did they succeed? And if they didn't succeed, was it just an analytical mistake, or was there no real intention to fix the part of the tax code that governed competitiveness in terms of where American companies were going to set up shop? And so I think there's going to be a lot of light shed on this subject today, and so I think that's a really important angle we're going to look at. So given all this, let's get to the program. I'm going to introduce our first three speakers, and then I will bring up Congresswoman Rosa DeLauro. Our opening speaker is the Congresswoman Rosa DeLauro from Connecticut's Third District. She's co-chair of the Democratic Steering and Policy Committee, and she's been a tireless champion of America's working families during her time in Congress. She's also been at the forefront of efforts to make sure America's trade rules are fair to typical workers, and that globalization isn't just used as a hammer to beat down their wages. And so we're delighted to have her here today. Rebecca Keisar is the professor of law at Brooklyn Law School, and will be joining the full-time faculty of Fordham University School of Law later this year. She teaches and researches in the areas of federal income tax, international tax, and the federal budget and tax legislative processes. She's published widely on these issues in law reviews. And prior to entering academia, she was a tax associate at Cravath, Swain, and Moore, where she advised on cross-border mergers, acquisitions, and restructurings. And Kimberly Clausing is the Thorman-Miller and Walter Mintz professor of economics at Reed College. Her research studies the taxation of multinational firms, examining how government decisions and corporate behavior interplay in an increasingly global world economy. Professor Clausing has received two Fulbright Research Awards and has worked on related policy research with the IMF, the Hamilton Project, the Brookings Institution, and the Tax Policy Center. And she has testified before both the House Ways and Means Committee and the Senate Committee on Finance. And so with that, I'm going to bring up Representative Deloro. Thank you so much. Thank you all very, very much. I'm delighted to be at EPI. Yay, EPI. That's all I can say is that where's the Thea Leave. I'm so delighted that she is here. But you've been just an unbelievable resource for those of us who are legislators. But I want to say a particular thank you to Josh for your introduction and what a critical leader that you have been and a resource, again, to all of us concerned about inequality, outsourcing, and policies that put the needs of people first. And I was always grateful to you for all of your time and effort as we were going through the debate on the Trans-Pacific Partnership Agreement. So many, many, many thanks to you. Panel sounds wonderful. I wish I could stay to listen, but they pay me to vote. So I'm going to have to head back to do that. But thank you for all of your work and your efforts in this area. And with regard to EPI, you really have offered a very, very clear and perceptive voice on behalf of America's middle class, of working families, of the vulnerable. And in a city in Washington with think tanks that you depend on, you really have achieved great reach and great impact. As I said, as a legislator, I turn to your rigorous and to your honest research. Your analysis provides the straight story on the economics of globalization, on labor markets, on trade and education, always ahead of the curve with your work, the latest and the sharpest take on the challenges that we face as a nation. And you're ahead of the curve on this issue as well, specifically how the majority's tax bill will accelerate, in my view, the outsourcing of American jobs. And I believe that the tax law is the single most expansive move that the US Congress has taken in a generation to exacerbate income inequality. Too many Americans who play by the rules today are in jobs that do not pay them enough to live on. Families are struggling every day. It's the rising costs of childcare, housing, health care, putting food on their table. And yet their needs are off the table. Meanwhile, our international trade policy over the past 25 years has decimated manufacturing in my state of Connecticut. According to the Bureau of Labor Statistics, we lost more than 100,000 manufacturing jobs since the North America Free Trade Agreement was enacted and when China was allowed to join the WTO, the period between 1994 and 2016, that amounts to nearly 40% of the manufacturing jobs in Connecticut. Taking into account both jobs created by exports and jobs displaced by imports, manufacturing went from accounting for about 20% of the private sector jobs in Connecticut to 11%. And I saw it and I fought it as the Ansonia Copper and Brass suffered under policies that invited outsourcing. We're now at Ansonia Copper and Brass, where we are raising the buildings that are there, thousands of jobs lost. Communities across the country have witnessed similar damage and according to a 2015 EPI report, the United States lost 5 million manufacturing jobs between January 2000 and December 2014. To make matters worse, the job loss was asymmetrical. Some regions bore all of the damage.  Flint, Michigan was a former industrial hub where austerity-driven decision-making created a public health catastrophe. So in short, again in my view, outsourcing devastates. Yet, as many of you know, the majority's tax law actually encourages companies to export jobs. It creates a lower rate for multinational corporations to invest abroad. Right now, a company that makes their wares outside the United States pays up to 13% in taxes. Yet, the same company making their wares in the United States will pay 21% in taxes. The AFL-CIO has called this provision a job killer. Considering that, Republicans claim that the tax law will lead to, quote, jobs, jobs, jobs, is certainly false, false news, fake news, which is why I introduced the closed tax law loopholes that Outsource American Jobs Act. What the bill would do is to strike the provisions of the tax law that allowed for a lower tax rate abroad and undo this incentive to outsource. My colleague, Lloyd Doggett, who you will hear from at the conclusion of this forum this morning, I have a piece of this, which is what I've just described. He has a much larger proposal with regard to the outsourcing of jobs. In my view, the tax law rigs the game against the middle class. It endangers jobs. It gives 83% of the tax cuts to the wealthiest 1% of Americans. It includes $1.3 trillion immediate massive tax break for corporations that will endanger social security and investments in education and other areas as well. So I'm not alone in my concerns. And Democrats are not alone. Republican Senator Bob Corker said about the tax law, and I will quote, if it ends up costing what has been laid out here, it could well be one of the worst votes that I have made. Furthermore, since the tax law went into effect, the majority of corporate tax cuts have been used on stock buybacks, not pay increases. American companies have announced more than $305 billion in planned stock buybacks, compared to less than $131 billion in bonuses or wage increases. Just last week, Apple announced a $100 billion buyback. And however, the vast majority of benefits from stock buybacks go to the richest 10% of American households. And that's according to the Joint Economic Committee. So the majority of the tax laws benefits have accrued to wealthy shareholders and executives, while only a minuscule portion of the benefits have gone to ordinary people. Even the reports about worker bonuses are misleading. Take Walmart. They announced bonuses for their employees, but severely restricted who was eligible for the full $1,000 bonus. If you work more than 20 years, you got $1,000. 15 to 19 years, $750. 10 to 14 years, $400. 5 to 9 years of service, $300. 2 to 4 years, $250.  Now, I don't look $200 and say, whoa, it's nothing. $200 to a struggling family is $200. But give us a break. $1,000 had to be there for 20 years. And at the same time, what they did, they shuttered 63 Sam's clubs, cutting 10,000 jobs. My district, Orange, Connecticut, the loss of 155 jobs. So we need to call it like it is. If these companies really want to give back to their employees, they could raise hourly wages, salaries, or expanded benefits. Because what good is a one-time bonus if you lose your job the next week? Republican Senator Marco Rubio echoed this concern in an interview with the economist. He said, and I quote, there was still a lot of thinking on the right that if big corporations are happy, they're going to take the money they're saving and reinvest it in American workers. In fact, they bought back shares. A few gave out bonuses. There's no evidence whatsoever that the money's been massively poured back into the American worker. End quote. Honestly, I wish he had the courage to actually demand that. The majority wrote and passed a tax law with perverse incentives that will create markets that prioritize concentrated wealth and which invite companies to employ workers abroad at the expense of those here. This is not an accident. Markets are built by policy. In other words, market conditions are a choice. Or as Roosevelt Institute chief economist, Joseph Stieglitz has said, and I quote, inequality is not inevitable. It is a choice we make with the rules that we create to structure our economy. And that is why today's panel is so important. People need to know about the tax laws outsourcing provision and the perverse incentives in the law that rig the benefits and the economy against middle class families. Most Americans today, polling these days bear this out, are suspicious of what the politicians in Washington are up to. Many may know the law mainly benefits the rich. However, they do not know that the president and the Republican Congress included a corporate tax cut that kills jobs. To close, I want to share a quote from one of my heroes and the longest serving labor secretary in our nation's history. And that would be Frances Perkins. And she said, and I quote, the people are what matter to government. And a government should aim to give all the people under its jurisdiction the best possible life. This tax law does not give the people the best possible life. It incentivizes more of the very outsourcing that is killing manufacturing in my state and across this country. And instead of giving tax cuts to the wealthiest Americans and corporations and extending them the invitation to outsource, we should be investing in the future of our country. We should be rebuilding our crumbling infrastructure, expanding access to early childhood education. We should be equipping workers with the skills that they need through job training and worker protections. We should be reforming our tax system so that it encourages the creation of jobs here at home. One-off bonuses do not put food on the table each month or money in a college fund. And so I leave you with these words and this charge. We need more studies and more dissemination from you. We need you to help us to underscore the problems and to uncover the solutions to protect workers and beyond that to address the issues that they actually face. I thank you so much for allowing me to be here this afternoon with what is a critically important discussion. And I look forward to the benefit of the many discussions you'll have here in the next couple of hours and hope to take advantage of the advice you give us and the directions that you think we ought to go. And it is imperative. And the country today does not know about what this tax bill has really meant to their lives in terms of their jobs. I have called on my caucus, the Democratic caucus, when we talk about the tax bill, that we stand up and we fight to let them know what is going on with the outsourcing of jobs continuously. And I'll be political and crass for a moment. When you take a look at Wisconsin and when you take a look at Michigan and when you take a look at Pennsylvania and you ask those folks what happened to them in the economy. It is that their jobs went elsewhere, their wages went down, and they can no longer take care of their families. We need to recapture this narrative. Thank you very, very much. This is the best. Josh. He says he's. OK, great. Thanks. Thank you, Josh. And thanks, everyone, for being here. It's my pleasure to be discussing international tax with you today. And one of the interesting things about the Francis Perkins quote that reminded me, she was the first woman in the cabinet, FDR Secretary of Labor, and we have something very unusual here today, which is three women all talking about international tax, which is four, I guess, really. So that's a surprising coincidence there. What I'm going to talk about today is a comparison of higher law and current law. And in particular, before the Tax Cuts and Jobs Act, what were the incentives to move activity or profit offshore? What are the problems that this legislation is trying to fix? Did this legislation fix those problems? Will it live up to its promises? And are there potentially better ways that we could reform or move forward from this? So first, let's talk about the prior law. One of the most noticeable features of this debate is the large mismatch between the label and the reality of prior law. So the bark of the prior law, shall we say, sounds quite intimidating. The US system taxes the worldwide income of multinational firms, and it does so at a 35% rate. That's the label. If you look at the reality on the ground, we really had a hybrid system. This US taxation doesn't occur until the income is repatriated. And since firms get to choose when they repatriate the income, many of them chose to leave it offshore, growing indefinitely at the offshore tax rates. So even though its label was worldwide, it was really technically a hybrid system because this US part of the taxation rarely happened in practice. Also, the 35% label was similarly misleading. It did apply, certainly, to purely domestic companies. They still got some deductions for this and that, but they paid something closer to that. But for the multinational firms, the ones that we're concerned with today, the ones who are fairly mobile and fairly agile, they often achieved effective tax rates far, far lower than that, with many being in the sort of single digit club where they managed to get the effective tax rates down into the single digits. And this is one thing that we'll have to keep our eye on when we're talking about the incentives of the new legislation is these two groups of firms look pretty different, the ones that are purely domestic and the ones that are multinational and they're gonna have different effects from this legislation. So prior law really came up for criticism for three problems. One, a large incentive to book income abroad and I'll talk about that and that's a very real problem that I estimate cost the US government quite a bit. A problem for some, which is the repatriation is discouraged. And I say it's a problem for some because I think it's a real problem for shareholders who wanna get their hands on the money. It's less of a problem for the US economy because many of those funds were already invested in US markets. And then an imagined problem, which is the competitiveness one, because of this mismatch between label and reality, there's actually very little data that would suggest that US corporate community had a competitiveness problem. So let's look at these three problems. First, the profit shifting. It's clear that US multinational firms are booking a lot of income in low tax countries and this has been a persistent problem for a long period. If you look at the top countries where we book income, seven of the top 10 are havens. Netherlands, Luxembourg, Ireland, Bermuda, the Caymans, Switzerland and Singapore all have effective tax rates paid by US affiliates that are below 5%. So there's only three on the top 10 list that aren't havens, the UK, Canada and China and those are countries where you expect a lot of income to be booked anyway. So it's clear that the income is artificially in some of these locations. Those top seven havens, for instance, account for fewer people than the state of California, but they account for over half of all of the foreign income of US multinational firms. You've got islands like Bermuda with 60,000 people accounting for 7% of all global profits and you know there's something off, shall we say. So my research has estimated what that costs the US government in revenue terms and you'll see by the sort of run up to this legislation exceeds $100 billion a year in revenue loss. Now it's true, that assumes that the income would have been taxed, something close to the US rate. So the more you lower that rate, one response to this diagram is to say, well if we tax corporate income at 10% instead of 30 that the revenue loss would be one third as large due to profit shifting. So this does assume the existing corporate rate which was at the time 35%, although I assumed some deductions would have reduced that to more like 30 in these calculations. But this does imply a lot of revenue loss in the neighborhood of $100 billion a year. So that's a real problem and a problem for some is this repatriation issue and most agree that it sort of doesn't make sense to have tax triggered by repatriation that it would probably make more sense to tax the income currently if you wanna tax the foreign income rather than have this sort of discretionary question as to when you bring it back and how much you pay. And this made it difficult for shareholders for instance to get their hands on the dividends and profits that they wanted to access. But it didn't necessarily reduce the income accessible to U.S. capital markets. Many of these dollars while offshore for tax purposes were still invested in U.S. capital markets and so that provided access to those funds for the U.S. economy. And also any company that wanted to make an investment had no problem borrowing against these piles of offshore cash to make an investment. And in fact, if you do that, which Apple did for instance on several occasions, you can create the equivalent of a tax-free repatriation. You basically borrow at home. You get an interest deduction here. It's true you were an income offshore that's taxed currently, the interest income. Those two tax events cancel and effectively you can access that money just by borrowing in capital markets. And so some of these companies with tens of billions of dollars offshore were nonetheless borrowing but that borrowing was a sign of them just undertaking worthwhile U.S. investments. So there's no reason to think that that's holding back new investments because these companies can easily access credit and there's some of the most credit worthy companies on the planet. So the repatriation as I said is a problem for some but not all. Competitiveness is what I would call an imaginary problem in the sense that the companies that we really worry about, the ones that really do face global competition because they're engaged in global markets because they're multinational, those companies weren't paying the 35% and they weren't being taxed on their worldwide income because they were leaving the income offshore. So it's not clear that those labels of the U.S. tax system are really holding back their competitiveness. And in fact, if you look at U.S. corporate tax revenues relative to those of peer countries, they're about 1% of GDP lower than those of typical peer countries. So we raised in the United States about 2% of GDP from the corporate tax. Most of our peer country trading partners are raising closer to 3% of GDP. So that should tell you right there that there's not a huge competitiveness problem but there's more evidence here too. Look at after-tax corporate profits for instance. If you look at the recent years since the early part of this century, corporate after-tax profits are about 10% of GDP. Whereas if you look in prior decades going back into the 1960s, 70s, 80s and 90s, corporate profits after-tax is a share of GDP. We're about 50% lower than they are at present. So it's clear that after-tax profits are pretty healthy. It's also clear that the U.S. has a disproportionate share of the world's top companies. The U.S. is about one-fifth of the world economy but we're about 30 to 40% of the world's top companies whether you count them up or whether you look at their sales or profits or assets or market capitalization. And these darker bars are showing you the 2016 Forbes Global 2000 list. The lighter bars show you 2014. So you see if anything, we're actually having slight increases in our share of the world despite the ascendancy of countries like China. So it doesn't look like our corporate sector sort of withering away under the strains of global competition. On the contrary, our multinational firms have been quite effective at avoiding taxes. And this has put them in the sort of the, under the scrutiny of the European Union and others who've sort of said, hey, U.S. multinational firms seem to have an unfair advantage in their abilities to avoid taxes. So that was a pre-existing problem with our tax system that other countries focused on too but it wasn't a problem of U.S. competitiveness. So I think the competitiveness conversation is really largely a myth. So let's talk about the Tax Cuts and Jobs Act. What does it do to respond to these problems which we've identified as a sort of illusory competitiveness problem, a repatriation problem for some and this income-shifting problem? Well, there's a huge cut in the corporate statutory rate to 21%. That costs 620 billion over 10 years. All of these numbers are 10-year numbers. There's a complex cut in the pass-through tax which I'll just briefly refer to at the end that also costs over 200 billion in revenue and there's a bunch of international provisions and those are the ones sort of of concerned today and there's sort of two types. There's types that lose money relative to the pre-existing law and there are types that raise money relative to the pre-existing law. So in the losing money category we have territorial which basically says, okay, there won't be a tax upon repatriation because we're gonna exempt foreign income. We also have this FDII which is a tax break for foreign-derived and tangible income, both of those lose revenue. On the gaining side we've got the guilty which is a global minimum tax that applies to intangible income and we've got the beat which is another measure that attempts to cut down on base erosion. Those both raise money but when you take all the international provisions together you'll see that by year 10 and over the 10-year period they're losing money. So that means relative to the situation that we had before with that large profit-shifting problem that I documented we're not actually broadening the base. We're doing some things to narrow it with territoriality which sort of encourages more offshoring and profit-shifting and then we're doing other things that counter that. Those do sort of cancel and so we're lowering the rate without broadening the base really on an international sense. There's also a deemed repatriation tax. I'm putting that to the side for the purposes of this analysis because it's kind of irrelevant in the sense that it's a tax break based on income you've already earned. So it's not clear what you really incentivize with that kind of tax break because the income's already been earned. We do raise some revenue temporarily but it goes away of course because the income has already been earned. Of note the legislation creates large deficits which I'll refer to later and also a lot of sources of uncertainty and complexity which we'll be discussing and Rebecca will also be discussing. So let's talk about these promises and what the legislation delivers. So there's sort of four hopes really. One that it will result in less profit-shifting. One that will cause more investment and thus hopefully redown to the workers in the form of wage growth. One that will be more competitive by being territorial and finally that it will entail sort of a true reform. I'm skeptical about it meeting any of these goals in fact so let's start with the profit-shifting. The interesting thing about this profit-shifting debate actually if you sort of look in the news coverage and talking to peoples it seems like everybody is disappointed. So on the one side we have people like myself who said hey we used to have all this profit-shifting problem this is a real opportunity to broaden the base while we lower the rate and maybe do a revenue neutral business tax reform like those proposed by the Obama administration or by Chairman Kamp of former Republican Ways and Means Chair but instead we're not actually raising revenue here so it's not clear that we're doing the base broadening part and so that's really disappointing for some observers. But the business community is also disappointed. We've got these complicated acronyms. The beat, the guilty, the FDII. Rebecca's gonna talk about some of the nuance here but a lot of the interactions are perplexing and befuddling to even the top experts and practitioners. They were I believe hoping for something that would be much more sort of like the candy store pure version of territoriality where the income would be exempted but there wouldn't be these base protections and so they view the acronyms as a big thorn in their side and so that creates unhappiness kind of all around. But I don't believe that this legislation on net is gonna substantially reduce the profit shifting problem. One if you sort of look at the JCT guess it appears that it's actually losing revenue so that's telling you the international provisions aren't raising revenue. But also the guilty itself it's got some strange perverse incentives where if you think about it it's a minimum tax that's done globally but it sort of makes the US the least desirable place to book your income and Rebecca will talk about this but effectively under the old system it's true in the US you had this high rate abroad you had a much lower rate so that differential was higher than it is now but there was still the speed limit provided by the threat of repatriation. So you didn't necessarily your shareholders did want the money eventually. So the fact that we were taxing it upon repatriation created sort of a natural speed limit to how much you'd wanna shift abroad unless you thought the system was gonna change. Whereas under this system we've got the sort of explicit permanent preference for the foreign income relative to the domestic incomes. The domestic income is taxed at 21% the foreign income if it's in a zero tax country would be taxed at 10 and a half it could be as high as 13 some of the interactions could complicate that a little but it's clear that you'd rather have the income at 10 and a half than at 21. So one question we have to ask is will the tax director sort of stop trying to do the tax avoidance simply because that margin has shrunk and my personal hunch is no like a good tax director is gonna do their job whether it's saving 10% or saving 30 so it's not entirely clear that this minimum tax is gonna raise that much money in the United States. Now I think it may actually raise some money in Germany and Japan because effectively if you're earning the income in other high tax countries you can use that high tax income blend it with the low tax income and avoid the minimum tax that way and Rebecca will talk about that in more detail so I won't go into the nuance here except for to point out that this sort of America last rank ordering of where you'd want to book your income because the haven would be best then the other high tax countries which didn't used to be the case and then the US is sort of last and then there's also some questions about whether we'll even get to keep these base protections that we already have the beat for instance has come under sort of a vociferous opposition from both the business community and trading partners don't like it. Many view it as actually kind of just a first solvo and an international sort of coordination game where it'll eventually be sort of reduced. A second question and promise of this legislation was that it was going to lead to investment and wage growth and one might also be a little bit skeptical here mostly because there's very little evidence that corporate taxes were really the thing that was holding back investment and wage growth in the first place. There's no evidence companies were cash constrained. There's no evidence that they had a hard time accessing credit markets to fund any worthwhile investment that they would want to take. So in a way you have to almost assume that companies were somewhat irrational if this tax cut is going to change their investment decisions for instance the repatriation part of this really should have no effect at all because you could have already borrowed against that money and on the equivalent of a tax-free repatriation. There is a sort of a net incentive provided by the lower corporate rate for domestics that weren't able to self-help to the single digit effective tax rate. Now their equity financed investments will be less expensive so that's a marginal increase in the incentive to do investment that's a real thing. That said the debt financed investments are actually less tax preferred under the new legislation than under the old legislation. So if we really want to think about the net incentive to invest we sort of have to average the incremental tax cut on equity financed investment and the incremental reduced subsidy on the debt financed investment. And it's not clear that the marginal incentive to invest will increase by anywhere near as much as some of these headline tax rate reductions might make you think. Another issue that I think is really important for this room to keep in mind and for economists to think in mind going forward is the fact that a lot of companies today and a lot of these companies that we're focusing on are really companies with market power who have above the normal return of profit. So when you're thinking back to your sort of intro econ tax theory you think okay well if we cut the tax on a perfectly competitive firm that marginally increases their inducement to invest ignoring the debt part that we already talked about but if you have an imperfectly competitive firm it's already earning above the normal profit and you're taxing that extra profit rectangles that would show up in a diagram, right? You're not actually discouraging investment with that you're just picking up some of the rents for the public fisk at the expense of the shareholders and the treasury economists have calculated that right now the corporate tax base is about three quarters excess profits. So I think that's a very important part of this debate but regardless of the vast majority of economists from all political stripes do feel that these tax cuts were oversold in this area particularly by the CEA and others in the administration. A third promise, this will be a competitive territorial system. Now a few quibbles. One is this new law anymore territorial than the old law not entirely clear. So remember in the old law we weren't taxing it until it was repatriated, right? So you could accumulate indefinitely offshore tax free under this new law actually there's more income as taxed currently that's foreign income than under the old law, right? Because if you earn the income right away in Bermuda it falls prey to the guilty immediately. Now you may be able to avoid the guilty by blending it with income from Germany and not end up paying the US government anything but it's not entirely clear that on that the law is more territorial than the prior version it's changed its label though and that's important for marketing purposes but it's still a hybrid and so is the old one. Another thing to keep in mind is other countries are not standing still here there's been half a dozen countries even since this legislation was under debate that have talked about subsequent changes to their tax laws including Australia today. And there are other aspects of competitiveness I would also point out than just tax and this is something that is important to keep in mind for instance, threatening the world trading system as the FDII does implicitly is not necessarily good for US global companies that have global supply chains and all these tariff threats as well it's not clear that those make US companies more competitive we live in a world where companies have global supply chains and if we start trading wars with all of our trading partners it's not clear that that's ultimately helping US business or US workers. Nor is it clear that it's competitive to underfund the government. We already have a debt to GDP ratio that's pretty high it's now forecast to approach 100% over the next decade. This is adding over one and a half trillion dollars to deficits and debt by the latest CBO calculations that have this even larger. So that means less money for other ingredients of competitiveness, infrastructure, education, R&D other things that we might wanna invest in to say nothing of responding to the next recession which could come and that's another thing that will make us ultimately less competitive. Plus there's bizarrely some new incentives to shift real assets offshore created by both the FDII and the Guilty and Rebecca will go through this in more detail but effectively the minimum tax is less binding the more assets, the more real assets not just paper profits that you have offshore. So this is another bizarre and sort of new feature of this tax legislation is it gives companies a reason to have their real assets offshore. I was on a call with a tax director at a major multinational and early in this process is he was sort of processing this incentives created by this line and he said it was like, well, of course, that gives us a reason to put more assets into Ireland and other places like that than we would otherwise because it's gonna reduce the fight of this guilty and that seems like a pretty obvious incentive. Finally, I don't think that this is really even reform. If you compare this sort of tax legislation to that of, for instance, the Tax Reform Act of 1986, right? The Tax Reform Act of 1986 was revenue neutral. It was distributionally neutral and it was voted on in the Senate by 97 to three, right? Let's compare that to this, right? We've got something that loses a lot of money that's much more regressive than any recent changes in tax law and it's not necessarily politically stable because it didn't have a single vote from the other party, right? So if you're a business person in the United States and you're looking at this tax environment, can you really count on it lasting for more than one or three years? Maybe, but that requires a lot of political assumptions. Plus, there's such a rushed process that a lot of mistakes were made that will probably need to be undone or unwound and that itself creates this own uncertainty as does these WTO challenges and other things. A final thing to keep in mind is that there's new types of income shifting. We've talked about profit shifting offshore, but we haven't talked about this new type of income shifting that's gonna be exacerbated by this legislation, which is shifting from labor to capital income. Now that corporate rates are quite low and we've got this new pass-through tax rate, it makes way more sense to earn your income in business form than the top labor rate, right? So when we're looking at the revenue consequences of this legislation, there's gonna be stuff that we can see, right?  There's also gonna be hidden stuff, which is this movement away from the traditional labor income tax base toward the corporate and business tax base.  And that's a new type of shifting that we've just made a lot worse.  And I'd remind you that a lot of equity income isn't taxed at all at the individual level due to 529 accounts, endowments, IRAs, and foreign holdings. There's only about 30% of U.S. equity income that's even taxed at the individual level. So the corporate layer of this is important in addition to the market power issues. So we could talk about this more in the panel, this is my final slide, but I would suggest sort of a repeal and replace here with the true tax reform. But the problem is that I think this first step is gonna make true tax reform more difficult because usually you bring the business community into true tax reform by saying, hey, guys, we can lower your rate, but we're gonna broaden the base. But if you're starting from a point where you're like, hey, we can lower your rate and we can keep the base roughly the same, right? And then you wanna go back for round two, what do you have to give them, right?  I mean, that's kind of what I would suggest here, but that's not gonna make them super happy. So I do think it makes reform politically a lot more difficult than it was gonna be. And we're not living in a stable environment in the international sphere either and that's gonna be something that we're gonna need to respond to. So I've got some suggestions for incremental improvement here. And I think Congressman Doggett's gonna have some things to say, for instance, about how to make the minimum tax better by making it per country rather than global, raising its rate. But we probably, for revenue purposes as well, would be better off having the corporate rate itself more like 25 or 28% than 21, getting rid of those pass-through provisions which are gnarly and complicated and trying to achieve the goals of the FDII in some other way. But one thing this process illustrates, both the TCGA's complexity with all the acronyms, but also the BEPS process with the OECD and the G20, which is this base erosion profit shifting initiative, is the incremental fixes here are really hard in the international tax realm. The OECD suggested literally 2,000 pages of guidelines about how to help establish source in the world economy. We've now got this acronym laden tax code that's extremely complex if you look at some of these flow diagrams. So I think all of this calls out for a more fundamental approach, sort of looking at other ways to try to get at this problem. And I don't think we should give up on taxing firms by any means, but I think we should think about a more holistic reform that might be either a true source or a true destination, but not this sort of hybrid complexity. And I'd be happy to talk about that more in the panel. Okay, so my job is to kind of walk through the new legislation in a bit more detail and to introduce you to the problems I see with regard to profit shifting and offshoring. So just kind of to summarize, we've done several things here. We've lowered the corporate rate to 21%. We now have a participation exemption system, which gives 100% deduction to U.S. corporations for dividends that they're receiving from their foreign subsidiaries. This is the quasi-territorial part of the system. And then we're also imposing a one-time transition tax for pre-existing E&P that's already out there. We're backstopping this new territorial regime with a minimum tax, and that's because, right, once we start exempting foreign income, then we've created incentives to profit shift. And so the minimum tax is an attempt to deal with that. And that's the quote-unquote guilty regime. We are also providing a special low-rate-on-export income. That's what I refer to as the FIDI regime, or FDII, and we're targeting profits stripping by foreign firms to U.S. affiliates through the BEAT regime. That's the inbound regime. So theoretically, the existence of a territorial system coupled with a minimum tax could be an improvement over our prior system, which, because of deferral, wasn't desirable for the reasons Kim mentioned. It's also preferable to a pure territorial system because of the protections it places on the revenue base. Nonetheless, although a minimum tax can work in concept, I think its current incarnation is problematic for reasons that I'll discuss. Also just a little background on terminology. When we talk about profit shifting, we're talking about something that can be accomplished on paper, for instance, companies not charging their affiliates' arms-length prices. Offshoring involves the shifting of economic activity in real assets, although that offshoring may also affect economic profits or reported profits. Okay, so as I'll discuss, the legislation makes some policy choices that I think unnecessarily incentivize the offshoring of assets, while it also largely preserves profit shifting. So let's kind of drill down into the minimum tax regime. There's, first of all, this policy choice of applying the minimum tax on a global, rather than per-country basis. And this encourages profit shifting. So the minimum tax regime allows a 50% deduction of what's called guilty income. At the 21% corporate rate, that amounts to a 10.5% rate on that guilty. Given the wide differential between the domestic rate and the minimum tax rate, there would remain substantial motivation to shift profits. That rate gap is not as large when we're talking about exports because of that FIDI regime, which produces an effective tax rate of 13.125%. But there are some problems with that regime, which I'll get into and it might not be so stable. So Republicans made this strategic choice in structuring how foreign tax credits work with guilty. The new legislation allows foreign taxes to be blended between low tax and high tax countries before offsetting guilty from those countries. Thus constituting a global minimum tax rather than a per-country minimum tax, where in a per-country system, you'd only allow the foreign taxes to offset the guilty from that country in which they are paid. So this structure is kind of encouraged firms to locate investment in both high tax and low tax countries. And the idea here can be illustrated in the following examples. So let's say we've got a company that earns a million dollars of income in country A. So this is my top line. That country is imposing also a 21% tax, as now we have. So they're paying $210,000 of foreign tax. Under guilty, they'd have a tentative guilty liability of 105. They're allowed to credit 80% of those taxes. So they're allowed to credit 168,000 of the 210 against their guilty liability. This brings down their final guilty liability to zero. They've already paid their taxes in country A. Now they don't have any guilty liability. The excess credits, the excess credits of 63,000 are forfeited all together. Okay, so that means that the total tax that that firm is paying is $210,000 in country A taxes. Now let's say the firm is trying to decide whether or not to locate an additional investment of $2 million in the US or abroad. If they were to locate it in the US, which is the second line, they would be paying the 21% on the $2 million. And so the final tax liability would be $420,000. So there the total tax in the US would be 420. Now combined, we now have US and foreign taxes of $630,000 on both of those investments. So what if we make the investment not in the US, but in let's say a tax haven, let's say country B. So this is my second line. If I were to make that $2 million investment in country B, I would have a tentative, guilty liability of $210,000. The credit is no longer relevant. The foreign tax credit is no longer relevant because there's no foreign taxes being paid in country B. So the final US tax liability there is $210,000, right? They're paying nothing to country B because it's a tax haven and they're paying $210,000 to the US. So in total, right? If we're just to look at this investment, they're paying total tax of $210,000. Coupled with the country A tax of $210,000, this would mean if we were to use a per country minimum tax, they would be paying in total $420,000. And that's because, so they don't get to take the $168,000. Of a foreign tax credit that would otherwise be available to them as is under current law. So let's look at current law. When we're looking at the $3 million, if we combine it using the global minimum tax, meaning that the foreign tax credits from country A can absorb country B tax liability, this brings down the guilty liability further. So that would have been $630,000. And also it would have been $420,000 under the per country minimum tax approach. So the per country minimum tax, right, still doesn't get to parity with the US because of the rate differential. But the fact that we're using this global minimum tax makes the situation worse. Okay, so that's the kind of what's called a blending technique. This is incentivizing countries to create a stream of zero tax income that brings the average foreign taxes down to the minimum rate. But it also can mean that a firm is incentivized to shield profits and tax havens by choosing to invest in high tax countries. So a firm may prefer to invest in a country with a higher tax rate than the United States because they can use taxes from those countries to blend down the US minimum tax to zero. So if a firm has profits in tax havens, then the effective tax rate of investing in a high tax country, say Sweden, which has a 22% statutory corporate rate, well, that might only be a rate of 4.4% because they get to credit 80% of those taxes and use those to blend down guilty. So this is gonna put the US at a competitive disadvantage, making it more likely, right, that jobs and investments go to Sweden. Okay, so this was a deliberate policy choice, Kim, in October, before any bills were out there, stood in front of the Senate Finance Committee and warned against it, but this was what the policy makers chose. Critics of a per country approach say that it's too complex to administer. I would say that the primary targets of guilty, right, are sophisticated multinational corporations that can effectively deal with the challenge of computational complexity. Moreover, the blending technique itself requires significant resources and complex tax planning. So you're saving resources by not having to do that kind of inefficient maneuvering under the global minimum. Okay, so also proponents of the global approach argue that the per country approach punishes multinationals that naturally conduct integrated production in high and low tax countries for non-tax reasons, but I think the national welfare objective implicated in cross-crediting for non-tax purposes overrides this concern. Okay, so that's one problem with guilty. The other problem is that corporations get to exempt the deemed 10% return on tangible assets of the foreign subsidiary, which provides incentives for offshoring assets. So the theory behind this exemption is that we're attempting to tax supernormal returns, returns that are larger than the typical returns on marginal investment in capital. So for instance, I was just in the Bahamas, and let's say ordinarily a restaurant in the Bahamas would return 4% to investors. But Bobby Flay has a restaurant there, Mesa Grill, and a return say 9% to investors because of its star power, because of its brand. That additional 5% return is the supernormal return. And those supernormal returns are efficient to tax, and they also represent returns to intangibles, which can be easily shifted abroad. So that's why the legislation targets them. But one problem, however, is defining what the normal return on capital is, since this is going to be a firm specific inquiry. Guilty takes a very rough approach to this by just deeming the return and deeming it at a very high rate. So let's see what happens to your tax bill when you put your assets offshore. So if we were to assume we have a domestic corporation and a foreign subsidiary, foreign subsidiary produces what's called net tested income. That's the income subject to the guilty tax. So that's $100,000. Let's assume that they have no tangible assets in their foreign subsidiary. So you've got income of $100,000, $10,500. Okay, so that's what happens when we don't have tangible assets offshore. But let's say if you're thinking about where to put assets while you're going to think about what happens to your guilty liability if you put them offshore. And let's say now you put $1,000,000 of tangible assets in your foreign subsidiary. And so you've got $1,000,000 tax basis in those assets. You subtract out the deemed 10% return on those tangible assets. That's gonna wipe out your guilty liability completely. And so now you have a net US current tax liability of $0. Okay, so of course you're gonna take into account non-tax considerations and local foreign taxes also will affect the equation. We might expect the off-shoring incentives guilty to primarily be a problem, right? When we've got low tax countries, but there might be some labor supply, legal, other limitations in those countries, some countries like say Ireland and Singapore are hospitable options for economic activity. Okay, so you might say that exempting a normal return on investments will always lead to some offshoring that this may be just part of the source-based regime. But at best this 10% figure is likely too high. Also note that these two features of guilty are really exacerbating one another. So the low rate on guilty combined with the 10% exemption is exacerbated by the ability to blend low tax income to absorb the excess foreign tax credits from high tax countries. Okay, so I mentioned we should move to a per-country minimum tax. What else can we do here? First, the deduction for guilty could be reduced so that the gap between the domestic rate and the minimum tax is not so large. We could also just simply eliminate that exempt return on tangible assets and instead apply the minimum tax to all foreign source income. If policymakers are wedded to the idea that the minimum tax should only target the intangible assets, an option would be to rethink that deemed rate of return. So the 10% rate is arbitrary. It doesn't seem to correlate to the market return on intangible, on tentables, and seems quite high. So you could, for instance, have a rate that was the riskless return plus a fixed rate premium. Finally, are things worse now than before? In many ways, right? You've got the 21% rate. You've got expensing. Other features reduce the gap between domestic and foreign rates of taxation. And certainly we would be worse off without a minimum tax altogether. But I think this one is poorly designed and we could have done better here. Okay, so the next regime I'll talk about is the FITI deduction which only applies to income above a deemed 10% return on tangible assets, which provides another incentive for offshoring real assets. So we kind of say that guilty is the stick for earning income from intangibles abroad, although some would say it's also a carrot because of that lower rate. And then FITI then becomes perhaps the tastier carrot for earning income here, as I've heard recently. So right, we're deeming a return on tangible assets. Anything above those tangible assets gets the advantage of the FITI regime. This is distinguished from other kind of patent box regimes. So other patent box regimes apply to patents and copyright software because, and this one is right, we're deeming just a return on tangible assets. So this is gonna encompass more intangibles like branding and other market-based intangibles. So like guilty, the way we come to this intangible slice of our income is just by taking out a 10% return on our assets. But these are of the domestic corporation, right? Remember when we're talking about guilty, we're talking about the assets of a foreign corporation. These are of the domestic corporation. Unlike guilty, the taxpayer wants to reduce their deemed return amount because doing so increases the amount available for the FITI deduction. So in contrast, right, in the guilty regime, the taxpayer there wants to increase their deemed return amount because that decreases the income subject to the minimum tax. And fortunately, right, this again creates some perverse incentives because we're dealing with domestic assets in this regime. The FITI regime is gonna push taxpayers towards minimizing their investment in assets here. So just to go through a simple example, let's say we've got a domestic corporation, it's earning income of $3 million, and it's got $2.5 million from tax support. And let's say it's got a tangible asset basis of $30 million. So in order to figure out what income gets the FITI reduction, we have to figure out the export ratio. So here, let's assume $2.5 million is from sales abroad that produces an export ratio of 83.33%. We then subtract out the income, rather subtract out the 10% return on assets. So 10% of $30 million would bring our total income down to zero. So that's the amount of income getting the benefit of the FITI deduction. So that's a bad situation. Now, let's assume that I've got no tangible assets in my domestic corporation. Now, I take just my $3 million without reduction for the 10% return on assets. And that's multiplied by the export ratio is the amount of income getting the benefit of the FITI deduction. So by moving my assets out of the US, I've increased the income that gets the benefit of the FITI deduction. Okay, so you might say that you have to have a lot of assets to produce tax savings here, but at the margins, this is where FITI pushes you to invest offshore. So it may not make a difference in every firm, but across the economy, it might matter. Okay, so take FITI and GILTI together, we're moving tangible assets abroad and that's gonna either decrease your GILTI liability or it's going to increase your FITI deduction in either case, lowering your tax. Okay, so there's more. One significant problem with the FITI deduction is that it threatens to reignite a three decades long trade controversy between the United States and the European Union that was thought to have been resolved in 2004. I pointed this out immediately on a blog post after the release of the Senate bill, which originated FITI, that the regime likely violates WTO obligations because it's likely an export subsidy. This is because the more a tax here's income comes from exports, the more of its income gets the benefit of that lower FITI rate. So specifically, right, WTO rules are prohibiting subsidies that are contingent upon export performance or upon the use of domestic or imported goods and a subsidy is defined as including the non-collection or forgiveness of taxes, otherwise due. This raises baseline questions. I think the right baseline here is the 21% rate. You could argue that it's the participation exemption rate so that taxpayers could just incorporate abroad and take advantage of that system. I'm skeptical that argument would fly at the WTO which tends to be very formalistic and doesn't really anticipate taxpayer responses, for instance, in judging prior export subsidies. The WTO ignored the fact that you could just park your income offshore and grind your tax rate down to zero through deferral. Okay, so the whole point of FITI is to create neutrality between having IP here abroad. No one's gonna be able to rely on it due to WTO issues, which will take years to resolve. So we have to wonder how effective it will be at that. Also, we have to question whether or not it's going to be successful at bringing in R&D. We wanna encourage R&D because of its spillover economic effects, but here the regime is over-inclusive because it's also getting at goodwill and going concern. So perhaps we should just get rid of FITI, raise the rate on guilty and address R&D through more targeted incentives. Okay, so lastly, with the beat, I'll just mention that I think there's some threshold concerns here that it only applies to firms that have $500 million in gross receipts. This is a large amount, and it also only applies where base erosion payments exceed 3%. So these thresholds allow for a great deal of inbound based erosion to be preserved, not to mention the fact that cost of goods sold is not captured by the regime, which allows a lot of IP to escape it. So when the dust is settled, how do we really put this all together? Here's a slide created by Steve Shea, which I'm using with permission. You've got the US on one side and the rest of the world on the other. If you've got a foreign subsidiary, you're exempting the 10% return sales to foreign customers or to US customers that are maxed out at a 10.5% tax, assuming a local tax holiday. And you've got your US corporate plant that is subject to tax rates between 13 and 21%. So this is kind of how the regime shakes out. Okay, so you might say some base erosion benefits, though, to be 10 guilty and before earning stripping was easy and deferral provided large incentives to shift profits offshore. So how much of profit shifting has been reduced? Here we see that guilty according to this CBO won't affect profit shifting too much and that's because IP is easily transferable. IP will stay there. It won't be attracted by the FIDI rate. Although CBO does say the FIDI rate will deter some small amount of profit shifting on newly created or future IP. And then in fact overall CBO estimates that nearly 80% of profit shifting remains in place. So we've got $65 billion annual reduction in profit shifting, mostly on the inbound side and total amount of profit shifting is estimated to be around $300 billion a year. Okay, so I should caveat this but it probably doesn't make sense for us to get this number down to zero. It's in our national interest to probably tolerate some degree of profit shifting because this allows multinationals to save foreign taxes which might benefit the US if shareholders are domestic. Also right, we worry about multinationals being more mobile. So we may be worried about them leaving if they're taxed too heavily. You could address some of the latter concerned by strengthening the inbound rules but it also doesn't seem like we've landed on quite the right amount of profit shifting because the CBO numbers don't even take into account investor reactions to the instability of the FIDI regime due to WTO concerns. Investor reactions to the instability of the legislation in general. We've got this legislation. It was enacted through a partisan process. The cuts were deficit financed. A lot of the provisions sunset, their new gaming opportunities were privileging certain industries over others in the pass through reduction. I would argue this creates a pretty wobbly regime that's going to reduce the effectiveness of some of the incentives to keep investment here. Another thing that CBO doesn't take into account is tax competition. Maybe we've got Belgium, France, China, Australia, Israel, Germany all seeking out rate reductions right now. Finally, I'll just talk about the deemed repatriation just quickly here. CBO projects that the economic effects are small because for reasons Kim mentioned, in a way these funds were already here doing work. They are owned by a foreign subsidiary of a U.S. company but in fact they're held in U.S. securities. Okay, so was it worth it? That's the final question. This $1.9 trillion increase to deficits over the next decade according to CBO in its revised estimates is quite large. You've got a new domestic base erosion problem through the pass through deduction that's going to open up a lot of gaming opportunities as others, some of my co-authors have explored. There's no meaningful reduction in the international base erosion problem. The design choices in the new provision incentivize offshoring. So I think given the enormous loss of resources and gamesmanship that the legislation is a whole world generate I think it's fair to ask a lot of the new international regime yet the international provisions seem to fall short mostly due to avoidable policy choices. And in the end, you could say this was a missed opportunity. If you think, you've got an optimistic view of the legislative process, then you might think this is a bridge to true reform. As I mentioned, there are ways to salvage some of these provisions. I think we need, however, to think about more ambitious reform. And I worry that maybe it's more of a missed opportunity than an opportunity for reform for some of the reasons that Kim mentioned about how incremental reform is not always the way to get to true reform. Okay, thank you so much. Thank you so much to Kimberly and Rebecca for those presentations and what we're gonna do now. It's moved to a panel discussion and we're gonna be joined by Chai Cheng Huang of the Center on Budget and Policy Priorities. She is the Deputy Director for Federal Tax Policy at the Center where she focuses on the fiscal and economic effects of federal tax policy. And I just do wanna mention that Congressman Lloyd Dogget has joined us. He is going to give closing remarks after the panel.  So I'm gonna turn it over to Chai Cheng. Fantastic, thanks so much. Well, this is such a pleasure because usually when I'm peppering the professors with questions, it's over email at strange hours. So it's a real pleasure to get to do so and to say thank you for their gracious responses in person this time. So I'd like to kick off, there's a lot of detail there and I'm curious, Professor Clousing mentioned the speed of the process and the extent to which some of these things were vetted. I think one response that I've heard to that is that actually these provisions, these ideas built on many years of discussion, many tax reform drafts. So they're not as novel as some people say they are and that this was sort of the culmination of a multi-year process. I wonder what you'd say in response to that. Yeah, it seems that the beat, for instance, I think is quite novel and hadn't been fully thought through even though some of its goals are admirable, I don't think there were many in the intellectual community even to say nothing of the policy community that really had a firm understanding of that. And there's also really important interaction effects between all of these alphabet soups that are still being a sort of torture for many practitioners. So I think it's pretty clear that the process wasn't as careful and deliberative as we would have liked. Typically, if you have tax legislation, for instance, there's time for bar associations to weigh in and there's time for hearings after you see the draft. In this case, neither of those were true. And I think some of the precursors, like the camp proposals and the Obama proposals, were subjectively pretty different from what actually emerged here. Professor Kaiser, in particular, you've raised a number of issues around both blending and the WTO problem. To what extent did you see policymakers grapple with those criticisms during the process? And even since that process, I watched your testimony recently to the Finance Committee. And I think it was striking to me that actually there wasn't much engagement with some of the points you were making. So I think a part of the problem is we're talking about international tax. So it's perhaps easier to get your mind around the problems of pass-through deduction. International tax is a very complicated subject. But the process itself, as Kim mentioned, was not great. There were no hearings after the bill tax was released. In contrast, in 1986, you had two years after the proposal was released. And there was numerous public hearings on that bill. And as far as engagements with criticisms go, there was some response to issues that we pointed out in the report that I worked on on the legislation. I think the only one that was really addressed in subsequent the subsequent bill was the fact, the conference bill, was the fact that you used to be able to use leverage to ramp up your guilty exemption. For instance, the WTO issue that I highlighted was discussed very briefly in markup, I'd say, in under a minute, and then dismissed. And as far as the Camp C proposals that you're referring to, which is where FIDI originated, I looked through some legislative history about whether or not the WTO issues were discussed in that context. And again, I saw one brief mention to them and then no real grappling with it. I think a huge part of the problem, we went through reconciliation. We gave a lot of power to party leaders, not as much to the tax committees. Also, we shortcut the expertise of Treasury and JCT. We had a very partisan process, so not so much thoughtful engagement. One of the points that you mentioned that I think the process hasn't left time for and that now we're still grappling with is some confusion around both the interactions of how these pieces work. And also, as you discussed a little bit, I've been detecting some confusion discussing the impact of the base erosion provisions in terms of what incentives they create. And there's some apparent over the last couple of weeks disagreement that when you dig down into maybe just people looking at it from different baselines, I wonder if you could shed some light for some of us that are trying to make sense of different people looking at the same provisions and seemingly saying different things about them. Yeah, I think some people are working from the baseline of current law versus old law. So some would say that the gap between domestic and foreign is reduced. You can't say that definitively yet, I think, but it's plausible. And however, you still find offshoring incentives even there, you could say that I'm working from a baseline of kind of normative ideal tax policy, and that's my luxury as an academic. But I think God help us if we ever stop judging policy from that normative baseline. And these were like deliberate choices that the drafters made. We should hold them accountable, especially in light of the overall impact of the bill, which was costly along several different axes. The other point I think of confusion is that, well, maybe my critiques on guilty can be read as thinking we should scrap the regime entirely and never recommended that. I think we need a minimum tax if we're gonna have a territorial system. Right, and I think I come at it from the point of view of looking at if we're trying to sort of grapple with the incentives that this new structure sets up, and this discussion in particular, people are interested in offshoring, the comparison that sort of I generally would start with is sort of the investment or the profit location decision here versus international, and that's my sense of mostly what both of you are trying to get at as opposed to the question of whether or not to make a new investment offshore versus nothing or versus the old regime. So another area where I think it's been sort of, you raised Professor Klausing about the deficit impact of the international provisions. How do you sort of think about that impact of both the international provisions and the corporate provisions as a whole when you're assessing how this law as a whole affects the economy and Americans generally? Yeah, I mean, I think there's still a lot of open questions about how big the deficits will ultimately be. For instance, the guilty is projected to raise 10 billion or so a year, but it's hard to know whether it will necessarily do that because as Rebecca's analysis points out and as many people have noticed, it does seem that a good tax director should be able to get their guilty down to zero by blending these two streams of income, and most of the companies that are really targeted by this type of legislation are pretty sophisticated and should be able to do that. So I would be actually kind of shocked if the guilty ends up raising very much money at all for us. I mean, I think it weirdly helps some of the other higher tax countries protect their tax bases. The beat I think is an open question. What that does, I think there's still a lot of confusion about that, but the revisions that I've seen to the deficit numbers overall suggest if anything, the 1.5 trillion is optimistic, the CBO has since altered it, in part because economic growth is anticipated to be greater than they thought, so that makes tax cuts even more costly, but in part because some of the business tax provisions that they've looked at, they kind of come up with more pessimistic conclusions, and the deficit issue is I think very important to think about when we think about the overall effects on the economy, because one, it stimulates the economy in a way that the Fed will have to counteract with monetary policy. So if you imagine you're a corporation and it's true you get this marginal increased incentive for some types of investment, equity financed investments, but also as Rebecca pointed out incentive to go offshore, but at the same time the Fed is raising interest rates more rapidly than they would have otherwise, which changes the entire economic content of what's going on. And so I think that that's another thing that has been underplayed in this is the interaction between fiscal and monetary policy to say nothing of the fact that there will be another recession. I think we're dreaming if we think we're living in the land post-recessions, and this has been one of the longest expansions we've seen in a long time, and if we're starting from a baseline of 5% of GDP deficits when this next recession hits, that's a much less comfortable place to be in than a place of more fiscal responsibility. So I think that part of it is very dangerous, and I think Corker's right that it's gonna be one of his worst votes. And in some ways this is what we read with the current JCT and CBO estimates is the rosy scenario, because I think Professor Kaiser's done some work previously, and I think this bill sort of combines those two things on sort of budget gimmicks, and the international tax provisions actually potentially includes some elements of that where the cost could end up being higher than they are anticipated, even if they run out in practice. Yeah, sometimes some way to think about it is the $1.9 trillion figure is a little bit misleading, because you're looking at a 10-year window, and so a lot of that includes the transition tax, which is a one-time event, so we're not gonna get that again in the second decade. Also, the estimates assume that there are several far-off tax increases that are allowed to go into effect on the international side of perhaps unlikely event. This is just sort of rate increases on the base of immigration provisions. On Guilty and Fiddy, and those spring into life in 2026, the 50% deduction on Guilty goes up to, or goes down to 37.5%, and the Fiddy deduction is also reduced in 2026 to 21.875.  Also, we're dealing with expiring provisions that are perhaps going to be made permanent, which will increase the cost, and if history is any guide, when we have sunsetted tax cuts, people really like those tax cuts, so they want to reenact them, and Congress will waive the budget rules so that they are never paid for. Also, that $1.5 trillion figure, which is the original figure at Corker agreed upon, that represented some budget gimmicks. You've got half a trillion dollars, $500 billion of expiring tax cuts that were included in that figure using what's called a current policy baseline, even though those expiring tax cuts were never paid for, and that also includes a very aggressive estimate of the dynamic growth estimates from the legislation. So another sort of, it seemed like a bit of a tell that those international ratchet up provisions weren't intended by at least some lawmakers to take effect, is that an earlier version of the bill had a trigger that would have automatically triggered them off, had a revenue type being met, and sort of prioritised those alongside other business provisions. So we have some insight perhaps into some lawmakers' priorities for what happens with some of those ratchets. I'm interested, also we talked a little bit about the instability potentially of the regime and the difficulty of figuring out what other countries are going to do. Joint Committee on Taxation and CBO, as you mentioned, it's almost an impossible thing to do to figure out what other countries lawmakers are going to do, so they just assume they sit pat. What do we know so far about how they're reacting? Have we sort of heard discussion about WTO challenges or about rates being changed in response to this tax law? There was a letter sent from the European finance ministers to Treasury Secretary saying that the regime presents WTO concerns, the FITI regime, that is, and I think it's very likely that we'll see WTO challenges. What we do with those is another open question before when we've had these challenges to our export subsidies, the US has repealed the illegal regimes under threat of sanctions. The last one of those was 14 years ago, things have changed, so it's hard to say whether Congress is going to do the same, but also remember you're going to have the industry to fight to preserve it, so WTO challenges take many years, but that is going to introduce a lot of uncertainty which is already going to hurt the effectiveness of the regime. So in your sort of estimation with all of these pieces going on, things ratcheting up that may not take effect and the uncertainty about how others react to it, given that we went into this reform process with stability and certainty in the business sector being a really high priority and one of the reasons why the corporate provisions are in fact permanent, whereas others are not, how far off the mark do you think we are in terms of getting something that at least businesses and policymakers can plan on having an effect permanently? Yeah, I think we're pretty far off the mark on that one. I mean, if you look at some of the things that are most stimulative like the expensing, they go away, the things that are permanent are the things that are precisely those that I think people like the least, and I think that was by design, right? This is the corporate tax cut isn't going to be that popular, but it's a permanent feature, whereas the things that people will agitate for the ones that are temporary and the foreign environment is going to continue to evolve, like after the 1986 tax cut lower the U.S. corporate rate, many countries followed mimicking those lower rates. So now we've got one of the largest economies in the world going from 35 to 21. I think we're going to see a continued evolution on the foreign front as well, in addition to these WTO challenges, which even if we ignore them, I do think create a different type of uncertainty. So let's say we decide not to respond by repealing the WTO non-compliant thing. Well, facing a lot of tariffs from your trading partners is not a fun business environment either, and that has real cost to families throughout the country who want to sell soybeans to China or want to have integrated business supply chains and jobs that are reliant on that. So I think those types of risks, even though they're not coming straight from the tax dimension, are still another type of business uncertainty that can hurt the economy. So just one final question on that front. Do you have a sense of, I think we've heard from some people that the minimum tax actually does put a limitation on the race to the bottom incentives. How do you think about that? There is some flaw to how low you can go for a developed country or does it really leave in place a lot of that ability to just keep cutting? Well, I think it's certainly better than having nothing at all. I absolutely agree on that, but I think we're far from a settled sort of permanent equilibrium here. We're not the only country with big fiscal challenges, and I think there's a lot of room for people to come together and talk about better ways to imagine what a corporate tax system would look like. Europe is working off and on on this common consolidated corporate tax base, but that's one way to sort of reconcile the tax competition pressures if you can agree on how to define the corporate tax base and make these types of erosion less easy. And if one country or one group of countries like the EU adopted something like that, it really does change the game in a fundamental way and make it easier to solve some of these problems. So I anticipate that if we wait a decade, a much bigger things are gonna be in the works because I don't think these little incremental racing is gonna be that satisfying to anyone. So on that forward-looking note, I think I'll wrap up and hand it back over to Dosh because I think ending on some sort of sense of optimism is always a good place to land. Thank you. Thanks so much. So thank you so much to all three members of our panel and right now to wrap things up, I'm gonna bring up Representative Lloyd Doggett who is a senior member on the House Wains and Means Committee and serves as the ranking member on the subcommittee on tax policy and has been a leader in the fight against international corporate tax avoidance. Thank you, welcome. Thank you so much to this institute for once again delving into the complexities of an important public policy issue. Each of these three experts that we've had the good opportunity to hear this afternoon have previously offered their valuable insights to Congress. Unfortunately, the Republican majority didn't listen to them very well. And while Professor Kaiser has been a very professional and generous in discussing the process, as many of you know in the House of Representatives, we had not one representative from academia or business and certainly no one with the courage in the administration to come forward and answer questions once this bill was out there to look at it and explore anything like the depth we've had today. In fact, there wasn't as much time as I'm gonna spend in this brief summary focused on any of the issues in this tax bill and that's why we have the monstrosity that we've got. Professor Kaiser referred to the Congressional Budget Office, CBO recent report, it's tenure outlook. And that report specifically, and I quote, said that by locating more tangible assets abroad, a corporation is able to reduce the amount of its taxable income. Similarly, by locating fewer tangible assets in the United States, a corporation can increase the amount of U.S. income that can be deducted from its income, together the provisions may increase a corporation's incentive to locate tangible assets abroad. In plain English, what I think that means is why would you want to make new investments in plant and equipment here in America when you can pay so much less in taxes, maybe nothing if you build that plant and equipment abroad? The disparity in the tax rates that they've described and you've used the acronym is the global and tangible low tax income. And I can't think of a more appropriate acronym for it than guilty because this Republican majority and Trump are guilty of something that's really false misleading and deceptive advertising overall, but it has the effect of providing a giant incentive for outsourcing jobs and exporting a revenue that ought to be in the Treasury. It represents a total reversal of the position that President Trump took back during the campaign, but of course that's nothing unusual. One measure of the scope of these incentives I think is just in dollars and cents. Professor Clausing testified in meetings that we had that were talking about $100 billion estimated every year that was lost under the old regime. And that was from the refusal, despite our repeated efforts over many years for Republicans to do anything about it, like the massive number of inversions that we had. You would think that any true reform would raise a good bit of revenue by closing the loopholes that permit that $100 billion a year to escape. But in fact, if you exclude the boondoggle called repatriation, the international tax provisions that we're talking about didn't raise any money under this bill. They lost revenue and that's a good summary of what occurred. Another measure of it is what Professor Kaiser put up on the board and I would just underline it a little bit and that is CBO coming out and saying how much money that was earned right here, how much in profits that was earned right here in the United States gets written off through various shenanigans to places where they don't have to pay any taxes on it. 235 billion dollars every year. That's an incredible figure. Yes, I'm not too worried that we'll ever get it to zero and I understand the reasons why we might not want it at zero, but think about that. 235 billion dollars of what may largely be tax-free income on profits that were earned within the United States through things like money transfer pricing and earning stripping and other kinds of gimmicks. And of course, that sleigh of hand which is paper only or on computer only does not even get to the specific incentives that were added to this bill that encourage the exporting of jobs. There's not any one bill that can solve these problems. In fact, as I went through the footnotes of your testimony to the Senate committee, which I thought were very helpful since the bill, there are so many steps that could be taken to resolve this. I simplified, perhaps oversimplified all of it into a bill that I appreciate. Some of the groups here have endorsed and a number of my colleagues have joined and called the No Tax Breaks for Outsourcing Act, HR 5108. And while I don't have an official score from joint tax as to how much it would save, it's clear from the experts we've heard today and from what CBO said that the door is wide open to continued offshore tax dodging. The bill that I propose would level the playing field so we wouldn't be picking winners and losers between multinationals and companies that are mostly domestic oriented. We wouldn't advantage Pfizer over Davila Pharmacy on the west side of San Antonio that I represent and say one gets these huge breaks and the other pays the statutory rate. And in the course of that, we would incentivize more jobs here and not abroad. Of course, the No Tax Breaks for Outsourcing Act has no chance whatsoever of being approved in this Congress. But I'm convinced change is coming and that is forums like this that set the groundwork and the understanding for those of you who will be back explaining this to others about what's at stake here. And it is important for us to understand it, to lay down a marker, to look for every opportunity we can to advance these complex issues and put them in simple terms that folks back home can understand. I think even some of the Democrats, particularly on the committees involved that have been a little reluctant to deal with international taxes in the past have got reason after this law became effective to reconsider their position because now that we have made such a dramatic cut in corporate tax rates way down to 20%, there's much less justification for all of the tax dodges that have been kept in here and added to that encourage outsourcing and encourage really a raid on the treasury. Prior to the new laws adoption, we were right about at the average of the developed OECD countries in terms of effective tax rates. But we made this dramatic reduction in what is now apparently going to be a race to the bottom in terms of corporate tax rates instead of the industrialized countries, the OECD, which tried to do a few modest things about this, working together to see that we don't have more and more stateless income. As you've heard, in addition to the half off or less tax on profits earned abroad, the new law exempts from US tax entirely a 10% return on tangible investments made overseas. In other words, there's a direct incentive to not make it in America, but to make it somewhere else. As we consider corrections legislation in the Ways and Means Committee, which may or may not get any kind of public hearing, this is a place to focus on the consequences of international tax dodging and to explore the various phony promises that were made to advance this tax law. And I would just close in touching on those because I think they really bring it home to people around the country. You know that we've heard so much about who'd be the winners and that this was all about the middle class. Indeed, when I met and a group of us met with President Trump, he assured us that he wouldn't get a dime out of it. The administration claimed that every American family would get an average of $4,000 in additional income this year. And that wasn't even enough for Secretary Mnuchin. He said it would go up to $4,500. So I think the message we need to be getting out and CWA did this early on, everyone needs to be asking, where's my $4,000? Where's my $4,500? Because they won't find it in their pockets this year. And all that bragging the administration has done about the bonuses. I think Rosa referred to this in her opening. You know, 20 years at Walmart for $1,000, that's a lot of greeting and a lot of packing. But in fact, a recent study shows that two-thirds of Americans didn't even do as well as those 20-year Walmart folks. They don't report getting any increase in compensation whatsoever as a result of this bill. So they're a long way from their $4,500. What we have then from the administration in short are more empty promises, more false and misleading advertising of this, more outsourcing, more corporate tax evasion, and huge deficits that will have the impact of threatening and providing excuses for those who want to weaken Medicare, weaken Social Security, undermine, they're already making these arguments now in talking about recisions, other vital public investments that could make America more competitive through our educational system and upgrading the skills of our workforce and having a competitive infrastructure system. All those things are jeopardized when you add trillions of dollars of additional debt, additional red ink, and it is the people back home, the ones that are struggling to get up the economic ladder who need a hand, who need to retrain, those are the folks that are the real tragedy of this Republican tax bill. So I look forward to continuing to work with these excellent experts and with EPI and so many others of you who are gathered to try to see that we get a little true tax justice because we've gotten none under this bill. Thank you. Okay, so I just want to say thank you to Representative DeLauro who opened and Representative Doggett who closed into our fantastic panel of experts and thank you all for coming. Have a good day.