Senator Scott Highlights Competitive Power Of The Tax Cuts and Jobs Act, Questions South Carolina Native and Tax Expert At Finance Hearing
WASHINGTON – At this week’s Senate Committee on Finance hearing on international tax policy, Senator Tim Scott (R-S.C.) underscored the power of the Tax Cuts and Jobs Act (TCJA) in spurring economic growth and competition. The senator expressed support for continuing tax policies that promote American competitiveness on the world stage, put money back into taxpayers’ pockets, and spur investment into the American economy.
The witness panel included South Carolina native Daniel Bunn, who is the President & CEO of the Tax Foundation.
Click here to watch Senator Scott’s questions.
Click here to watch South Carolina Witness Daniel Bunn answer questions.
Senator Scott’s questions as delivered:
I remember a warm day in South Carolina. After the passage of the TCJA, South Carolinians were celebrating the opportunity to see 4,000 plus dollars coming back in the average family’s pocketbooks. As a result of the TCJA, we not only saw the resources coming back to the household by letting people keep their own cash, we also saw a 3% increase to the treasury with lower taxes. Mr. Bunn, we all know that the TCJA ended inversions and made the US competitive as a location for investment as well as a location for multinational groups to be headquartered. Since the passage of the Republican tax bill, there hasn’t been a single inversion, and the dominance of foreign acquirers in cross-border mergers and acquisition transactions has ended. In effect, Republicans helped to flip the script. The question for you is if we moved the taxes back up to 28%, GILTI to 21% – talk to me about the impact.
Witness Bunn: Thank you for the question sir, and I was able to be in South Carolina this past weekend visiting family. Still a great state sir. The question that you have is connected to competitiveness. What does it mean to be a US headquartered company, and be able to invest and earn profits around the world, and be able to serve markets here at home, and hire and invest here as well? When the US tax code is out of line with our foreign competitors, it creates a disadvantage to be a US headquartered company and that’s what we saw leading up to the Tax Cut and Jobs Act. Since then, as you’ve said, we’ve seen a reversal. We’ve seen US acquisition of foreign companies grow while foreign acquisition of US companies shrink. Now, there’s all sorts of different reasons for cross-border mergers and acquisitions, but being able to see those trends reverse, as you say, speaks to the competitiveness of the US tax code that is fundamentally different than it was before the Tax Cut and Jobs Act. There’s still room for improvement—especially in the context of the challenges of the mismatches between our rules and these global minimum taxes rules—but as you say, we have become more competitive.