Nomination of Katherine Archuleta to Be Director of the Office of Personnel Managementby Senator Lisa Murkowski
Posted on 2013-10-30
MURKOWSKI. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Brown). Without objection, it is so ordered.
Ms. MURKOWSKI. Mr. President, I ask unanimous consent at this time to enter into a colloquy with my colleague from North Dakota.
The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered.
(The remarks of Ms. Murkowski and Ms. Heitkamp pertaining to the introduction of S. 1622 are printed in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'') The PRESIDING OFFICER (Mr. Blumenthal). The Senator from Montana.
The Tax Code Mr. BAUCUS. The famed author George Bernard Shaw once wrote: The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself.
A few weeks ago, lost among the headlines about shutdowns and showdowns was another very important news story. This story didn't receive big headlines. It didn't make the evening news, and it wasn't trending on Twitter.
Yet the story in the October 8 edition of the New York Times has serious implications for the future of our economy and our ability to adapt to the modern world. The eye-opening article discussed the merger of a California-based chip maker called Applied Materials. Applied Materials merged with a Japanese company called Tokyo Electron.
Applied Materials is one of the biggest companies in Silicon Valley, an industry leader with a global presence. They have more than 13,000 employees across 18 countries. Their headquarters, where they got their start 46 years ago, is in Santa Clara, CA. In addition to 8,000 workers in the Bay Area of California, Applied Materials has employees at research, development, and manufacturing facilities in Texas, Utah, Massachusetts, and in my home State of Montana.
Now, with the merger with Tokyo Electron, what is this all-American company doing? It is shifting its corporation, not to Japan, but to the Netherlands. That is right. This new American-Japanese company will be incorporated in Holland.
Why are they moving to the Netherlands? What is going on.
In the New York Times article on the merger, reporter David Gelles wrote: Executives at Applied Materials highlighted a number of advantages in announcing a merger recently with a smaller Japanese rival, but an important one was barely mentioned: lower taxes.
The merged company will save millions of dollars a year by moving--not to one side of the Pacific or the other, but by reincorporating in the Netherlands.
The article goes on to note that Applied Materials' effective tax rate will drop from 22 percent to 17 percent as a result of the merger. For a company that had nearly $2 billion in profit in 2011, that amounts to savings of about $100 million per year.
Mergers resulting in U.S. companies being owned by companies in tax haven jurisdictions such as Ireland, Bermuda, or the Cayman Islands, are a new spin on the old ``inversion'' problem, and it is becoming an increasingly popular practice.
The Times article highlighted the following additional examples.
Last year, the Eaton Corporation, a power management company from Ohio, acquired Cooper Industries from Ireland for $13 billion and then reincorporated in Ireland. The company expects to save $160 million a year as a result of the move.
In July, Omnicom, the large New York advertising group, agreed to merge with Publicis Groupe, its French rival, in a $35 billion deal. The new company will be based in the Netherlands, resulting in savings of about $80 million a year.
Also in July, Perrigo, a pharmaceutical company from Michigan, said it would acquire Elan, an Irish drug company, for $6.7 billion. Perrigo will also reincorporate in Ireland, lowering its effective tax credit from 30 percent to 17 percent, and saving the company an estimated $150 million a year, much of it in taxes.
Earlier in the year, Actavis, based in New Jersey, bought Warner Chilcott, a drug maker with headquarters in Dublin, and said it would reincorporate in Ireland, leading to an estimated $150 million in savings over 2 years.
It would be easy for us to attack these companies by calling them immoral and unpatriotic, but it is much more constructive to step back and ask: What's motivating these companies? Why are they moving their headquarters abroad? How can we keep them in the United States? How can we adapt to the world and fix the problem? It is a very simple issue. Globalization has made America's Tax Code system out of date.
The United States is stuck with a 35 percent corporate tax rate--one of the highest in the world--and a maze of incentives that only an army of tax lawyers can navigate. Some of these tax incentives are extremely costly but are much less valuable to businesses than a rate reduction with the same price tag.
When U.S. companies look abroad, what do they see? They see other countries with more modern, more efficient, and more competitive tax codes. Then, what do they do? They reincorporate overseas by acquiring or merging with another business.
They are not necessarily breaking laws. In fact, many of these companies are following the rules that America's outdated, overly complicated Tax Code provides.
The United States is losing hundreds of millions in revenue as a result. Even worse, it is losing jobs. When headquarters moves abroad, good-paying jobs often go abroad too. We need to reverse that tide. We need to bring our tax system into the 21st century to make the United States more competitive. That is what tax reform can do. It can help America overcome the competitiveness crisis that is driving businesses and jobs overseas.
This competitiveness crisis was made very clear in a Harvard Business School study last year with the sobering title: ``Prosperity at Risk.'' This indepth report examined the risks that threaten to undermine U.S. competitiveness in the global marketplace. It also looked at what action we could take in the United States to restore our country's economic vitality.
Harvard Business School surveyed 10,000 of its graduates who live and conduct business worldwide. They asked about the challenges of doing business in America. These individuals are leaders on the front lines of the global economy. They are CEOs, CFOs, business owners, and presidents. They are personally involved in decisions about whether to hire, where to locate, and which markets to serve.
Unfortunately, these business leaders are pessimistic about America's economic future. They think America's prosperity--our success, our growth, and our economic status--is at serious risk. The vast majority of those surveyed, 71 percent, expected U.S. competitiveness to deteriorate over the next several years.
A survey found that the U.S. fared poorly when competing to attract business and pointed to increased competition from emerging markets. According to the survey: ``For the first time in decades, the business environment in the United States is in danger of falling behind the rest of the world.'' What did they identify as the root of America's competitiveness problem? Respondents--remember, these are 10,000 Harvard Business School graduates working all around the world and in the United States--pointed to America's Tax Code as the root of the problem. Specifically, they pointed to the complexity of the code as one of the greatest current or emerging weaknesses in the U.S. business environment.
The Harvard study made clear that our Tax Code puts American businesses at a competitive disadvantage on the world market. That obviously concerns us.
Where do we go from here? I believe we have to reform our Tax Code. We have to adapt. We have to help make America more competitive. It is very clear. It is very simple. We have to give companies such as Applied Materials a reason to keep their headquarters in the United States.
[[Page S7663]] We have been through a difficult and counterproductive period on Capitol Hill. The recent shutdown and the threat of default undermined confidence in the U.S. and did $24 billion in unnecessary damage to our economy.
According to a report from the White House Council of Economic Advisers, the shutdown cost 120,000 jobs in October alone.
I spent last week home in my State, as others were in their States. I was meeting with my bosses, the folks and citizens of Montana. They are not too happy with the antics going on in Washington, DC--and rightly so.
Fortunately, that battle is behind us and the government is back to work. It is time for us to come together to tackle the challenges facing our country.
Right now there are more than 11 million unemployed Americans looking for work. Our economy is expected to continue growing at a sluggish rate for the next year, less than 3 percent.
We have to ask: How do we create jobs? How can we spark faster growth in our economy? How can we boost our competitiveness and keep American companies at home in America? Tax reform must be part of the solution. It is not the whole solution, but it is part of the solution.
That was the clear message I heard traveling around the country this summer with my friend Dave Camp. Dave is the chairman of the House Ways and Means Committee. Dave and I met with families and businesses, large and small, to hear about their experiences in dealing with the Tax Code.
We visited a family-owned bakery in Minneapolis, a small appliance store in New Jersey, a tech start-up in Silicon Valley, and a farm in Tennessee. We visited some large companies as well, companies such as 3M, Intel, FedEx, who employ thousands of people in the United States and around the world.
At every stop Dave and I heard the same message. U.S. companies and workers, companies large and small, workers employed at large and small companies, want a more simple, more fair Tax Code that closes loopholes and helps them compete and strengthens our economy.
This issue is not going away. It is too important. With so many people out of work, with economic growth still too slow, with a competitiveness gap costing us jobs and revenue, it is time for us to act. It is time for us to reform our Tax Code.
The chairman of the House and Senate Budget Committees brought their conferees together for the first time today. They have come together to try to find common ground on a budget and a plan to rebuild confidence in our economy. Patty Murray and Paul Ryan are incredibly smart and hard-working people. They care. And I am confident they can craft a compromise to help get America back on track.
I look forward to working with Chairman Murray and Chairman Ryan in the tax entitlement components of their discussions, but at the same time I will continue to work on a parallel track with the Finance Committee advancing tax reform.
We are working hard--in Bernard Shaw's words--to adapt to the world and build a tax code that works. And Dave Camp is doing the same thing in the House. We are going down separate paths but coming together with a common goal--reducing the deficit, creating jobs, and promoting economic growth. We are coming together to put America back on track.
Mr. President, I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BAUCUS. Mr. President, I ask unanimous consent that all time on both sides be yielded back.
The PRESIDING OFFICER. Without objection, it is so ordered.
All time having been yielded, the question is, Will the Senate advise and consent to the nomination of Katherine Archuleta, of Colorado, to be Director of the Office of Personnel Management? Mr. BAUCUS. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There appears to be a sufficient second.
The clerk will call the roll.
The assistant legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber desiring to vote? Mr. DURBIN. I announce that the Senator from Virginia (Mr. Kaine) is necessarily absent.