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Roberts: Tax Reform is Critical to Economic Growth, Creating Jobs and Higher Wages

WASHINGTON – U.S. Senator Pat Roberts (R-Kan.), a senior member of the tax-writing Senate Finance Committee, today spoke on the Senate floor in support of the Senate’s tax reform legislation, saying it is critical to maximizing economic growth, creating jobs and higher wages, and finally getting our economy back on track.

“We all understand how critical tax reform is,” said Roberts. “We have before us now a comprehensive plan to address the many issues with our current tax code, cleaning up and modernizing the tax code, to help generate more growth in our economy. The bill before the Senate does exactly that, providing meaningful tax relief for families, small businesses, and farmers and ranchers.”

To view or download video of Roberts speaking on the Senate floor, go here, or click the image below.

Roberts, who was tapped to be the leading voice on agriculture issues on the Finance Committee, praised the legislation’s provisions that will provide certainty to farmers and ranchers. He said, “I am very pleased the Senate bill keeps the Ag tax provisions, but will also help our farmers by creating a much more pro-growth tax system, lowering their tax burden and simplifying the tax provisions relating to the agricultural sector.”

The Tax Cuts and Jobs Act passed out of the Senate Finance Committee, with Roberts’ support, on November 16, after a week of marking up the legislation. For video of his opening statement at the markup of the legislation, go here.

The U.S. House of Representatives passed their version of the Tax Cut and Jobs Act earlier this month. The legislation is expected to be voted on in the Senate this week.

Roberts’ full remarks, as prepared for delivery are below:

Mr. President, soon, this Senate will take an historic vote that will impact every American. These votes do not come very often.

We all understand how critical tax reform is. All of us in the Senate – on both sides of the aisle – are familiar with the burdens, the complexity, and lack of competitiveness associated with our current tax system.

It is abundantly clear that this complexity and our antiquated corporate tax system act as a brake on our economy.

It is equally clear that in recent years our economic growth rate – our gross domestic product –has been stuck at an historic low level – 1.9 percent or less.

There are many opinions as to why our economy has been so stagnant, causing American job loss – unemployment and more reliance on government programs.

For one, I believe what the great majority of small business owners, manufacturers, community banks, other lending institutions, individual workers – laid off or hanging on paycheck-by-paycheck, virtually everyone in rural America – farmers, ranchers, growers – every town hall meeting – have told me:

The number one issue of concern is the crushing weight of federal regulation.

This was summed up by one Western Kansas rancher who said “Pat. I feel ruled, not governed.”

But we are unwinding this regulatory overkill.

Today, we are again making government a partner – not a regulatory adversary.

How on Earth did we reach this sad state of affairs?

There are many factors – Administrative policy that seems to mimic or compare to European Union monetary policy, government agendas, and central control.

But with this tax bill, that can change, and will change – if only we recognize and take this important opportunity – an opportunity that many members in this body have never had to truly make a difference.

Can America get back to a place – to make history – and to once again experience the power of the American dream?

I am confident we can.

We have before us now a comprehensive plan to address these issues, cleaning up and modernizing the tax code, to help generate more growth in our economy.

The bill before the Senate does exactly that, providing meaningful tax relief for families, small businesses, and farmers and ranchers.

I am especially pleased with the rates and bracket structure the legislation would put into place on the individual side.

We have done a good job pushing these rate reductions down to lower and middle-income families. This would provide a net tax cut for families in Kansas of about $2,500, and nearly 10,000 new jobs.

As many have pointed out today, we accomplish this by reducing individual tax rates, raising the standard deduction, and increasing the child credits in the tax code.

Let’s be clear, these are consensus, bipartisan ideas, and are proposals that my colleagues on the other side of the aisle have, in the past, regularly proposed and supported.

Let me also comment on concerns raised by some of my colleagues that we simply cannot afford this bill, and that it will worsen the country’s financial condition.

I do not believe this is the case, but let me briefly explain why.

In putting this bill together, we have used very modest economic growth estimates – below the historic post-World War II norm of 3 percent.

In fact, the Congressional Budget Office is currently projecting 1.9 percent growth over the next 10 years.

We learn today that the Joint Committee on Taxation says the Senate bill will create only modest economic growth.

Notwithstanding the fact that I have never seen a CBO or Joint Tax projection that has come true, I think these estimates are far too low, hard to believe, and is simply unacceptable.

I refuse to accept that we cannot return to more robust economic growth.

And I think we will achieve better growth rates, and observe that we are well on our way – recent economic activity bears this out.

The economy is now growing at a solid pace with low unemployment and low inflation. Real GDP growth during the first two quarters of the year averaged 2.1 percent at an annual rate.

Since January, the unemployment rate fell 0.6 percentage points to 4.2 percent in September, the lowest rate since 2001.

And overall growth is poised to average about 3 percent over the second half of this year.

These are positive trends, but we can do more. We need even stronger growth.

Stronger growth leads to higher living standards, less dependence on governmental support, and lower need for spending on entitlement and other programs.

So how do we get there? Tax reform – to maximize growth to create jobs and increase wages.

This is not “trickle down” economics or any other name you want to call this. This is commonsense economics – which I have yet to see be refuted by any mainstream economist.

Increase the supply of capital in the economy and you expand the productivity of the economy.

This result is more business investment, leading to worker productivity gains, workers who then earn more, increasing their after-tax-income, and, in the end, raising their living standards.

I want to turn to an essential sector of our national economy – agriculture – those who are responsible for feeding America and a troubled and hungry world.

I am pleased that the bill reflects the importance of production agriculture to our economy.

It is important to keep in mind that few other sectors of the economy face the multiple uncertainties of production agriculture – weather, storms, fires, volatility in global commodity prices, trade disputes, and transportation issues and more.

When we pass this bill, the agriculture industry will have a number of provisions in the tax code that recognize the uncertain and volatile nature of the income and expense associated with agricultural operations.

These provisions – about 34 or 35 of them at last count – include accounting rules that allow farmers to manage their income and expenses. For example, in a year when commodity prices are low, they can account for costs in a way that keeps them in operation.

There are also specific inventory rules to help manage costs associated with livestock and dairy operations, and to handle items needed for other basic operations – such as fertilizer and crop treatments.

There are unique rules for timber operations.

Even baby chickens have their own inventory rule – which differs from the rules for ostriches and emus.

There are rules set for how to handle damaged crops and livestock disasters. These are certainly important today.

I can tell you that these disaster rules provided a critical boost to ranchers in my state, enabling them to begin to recover from the devastating prairie fires in western Kansas earlier this year.

Turning to the new provisions in the bill, we have developed it with agriculture in mind. And here I would be remiss not to mention the strong input and advice I have received on these matters from Senator Grassley, Senator Thune and Senator Scott, my colleagues who also share a strong interest in our agricultural economy.

The bill, for example, liberalizes the depreciation rules for agricultural operations, giving farmers and ranchers 5-year property depreciation and permitting full expensing of plant and equipment purchases.

The bill would greatly improve the ability of the agricultural community to use the cash method of accounting, which provides flexibility in managing cash flow – which is essential to providing certainty in operations.

There are significant provisions in the legislation, that establish a new income tax rate for passthrough organizations.

This is a very important issue for the agricultural community. The majority of farms and ranches are set up as passthroughs, and most of the income earned by farmers flows through these structures.

The bill also includes new rules for farmer cooperatives, which are an important part of production agriculture. We have worked very hard to ensure that the benefits of cooperative farming are held whole in this tax reform plan.

The bill also doubles the exemptions from the Estate and Gift, up to $22 million per couple.

This may sound like a lot, but for land owning, cash constrained farmers, they can hit this exemption amount quickly.

And even when they do not, many farmers and ranchers spend thousands of dollars a year on lawyers’ and accountants’ fees to plan for the best way to pass their life’s work on to their children.

While I will continue to press for permanent repeal of the death tax, for now, let’s modify it so that we reduce its damaging reach.

Finally, and above all, the legislation will provide farmers and ranchers with certainty.

Certainty that they will not be taxed out of business in a down year.

Certainty that they will have cash available to fund their operations.

Certainty that their hard-earned farm or ranch will not have to be sold off just because someone has died.

Certainty that the federal government recognizes their irreplaceable role in meeting the challenges of a fractured and hungry world.

So I am very pleased the Senate bill keeps the Ag tax provisions, but will also help our farmers by creating a much more pro-growth tax system, lowering their tax burden and simplifying the tax provisions relating to the agricultural sector.

I yield the floor.

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