Congressman Pat Tiberi (R-OH), Chairman of the Subcommittee on Select Revenue Measures, today announced that the Subcommittee will hold a hearing on the international tax reform discussion draft released on October 26, 2011 by the Committee on Ways and Means.  The Committee released the discussion draft to solicit feedback on the details of the corporate rate cut and participation exemption (i.e., territorial) system that the Committee hopes to include as part of comprehensive tax reform. The hearing will take place on Thursday, November 17, 2011, in Room 1100 of the Longworth House Office Building at 10:00 A.M.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only.  However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.  A list of invited witnesses will follow.

BACKGROUND:

As part of its pursuit of comprehensive tax reform, the House Ways and Means Committee (“the Committee”) released on October 26, 2011, a discussion draft of one discrete component of broader tax reform legislation: a participation exemption for certain foreign-source income (sometimes referred to as a “territorial” system).  The Committee released this draft because it views the participation exemption as a fundamental change in the way the United States taxes cross-border activity, and in the interests of transparency seeks feedback from a broad range of stakeholders, taxpayers, practitioners, economists, and members of the general public on how to improve this proposed set of rules. 

The discussion draft is intended to be revenue neutral in and of itself when considered as part of comprehensive tax reform legislation that reduces the corporate tax rate to 25 percent. In addition to the exemption and other simplifications, the draft includes a number of options intended to prevent U.S. base erosion from activities such as overleveraging and income-shifting. Ways and Means Committee Chairman Dave Camp (R-MI) asked Chairman Tiberi to schedule a hearing on this discussion draft to begin to gather analysis from outside experts on the details of the draft.

In announcing the hearing, Chairman Tiberi said, “The Members of the Ways and Means Committee worked hard to produce a draft proposal that encourages investment and job creation here in the U.S. while addressing concerns about potential erosion of the U.S. tax base through creative tax planning.  Having said that, we want to ensure the plan carefully considers the potential impact on American businesses and workers, and we welcome feedback from the public on how to refine and improve the draft proposal.”

FOCUS OF THE HEARING:

The hearing will focus on the Ways and Means discussion draft released on October 26, 2011.  For purposes of this hearing, the Subcommittee is particularly interested in comments and analysis of the basic architecture of the draft exemption system, including the scope of the 95 percent exemption for certain dividends and capital gains, the treatment of different forms of entities and ownership structures, and the transition rule applied to pre-effective date earnings.  The hearing also will review the various options for protecting the U.S. tax base, both with respect to thin capitalization rules and income-shifting through the location of intangible property and similar means.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, https://waysandmeans.house.gov, select “Hearings.”  Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.”  Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance with the formatting requirements listed below, by the close of business on Thursday, December 1, 2011.  Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225-3625 or (202) 225-2610.

FORMATTING REQUIREMENTS:

The Committee relies on electronic submissions for printing the official hearing record.  As always, submissions will be included in the record according to the discretion of the Committee.  The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines.  Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below.  Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All submissions and supplementary materials must be provided in Word format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased.  All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. All submissions must include a list of all clients, persons and/or organizations on whose behalf the witness appears.  A supplemental sheet must accompany each submission listing the name, company, address, telephone, and fax numbers of each witness.

The Committee seeks to make its facilities accessible to persons with disabilities.  If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested).  Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

Note: All Committee advisories and news releases are available on the World Wide Web at http://www.waysandmeans.house.gov/.