Our business tax system: objectives, deficiencies, and options for reform: statement of David L. Bernard, TEI International President, before Senate Committee on Finance on September 20, 2006.

Chairman Grassley, Ranking Member Baucus, and Members of the Committee: Thank you for inviting me to testify on behalf of Tax Executives Institute, where I currently serve as International President, to provide the perspective of business tax professionals on fundamental tax reform. Tax Executives Institute is the preeminent association of in-house tax professionals. Our 6,000-plus members represent more than 2,800 companies in the United States, Canada, Europe, and Asia. Our members deal with the tax laws--in the United States and throughout the world--on a day-to-day basis, and we are proud of our record of working with Congress, the Treasury Department and Internal Revenue Service, and their counterparts around the globe to improve both tax policy and tax administration.

In addition to my volunteer service to TEI, I am Vice President-Tax and Real Estate for Kimberly-Clark Corporation, where I have been employed for my entire 32-year career. Kimberly-Clark is a 130-year old company founded in Neenah, Wisconsin, by four young businessmen to manufacture and sell paper, pulp, and bathroom tissue. We have grown from an initial capitalization of $30,000 to a market capitalization of almost $30 billion, and today the company is a global leader in health and hygiene products, with products manufactured in 18 states and 39 countries and sold in more than 150 countries.

Mr. Chairman, not to date either us, but the tax world has changed considerably since I joined Kimberly-Clark and you were first elected to Congress. Back then, you could easily carry the Internal Revenue Code (1 volume) and regulations (2 volumes) in your briefcase with room to spare. Since those times, our tax code--like the world around us--has grown significantly and become increasingly more complex. This exponential growth of our tax law, in terms of size, scope and complexity, has spawned a universe of statutory law and regulatory pronouncements that is profoundly difficult for taxpayers to understand and comply with and for tax administrators to examine, interpret, and enforce. Part of the reason for this is society's increasing reliance on the Internal Revenue Code, not merely to raise revenue from individuals and entities to fund governmental operations, foster economic growth, and enable prosperity, but also to advance social and economic policies that, while perhaps laudable, impose heavy costs on the tax system and its participants. Thus, in a very real sense, the Code has lost its way, and all of us must accept a measure of responsibility for that having taken place.

The challenge to both government and business is to refocus our internal revenue laws. To TEI, that is what fundamental tax reform is all about.

We are not naive about the challenge. We recognize that whatever the need for tax reform, the prospects for it remain uncertain, both because certain groups, industries, and advocates are heavily invested in the current system (or one or more of the competing alternatives)--not without reason--and because transitioning to a new system will never be easy.

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