The American Council for Capital Formation and its public policy think tank, the ACCF Center for Policy Research, brought together top tax and environmental policy experts from its corporate, association, and foundation supporters for an Issues Roundtable on December 2 in Washington, D.C. In addition to discussing key policy issues anticipated in the year ahead, participants shared their views about specific tax, regulatory, and environmental concerns at the top of their 1998 agendas.

The Issues Roundtable focused on fundamental tax reform, saving, and investment issues; capital gains tax policy; multinational companies and tax policy; climate mitigation policy; Clean Air Act amendments; and regulatory improvement. Roundtable discussion leaders were Dr. Charls E. Walker, chairman, American Council for Capital Formation; Mark Bloomfield, ACCF president; Stuart J. Brahs, vice president, federal government relations, The Principal Financial Group; William F. O'Keefe, executive vice president, American Petroleum Institute; Bruce Steiner, vice president, environment and energy, American Iron and Steel Institute; and Lynn Schloesser, director, federal affairs, Eastman Chemical Company. Dr. Margo Thorning, ACCF senior vice president and chief economist, moderated the Roundtable.

Nicholas Giordano, minority chief tax counsel, Senate Finance Committee, and Gregg D. Renkes, staff director, and David Garman, professional staff member, Senate Committee on Energy and Natural Resources, addressed the Roundtable's luncheon session.

Tax Policy Issues

• Fundamental Tax Reform
  
  Dr. Charls E. Walker opened the Issues Roundtable with an overview of the outlook for fundamental tax reform. He suggested that while congressional interest in the topic remains high, it does not seem to be a priority for the business community. He added that without strong leadership, policymakers may continue to talk about but not enact fundamental tax reform. However, the ACCF chairman queried, if interest in the issue is revived, perhaps in the 2000 presidential election campaigns, how should the business community respond given the differing points of view on the issue?
  
  Dr. Walker noted that the ACCF has long made the case that low taxes on saving and investment promote job growth, economic strength, and competitiveness in world markets. He stressed that, despite the current strong U.S. GDP growth, public policy changes that encourage saving and investment must be put in place to avoid sapping the nation's future economic strength.
  
  
• Capital Gains Tax Policy
  
  Mark Bloomfield summarized the progress made in 1997 to reduce capital gains taxes and outlined the political and policy issues that will continue to dominate in this debate. He argued that political realities and revenue needs may spur a backlash against the 1997 reductions in capital gains taxes. Mr. Bloomfield stressed that new research is needed to support the economic case for maintaining and expanding the 1997 capital gains rate reductions in order to increase investment.
  
  
• US. Multinational Companies: Tax Policy Issues
  
  Stuart J. Brahs explained that U.S. financial services firms competing with foreign companies in world markets are hampered by high U.S. tax rates on foreign source income. While some relief was contained in the 1997 tax bill, that provision was one of the three subject to the President's line-item veto. Mr. Brahs said research on the impact of the U.S. tax code on the competitiveness of financial service firms sponsored by the ACCF Center for Policy Research had made an effective case concerning the tax disadvantage faced by U.S. firms in the global marketplace.
  
  Dr. Margo Thorning noted that, in 1998, the ACCF Center for Policy Research hopes to undertake a research project incorporating a multi-industry perspective, including U.S. manufacturing, on the impact of the U.S. tax system on American companies competing in the global marketplace.

• Climate Mitigation Policy
  
  With the international conference on global climate mitigation underway in Kyoto, William F. O'Keefe reviewed the status of the policy debate for Roundtable participants. Noting that scientists cannot actually distinguish between natural climate changes and other impacts, he said policy prescriptions should reflect the range of uncertainty in the debate, not simply assume the worst-case scenario, especially since all economic studies of the effect of substantial near-term reductions in fossil fuel emissions point to a strong negative impact on the economy.
  
  Policymakers should promote actions that are consistent with the state of scientific knowledge and that do not reduce economic growth and cause job loss, Mr. O'Keefe noted. He added that the President should not sign a treaty that excludes the developing countries.
  
  
• Clean Air Act Amendments
  
  Bruce Steiner reviewed the three levels of activity currently affecting the Clean Air Act. First, on the legislative level, Mr. Steiner said he anticipates legislation will be proposed in the next Congress to postpone setting new standards for five years. Second, on the legal front, there are challenges on several Clean Air Act issues and, third, on implementation, the Environmental Protection Agency is obligated to issue guidance.
  
  
• Regulatory Improvement
  
  Lynn Schloesser stressed the need for linking regulatory accounting and cost-benefit analysis, noting that while good research has been done in this area, it is not yet a part of the public policy dialogue. He also reviewed some of the problems, including the lack of accountability for costs and benefits, that have arisen as regulatory information demands make information on products increasingly available, causing competitiveness problems for American companies.

• Tax Policy Agenda
  
  Nick Giordano told Roundtable participants that the Finance Committee will have a full agenda in the second session of the 105th Congress. Among the issues he expects the Committee to address through hearings or legislation are climate change and electricity deregulation, ISTEA (the Intermodal Surface Transportation Efficiency Act), IRS restructuring and oversight, education IRAs, and technical corrections to the Taxpayer Relief Act of 1997. He noted that House Ways and Means Committee Chairman Bill Archer is expected to put together a tax cut bill, to be paid for by the anticipated budget surplus, which could include provisions to address the marriage tax penalty, estate taxes, the individual alternative minimum tax, payroll taxes, and expiring provisions. Mr. Giordano also said he expects the Finance Committee to hold hearings on fundamental tax reform and to address trade policy issues, including "fast track" and the Caribbean Basin Initiative.

ACCF Welcomes New Board Members

The American Council for Capital Formation is pleased to announce the election of six new members to its board of directors:

• Hon. Andrew H. Card, Jr., President and Chief Executive Officer, American Automobile Manufacturers Association, and former U.S. Secretary of Transportation;
  
  
• Red Cavaney, President, American Petroleum Institute;
  
  
• Brian H. Dovey, President, National Venture Capital Association, and General Partner, Domain Associates;
  
  
• Hon. James R. Jones, President, Warnaco Inc. International, and former U.S. Ambassador to Mexico and former House Budget Committee Chairman;
  
  
• M.B. Oglesby, Jr., President, Association of American Railroads; and
  
  
• William D. Witter, William D. Witter, Inc.