Senate Proceeding on Apr 1st, 2009 :: 10:36:35 to 10:55:30
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10:36:35 to 10:55:30( Edit History Discussion )
Speech By: Olympia Snowe

10:36:46 to 10:37:06( Edit History Discussion )

Olympia Snowe: quorum call: ?" snow mr. president? senator from maine. consent the call of the quorum be dispensed. the presiding officer: without objection, so ordered. ms. snowe: thank you, ilan to offer an amendment tomorrow i would like to discuss here this morning because i do think it's an important matter as we consider the economic climate we

10:37:07 to 10:37:27( Edit History Discussion )

Olympia Snowe: ourselves. my amendment would create a deficit neutral reserve fund that extends the 2001 tax cut-rates for small business owners so this tax increase does not subtract from the pool of capital that is going to be available to small business. as ranking member of business committee and senior member of the finance committee i rise in

10:37:28 to 10:37:50( Edit History Discussion )

Olympia Snowe: sufficient of taxation because i'm deeply concerned about how proposed tax rate increases will harm small business capital formation. there has been a debate that has ensued since the resolution was offered that raises the tax rates for those over $250,000 and i don't

10:37:51 to 10:38:13( Edit History Discussion )

Olympia Snowe: disagree with some of those efforts but i do have a deep concern about the impact and the implications that it will have on small business and their ability to access affordable capital in this current economic down town. now the expiration of the tax cuts in 2001 and 2003 for

10:38:14 to 10:38:35( Edit History Discussion )

Olympia Snowe: couples making more than $250,000 will affect small businesses directly. hiking taxes from 33% to 36%, from 35% to 39.6% results in a 9% tax officer for either tax rate. so if the government is subtracting 9% from small busi

10:38:36 to 10:38:57( Edit History Discussion )

Olympia Snowe: suggests fewer resources will be available to reinvest in business as we know access to capital is a constant struggle for america's small businesses particularly at this time of a continuing concrete crisis. we have seen the concrete crunch that has had a direct affect on small businesses. lines of credi denied, access to capital is

10:38:58 to 10:39:19( Edit History Discussion )

Olympia Snowe: simply not available. time and time again we have heard from small businesses and certainly that's been true at a hearing that we held recently in the small business committee because small business owners were saying, repeatedly, that they have had considerable difficulty in being able to

10:39:20 to 10:39:40( Edit History Discussion )

Olympia Snowe: access credit from banks. so we have a serious crisis because if we depend on small businees to generate the jobs which they net new jobs in this country, half of all the private-sector employers, 70% of the nong.d.p -- then clearly we have

10:39:41 to 10:40:02( Edit History Discussion )

Olympia Snowe: to b concerned about the response of small business when we raise the tax rates for those over $250,000. we cannot increase taxes by 9% on small businesses and not expect this tax hike will have an immediate affect on the amount of capital their own respected business.

10:40:03 to 10:40:24( Edit History Discussion )

Olympia Snowe: i fear in lieu of investing in their own funds small businesses will have to turn to the frozen credit markets that clearly has impeded any ability of small bu most recently, a federal reserve study demonstrad that 70% of banks small businesses.

10:40:25 to 10:40:45( Edit History Discussion )

Olympia Snowe: well, chairman landrieu of the small business committee and i have been working to free up lending for small business owners. recently, the president conducted a small business summit at the white house and we heard directly from small business owners who said, you know, their lines of credit have simply dried up. now,

10:40:46 to 10:41:06( Edit History Discussion )

Olympia Snowe: have said, some of the tarp recipients have said we are lending money but the truth is, it simply is not happening. and so there are numerous provisions in the stimulus package that i and chair landrieu have worked to insert because we thought it was important to make sure that we took the steps to ensure a main

10:41:07 to 10:41:27( Edit History Discussion )

Olympia Snowe: street recovery. some of which were on the flag ship s.b.a. programs, the 7-5 and the 504 programs to reduce or eliminate the lenders and bawshers' fees center will be instrumental in to more freely loan money to small businesses because these

10:41:28 to 10:41:49( Edit History Discussion )

Olympia Snowe: are the key programs and provided for 90% guarantee under of any of the loans that are issued. in the stimulus package i was able to secure a provision that will allow small businesses to pay 90% of their tax liability for the year 2008 for this tax

10:41:50 to 10:42:11( Edit History Discussion )

Olympia Snowe: year instead of the 1 that's important to ensure there is available capital for small businesses to ease t restraints on small businesses to make sure that they have more capital vabl -- available to survive in this serious downturn.

10:42:12 to 10:42:32( Edit History Discussion )

Olympia Snowe: we have done a number of things that will be so essential for the preservation and survival of the small business in this very serious recession which is the worst since the great depression. we included a stabilization loan fund that will provide up to $35,000 for small businesses who otherwise have been viable businesses but hav

10:42:33 to 10:42:53( Edit History Discussion )

Olympia Snowe: difficult making payments so we want to ease thelow of capital on a monthly basis so it gives them a lifeline, a bridge, until they will be able to find a better economic climate in which to do business. the fact is, credit is essential. small businesses are vital

10:42:54 to 10:43:14( Edit History Discussion )

Olympia Snowe: because they are job generators in america. our economy is totally dependent on the well-being and the health of small businesses. and that's why the president and it is something had recommended and endorsed, which is to use some of the tarp f to buy small business l the secondary market. again, freeing up the capital,

10:43:15 to 10:43:36( Edit History Discussion )

Olympia Snowe: easing the pressures on many of the banks so that they can issue those loans in the secondary markets and the tarp funds would be used up to $15 billion so, again, another way at easing, you know, the credit restrains but also to providing more liquidity in the markets so that

10:43:37 to 10:43:57( Edit History Discussion )

Olympia Snowe: small businesses are able to go about and continue to do their business. we have to avert, you know, not only job losses in this economy but primarily to make sure that if we're going to do so that with prevent small business owners from shutting their doors on main streets all across america.

10:43:58 to 10:44:20( Edit History Discussion )

Olympia Snowe: the vast majority of businesses in this country known as flow through or pass tough businesses meaning the income from a business is taxable to the ind not taxed at the business level. and the fall into that definition of

10:44:21 to 10:44:41( Edit History Discussion )

Olympia Snowe: flow-through businesses are sole proprietyship and s corporations. according to the small business corporation, business represent 93% of all small business in 2004 and specifically there are 19.2

10:44:42 to 10:45:02( Edit History Discussion )

Olympia Snowe: million sole pry private toreship, and there are 3 million s corporations representing 12% of the businesses.we consider this tobe an small businesses because there are roughly 2 million small "c" corporations representing 7% of businesses that pay taxes both at the individual and the

10:45:03 to 10:45:24( Edit History Discussion )

Olympia Snowe: business level and when profits are distributed. the point is, mr. president, that smallusinesses are critical. they pay the individual rate. and that's the problem with allowing the tax rates to expire from the 2001 and the 2003 tax bills for those small business

10:45:25 to 10:45:45( Edit History Discussion )

Olympia Snowe: who are earning more than $250,000. the data provided earlier this week from the joint taxation shows that 6.5% of business owners, as defined by individuals, as i mentioned earlier, receiving a flow-throw income pay the individual tax rate. they will see their taxes

10:45:46 to 10:46:06( Edit History Discussion )

Olympia Snowe: increase aa result of this major tax hike. this is in stark contrast to other critics who haveaid well, you know, it's only going to be 2.2% of taxpayers that will be affected by this tax increase. but yet it's almost three times what they indicated. but more importantly, it's the

10:46:07 to 10:46:27( Edit History Discussion )

Olympia Snowe: amount of income that these tax -- that these small businesses generate in our nation's economy. the joint committee on taxation reinforced the 2007 treasury stud among taxpayers whose flow-through income amounted to at least 50% of clearly indicating that the

10:46:28 to 10:46:49( Edit History Discussion )

Olympia Snowe: primary business owner that 9% earn 69% of total flow-through income but paid 81% of the tax on it. so 9% earned 69% of the income but pay 81% of the taxes, and that's the problem, mr. president. because we're going to directly

10:46:50 to 10:47:10( Edit History Discussion )

Olympia Snowe: affect and impact those small businesses that generate the -- the preponderance of the income from small businesses in america. now, i drew on this treasury study to help craft my amendment which targets not the passive investor and small business but the individual who is really earning their keep from small business.

10:47:11 to 10:47:31( Edit History Discussion )

Olympia Snowe: and my amendment uses the definition of small business as determined by the small business administration. and i want to highlight one form of business ownership in particular and that is the "s" corporation because this form of ownership represents small firms that have graduated past the kitchen table stage of business and have employees.

10:47:32 to 10:47:55( Edit History Discussion )

Olympia Snowe: again, the joint committee on taxation data indicates in 2006, 22% of taxpayers who earned income from "s" corporations were making more than $250,000. furthermore, a new study -- a very recent study -- from the s.b.a. office of advocacy demonstrated there were roughly 3.3 million "s" corporation

10:47:56 to 10:48:17( Edit History Discussion )

Olympia Snowe: returns filed in 2004, and by industry sect turk -- sector, the most pro most prevalent were wholesale and retail trade. so in essence, these are the main street businesses, the retailers, the construction firms, the manufacturers, the job generators of this economy. we cannot subtract another 9% of the income and not think it's not going to affect not only

10:48:18 to 10:48:40( Edit History Discussion )

Olympia Snowe: them but our nation's economy. we have to do everything that we can to nurture and cultivate an environment whi -- in which small businesses can survive during this economic crisis. we need to be fostering, you know, that environment, not increasing taxes on small businesses at the very time that

10:48:41 to 10:49:01( Edit History Discussion )

Olympia Snowe: they need more capital just to get by. a recent s.b.a. study noted that half of all small business income is earned by businesses organized either as a partnership or an "s" corporation despite the fact that they constitute only about 20% of business so, mr. president, it is

10:49:02 to 10:49:23( Edit History Discussion )

Olympia Snowe: critical that we evaluat this particular provision when we're talking about allowing the expiration of the tax rates in 2001 we have to consider and evaluate it specifically in thousand will affect the health and the well-being of in -- thousand will affect the

10:49:24 to 10:49:45( Edit History Discussion )

Olympia Snowe: health and well-being of small business in america. small businesses as job generators have been spurned appreciated, unrecognized. they have been the unsung heroes of our economy even prior to this recession. and i think that wholly attai attentive to the role nation's economy. after all, there are 27 million

10:49:46 to 10:50:07( Edit History Discussion )

Olympia Snowe: small businesses in america today and we have to ensure their survival. and the way we can do it is to consider the policies that we're enact and how they directly have an effect on small businesses, whether it's on regulation or diminishing their availability of credit, taking away, because we're raising

10:50:08 to 10:50:28( Edit History Discussion )

Olympia Snowe: taxes, all of which have a collective effect on the well-being and effectiveness of small business in today's climate. i think it's rather ironic that on one hand we're doing everything we can to the stimulus, through -- stimulus, through the tarp funds to make credit available and then on the other hand we're

10:50:29 to 10:50:50( Edit History Discussion )

Olympia Snowe: raising the tax rate. now, some people say we're deferring and that's only going to be two years away. but small businesses have to planor the future. and the net effect that they will constantly retrench in anticipation that their tax rates are going to rise, which only stands to reason. it's a logical response.

10:50:51 to 10:51:11( Edit History Discussion )

Olympia Snowe: it certainly represents that they will -- ty will change their behavior as a result of what they can expect in the future. so suggesting that somehow deferring it two years out and we don't have any prognostications in terms of what this economy's going to look like two years, we still will have high rates of unemployment

10:51:12 to 10:51:34( Edit History Discussion )

Olympia Snowe: it's going to be a slow path forward towards recovery and we'll be spending -- we'll be depending on small businesses to ultimately lead the way out of is recession and to pave the way forward towards a recovery. so if we're dependent on small businesses, as we are, then we have to really consider very

10:51:35 to 10:51:56( Edit History Discussion )

Olympia Snowe: carefully, you know, the impact of what this provision will have on small businesses in so when we discuss the fact that, well, it won't have an impact today but it will have it, you know, two it will because they will just, you know, defer a plant, they'll defer investments, they'll defer hiring, they may lay off, given

10:51:57 to 10:52:17( Edit History Discussion )

Olympia Snowe: the current climate, to be sure, but also in anticipation of the future knowing that they will have to pay increased taxes. tax alters economic behavior, it althoughers capital formation -- it alters capital for indisputably

10:52:18 to 10:52:38( Edit History Discussion )

Olympia Snowe: and so on this issue alone, mr. president, i think it's very critical that we be circumspect and cautious in terms of how we approach it. and that's why the amendment that i will offer tomorrow will create a deficit-neutral reserve fund so that we can be assured that we do not have these sort of tax increases that will be

10:52:39 to 10:53:03( Edit History Discussion )

Olympia Snowe: directly imposed businesses. and i would hope that the senate will support, you know, this amendment. it's specific and targeted for small business owners so that we -- this tax increase doesn't affect them, it doesn't affect their behavior either now or into the future there is a pool of capital so

10:53:04 to 10:53:29( Edit History Discussion )

Olympia Snowe: that they can continue to do business and hopefully will be able to overcome and survive the hurdles that this economic climate represents. the small business and entrepreneurship council recently stated the higher the marginal tax rate, the higher the relative price of cost or additional work and risk taking, and that high rate discourages

10:53:31 to 10:53:53( Edit History Discussion )

Olympia Snowe: economic activity. and i know a number of organizations have conducted their own surveys and i think it's illustrative again of the small businesses as a direct result, you know, of this specific tax increase. the -- the's a poll conducted by gallup for the national federation of independent businesses, otherwise known as nfib.

10:53:54 to 10:54:15( Edit History Discussion )

Olympia Snowe: when surveys, 21.7% of small business owners who employ 20 to 249 employees responded that the income earned from their businesses would be greater than $250,000. that bears reiterating more than 20% of small that they would have income greater tn $250,000.

10:54:16 to 10:54:36( Edit History Discussion )

Olympia Snowe: this data certainly comports with the data provided by the joint committee on taxation regarding partnership income and "s" corporation income. even more striking was the response from other small businesses where they indicated that they would certainly have a detrimental impact when they

10:54:37 to 10:54:57( Edit History Discussion )

Olympia Snowe: were asked about their total household income from all sources, and 40% of these entrepreneurs with 20 to 249 employees responded that their household income would be greater than $250,000. in either survey question, this

10:54:58 to 10:55:20( Edit History Discussion )

Olympia Snowe: cohort was the largest response group of any income group or size of employer and is indicative that successful small businesses are precisely the group that is most likely to face increased taxes if the top two marginal tax rates again

10:55:21 to 10:55:33( Edit History Discussion )

Olympia Snowe: the net result is they will face a 9% tax increase. so, mr. president, i hope that the senate will endorse my amendment when i offer it tomorrow.