[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]










         MAKING WASHINGTON WORK FOR AMERICA'S SMALL BUSINESSES

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             MARCH 22, 2017

                               __________

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
      
          
          
       
            Small Business Committee Document Number 115-010
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
              
              
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                          DON BACON, Nebraska
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                                 VACANT
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

                   Kevin Fitzpatrick, Staff Director
                       Jan Oliver, Chief Counsel
                Adam Minehardt, Minority Staff Director
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Brad Schneider..............................................     2

                               WITNESSES

Ms. Maxine Turner, Founder, Cuisine Unlimited, Salt Lake City, 
  UT, testifying on behalf of the U.S. Chamber of Commerce.......     5
Ms. Ann Chambers, Co-Founder and CEO, Red212, Cincinnati, OH, 
  testifying on behalf of Women Impacting Public Policy..........     6
Mr. Rutland ``Skip'' Paal, Owner, Rutland Beard Floral Group, 
  Baltimore, MD, testifying on behalf of the Society of American 
  Florists.......................................................     8
Mr. David Borris, Owner, Hel's Kitchen Catering, Northbrook, IL, 
  testifying on behalf of the Main Street Alliance...............     9

                                APPENDIX

Prepared Statements:
    Ms. Maxine Turner, Founder, Cuisine Unlimited, Salt Lake 
      City, UT, testifying on behalf of the U.S. Chamber of 
      Commerce...................................................    23
    Ms. Ann Chambers, Co-Founder and CEO, Red212, Cincinnati, OH, 
      testifying on behalf of Women Impacting Public Policy......    30
    Mr. Rutland ``Skip'' Paal, Owner, Rutland Beard Floral Group, 
      Baltimore, MD, testifying on behalf of the Society of 
      American Florists..........................................    38
    Mr. David Borris, Owner, Hel's Kitchen Catering, Northbrook, 
      IL, testifying on behalf of the Main Street Alliance.......    44
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
         MAKING WASHINGTON WORK FOR AMERICA'S SMALL BUSINESSES

                              ----------                              


                       WEDNESDAY, MARCH 22, 2017

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2360, Rayburn House Office Building, Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Luetkemeyer, Kelly, Blum, 
Bacon, Evans, Murphy, Lawson, Clarke, Adams, Espaillat, and 
Schneider.
    Chairman CHABOT. Good morning. I call this hearing to 
order. And I want to thank everyone for being here. We 
especially appreciate the witnesses' time being taken from 
their businesses, and very significant ones at that. So we 
really do appreciate your testimony.
    And for those of you who follow our Committee, you know how 
relentless we are in our advocacy for America's 28 million 
small businesses. We constantly remind folks about how 
important small businesses are to the American economy. We 
remind people that they make up 99 percent of all firms; that 
48 percent of the people working today work for a small 
business; that they account for 46 percent of our gross 
national product. We do this because it is important. We have 
to continue to shout it from the rooftops because too often 
some folks here in Washington take small businesses for 
granted.
    Take, for instance, the implementation of the Affordable 
Care Act, or Obamacare. Small business witness after small 
business witness has come before us, and constituent after 
constituent back home, and stated how unworkable the whole 
thing is. We hear stories of astronomical premium increases, 
severely limited choices, and little to no assistance for small 
businesses trying to help themselves to get insurance or to 
their employees. Yet, there are folks out there who think that 
Obamacare is working just fine. Well, it is not, and small 
businesses are usually the ones left holding the bag.
    Another problem that continually hinders small business 
growth is the avalanche of unnecessary and unworkable 
regulations. Because of the unique role small businesses have 
in the economy, regulations have a substantially higher impact 
on them than they do on larger business entities. In fact, a 
recent study by the National Association of Manufacturers found 
that small firms pay an average of $2,041 more per employee per 
year than their larger counterparts.
    It does not get any easier for small businesses in the tax 
realm either. A study by the Small Business Administration's 
Office of Advocacy disclosed that small firms pay 67 percent 
more to comply with the Tax Code than do large firms. The 
growing number of tax provisions, along with the fact that 
small firms frequently do not have an in-house accountant or 
tax attorney means that small business owners must hire outside 
experts or add duties to another employee's work load, which 
that takes time away from their actual contribution towards the 
business because they just have to figure out the tax burden. 
These issues are important because too often small businesses 
get the short end of the stick, which is counterproductive to 
the economic health of our Nation.
    This hearing is a little bit different than others that we 
have done. Instead of focusing on just one topic as we usually 
do, we simply asked the witnesses to give us advice on the 
policies and initiatives that we could be focusing on to help 
them the most. By getting input now, we can focus our efforts 
throughout the 115th Congress to serve our constituency, which 
are small businesses, as responsibly and as effectively as 
possible.
    We have an excellent panel, as I mentioned before of 
witnesses here today, and I again want to make note of how 
important it is that you are all with us.
    And I would now like to yield to the gentleman from 
Illinois, Mr. Schneider. Ms. Velazquez, who is usually here, is 
unable to be here this morning, so Mr. Schneider is filling in.
    Mr. SCHNEIDER. Thank you, Mr. Chairman. Thank you for 
calling this hearing. I, too, want to thank the witnesses for 
taking the time to be here.
    There are nearly 30 million small businesses in the United 
States representing more than 99 percent of all businesses. 
These small firms employ nearly 50 percent of all private 
sector employees in the United States. At the same time, 1 out 
of every 10 Americans are self-employed, and another 7 percent 
of American workers are actively trying to start a business. 
These trailblazers, both new entrepreneurs and small growing 
firms, animate the American economy. They take great risks by 
launching new ventures, developing new products, establishing 
new industries, and ultimately spurring job growth.
    As we look to foster and encourage this type of risk-taking 
and entrepreneurship, there are a range of policy areas that 
come into play. Federal regulation, for example, is a 
fundamental tool of government used to implement public policy. 
They serve to protect workers and clarify how our Nation's laws 
are implemented. Most regulations serve an important purpose, 
like ensuring food is safe to eat and our air and water remain 
unpolluted. In fact, according to a recent poll by the American 
Sustainable Business Council, Main Street Alliance, and the 
small business majority, 86 percent of small business owners 
see regulations as a necessary part of our modern economy.
    Of course, we must always be mindful of the burdens and 
compliance costs certain regulations impose on smaller 
companies, but we also must bear in mind that regulations and 
regulatory certainty are needed to protect the public health 
and can even be necessary for economic growth.
    Just as regulations are part of a thriving and modern 
economy, so is accessibility to affordable quality health 
insurance. Seven years ago, President Obama signed into law the 
Affordable Care Act. Since then, about 22 million people have 
secured coverage. These gains have been significant for small 
business employees as their uninsured rate fell from 27 percent 
to less than 20 percent between 2013 and 2015.
    The Congressional Budget Office estimates that the 
Republican Healthcare Bill, or Trumpcare, would rip away health 
insurance from 14 million Americans in the first year alone. 
That number jumps to 24 million over a decade, nearly doubling 
the share of Americans who are uninsured.
    And of particular note for small employers is the 
elimination of the Small Business Health Care Tax Credit. 
Rather than improving this provision to make it work better for 
small firms, Trumpcare simply eliminates it.
    Slash-and-burn proposals like this leave little optimism 
for making bipartisan headway in other areas like tax reform. 
That is unfortunate because I think everyone on this Committee 
agrees on the need for reforming our Tax Code. Simplifying the 
Tax Code would give small businesses greater certainty and 
allow them to spend their time and resources on what they do 
best: creating new jobs in their own local communities.
    I am grateful that we are here today to learn how Congress 
can serve the needs of small businesses and entrepreneurs so 
they can help grow our economy. The difficulty will be 
identifying tangible, bipartisan solutions we can all get 
behind and hopefully implement. In that regard, the small 
business community's input will be critical.
    This Committee does its best work when we hear firsthand 
from small businesses. In that regard, I look forward to 
hearing today's testimony. Let me again thank the witnesses, 
and I yield back.
    Chairman CHABOT. Thank you very much. The gentleman yields 
back.
    And if Committee members have opening statements prepared, 
I would ask that they be submitted for the record.
    And I would like to take just a moment to explain our 
timing rules in this Committee. It is pretty simple. It is a 5-
minute rule. Each of you will get 5 minutes and then each of us 
will get 5 minutes to ask questions. And there is a lighting 
system to assist you in staying within the limits. The green 
light will be on for 4 minutes. The yellow light will come on 
when you have got a minute to wrap up, and then when the red 
light comes on, if you could wrap up by then, we would 
appreciate it. If you go a little bit over, that would be okay, 
but not a lot over. So if you could stay within that we would 
greatly appreciate it.
    I would now like to introduce our very distinguished panel 
here this morning. Our first witness is Maxine Turner, who is 
the founder of Cuisine Unlimited in Salt Lake City, Utah. After 
8 years in the financial services industry, Ms. Turner was 
asked to join a nonprofit organization in heading their 
fundraising catering program. Her interest in events grew from 
this experience and she later established Cuisine Unlimited 
Catering and Special Events, an award-winning national and 
international catering and special event company. Established 
in 1980, her company now employs over 120 people. She is 
testifying on behalf of the United States Chamber of Commerce 
in her capacity as chairperson of their Small Business Council, 
and we welcome you here this morning, Ms. Turner.
    Our next witness will be Anne Chambers, who is the owner of 
Red212 in Cincinnati, Ohio. I will repeat that. In Cincinnati, 
Ohio, which happens to be my hometown. Red212 is an independent 
content strategy agency that offers digital, traditional, and 
cultural solutions. She is testifying on behalf of Women 
Impacting Public Policy, WIPP, a national nonpartisan 
organization advocating on behalf of women entrepreneurs. Since 
its inception in June of 2001, WIPP has reviewed, provided 
input, and taken specific positions on many economic issues and 
policies which affect the bottom line of its members. And we 
thank you also for participating this morning.
    And up next is Rutland ``Skip'' Paal, president and CEO of 
Rutland Beard Floral Group, RBFG, a fourth generation family-
owned floral business with more than 180 employees across 4 
States. RBFG delivers nearly 100,000 floral orders annually, 
and under Skip's leadership and direction the company has grown 
over 1,500 percent during the past decade. He currently serves 
on the board of directors of the Society for American Florists 
and is testifying in that capacity today. We also welcome you 
here.
    And I would now like to yield to Mr. Schneider, who is not 
only filling in for Ms. Velazquez, but is also the ranking 
member in his own right for the Agriculture, Energy, and Trade 
Subcommittee, for introducing our next witness.
    Mr. SCHNEIDER. Thank you. It is always an honor to 
introduce an expert witness. It is even a greater honor to 
introduce a friend.
    David Borris of Hel's Kitchen in Northbrook, Illinois. 
David began in 1985 in a 900-square-foot retail storefront with 
his wife. Pursuing the American dream, all they wanted to do 
was have the opportunity to use their balanced energy and 
acquired hospitality skills to offer our community, the North 
Shore of Chicago, a new experience in gourmet retail carryout 
food. Armed with a handful of amazing family recipes and a 
steadfast, unfailing work ethic, they set out to fulfill this 
vision. Thirty-two years and three expansions later, Hel's 
Kitchen Catering has become a permanent fixture in our 
community. What started as a simple dream for two committed 
entrepreneurs has become the lifeblood and livelihood for 
dozens of employees.
    David has been a leader with Main Street Alliance since 
2008. He is a member of the Main Street Alliance Executive 
Committee, has represented Main Street Alliance numerous times 
in Illinois, and even here in Washington, D.C., on a variety of 
issues ranging from health care, job quality, climate justice, 
tax reform, incorporation transparency, Wall Street reform, and 
more. He understands the issues, he is a good friend, and I am 
glad to have you here. Thank you very much.
    Chairman CHABOT. Thank you very much.
    As I said, we have a very distinguished panel and, Ms. 
Turner, you are recognized for 5 minutes.

 STATEMENTS OF MAXINE TURNER, FOUNDER, CUISINE UNLIMITED; ANNE 
 CHAMBERS, CO-FOUNDER AND CEO, RED212; RUTLAND ``SKIP'' PAAL, 
 OWNER, RUTLAND BEARD FLORAL GROUP; DAVID BORRIS, OWNER, HEL'S 
                        KITCHEN CATERING

                   STATEMENT OF MAXINE TURNER

    Ms. TURNER. Thank you so much. Chairman Chabot, Ranking 
Member, thank you so very much for this opportunity to speak 
with you today.
    My name again is Maxine Turner. I am the founder of Cuisine 
Unlimited. We are a catering and special event company in Salt 
Lake City, Utah.
    My 37-year-old company is now a second generation family-
owned business with 120 employees catering events certainly 
locally, nationally, and internationally. We have been involved 
with seven Olympic Games, including exclusive cater at USA 
House in Athens and Torino.
    I represent the U.S. Chamber of Commerce, of which I am on 
the board and chairperson of the Small Business Council. I am 
honored to speak before you today regarding the critical issues 
that affect our small business community.
    The Chamber represents the interests of over 3 million 
businesses of all sizes, sectors, and regions. The majority of 
Chamber members are small firms. In fact, 96 percent have fewer 
than 100 employees. Our Small Business Council works to ensure 
the views of small businesses are part of the Chamber's 
policymaking procedures.
    As chair, I have met with hundreds of business owners to 
better understand the small business landscape. Over the past 
decade there have been many obstacles, including the worst 
recession since the Great Depression and a multitude of Federal 
mandates that have challenged our very existence.
    We want to grow our companies. We find, however, roadblocks 
to that opportunity. We want to work with you to change that 
course so that we may have the resources to expand and create 
new jobs.
    Law passage of the Dodd-Frank law may have calmed fears of 
another financial meltdown. An unintended consequence of that 
law has been limiting small businesses access to capital. My 
company was impacted by these over-restrictive credit policies. 
We were awarded the exclusive catering contract at our 
Performing Arts Center. It required an investment to equip 
three kitchens onsite with small wares. We met with several 
banks and our SBA representative. We have had four very 
successful loans with SBA, all repaid ahead of schedule.
    The bottom line, we were turned away by all the banks. How 
could we fulfill our obligation to this contract without 
financial backing? We looked to other sources and learned of a 
grant offered by our city. We applied and received one-third of 
the necessary funds. We made due equipping only one of those 
kitchens and used the small wares that we had existing in our 
catering operation. We used much of our profits from 2016 to 
purchase critical items with the hope that 2017 will see us 
through any additional challenges.
    My story is not unique. It simply should not be this hard 
for businesses to get access to the capital they need.
    A Small Business Council member, Ashok Krish, is a good 
example of how tech firms are struggling to keep up with 
staffing needs. Ashok is the owner of Kaizen Technologies in 
Edison, New Jersey. There are over 3,000 IT firms in the 
tristate area. His needs for highly skilled workers cannot be 
met without a reliance on foreign professionals who work under 
the H1B visa program. He cannot fill the technical positions he 
currently has.
    Many of our small business members have voiced concerns 
about regulations. From the overtime rule to the fiduciary 
rule, the minimum wage, to Affordable Care, we have worked with 
policy committees at the Chamber and have testified before your 
Committee to try and bring about regulatory reform.
    Tom Donahue, in his State of the American Address, said if 
we are able to move our economy 2 percent to that 3 percent 
growth, that is not a 1 percent increase in performance; it is 
a 50 percent increase. Ultimately, growth is not about numbers. 
Growth is about people. This growth rate would have an 
extraordinary impact on jobs and opportunities, not for just a 
few, but for the many.
    New opportunities, beginning with tax reform, regulatory 
reform, and other priorities should have better result on our 
economy. A healthcare program that meets the needs of our 
citizens with reasonable costs will spark new optimism. We are 
here to support and to work with you, to stroke an economy 
where opportunities abound.
    Thank you again for this opportunity to speak with you 
today, and I look forward to any questions you may have.
    Chairman CHABOT. Thank you very much.
    Ms. Chambers, you are recognized for 5 minutes.

                   STATEMENT OF ANNE CHAMBERS

    Ms. CHAMBERS. Thank you. Good morning, Chair Chabot, and 
good morning to the Committee. My name is Anne Chambers. I am 
the CEO and owner of an ad agency in Cincinnati called Red212, 
as well as a startup called Jambaar. I am testifying today on 
behalf of Women Impacting Public Policy, a national nonpartisan 
organization that advocates on behalf of women entrepreneurs.
    I admit the title of this hearing is a little daunting, 
``Making Washington Work for America's Small Businesses.'' But 
I think the tagline for my business, Red212, might be helpful 
to this conversation.
    ``At 211 degrees Fahrenheit, water is just hot. But by 
raising the temperature just 1 degree to 212 degrees, water 
boils and change occurs. Steam is created with a force so 
powerful that it can hurtle a locomotive across a continent and 
this 1 degree makes all the difference.''
    I understand that this Committee has a history of 
bipartisanship and we are really thankful to the leadership of 
the Committee for its ability to get things done, mostly by 
raising cooperation and collaboration by 1 degree. WIPP 
publishes an annual blueprint that lays out policy principles 
and recommended congressional actions.
    The 2017 edition is hot off the presses, so I will 
concentrate my remarks on a few of the major issue areas that 
we know Congress is interested in pursuing. First and foremost 
is tax reform. For far too long, small businesses have 
struggled with the cost of compliance, and we have paid far 
higher taxes than large businesses. Higher rates. The House 
Blueprint on Tax Reform finally addresses the tax rate of pass-
through entities by capping it at 25 percent. Further, it 
proposes to repeal the estate tax and the alternative minimum 
tax. This meaningful reduction in taxes would give us 
additional capital to grow our businesses and create jobs. Our 
economic blueprint calls for fair and equitable tax treatment 
for all businesses.
    Health reform is another issue constantly on our minds. The 
primary concern here is that any changes made to the current 
system take into account the impact on the small group market. 
Without the ability to pool, small businesses do not have the 
market clout to buy insurance.
    Equally important is access to pricing. We are disappointed 
that the current pooling mechanism, the instate-based 
exchanges, have underperformed. We are not wedded to the 
current system of exchanges. However, ensuring that a 
replacement plan contains an effective pooling mechanism will 
make Washington work for us.
    Access to capital continues to hinder business growth for 
women-owned businesses, as Maxine pointed out. With the 
emergence of technology-based lenders, crowd funding, and 
community development financial institutions, CDFIs, more 
options exist for women business owners than ever before. But 
women still lag behind their male counterparts with respect to 
access to capital. In fact, only 4 percent of all commercial 
loan dollars and 10 percent of all venture capital goes to 
women-owned firms.
    We recommend that Congress take the following steps. First, 
support SBA programs that provide women business owners with 
the business assistance they need to obtain capital, such as 
Women's Business Centers, SBDCs, and SCORE.
    Second, continue to support SBA loan programs. Again, as 
Maxine pointed out the importance of these, we encourage you to 
modernize the microloan program which has proven to be an 
important source of capital for women-owned businesses.
    As this Committee is well aware, WIPP fought for access to 
Federal contracts through the WOSB Procurement Program for 15 
years. Although great strides have been made with respect to 
accessing Federal contracts, much more remains to be done.
    In 2016, WIPP published a report, ``Do Not Enter,'' which 
showed that women lack access to the government's largest 
contracts, Multiple Award Contracts, MACs. We are calling on 
Congress to require SBA to do a study of all MACs and determine 
to what extent women and other socioeconomic groups have tracks 
which allow them to compete for these large contracts.
    Last but certainly not least, compliance with regulations 
is part of doing business. We certainly appreciate the efforts 
by this Committee to increase the SBA's Office of Advocacy's 
clout as this will result in an amplification of our voice.
    President Reagan once said the most terrifying words in the 
English language are, ``I am from the government and I am here 
to help.'' WIPP believes that by working in a bipartisan 
fashion, Washington can truly be here to help. Women 
entrepreneurs all over this great Nation have the expectation 
that our elected officials are here to help. Whether it is 
access to Federal markets, access to capital, or lessening the 
tax burden, we stand ready to work with you on these important 
issues.
    This concludes my testimony. Thank you so much.
    Chairman CHABOT. Thank you very much, Ms. Chambers. And we 
would like to think that this Committee is here to help, but I 
do not know if I can speak for overall Washington.
    Mr. Paal, you are recognized for 5 minutes.

               STATEMENT OF RUTLAND ``SKIP'' PAAL

    Mr. PAAL. Mr. Chairman and distinguished members, thank you 
for inviting me to present testimony before the Committee.
    I am a fourth generation florist. In 1923, my great-
grandfather opened a flower shop and greenhouses outside 
Baltimore. We now operate out of 12 locations in Maryland and 
New Jersey, including my great-grandfather's original location. 
Our employees are the heart of our business. They are the ones 
who comfort grieving families, share hugs with new 
grandparents, and see true love between couples preparing for 
marriage.
    We have always taken care of our employees. We were 
offering health care decades before ACA required us to do so. 
We established a company-sponsored retirement plan when we 
realized Social Security might not be enough for our retirees. 
We have a paid leave program that is extremely competitive for 
retail and nearly unheard of in the flower business.
    As a result, we have many valued employees who have made a 
lifelong career with us. It is important to note that our 
company attracts talent by offering competitive wages and 
benefits because we want to, not because we are forced to. 
Having the opportunity to set ourselves higher than required 
allows us to maintain a competitive employment environment.
    Since several years have elapsed since full implementation 
of the ACA, we have had an opportunity to see firsthand the 
devastating impacts that have occurred as a result of the 
legislation in our business. Since the enactment of the ACA, 
our monthly premiums have nearly doubled, yet our deductibles 
have more than tripled. In my opinion, it is not wise Federal 
policy to force us to pay significantly more for substantially 
less coverage.
    In addition to skyrocketing costs and reductions in 
benefits, the ACA has placed me at a competitive disadvantage 
because my competitors are not required to offer health care 
and are able to entice prospective employees with a higher 
salary. I ask Congress to fix the broken ACA system that is 
detrimental to me and countless other Main Street businesses.
    I applaud the recognition by Congress and the 
administration that the Tax Code, which seems to be so complex 
that not even my account can fully understand it, needs to be 
drastically simplified.
    Payroll taxes are simple, straightforward to calculate, and 
easy to plan for. We need something just as uncomplicated for 
corporate and pass-through taxes.
    While I highly commend efforts to reform our Tax Code, the 
Border Adjustment Proposal would be devastating to my business. 
Nearly 95 percent of the flowers I use in my retail flower 
shops are grown overseas. There is no domestic capacity to meet 
the demand. Flowers are not a necessity like food, clothing, or 
housing. If our products are taxed at a higher rate, those 
costs will translate to higher prices and consumers will shift 
their spending to other products where flowers have 
traditionally been appropriate.
    I ask that any border adjustment and tax reform exempt 
floral agricultural products to avoid significant harm to the 
more than 10,000 small flower shops across the country.
    There also needs to be certainty in legislation and 
regulation that allows small business owners to properly plan 
and prepare. The current environment creates economic chaos 
where we are unable to plan for payroll, benefits, or growth. 
Due to the current uncertainty, I am not comfortable continuing 
to expand my business. Constant political upheaval and shifting 
rules are counterproductive to business growth.
    In an era where only some criticize our government, I do 
want to take an opportunity to say thank you. I urge the 
Committee to celebrate prior bipartisan successes, such as 
repealing 1099 reporting requirements and reforming the estate 
tax, which have been issues with bipartisan support that have 
directly benefitted Main Street. However, there is much more 
work to do. I am hopeful that this Committee and this Congress 
will act to give a degree of certainty and clarity to business 
and to craft and pass legislation which will lead small 
business into a new era of prosperity.
    I am hopeful that my great-grandchildren will be able to 
take the reins of the family business 94 years from now just as 
I am today.
    Thank you again for giving me the opportunity to present 
this testimony before the Committee, and I look forward to 
answering any questions the members may have.
    Chairman CHABOT. Thank you very much.
    Mr. Borris, you are recognized for 5 minutes.

                   STATEMENT OF DAVID BORRIS

    Mr. BORRIS. Thank you, Chairman Chabot, Congressman 
Schneider, and members of the Committee. Thank you for the 
invitation to testify today.
    My name is David Borris, and I serve on the Executive 
Committee of the Main Street Alliance, a national network of 
small business owners. I have been a small business owner for 
32 years. My wife and I opened a homemade food store in 1985, 
and over the years have expanded it into a full-service 
catering company with 33 full-time employees and over 80 part-
time and seasonal workers. We take great pride in what we do.
    Businesses need safety, transparency, and predictability in 
order to thrive. Today, I will focus on what Washington can do 
to ensure these basic vital conditions are met so small 
businesses like mine can succeed.
    This starts with ensuring that my employees, my family, and 
I can access quality, affordable health coverage. Hel's began 
offering health care in 1992, as we felt a moral obligation to 
do right by the people who are making our lives' work theirs as 
well. Employees contributed 50 percent in the first year and 
nothing thereafter. Beginning around 2002, though, we began to 
experience a series of annual, volatile premium increases. In 
2004, 21 percent; in 2005, 10 percent; in 2006, 16 percent; in 
2007, 17 percent; and in 2008, yet another double-digit 
increase forced us to ask long-term employees to reach into 
their pockets once again.
    Just as confounding as the premium swings themselves was 
the source of their unpredictability. For example, we had a 
dishwasher, great at his job for he suffered from a malady that 
required kidney dialysis. When I met with my insurance broker 
to discuss the steep rising premium for the upcoming year, he 
quietly acknowledged the spike was primarily due to the illness 
of that one single employee.
    The ACA has helped stabilize these costs as insurers can no 
longer underwrite based on health status and must adhere to 
medium medical loss ratios. This shields my business from sharp 
swings in premiums based on the health of one or two employees. 
I see these gains in my bottom line.
    My company has witnessed an unprecedented slowdown in rate 
increases. Since the passage of the ACA, our average annual 
increases are a fraction of what they were before, averaging 
4.6 percent annually for the past 7 years. I am saving money on 
premiums and can plow those savings back into business 
investments and job creation.
    Beyond health care, the Federal Government has to ensure 
that we have sensible, protective regulations in place. As a 
small business owner who deals with regulations every day, I 
recognize the profound value of good regulation. Let me give an 
example close to home.
    I make my living preparing food. On a daily basis, I 
receive poultry, beef, and dairy products at my back door. I 
know that I can trust the safety of that food because of strong 
national industry regulations. And food service operations are 
some of the largest consumers of potable water in the country. 
We need powerful oversight of food and clean water regulations 
to stay in business. If Northbrook, Illinois, were to go 
through what Flint, Michigan, went through, I would be out of 
business the next day.
    Finally, what businesses like mine require more than 
anything from our Federal Government are evidence-based 
policies that keep overall consumer demand strong. The single-
most important thing I need to be successful and to create more 
jobs is more customers, not tax breaks, not fewer regulations, 
customers; customers with enough disposable income to engage my 
services. The health of my business is tied to a healthy 
economy that has money circulating in a virtuous cycle of 
rising wages, consumer demand, and job creation. To do this we 
should raise the Federal minimum wage.
    Henry Ford understood the link between well-paid employees 
and paying customers more than a century ago when he recognized 
his business would only succeed if his workers earned enough 
money to buy the cars they were building and he doubled their 
wages overnight. In our local economies, the same link applies. 
My fairly paid employee is my neighbor businesses' paying 
customer. When people in my neighborhood cannot earn enough to 
keep up with the basics--things like buying goods, obtaining 
school supplies, and making car repairs--the entire local 
economy becomes unstable. That is bad for small business and 
bad for the economy as a whole.
    And finally, sensible immigration reform is critical for an 
inclusive healthy middle class. In the 10th Congressional 
District of Illinois alone, there are over 172,000 immigrant 
residents, including 5,700 entrepreneurs paying $1.7 billion in 
taxes and spending over $4.5 billion in our economy. Our 
current immigration and visa policies not only discourage 
international tourism and business travelers, but also hinder 
many businesses from finding the workers they need. We need to 
change that.
    In closing, I believe the role of Washington is to create 
the basic market conditions that allow small businesses like 
mine to thrive and compete on a level playing field with our 
larger competitors. We cannot continue to be the job creators 
and innovators that America needs us to be without these basic 
conditions. Affordable quality health care, sensible protective 
regulations, and policies that fuel a strong middle class, this 
is the recipe for small business success.
    Thank you again. I look forward to your questions.
    Chairman CHABOT. Thank you very much.
    We would now like to go into our questioning and, Ms. 
Turner, I will begin with you. I recognize myself for 5 
minutes.
    It is said that a rising tide lifts all boats, and we have 
been seeing some good news lately in a number of areas. We have 
seen the stock market at record highs. We have seen 
unemployment numbers coming down, and productivity gains and 
other positive economic factors lately. What can we do here in 
Washington to ensure that those gains reach the small business 
segment of the American economy?
    Ms. TURNER. Can you hear me okay? I think it is the access 
to capital first and foremost. We have been waiting for such a 
long time in order to be able to expand our companies, to grow 
our businesses. I think the access to capital, especially since 
the economy is strong at this point, that would be the number 
one thing that we could use.
    Chairman CHABOT. And you mentioned that Dodd-Frank has been 
particularly detrimental to that effort to make sure that small 
businesses get more access to capital, is that right?
    Ms. TURNER. I do. I think that has to be reformed.
    Chairman CHABOT. Okay. Thank you very much.
    Ms. Chambers, I will move to you next. This week the House 
is debating H.R. 1101, the Small Business Health Fairness Act, 
which would allow small businesses to band together through 
associations to purchase quality health care for their workers 
and their families, hopefully at a lower cost. You mentioned 
that WIPP, Women Impacting Public Policy, supported such 
measures in the past. Could you explain how policies such as 
the one that we are considering this week could help small 
businesses lower their healthcare costs?
    Ms. CHAMBERS. WIPP has supported----
    Chairman CHABOT. Can you turn the mic on? I am not sure if 
it is on.
    Ms. CHAMBERS. I am sorry.
    Chairman CHABOT. That is all right.
    Ms. CHAMBERS. WIPP has supported association health plans 
for a long time and the idea is that it gives us so much more 
negotiating power because as small businesses we simply cannot 
compete with the negotiating power that big businesses have. So 
if Congress can allow small businesses to join bigger pools, 
especially across State lines, it gives us even more buying 
power.
    Our objectives really are to have choice of plans and lower 
prices. That is our main goal. It is complicated. I think we 
talked about it earlier, Mr. Borris, and the devil I think is 
in the details, but this is important to us.
    Chairman CHABOT. Okay. Thank you very much.
    Mr. Paal, I will go to you next. Could you talk a little 
bit about the nexus of how Obamacare has not only driven up 
costs, especially in your instance. I think you said that your 
premiums have doubled and the deductibles have risen, so 
actually using that has tripled. So even if you have coverage, 
oftentimes you are paying so much out-of-pocket, by the time 
the insurance kicks in, you effectively, arguably do not really 
have health insurance, or at least very good health insurance. 
And it has also raised taxes, Obamacare has, on small business 
owners, and significantly increased regulatory costs. Arguably, 
it is kind of like a triple whammy. Would you address that?
    Mr. PAAL. Sure. Thank you for the question.
    As far as ACA is concerned, one of the biggest challenges 
that it hits us with is we are in this middle ground. We have 
more than 50 FTEs, so we are required to offer health care, but 
we do not have more than 50 full-time employees. And so as a 
result, we get put into large group insurance plans when we 
really only have 15 to 20 employees who actually participate 
with them. So the ratings and the underwriting that is involved 
on our end ends up driving those premiums way up.
    In addition, we happen to own a number of individual, 
standalone, retail flower shops. Most other retail flower shops 
do not hit that threshold of having to provide coverage, so 
most of my competitors are able to offer a little bit more in 
terms of a salary to their employees or prospective employees 
whereas those employees can then go on the exchange and get a 
lesser expensive plan or a subsidy. We are not able to do that 
because we have to offer them the coverage, and if they do not 
take it from us, they do not get the subsidy. So it is a 
vicious cycle that definitely needs some work.
    Chairman CHABOT. Thank you.
    And I do not have a whole lot of time, but I want to go to 
you, Mr. Borris, if I can. In your testimony you did not 
mention any regulations that negatively impact your business. 
Are there any Federal regulations that you do not like?
    Mr. BORRIS. Yeah, so we are a small business. Right? I can 
honestly tell you that I cannot think of a time that I sit at 
my desk and I am tearing my hair out over why do I need to 
comply with this and why do I need to comply with that? Now, it 
just has not really hit me in that way.
    Chairman CHABOT. Okay. Fair enough. The answer basically is 
there are not any that come to mind that you do not like coming 
out of Washington?
    Mr. BORRIS. Correct.
    Chairman CHABOT. Okay. Thank you very much.
    The ranking member is recognized for 5 minutes.
    Mr. SCHNEIDER. Thank you. And again, thank you to the 
witnesses for sharing your experience, your insight. It is so 
important for us to hear what you are dealing with so we can 
understand. Ms. Chambers, as you said, we really can and hope 
to be of some assistance to clear away the obstacles to help 
small businesses succeed.
    As I think, and I come from a small business background, 
having my own business working with other clients in my 
consulting practice, but in my mind there are four big things 
that the businesses really need to succeed. The first we cannot 
help you with. It is the concept. Each of you have your own 
business concept. People come up with their ideas. Some are 
good, some are bad, some will succeed. That is what the market 
should determine. But the other areas I think we can help.
    The second thing I think we need, and you have touched on 
it, is talent. Access to talent. Good people who have the 
skills to come to your businesses, learn your specific 
business, and that I think falls on us to make sure that we are 
investing in education, that we are providing young people the 
skills and lessons they need to go into business to do any 
variety of things and training the next generation of 
entrepreneurs.
    Ms. Turner, as you touched, and I agree with you, the need 
to have access to capital, we all have our ideas. Without the 
capital behind them, whether that is going to get a loan from a 
bank, to be able to reach out to angel investors--and I will 
complement the chairman on his effort of passing in the House 
anyway, the Halos Act, and we need to see that pass in the 
Senate. But capital is crucial.
    It is the fourth thing that I think is most important in 
general for the economy, and that is a stable business 
environment. That comes from sensible regulation that lays out 
the lines. In my mind I use my analogy all the time of a 
bowling alley. Regulations should be the bumpers and the gutter 
to keep the balls from going in the gutter. If they start to 
encroach on the alley and make it more difficult to knock down 
the pins, they have gone too far. If they start exposing the 
gutter to risks, they have gone too far the other way.
    But it is also on taxes, as you touched on, Mr. Paal. It is 
on confidence, knowing what is coming out of this institution 
so small businesses in particular can make the plans. I think 
the reason we have seen small businesses not leading the last 
recovery is because small business owners can make the decision 
to wait another month, another year to do that. So I think that 
is key.
    As I focus on the uncertainty, Mr. Borris, I am going to 
turn to you and part of your last remarks because you talked 
about immigration reform, the need for immigration reform. 
Well, the CBO has said if we pass comprehensive immigration 
reform it would add $2 trillion to our economy. What impact has 
the uncertainty and perhaps the recent executive orders had on 
your business?
    Mr. BORRIS. Yeah. So my entire kitchen staff, right, are 
all immigrant workers, and half my operation staff, 70 percent, 
80 percent of my hourly laborers are from immigrant families. 
And it is this climate of fear that is living in there now. 
Even though, you know, we have I9s, all my guys are legal, but 
I do not know what the story is with their extended families--
parents, brothers, uncles, sisters--and it is an 
extraordinarily uncomfortable thing for them. And to look at 
them and juxtapose to my Caucasian, you know, five-generation 
citizens of the United States, to impose that on them is 
extraordinarily uncomfortable.
    And what we do not know is that if this thing starts to 
turn into tremendous mass deportations, what happens when an 
uncle gets deported and now my guy says, well, I cannot really 
stay here now because I have got to go back home and help him 
out even though I can stay here and be here. I think we all 
know the comprehensive immigration reform is critical to 
getting people out of the shadows, getting people to a point 
where they can earn more money so that they can feel empowered 
that they can negotiate and not feel like they have to be 
afraid with their bosses, feel empowered to work in safe 
working conditions. I mean, it is a train wreck and the way to 
address it is not to----
    Mr. SCHNEIDER. I do not mean to cut you off, but I want to 
turn to the others. If it were possible that across the aisle 
we could come together and come up with a policy to secure our 
borders, to have certainty around immigration law, would it 
have an impact on your business? Mr. Paal?
    Mr. PAAL. Most certainly it would. There is a huge segment 
in the floral growing industry, especially on the West Coast, 
that depends heavily on immigrant labor, and they are 
struggling right now with finding good people and it is an 
issue for us on an ongoing basis. Not me directly, but it is 
the trickledown to me. If they are able to get the flowers 
grown then, then it lessens some of the impact on some of the 
other issues.
    Mr. SCHNEIDER. Ms. Chambers, Ms. Turner?
    Ms. CHAMBERS. For me, not as directly for Red212, but for 
Jambaar, the startup that I am doing, in terms of technology 
expertise and the growth that we are going to need with 
employees, yes, I do think it will.
    Mr. SCHNEIDER. And Mrs. Turner--Ms. Turner?
    Ms. TURNER. Absolutely. We have about 15 immigrant 
employees, and there is that feeling of uncertainty for them. 
Even though they have been through E-Verify and we know that 
they are here, it is the extended families that we worry about 
and the impact that that could have on our company. And they 
are family. Some of them have been with me for 20, 25 years. It 
is a difficult situation and we empathize that they worry about 
this every single day.
    Mr. SCHNEIDER. Well, thank you. My time is expired and I 
yield back.
    Chairman CHABOT. Thank you. The gentleman's time is 
expired.
    The gentleman from Nebraska, Mr. Bacon, is recognized for 5 
minutes.
    Mr. BACON. Thank you. We appreciate our distinguished panel 
for being here today and I associate my comments, too, with Mr. 
Schneider there. I think we do need to find a bipartisan way 
forward on securing the border, but plus, find a better way to 
meet business concerns with immigration. We have got to 
modernize that and find a compassionate way ahead for those who 
are here. So I think we can do that working together.
    My first question is for Mrs. Turner. We had a previous 
testimony here that said that regulations were the top concern 
for small businesses, but it has recently been superseded by 
health care and the ACA and the impacts of the costs. I think 
also going around my district I hear about health care, 
regulations, taxes, access to capital, and also having a hard 
time finding a workforce to fill spots. What would be the top 
one or two things that we should be focusing on out of that 
list?
    Ms. TURNER. You know, I think so much of this is 
regionalized, because what is affecting middle America is 
different for other regions. Every single one of these is 
important. Every single one of these has to be addressed. If I 
were looking at my own company in my narrow part of the world, 
it would be regulatory.
    Mr. BACON. Okay.
    Ms. TURNER. Has a tremendous affect. But having spoken with 
small businesses throughout the company, there is not one thing 
that I would say comes to the top of the list every single 
time. It is a gamut.
    Mr. BACON. So we have got a lot of work to do. That is what 
I am hearing.
    Ms. TURNER. You certainly do.
    Mr. BACON. Okay.
    Ms. Chambers, could you expand a little bit on why it is so 
important for Congress to nullify the blacklisting rule by 
passing H.R. 37?
    Ms. CHAMBERS. I do not know what the blacklisting rule is.
    Mr. BACON. Okay. Okay, well, we come back to that then.
    Are there others?
    Ms. CHAMBERS. Okay. I understand blacklisting contractors. 
WIPP is happy for the repeal that was done.
    Mr. BACON. Okay.
    Ms. CHAMBERS. Blacklisting contractors.
    Mr. BACON. Are there any other regulations we should go 
after with the Congressional Review Act? Or any other 
regulations we need to pull out?
    Ms. CHAMBERS. No. I mean, my focus is on access to capital 
and representing Women Impacting Public Policy.
    Mr. BACON. Okay.
    Ms. CHAMBERS. So our issues are really around parody and--
--
    Mr. BACON. The access to capital focus area. Okay.
    Ms. CHAMBERS. As well as tax reform for small businesses.
    Mr. BACON. And one last question to Mr. Paal. Your 
testimony about the premiums are compelling: double the 
premiums, triple the deductibles. Hard to afford that.
    Mr. PAAL. It is. And where we really see it, you know, it 
hits home. We had my first son 5 years ago, or 5-1/2 years ago, 
and I remember our deductibles then. And we are pregnant with 
our third now and our deductibles are much different and our 
copays are much different this time around. And so you see it 
firsthand in the course of just a couple of years.
    Mr. BACON. I just encountered a recent mom who had a 
$12,000 deductible. Her health care paid not a single penny for 
the delivery of her child, so it did not work for her.
    Could you expand a little bit about the impact of the 
overtime rule and how that has impacted your business? We are 
going to open it up to all four of you.
    Mr. PAAL. Absolutely. It has impacted us tremendously. We 
have a number of, especially our management team, they are all 
salaried employees. And being a somewhat seasonal business, 
Valentine's week, everybody is working. Everybody is working 
every day and we are working long hours. And one of the 
privileges that our staff that were salary-based had enjoyed 
was being able to take some extra time off the next week or the 
next month and still get their full pay. So their cash flow at 
their level was consistent. We had to redesign our whole 
compensation package when those regulations came out, so we 
still have, you know, when I talk about uncertainty, that is it 
in a nutshell right there. We do not know where it is going to 
land.
    Mr. BACON. Right. Mr. Borris, has the overtime rule 
impacted you?
    Mr. BORRIS. Yeah. So what we did with the overtime rule is 
we had to be a little bit thoughtful about how we were 
structuring salaries in the $35,000 to $40,000 range, because I 
do have people who earn in the $35,000 to $40,000 range. And 
our understanding of the overtime rule is that you can create a 
salary based on a workweek larger than 40 hours. Right? As long 
as you are not falling underneath minimum wage requirements. 
Right? For us, we actually have higher minimum wage 
requirements personally in my company than we do in the State 
of Illinois, or sadly at the Federal level. I mean, we have an 
$11 minimum wage as a company minimum wage. So I think that 
some of the conversation on the overtime rule can continue to 
be expanded. I think the intent of it is critical, though, that 
we look at when we are talking about either hourly wages or 
salaried wages that what we are looking at is how do we 
continue to put upward pressure on wages so that we put upward 
pressure and more money circulating in the economy? So while I 
am not necessarily averse to having a deeper discussion on how 
we nuanced the overtime rule, I think the idea behind it is 
important. And when we look at what has happened with salaried 
employees over a 30-year period and we look at the lack of 
purchasing power and then we look at organizations who deeply 
take advantage of people. Right? A kid working at a gas station 
is supposed to be 70 hours a week and because we give him a key 
and tell him he can lock the door, so he satisfies the duties 
test and he is getting paid $22,000 to work 70 hours a week, 
that does not help my local economy.
    Mr. BACON. Well, my time is expired. I want to thank you 
all for your testimony, and I yield back.
    Chairman CHABOT. Thank you. The gentleman yields back. And 
I might note my first job was pumping gas in an Ohio station, 
in Cincinnati, Ohio, and I made $1.25 an hour. I thought I was 
making big money, so.
    Mr. BORRIS. At least you got the $1.25 for every hour you 
worked.
    Chairman CHABOT. That is right. And the job, there are not 
many people who pump gas anymore, other than they used to do it 
at the Exxon station on Capitol Hill on Pennsylvania Avenue 
where it is like $2.10 elsewhere and it is like $5 up there, 
but it is one of the only stations around so you pay it. Sorry, 
I digressed there a bit.
    The gentleman from Pennsylvania, Mr. Evans, who is the 
ranking member of the Subcommittee on Economic Growth, Tax, and 
Capital Access, is recognized for 5 minutes.
    Mr. EVANS. Thank you, Mr. Chairman.
    Mr. Borris, I would like to--the title of this hearing is 
``Making Washington Work for American Small Business'' is the 
title. Then when I go to your testimony, on page 4 you say, 
``Small business owners need policies that keep consumer demand 
strong.'' So what I am trying to figure out is, are we talking 
past each other?
    Because I am listening carefully to what you said. You said 
not tax breaks, not fewer regulations, not less oversight, but 
more customers. So what I am interested in is you said making 
Washington work for small business, and I need you to tell us, 
it does not sound like we are either listening to you on the 
frontline, and I am just curious if anybody else has that same 
view because I thought you were very direct in what you said, 
the name of the game is customer, not that your taxes need to 
be in--not that everything is overregulated. I am just trying 
to reconcile what is being said at the hearing and what you 
were saying.
    So are we missing something? Tell me.
    Mr. BORRIS. Yeah, that is a nice broad-based question.
    Mr. EVANS. Yes, I need this.
    Mr. BORRIS. I think that there is a few areas, right?
    Mr. EVANS. Go ahead.
    Mr. BORRIS. One I touched on is wage growth.
    Mr. EVANS. Right.
    Mr. BORRIS. For Washington to get behind seeing solid wage 
growth and to create conditions that push for that I think is 
really important. I think on tax policy it is really important.
    I think every small business owner at the table would agree 
with me that as a small business, none of us have--do any of 
you guys have five or six tax accountants working for you and 
trying to pick out the loopholes, right? So I think that when 
we look at companies that do not pay their fair share, right, 
when we have, you know, if it is 288 profitable Fortune 500 
companies, 26 paid no Federal income tax last year. So where 
does that money sit? So it sits in their coffers. They are not 
putting it back into the economy.
    We have trillions of dollars expatriated offshore. If we 
could figure out a way to get that back in a fair way and not 
in such a low rate that they are incentivized to do it again 
and again and again and put that money to work in this economy, 
that is going to exponentially help the free flow of capital 
through the economy. For me, it is really about aggregate 
demand, right?
    So when you guys are looking at policies, I would say that 
the test for that is, is this going to stimulate additional 
demand in the economy or is this just going to provide a whole 
boatload of dough that is going to get scraped off the top into 
the pockets of people who do not really need it and not going 
to be flowing through the economy? Without being a policy 
expert, you guys are policy experts, I am just a small business 
owner, but those would be the things that I think would be 
helpful.
    Mr. EVANS. I think you are a better policy expert than 
anybody because you are on the front line. I mean, you are. So 
that is why I wanted to kind of reconcile the hearing title and 
you.
    Mr. Paal, your reaction to the aspect of the recognization 
of the title and are we talking past each other?
    Mr. PAAL. No. I think there has been an atmosphere, as far 
as I have seen, of Washington working for Washington back and 
forth in this and the typical politics that you hear about on 
the news shows and whatnot. I think just physically having this 
hearing makes it very clear consideration that this Committee 
and this Congress is interested in what small business is 
involved in.
    I have had a lot of visits from local representatives back 
in district at a bunch of our different retail locations, and 
it is nice. They walk in, what can we do to help you? And they 
are hearing at that point not just from me as a business owner, 
but also my employees, our delivery drivers, our flower 
designers, and our sales clerks that are working part-time. So 
I applaud having the meeting for sure.
    Mr. EVANS. Ms. Chambers?
    Ms. CHAMBERS. I would echo what Mr. Paal said, that I think 
the very fact that we are having this hearing speaks volumes 
and that I think it really says that you are listening and that 
we are having this back-and-forth, and I think the 
collaboration is what is key. I think the bipartisanship is 
fantastic, but I think that the collaboration and this 
conversation is really important for our businesses.
    Mr. EVANS. Ms. Turner?
    Ms. TURNER. I think you are definitely hearing us. I think 
that, as Mr. Bacon outlined, you have down the main points of 
what it is that is concerning businesses. And so I do, and it 
is a pleasure to be able to come forward and to speak with you 
today because this is the kind of dialogue that is needed. It 
is now your responsibility to then take what our concerns are 
and to put these into policies that are then making a 
difference for each and every one of our small businesses.
    Mr. EVANS. Thank you, Mr. Chairman.
    Chairman CHABOT. Thank you very much. The gentleman's time 
is expired.
    The gentlelady from North Carolina, Ms. Adams, is 
recognized for 5 minutes, and she is the ranking member of the 
Subcommittee on Investigations, Oversight, and Regulations.
    Ms. ADAMS. Thank you, Mr. Chair and Ranking Member, and 
thank you to all the witnesses for your testimony.
    Ms. Chambers, to start, can you speak about what Congress 
can do to proactively help small firms adapt to the current 
levels of lending, which are better today, but still not as 
great as previous session lending numbers?
    Ms. CHAMBERS. Could you repeat that question for me?
    Ms. ADAMS. Can you speak about what Congress can do to 
proactively help small firms adapt to the current levels of 
lending, which are better today, but still not as great as 
previous session lending numbers?
    Ms. CHAMBERS. In terms of the area that I focus on with 
women-owned businesses because the numbers are so small, I 
think as I said in my presentation or in my testimony, 
supporting the various programs, particularly the SBA, 
modernizing the micro-lending programs would be very beneficial 
for women-owned businesses and businesses in general. But until 
women have access to capital for their businesses, I think this 
is an issue that will not go away.
    Ms. ADAMS. Yes, ma'am. Would anyone else like to respond?
    Mr. BORRIS. Yeah, I will jump in.
    Ms. ADAMS. Yes, sir. Go ahead.
    Mr. BORRIS. Yeah, so I think that either between the SBA 
and between looking back at the Community Reinvestment Act, 
right, so that we get more robust enforcement of what was 
originally intended, right? That what we want to do, and I 
think these guys would agree with me, also, we want to open up 
this flow of capital not just for businesses with 500 employees 
and 400 employees, but for businesses with 10 and 20 and 30 and 
50 employees, right? Businesses who are trying to grow from a 
$2 million business to a 4- or $5 million business, and not 
just talking about $50 million and $100 million businesses. 
They might well become $50 million businesses in the future if 
we can help them get over the next leg.
    So that would be my thinking on it. Not so much money going 
into the big banks for the big loans, but pushing money into 
community banks for smaller loans and being able to help small 
business that way.
    Ms. ADAMS. Thank you. To any member of the panel----
    Ms. TURNER. Ms. Adams?
    Ms. ADAMS. Yes? Oh, yes, ma'am. Go ahead.
    Ms. TURNER. I think the repeal of Dodd-Frank would be a 
very good way to begin, so that the community banks would be 
able to lend to small businesses again.
    Ms. ADAMS. Okay. Thank you for your comments.
    With regard to tax reform, what policies are necessary to 
include in a reform package, and which policies would you 
consider a nonstarter with regard to its impact on small 
businesses? Anyone who would like to respond can do so.
    Mr. PAAL. Well, I could tell you and I spoke about it in my 
opening statement. The Border Adjustment Tax would be a real 
deal killer in the flower business. You know, most of our 
flowers come out of either South America or Holland or Canada. 
There is some growing happening in Mexico now. There is just 
not production ability in the U.S. That is all we sell. It is 
not like you say, okay, well, you know, the price of avocados 
is going to go up at the grocery store. That is all we sell in 
our business is flowers. So if that passes through, we cannot 
absorb a 20 percent price increase, and we cannot pass it on to 
our consumer because our customers will simply--they will just 
not buy flowers. They will buy a fruit basket or candy or 
something that is grown domestically. So that hits real big for 
us. And whether there is an exemption for floral agriculture or 
maybe an exemption for small business to a certain threshold 
that would assist other industries as well.
    Ms. ADAMS. Okay. Does anyone else want to comment with a 
few seconds left?
    Ms. CHAMBERS. Yes. I just want to add on that reforming the 
Tax Code to make deductions and credits equitable no matter 
what the structure of the business, especially around pass-
throughs, permanently repealing the estate tax and allowing 
small businesses to pass from one generation to another as you 
talked about, and then simplifying the Tax Code for small 
businesses, as Mr. Borris said, I just want to support that as 
well.
    Ms. ADAMS. Great. Thank you very much. Mr. Chair, I yield 
back.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    The gentleman from Florida, Mr. Lawson, who is the ranking 
member of the Subcommittee on Health and Technology, is 
recognized for 5 minutes.
    Mr. LAWSON. Thank you, Mr. Chairman.
    My question will center around access to capital, and the 
question would be since more credit unions and commercial 
lenders have been getting involved in making loans to minority 
and women-owned business, has that been very beneficial, 
especially for women-owned businesses in the marketplace to 
have greater access to capital? Ms. Chambers, you might want to 
respond to that.
    Ms. CHAMBERS. Well, certainly there has been improvement, 
but we have such a long way to go. Women are still receiving 
only 16 percent of all small business loans, so without making 
much greater strides we are going to be behind our male 
counterparts for a long, long time. So we are going to need to 
continue with this push and think of different programs. The 
idea that in government contracting we have finally reached our 
5 percent quota last year, but it took 16 years to get there. 
So I think that there is a lot of work that needs to be done.
    Mr. LAWSON. Okay. And if I may, and someone else can answer 
it, and this is where they say that they would like to keep the 
government out of the small business situation, should there be 
legislation that requires a financial institution to provide 
resources for minority and women-owned business at a certain 
level?
    Mr. BORRIS. Is that an open question?
    Mr. LAWSON. Yeah.
    Mr. BORRIS. So yes, I think. The CDFI funding that was 
zeroed out in the Trump budget should certainly be restored. 
That is where I would begin, and I would also say that if we 
are looking for where that money comes from into our Federal 
coffers, I know there is going to be a big argument about what 
the rate of repatriation is, but I think we can take one step 
back in that conversation and talk about how we start ending 
deferral to begin with so we do not have to deal with this 
again with trillions of dollars in the future.
    Mr. LAWSON. I have another question that you might have 
responded to earlier. It appears that everyone speaks about 
rebuilding America, you know, and I think about it as 
rebuilding ports, railroads, bridges, and highways. 
Infrastructure improvement is critical to America. Everyone 
talks about it in every political campaign and so forth. Can 
you detail the regional impact of spending, and is that 
critical to small business growth?
    Mr. BORRIS. Sure. I think that for any one of us to look at 
what happened when Dwight Eisenhower made the decision, right, 
to build the interstate highway system, for any of us to 
believe that the business growth that we saw in the 1960s in 
this country, to pretend that had nothing to do with taxpayer 
investment and being able to move goods and services from 
Cincinnati to New York in half the time that they used to move, 
that matters tremendously. And I think the critical question on 
infrastructure investment, though, is when we start granting 
these contracts and we start investing taxpayer dollars, are we 
going to allow companies to pay $6 an hour so that the company 
that has the contract gets to keep all the profit which they 
suck out of the community and take it to their multinational 
headquarters? Or are we going to demand union wages, prevailing 
wage? Are we going to make certain that that money gets spent 
and stays in the pockets of the local communities where the 
infrastructure development is being done? I think that is the 
critical question.
    Mr. LAWSON. Okay. And I will try to be brief on this 
question. When I was in Florida in the Senate, I repealed the 
intangible tax on businesses that are earning less than at that 
time $25,000, you know, because it took probably more money to 
pay the accountant to do the forms than the tax that it was 
paying to the government. Should there be more consideration 
done about repealing some of the other burdens that they have 
on small businesses? Ms. Turner? I only have about 15----
    Ms. TURNER. Absolutely. I totally agree with you that 
changing that outlook will make small businesses flourish and 
quicker. As I stated before, we have been waiting for this to 
take shape and I think it is very important that we move 
forward as quickly as possible. Once we start putting money 
back into the small business community, we are going to see a 
tremendous growth. And if we can hit that 1 percent, that 2 to 
3 percent movement, then we are going to see extraordinary 
things happen.
    Chairman CHABOT. Thank you. The gentleman's time has 
expired. Go ahead.
    Mr. BORRIS. Okay. I would just say I agree. The incubator 
conversation is an important conversation. Right? This is a 
scalpel conversation versus a hatchet. And when we are looking 
at regulations, yes, allowing it to soften on the smallest of 
small businesses so we can incubate them and give them a chance 
to grow makes sense. But to take that and then run that up to 
business that are doing hundreds of millions of dollars and 
letting them be the beneficiaries of those carve-outs because 
we are going to try a one-size-fits-all does not work.
    Chairman CHABOT. Thank you. The gentleman's time is 
expired.
    Just a brief comment from the chair before we adjourn the 
hearing here today. The gentleman mentioned infrastructure and, 
Mr. Borris, you mentioned the interstate highway system. I 
happened to be at a speech last night and the keynote speaker 
was somebody who probably half the people in this room thinks 
is great and the other half loathe. And he gave an interesting 
speech, and a couple of things he mentioned. One thing he 
mentioned was Abraham Lincoln approving the intercontinental 
railroad and he mentioned Eisenhower approving the interstate 
highway system as you just mentioned that. And then he was 
talking about the infrastructure bill and the importance of 
that. I do not know if he was talking about putting himself in 
the same category as those other two presidents, probably in 
his mind yes, but it was interesting to hear your question, 
your response, and think of what I just heard last night.
    But in any event, I think this hearing has been very 
helpful, and there is a whole lot of things going on. Tomorrow 
we are supposed to have a key vote on one of the issues that we 
touched on: health care. Whether that vote will happen or not 
remains to be seen. It depends on whether the votes are there, 
I think, or not, and maybe that is the reason some members are 
not here; they are being worked on. But there is a lot of key 
issues, like that one tomorrow on health care.
    Regulations, you know, are a key issue that affect small 
business folks. Tax reform that we touched upon, access to 
capital and Dodd-Frank, a whole range of things are very 
important issues, and I think this panel was very, very helpful 
in letting our members and the members that we will communicate 
with that did not have the ability to be here today to let them 
know what the small business community thinks about these 
issues and what kind of changes that we ought to be making. Not 
just because it is relevant the small business community, but 
they are paramount as far as this Committee is concerned.
    So I want to thank you for shedding light on each of these 
topics. You all did a great job, I think. Whether you were 
called by the majority or the minority really, I think you are 
all very, very good. So thank you very much for that.
    I would ask that all members have 5 legislative days to 
submit statements and supporting materials for the record. And 
if there is no further business to come before the Committee, 
we are adjourned. Thank you very much.
    [Whereupon, at 12:09 p.m., the Committee was adjourned.]
                            A P P E N D I X

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    The U.S. Chamber of Commerce is the world's largest 
business federation representing the interests of more than 3 
million businesses of all sizes, sectors, and regions, as well 
as state and local chambers and industry associations. The 
Chamber is dedicated to promoting, protecting, and defending 
America's free enterprise system.

    More than 96 percent of Chamber member companies have fewer 
than 100 employees, and many of the nation's largest companies 
are also active members. We are therefore cognizant not only of 
the challenges facing smaller businesses, but also those facing 
the business community at large.

    Besides representing a cross-section of the American 
business community with respect to the number of employees, 
major classifications of American business--e.g., 
manufacturing, retailing, services, construction, wholesalers, 
and finance--are represented. The Chamber has membership in all 
50 states.

    The Chamber's international reach is substantial as well. 
We believe that global interdependence provides opportunities, 
not threats. In addition to the American Chambers of Commerce 
abroad, an increasing number of our members engage in the 
export and import of both goods and services and have ongoing 
investment activities. The Chamber favors strengthened 
international competitiveness and opposes artificial U.S. and 
foreign barriers to international business.
    Thank you Chairman Chabot, Ranking Member Velazquez, and 
Members of the Committee for the opportunity to speak with you 
today. My name is Maxine Turner and I am the Founder of Cuisine 
Unlimited Catering & Special Events in Salt Lake City, Utah. I 
am here representing the U.S. Chamber of Commerce of which I am 
a Board Member and chairperson of the Small Business Council. I 
am honored to speak before you today regarding the critical 
issues that affect or small business members.

    The Chamber is the world's largest business federation. It 
represents the interests of over 3 million businesses of all 
sizes, sectors, and regions, as well as state and local 
chambers and industry associations. The majority of Chamber 
members are small firms. In fact, 96 percent of Chamber member 
companies have fewer than 100 employees and 75 percent have 
fewer than 10. Our Small Business Council works to ensure the 
views of small business are considered as part of the Chamber's 
policy-making process.

    My company, Cuisine Unlimited, was established more than 37 
years ago offering off-premise catering. Today, we are a 
second-generation family owned business with 120 full and part-
time employees offering full catering and events services in 
our local community, nationally and internationally. We have 
catered events throughout the country and have been involved 
with seven Olympic games. We were the exclusive caterer at USA 
House for the United States Olympic Committee in Athens and 
Torino.

    As chair of the Small Business Council, I have met with 
hundreds of small business owners to better understand the U.S. 
small business landscape. Over the past decade, there have been 
many obstacles to overcome, including the worst recession since 
the Great Depression and a multitude of federal mandates coming 
from Washington, DC that have challenged our very existence. We 
want to grow our companies and contribute to the success of our 
communities. We find, however, roadblocks to that opportunity. 
We want to work with you to change that course so that our 
businesses have the resources to expand, create new jobs, and 
have a positive impact on our economy.

    Sometimes it is overlooked that small businesses comprise 
99 percent of all U.S. employer firms and provide almost half 
the private-sector jobs.\1\ An individual employer may seem 
small, but the collective economic power of small business is 
very large. Roughly 50 percent of small businesses are women-
owned and the small business sector is a job-creation machine, 
accounting for 2/3 of the net new jobs over the past two 
decades.\2\ These facts reinforce the importance of policies 
that encourage and help sustain our businesses so we may invest 
in our future and that of our country.
---------------------------------------------------------------------------
    \1\ Office of Advocacy, U.S. Small Business Administration, 
Frequently Asked Questions (June 2016), available at: https://
www.sba.gov/sites/default/files/advocacy/SB-FAQ-
2016--WEB.pdf.
    \2\ Id.

    As chair of our Small Business Council, I have the 
opportunity to hear from our members on a regular basis. Their 
stories are compelling and one cannot help but empathize with 
---------------------------------------------------------------------------
the difficulties faced by these business owners.

    Access to Capital

    The challenge of obtaining capital has been a consistent 
theme for small businesses. It is, however, the very 
fundamental component that drives innovation and business 
growth. Small businesses do not have large cash flows, cash 
reserves, or emergency funding. Therefore, access to capital 
plays a paramount role in economic growth and job creation.

    While passage of the Dodd-Frank law may have calmed fears 
of another financial meltdown, an unintended consequence of the 
law has been limiting small businesses' access to capital.

    Natalie Kaddas is an example of the unintended consequences 
of Dodd-Frank. Kaddas Enterprises is an active member of the 
Salt Lake Chamber of Commerce and I met Natalie through our 
mutual leadership in Salt Lake City. Kaddas is a 50-year old 
plastic molding manufacturing firm and a few years ago they 
secured an international contract for their 
BirdguarDTM product. Natalie thought this incredible 
opportunity was the time to take an entrepreneurial leap 
forward and build a new facility. They immediately filled out 
bank applications, and worked with a realtor and contractor to 
begin the process. Hopes were dashed when three banks with 
Small Business Administration (SBA) guarantees turned them 
down. Land was pledged, collateral offered, but like so many 
others, Kaddas didn't make it high enough up the point system 
for any bank to consider the loan.

    Personally, my company faced the exact same problem. We 
were awarded the exclusive contract for all food and beverage 
services at our new performing art center that opened in 
November 2016. It required that we make the investment to equip 
three on-site kitchens and all the necessary small wares. This 
annual multi-million dollar contract gave us the opportunity to 
expand. We would increase from a staff of 50 to well over a 
hundred within a few months. We met with three banks and our 
regional SBA representative. We have had four very successful 
loans through SBA and all repaid ahead of schedule. The bottom 
line, all three banks turned us away. How could we fulfill our 
obligation to this contract without financial backing?

    We looked for other sources of revenue. We learned of an 
economic development grant offered by our city. We applied and 
received 1/3 of the necessary funds needed. We made due, 
equipping only one kitchen and pulling used small wares from 
our catering operation. We halted a remodel to our main 
catering facility to accommodate the additional inventory and 
servicing the theater. We used much of our profits from 2016 to 
purchase the most critical items with the hope that 2017 would 
be a good enough year to see us through any additional 
challenges. It left us with little working capital and no 
reserves. It simply should not be this hard for businesses to 
get access to the capital they need.

    Competitive Workforce

    In his State of American Business address, the President & 
CEO of the U.S. Chamber of Commerce, Tom Donohue, expressed his 
concern regarding a competitive workforce. He stated, ``A well-
trained, well-educated workforce is also critical to driving 
economic growth--and to making sure all Americans have a 
genuine opportunity to share in that growth. ...[W]e need to 
help young people, as well as adults who need retraining, 
obtain credentials--degree, certificate, or otherwise--that are 
valued in the labor market. We need to encourage work-based 
learning opportunities and develop more partnerships between 
local business communities and local educators.'' \3\
---------------------------------------------------------------------------
    \3\ Tom Donohue, 2017 State of American Business Address, U.S. 
Chamber of Commerce (January 11, 2017), available at: https://
www.uschamber.com/speech/2017-state-american-business-address.

    The lack of a skilled workforce is challenging for all 
businesses no matter the size. For small businesses, access to 
job seekers with the skillset needed is a tedious and time-
consuming task. When the Goldman Sachs 10,000 Small Business 
initiative partnered with Babson College to study small 
business issues, they discovered that over 70 percent of small 
businesses find it difficult to hire qualified employees.\4\ 
The main reason cited was that potential candidates lack the 
requisite skillsets.\5\
---------------------------------------------------------------------------
    \4\ Babson College, The State of Small Business in America 2016 
(June 24, 2016), available at: http://www.goldmansachs.com/citizenship/
10000-small-businesses/US/news-and-events/babson-small-businesses/
multimedia/babson-state-of-small-business-in-america-report.pdf.
    \5\ Id.

    I commend the U.S. Chamber of Commerce and its efforts to 
address these issues. A priority for the Chamber is to improve 
the workforce system by working with Congress to reauthorize 
the Carl D. Perkins Career and Technical Education Improvement 
Act of 2006. The law's reauthorization will help ensure 
alignment between career and technical education (CTE) and 
other workforce development laws, such as the Workforce 
Innovation and Opportunity Act. Also, reauthorization will 
continue the strong emphasis of developing CTE programs with 
employer input, that reflect regional labor market needs, and 
that are relevant and meaningful for students by providing them 
with a path to a postsecondary degree or certificate or to 
---------------------------------------------------------------------------
high-skilled, high-paying jobs.

    Another Small Business Council member, Ashok Krish, is a 
good example of how small tech firms are struggling to keep up 
with staffing needs. Ashok is the owner of Kaizen Technologies 
in Edison, New Jersey. There are over 3,000 IT firms in the 
tri-state area and his needs for highly skilled workers cannot 
be met without a reliance on foreign professionals who can work 
for him under the H-1B Visa program. Like many small business 
owners, Ashok works with his state's labor department and 
assists in training programs for those returning to the 
workforce. Even with his networking, good will, and resources 
devoted to training potential hires, Ashok needs to utilize the 
H-1B Visa program so he can fill the technical positions he has 
available to meet the growing demand for these skills.

    Many small businesses have partnered with trade schools 
offering their students paid internships. Large corporations 
are offering recent high school graduates good pay with on-the-
job training with a guarantee of a high-paying job upon 
completion of their education. Small business owners are 
feeling the pressure that their future workforce will no longer 
be available.

    Regulations

    A supportive regulatory environment is essential to protect 
the general public and help guide sound business practices. 
Over regulation is burdensome and the recent upsurge in 
regulations over the past several years has left business 
owners overwhelmed and concerned.

    As noted by J.D. Foster, Chief Economist for the U.S. 
Chamber of Commerce, ``Regulations have costs that go far 
beyond the simple calculations presented. They also create 
uncertainty among affected businesses as they wait for the 
regulations to come out, become final, and then become 
internalized within the business. Perhaps even more important, 
when businesses are subject to such an onslaught of regulations 
in complete disregard to the economic damage they inflict, and 
especially in combination with other policies such as the 
administration's enacted and proposed anti-growth tax policies, 
the net result is to create at least the appearance of an 
antagonistic attitude toward businesses. Businesses can then 
become overly cautious and defensive and these consequences 
appear in the declining business investment in [the middle two 
quarters of 2016].'' \6\
---------------------------------------------------------------------------
    \6\ J.D. Foster, Declining Labor Productivity; Both a Symptom and a 
Warning, U.S. Chamber of Commerce, Above the Fold (August 11, 2016), 
available at: https://www.uschamber.com/above-the-fold/declining-labor-
productivity-both-symptom-and-warning.

    The Chamber has heard loudly from its small business 
members about the problems with the torrent of federal 
regulations emanating from Washington, DC. Research conducted 
by the U.S. Chamber of Commerce Foundation probes into the 
costs of red tape on small business and spells out how the $1.9 
trillion annual cost of federal mandates is a drag on the 
American economy. The Foundation study includes a survey of 
leaders from local chambers of commerce who are alarmed by the 
slump in new business startups and insist that federal 
regulations are largely to blame.\7\
---------------------------------------------------------------------------
    \7\ Michael Hendrix, Regulations Impact Small Business and the 
Heart of America's Economy, U.S. Chamber of Commerce Foundation, Above 
the Fold (March 14, 2017), available at: https://
www.uschamberfoundation.org/blog/post/regulations-impact-small-
business-and-heart-americas-economy.

    I am proud of the members of the Chamber's Small Business 
Committee for voicing concerns to agencies and to Congress 
about problems with red tape. From the overtime rule to the 
fiduciary rule to minimum wage thresholds and problems with the 
Affordable Care Act, we have worked with policy committees at 
the Chamber and have testified before your Committee and others 
to try and bring some ``Main Street common sense'' to 
---------------------------------------------------------------------------
regulatory policy decisions here in our nation's capital.

    I also greatly appreciate this Committee's work to address 
the problems associated with unnecessary, duplicative, or 
excessive federal red tape by guaranteeing that small business 
stakeholders like me have a place at the table when regulatory 
decisions are made. That is the concept embodied in H.R. 33, 
the Small Business Regulatory Improvements Act that passed the 
U.S. House of Representatives. I hope the Senate takes up the 
measure soon.

    Closing Remarks

    In closing, Tom Donohue, in his January State of American 
Business Address, said, ``if we are able to move our economy 
from 2 percent growth to 3 percent growth, that's not a one 
percent increase in our performance--it's a 50 percent 
increase. Yet ultimately, growth is not about numbers. Growth 
is about people. Increasing our growth rate 50 percent or more 
would have an extraordinarily positive impact on jobs, incomes, 
and opportunities--not just for the few, but for the many.'' 
\8\
---------------------------------------------------------------------------
    \8\ Tom Donohue, 2017 State of American Business Address, U.S. 
Chamber of Commerce (January 11, 2017), available at: https://
www.uschamber.com/speech/2017-state-american-business-address.

    New opportunities for entrepreneurs, beginning with tax 
reform, regulatory reform, and other priorities, would result 
in an economic vigor that would benefit every family across 
this country. A health care program that meets the needs of our 
citizens with reasonable costs would spark new optimism. We 
understand the serious work that must be done to solve many of 
these issues. We are here to support and work with you to 
---------------------------------------------------------------------------
stroke an economy where opportunities abound.

    Thank you for the opportunity to speak with you today and I 
look forward to any questions you may have.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Good morning. Chair Chabot, Ranking Member Velazquez and 
distinguished Members of the Committee, thank you for the 
opportunity to testify. My name is Anne Chambers, and I am the 
owner of two businesses in Cincinnati, Ohio - Red212, an 
independent content strategy agency that offers digital, 
traditional, and cultural solutions, and Jambaar, a video 
creation company providing data and technology for business 
growth.

    Today, I am here representing Women Impacting Public Policy 
(WIPP), an organization of which I am a member. WIPP is a 
national nonpartisan organization advocating on behalf of women 
entrepreneurs - strengthening their impact on our nation's 
public policy, creating economic opportunities, and forging 
alliances with other business organizations.

    First, let me thank the Committee for holding this hearing. 
WIPP is appreciative of the bipartisan efforts of this 
Committee to advance the agenda of women entrepreneurs 
including accessing capital, accessing federal markets, and 
providing a business-friendly environment.

    Few topics are as timely as today's hearing: Making 
Washington Work for America's Small Businesses, as women 
business owners are a strong economic force that make up a 
third of all American businesses. We are growing at a rate four 
times the rate of male owned firms, and contribute over $1.6 
trillion dollars to the nation's economy.\1\
---------------------------------------------------------------------------
    \1\ 10 Million Strong: The Tipping Point for Women 
Entrepreneurship: 2015 Annual Report. National Women's Business Council 
(2015).

    To provide information on the issues most important to 
women entrepreneurs, WIPP has prepared an economic blueprint 
which sets a bold, comprehensive set of public policy 
expectations on behalf of the women's entrepreneurship 
community. The Economic Blueprint expresses our voice and our 
interests regarding the pressing business challenges that 
require action by our elected officials. My testimony outlines 
---------------------------------------------------------------------------
many of the blueprints core principals.

    Economy

    Government and private sector efforts should be focused on 
increasing investments that drive economic growth. Policymakers 
are responsible for ensuring the business environment is 
conducive to growth and that the federal government is a wise 
steward of tax payer dollars.

    1) Investment in Entrepreneurship Pays Off

    Over 36% of American businesses are women-owned, a segment 
growing at four times the rate of men-owned businesses.\2\ 
Critical support for these entrepreneurs includes access to 
credit, access to the federal sector and access to training and 
counseling. Doing so maximizes their already sizable impact: 
contributing $1.6 trillion annually to the economy and 
employing nearly 9 million Americans.\3\
---------------------------------------------------------------------------
    \2\ Id.
    \3\ Id.

    2) Provide Women-Owned Businesses with Certainty in 
---------------------------------------------------------------------------
Economic Policy and Regulations

    Federal regulations cost businesses just under $10,000 per 
employee annually, with the annual total cost burden on the 
typical U.S. business coming in at a $233,182.\4\ This problem 
is exacerbated by the government's inability to provide long-
term policies on which businesses can rely. Whether it is the 
continued threat of government shutdown in the annual budget/
debt ceiling debate, steep spending cuts across the government, 
or even retroactive tax credits, women entrepreneurs are often 
left to guess at government outcomes affecting their 
businesses.
---------------------------------------------------------------------------
    \4\ W. Mark Crain and Nicole V. Crain, ``The Cost of Federal 
Regulation to the U.S. Economy, Manufacturing and Small Business,'' 
National Association of Manufacturers (September 2014).

    WIPP appreciates the support of this committee to ease the 
regulatory burden on small businesses. In particular, we would 
like to thank Members of the Committee for their support of the 
---------------------------------------------------------------------------
following legislation:

    H.J. Res 37, which nullifies the Federal Acquisition 
Regulation (FAR) contractors blacklisting rule. While the 
intent of the rule, to keep bad actors from doing business with 
the government, is good, the execution was too burdensome for 
contractors.

    H.J. Res 83, which nullifies the Department of Labor (DOL) 
rule that would enable the agency to cite employers for record-
keeping violations up to five years old.

    The Regulatory Accountability Act (H.R. 5), which would 
strengthen the Small Business Administration (SBA) Office of 
Advocacy and allow for the issuance of smarter, less burdensome 
regulations that consider the direct economic effects on small 
businesses.

    The Regulations from the Executive in Need of Scrutiny 
(REINS) Act (H.R. 26), which would send new rules that will 
have a significant impact on the economy to Congress for an up 
or down vote before they can be implemented.

    Tax

    A Congressional tax overhaul should include an equitable 
reform of tax rates for all businesses. Given that 90% of all 
businesses in the U.S. are pass-through, entities, reform 
should address the individual as well as the corporate tax 
rate.\5\ On the Federal level, pass-through entities are 
subject to a top individual tax rate of 43.4% and up to an 
additional 13.3% for state and local taxes.\6\
---------------------------------------------------------------------------
    \5\ Scott Greenberg, ``Pass-Through Businesses: Data and Policy,'' 
Tax Foundation, (January 17, 2017).
    \6\ Id.

---------------------------------------------------------------------------
    WIPP supports:

           Reforming the tax code to make deductions 
        and credits equitable no matter what the structure of 
        the company

           Permanently repealing the estate tax and 
        allowing small businesses to pass from one generation 
        to the next

           Simplifying the tax code for small 
        businesses to reduce the imbalanced cost of compliance 
        versus large businesses

    Access to Capital

    Capital is the lifeline of business and the ability to 
secure capital is often the determinant of an entrepreneur's 
opportunity to start or grow a business. For women, however, 
accessing capital continues to be difficult. Women-owned 
businesses ask for less funding - on average, $35,000 dollars 
less than male-owned counterparts.\7\ Yet, women receive just 
16% of all small business loans made each year.\8\ A 
Congressional report on women entrepreneurs found that women 
only receive 4% of all commercial loan dollars.\9\
---------------------------------------------------------------------------
    \7\ Jared Hecht, ``State of Small Business Lending: Spotlight on 
Women Entrepreneurs,'' Fundera Ledger (September 6, 2016).
    \8\ Id.
    \9\ U.S. Senate Committee on Small Business and Entrepreneurship, 
Majority Report, 21st Century Barriers to Women Entrepreneurship (July 
23, 2014).

    WIPP's annual membership survey regularly finds that women 
must make multiple attempts to secure bank loans or lines of 
credit - with a full 40% never succeeding. Yet, women make up 
one-third of business owners, generating more than $1.6 
trillion annually in receipts, and growing at 1.5 times the 
rate of average businesses.\10\
---------------------------------------------------------------------------
    \10\ Supra, note 1.

    In response to this crisis of capital, WIPP proposes the 
following policy-based solutions to spur lending to fuel the 
---------------------------------------------------------------------------
innovation and success of women entrepreneurs.

    1) Changing the Capital Infrastructure

    Simplify Intellectual Property Protections

    Traditional and alternative investors are increasingly 
interested in the intellectual property (IP) value of companies 
seeking funds. Women entrepreneurs, however, lag significantly 
behind male counterparts in filing patents.\11\ Additionally, 
simplifying the IP patent process for entrepreneurs will 
catalyze interest in investment smaller firms.
---------------------------------------------------------------------------
    \11\ Margaret E. Blume-Kohout, ``Understanding the Gender Gap in 
STEM Fields Entrepreneurship,'' SBA Office of Advocacy (October 2014).

---------------------------------------------------------------------------
    Re-think Credit Scores

    Lending decisions relying on credit scores, employment 
history and income are undermined by the many studies that show 
women lag behind male counterparts in pay.\12\ Beyond pay 
discrepancy, antiquated scoring models disproportionately 
hinder women entrepreneurs seeking loans.
---------------------------------------------------------------------------
    \12\ The Simple Truth About the Gender Pay Gap, American 
Association of University Women (2017).

    FICO introduced in 2014, and adopted in 2016, an 
alternative credit scoring system that would allow up to 15 
million previously ``unscorable'' Americans to be scored based 
on alternative data. This includes payment histories, utility 
bills, cable bills, cellphone bills, and public record 
information (e.g., address history). This alternative scoring 
model may also help give lower lending rates based on a higher 
credit score. These modernizations in the credit industry hold 
great promise for women entrepreneurs and should be utilized in 
---------------------------------------------------------------------------
government lending programs.

    Develop Female Fund Managers through ``Emerging Managers'' 
SBIC Program

    Venture capital (VC) continues to be elusive to women who 
need it. Less than 10% of overall VC funding goes to women-
owned companies.\13\ Data from Small Business Investment 
Companies (SBICs) licensed by the SBA, show women receive only 
3% of investments.\14\ Few fund managers are women. In a 
classic ``chicken and egg problem,'' many women cannot gain the 
requisite portfolio managing experience to become a fund 
manager, leading to a cyclical exclusion of women managers--
ultimately preventing women from lending to women.
---------------------------------------------------------------------------
    \13\ JMG Consulting, LLC & Wyckoff Consulting, LLC, Venture 
Capital, Social Capital, and the Funding of Women-led Businesses, SBA 
Office of Advocacy (April 2013).
    \14\ Annual Report Fiscal Year 2014, The Small Business Investment 
Company Program (2014).

    Creating an ``Emerging Managers'' track in the SBIC program 
and allowing these managers to engage in equity-based financing 
would help develop a generation of female fund managers, who in 
---------------------------------------------------------------------------
turn would increase the VC opportunities for women-owned firms.

    Tax Incentives for Angel Investors

    According to the Angel Capital Association, an estimated 
300,000 people have made an angel investment in the last 
several years.\15\ The same estimates found a potential of 4 
million investors nationwide. Incentivizing this kind of 
capital should be a priority.
---------------------------------------------------------------------------
    \15\ FAQ: The Value of Angel Investors and Angel Groups, Angel 
Capital Association (2013).

    More than half of U.S. states offer tax incentives for 
angel investors.\16\ Creating a federal tax credit mirroring 
state models, would increase angel investment at the critical 
early stage, such as Connecticut's. Federal support could 
include: grants, matches, or a dedicated fund. Additionally, to 
the extent possible, tax credits could be designed to 
incentivize angel investment in women-owned businesses.
---------------------------------------------------------------------------
    \16\ State Angel Investor Tax Incentive Programs, Angel Capital 
Association (accessed March 16, 2017).

---------------------------------------------------------------------------
    2) Supporting Small Lending Institutions

    Ending a ``One-size-fits-all'' Approach to Regulation

    Currently, banks and credit unions of all sizes largely 
face the same requirements under Dodd-Frank reforms. Small 
regional and community banks have the highest approval rate for 
small business loans. For example, community banks lent $2.6 
trillion in loans to consumers, small businesses and the 
agricultural community.\17\ Yet, community banks have struggled 
with compliance and the regulatory environment that allows them 
to lend to small businesses. Congress should enact legislation 
to address the regulatory relief needed for smaller lending 
institutions.
---------------------------------------------------------------------------
    \17\ Independent Banker 2017 Media Guide, Independent Community 
Bankers of America (2017).

---------------------------------------------------------------------------
    Lift the Credit Union Lending Cap

    A cap limits most credit unions to lending no more than 
12.25% of their assets to small businesses.\18\ Credit unions 
could lend an additional $16 billion to small businesses if 
Congress increased the statutory cap on credit union business 
lending.
---------------------------------------------------------------------------
    \18\ H.R. 1151, 105th Cong. (1998).

---------------------------------------------------------------------------
    3) Strengthening Government Investment

    Accelerate SBIR Commercialization

    Innovative products are developed for government use 
through the Small Business Innovation Research (SBIR) program, 
which has three phases. Federal support generally ends after 
the second phase of meeting the government needs. The 
Department of Defense (DoD) has successfully utilized the Rapid 
Innovation Fund (RIF) to commercialize SBIR technology. A RIF 
fund should be created at all federal agencies conducting 
research and development, to enable the government to purchase 
innovative products and services from small businesses. 
Additionally, agencies could also model the third stage 
commercialization of SBIR products on a public-private 
partnership to bring a pipeline of innovative products - 
already proven for government use - to market.

    Modernizing the SBA Microloan Program

    Women are the biggest users of loans under $50,000, 
accounting for 45.2% of loans made through the SBA Microloan 
Program in Fiscal Year 2016.\19\ Not only should Congress 
continue to fund this program, they should also modernize it. 
WIPP looks forward to working with this Committee to remove 
limitations on technical assistance and allow for funds to be 
distributed more effectively.
---------------------------------------------------------------------------
    \19\ U.S. Congressional Research Service, Small Business 
Administration Microloan Program (R4 1057, Dec. 6, 2016) by Robert Jay 
Dilger.

    Provide Adequate Resources for Financial & Business 
---------------------------------------------------------------------------
Counseling

    Obtaining assistance and coaching is the first key step in 
the capital access process. Businesses that receive assistance 
have an 80% success rate, compared to the 50-80% mortality rate 
for small businesses overall.\20\
---------------------------------------------------------------------------
    \20\ Briding the ``Pioneer Gap'': The Role of Accelerators in 
Launching High Impact Enterprises, Aspen Network of Development 
Entrepreneurs (accessed March 21, 2017).

    Congress should adequately support organizations such as 
Women's Business Centers, Small Business Development Centers, 
and other non-profits that provide financial counseling and 
prepare women to obtain capital. Traditionally funded by the 
Small Business Administration, the Department of Agriculture, 
and the Department of Treasury, investing in these programs 
will ensure that business owners receive the coaching they need 
---------------------------------------------------------------------------
to be a part of the 80% of businesses that succeed.

    WIPP appreciates the efforts of this committee to enable 
women entrepreneurs to secure the capital necessary to start 
and expand businesses. We look forward to working with this 
Committee to make changes necessary to support all 
entrepreneurs.

    Procurement

    In FY2015, for the first time, 5.06% of all government 
contracts were awarded to women-owned businesses.\21\ While 
reaching the contract goal is certainly a milestone, a report 
issued by the U.S. Department of Commerce showed that women-
owned businesses are still 21% percent less likely than male 
counterparts to be awarded a federal contract.\22\ Below are 
WIPP's suggestions to correct that inequity.
---------------------------------------------------------------------------
    \21\ SBA Press Release: Federal Government Breaks Contracting 
Record for Women-Owned Small Businesses (March 2, 2016) available at 
https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-
advisories/sba-federal-government-breaks-contracting-record-women-
owned-small-businesses.
    \22\ David N. Beede, Robert N. Rubinovitz, Utilization of Women-
Owned Business in Federal Prime Contracting, Report Prepared for the 
Women-Owned Small Business Program of the Small Business Administration 
(December 31, 2015).

    1) Ensure Acquisition Reforms Support Women-Owned 
---------------------------------------------------------------------------
Businesses

    Last year, WIPP published a report, Do Not Enter: Women 
Shut Out of U.S. Government's Biggest Contracts. The report 
showed that women have limited opportunities to win some of the 
government's largest contracts, also known as Multiple Award 
Contracts (MACs). We Urge Congressional action to require the 
SBA to conduct a comprehensive study on the participation of 
all small businesses on MACs. WIPP will work to ensure that 
agencies structure MACs to include all socio-economic groups, 
including women.

    The continued effort to implement broad reforms in 
government procurement has not fully taken into consideration 
the damaging impact on small businesses. WIPP urges Congress to 
ensure that procurement reforms, including government-wide 
acquisition initiatives like category management, take into 
consideration impacts on government contractors, while also 
supporting the government's fundamental goal of getting ``best 
value'' in federal procurement.

    2) Adequately Support and Train the Contracting Workforce

    Procurement professionals struggle to keep up with changes 
to acquisition policy. Often these changes are designed to 
benefit small, minority, or women-owned businesses. New 
contracting policies, like sole source authority in the WOSB 
Program, should be explained to the government acquisition 
workforce to ensure changes passed by Congress are fully 
utilized by federal buyers.

    3) Sole Source Parity

    In 2015, WIPP pressed for--and achieved--the swift 
implementation of sole source authority to the WOSB Procurement 
Program. The WOSB sole source is limited to contracts valued at 
$6.5 million or less for manufacturing and $4 million or less 
for all other procurements.\23\ While the WOSB sole source was 
being finalized, the amount for manufacturing sole source was 
increased from $6.5 million to $7 million for other socio-
economic groups. We urge the Committee to ensure that WOSB sole 
source for manufacturing is also raised to $7 million.
---------------------------------------------------------------------------
    \23\ 80 C.F.R. Sec. 251 (2015).

---------------------------------------------------------------------------
    Healthcare

    Small businesses face higher administrative and premium 
costs for health insurance. This puts women entrepreneurs at an 
inherent disadvantage, as health insurance is an important 
benefit to attract and retain employees. Congress and the 
Administration should implement the healthcare reforms 
targeting this inequity.

    1) Implement a Strong Pooling Mechanism for the Small Group 
Market

    The Affordable Care Act (ACA) established SHOP exchanges, 
but only on a statewide basis. Prior to the ACA, WIPP supported 
the concept of Association Health Plans (AHPs), which would 
have allowed small businesses to pool their buying power 
through associations in order to purchase healthcare across 
state lines. While WIPP supported the mechanism of state 
exchanges in the ACA, WIPP urges Congress to consider 
structuring the purchasing pools to maximize small business 
participation by revisiting the ability to shop across state 
lines.

    2) Define Work Weeks as 40 hours

    The Affordable Care Act defined a full-time worker as 
working thirty hours a week. The definition matters for 
defining whether a business is exempt from the employer mandate 
(under 50 FTEs is exempt). WIPP supports efforts to define the 
workweek traditionally, as forty hours. When revising health 
care legislation, WIPP urges Congress to define the workweek as 
40 hours, if the employee mandate is retained.

    3) Allow Health Insurance Deductions for the Self-Employed

    WIPP supports reforming the tax code to make deductions and 
credits equitable, no matter what the structure of the company.

    WIPP looks forward to working with Congress to ensure that 
any reform to health care addressed challenges for women 
business owners.

    Conclusion

    Opportunities for the nation's ten million women 
entrepreneurs have never been stronger, but challenges still 
remain. WIPP's economic blueprint outlined in this testimony, 
provides solutions to improve in a number of key areas 
including: tax, access to capital, health care, and 
procurement. This Committee has always acted in a bipartisan 
manner to support women entrepreneurs and we appreciate your 
interest in our input, making sure that the challenges of women 
entrepreneurs are considered.

    Thank you for the opportunity to testify and I am happy to 
answer any questions.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Chairman and distinguished Members, thank you for 
inviting me to present testimony before the Committee regarding 
my company.

    I am a fourth generation florist. In 1923, my great-
grandfather opened a flower shop and greenhouses outside 
Baltimore where he grew and sold flowers and plants. My 
grandparents took over the business in the 1950's and ran it 
until my parents took over in the 1970's.

    When I joined the business in a full-time capacity in 2002, 
our family owned two retail flower shops and had just under 20 
total employees, of which 8 were considered full-time. Soon 
thereafter, I realized there was an opportunity to grow our 
business by acquiring additional locations. In 2007, I 
purchased my first location and have continued to acquire 
retail flower shops.

    In 2009, we expanded beyond traditional retail to include a 
wholesale florist and import division. Last year my company 
employed over 180 people and operated at 12 different locations 
in Maryland and New Jersey, including my great-grandfather's 
original location outside Baltimore.

    My company employs about 90 people on any given day--about 
25 full-time and 65 part-time. Seasonal increases for the peak 
periods of Valentine's Day, Mother's Day, and Christmas will 
almost double our daily workforce.

    Our operation is multi-channel--we service import, 
wholesale, and drop-ship segments of the floral industry. 
However, our main street retail existence remains our largest 
presence within the flower business. Through our local brands, 
we deliver smiles to the faces of nearly 100,000 people each 
year. Our company receives numerous awards every year at both 
the local level as well as the national level.

    Our employees are the heart of our business. They are the 
ones who comfort grieving families, share hugs with new 
grandparents, and see true love between couples preparing for 
weddings. We have always taken care of our employees.

    We were offering health care decades before Affordable Care 
Act (ACA) required us to. We established a company-sponsored 
retirement plan when we realized that Social Security might not 
be enough for our retirees. We have a paid leave program that 
is extremely competitive for retail business and nearly unheard 
of in the floral industry.

    As a result, we have many valued employees who have made a 
lifelong career with us. It is important to note that our 
company attracts talent by offering competitive wages and 
benefits because we want to, not because we are forced to. 
Having the opportunity to set ourselves higher than required 
allows us to maintain a competitive employment environment.

    While the overall economy is certainly in better shape than 
it was several years ago, it is important to understand that 
our industry and small businesses all over the nation are still 
experiencing significant challenges which are preventing 
entrepreneurs from fully attaining the American Dream.

    Since several years have elapsed since full implementation 
of the ACA, we have had an opportunity to see firsthand the 
devastating impacts that have occurred as a result of the 
legislation. I want to share my experience with the ACA in an 
effort to encourage Congress to pass legislation to correct the 
devastating impacts the ACA has had on my business and ability 
to offer quality health care insurance to my employees.

    It is important to note that while I support employer-
sponsored health care for true full-time employees as evidenced 
by my company's insurance offerings for multiple decades, the 
current mandate for employer-sponsored health care simply is 
not working.

    I received renewal quotes from our health insurance broker 
a few weeks ago. Our premiums will be increasing by over 30%, 
and the past several years have seen similar surges. Increases 
of that magnitude are simply not sustainable. Since the 
enactment of the ACA, our monthly premiums have nearly doubled 
and our deductibles have nearly tripled.

    In my opinion, it is not wise federal policy to force us to 
pay significantly more for substantially less coverage.

    In addition to skyrocketing costs and reductions in 
benefits, the ACA has placed me at a competitive disadvantage 
because of the cost of insurance. The actual employer's cost to 
insure a full-time employee on our health insurance policy adds 
over $2.00 an hour that ACA defined ``small employer'' 
competitors do not incur. This burden places me at a 
disadvantage since many other employers are not required to 
offer coverage to the same individual and can therefore afford 
to entice them with a higher salary.

    For an hourly-based employee making $14 an hour, that $2 an 
hour is a significant monetary factor and often times makes the 
difference between working for us and taking a job elsewhere. 
Additionally, since many other employers are not required to 
offer coverage to their employees, the employee can still 
benefit from subsidies on the exchange which they would not 
have access to under employment with me. The result is a 
variance in net expendable income to an employee of thousands 
of dollars a year, which to someone making $20,000-$30,000 a 
year creates a significant difference of their income.

    I ask Congress to fix the broken ACA system. It is 
detrimental to me and countless other main street businesses. 
If something is not done quickly, I fear that when I receive 
next year's health insurance quote it will simply be 
unaffordable to the point where we would no longer be able to 
offer that benefit to our employees.

    I applaud the recognition by Congress and the 
Administration that the Tax Code, which seems to be so large 
that not even my accountant can fully understand it, needs to 
be drastically simplified.

    Tax relief to small business is incredibly important. The 
complexity of the Tax Code and its associated case law is not 
something that I can even begin to understand. Payroll taxes 
are simple, straightforward to calculate, and easy to plan 
for--we need something just as uncomplicated for corporate and 
pass-through taxes.

    The tax rate also needs to be lowered. The United States 
has the highest corporate tax rate in the developed world and 
its obviously too high. Our current tax system discourages 
hiring and growth. The high tax rate forces businesses to make 
decisions on how lower their net tax rate rather than how to 
grow their businesses and hire more employees.

    While I highly commend efforts to reform our tax code, the 
border adjustment proposal would be devastating to my business. 
Eighty percent of the flowers sold in the United States are 
imported. Nearly 95% of the flowers used in my businesses are 
grown overseas. There is no domestic capacity to meet the 
demand. Flowers are not a necessity like food or housing--if 
our products are taxed at a higher rate, those costs will 
translate to higher prices and consumers will shift their 
spending to other products where flowers have traditionally 
been appropriate.

    I ask that any border adjustment in tax reform exempt 
floral agricultural products to avoid significant harm to small 
floral businesses nationwide.

    One of the greatest concerns that I and other members of my 
industry have is the sense of uncertainty and lack of clarity 
in legislation and regulations. It is impossible for small 
businesses to make decisions and plan when legislation and 
rules are constantly changing. I have discussed the challenges 
I face with several of my peers in different segments of the 
floral industry. Every single person told me their greatest 
concern was either uncertainty or lack of clarity.

    For example, when regulations changing overtime policy were 
issued, I, along with many of my peers, recreated the entire 
compensation structures for our full-time employees to conform 
to the new regulations.

    Being in a somewhat seasonal business, we had previously 
offered our salaried employees the opportunity to bank extra 
hours worked during peak weeks and redeem them as additional 
paid time off during other slower periods. Our employees had 
always viewed this as a benefit that allowed them to maintain 
consistency in their cash flow throughout the year.

    Because the overtime rule forced us to restructure our 
compensation structure, our workplaces were highly disrupted. I 
even had one employee quit after we informed her that she would 
not be able to accrue comp time during peak weeks. Please try 
to imagine the frustration after we redesigned our compensation 
plan only to have the regulation halted just days before it was 
scheduled to go into effect.

    There needs to be certainty in legislation and regulation 
that allows small business owners to properly plan and prepare. 
The current environment creates economic chaos where we are 
unable to plan for payroll, benefits, or growth.

    One of the greatest uncertainties that I have rests in the 
handling of non-hard assets during acquisitions. There has been 
little released about how assets such as trade names, phone 
numbers, websites, and goodwill--normally depreciated over a 
longer period of time, minimizing any benefit--would be handled 
under any of the tax reform proposals being considered. I am 
not comfortable continuing to expand my business without 
knowing how those asset will be treated under a reformed tax 
system. Constant political upheaval and shifting rules are 
counterproductive to business growth.

    In an era where many people only criticize our government, 
I want to take an opportunity to say thank you. Recently a 
number of significant challenges have been overcome thanks to 
the support of our legislators. I urge the committee to 
celebrate these prior successes as we all work together to make 
the future brighter.

    While the Affordable Care Act remains substantially intact, 
there have been some requirements under the ACA which have been 
reviewed and changed to assist small businesses. For example, 
the original ACA legislation required 1099 reporting 
requirements which would have been overly burdensome, 
especially on small business. Through bi-partisan cooperation, 
this burdensome provision was removed. I am hopeful that 
Members of Congress will continue to work to eliminate many of 
the other tedious reporting provisions with which small 
businesses have struggled.

    The Estate Tax has been an ongoing issue for small 
business, especially in multi-generational businesses where the 
business itself sits upon real estate which has been passed 
down from one generation to the next.

    I applaud the efforts over the years by legislators to keep 
Estate Tax levels at a level which allows for transition of 
small businesses from one generation to another without forcing 
family members to take out life insurance policies or loans to 
pay the taxes which might occur as a result of the death of a 
family member. I urge Congress to continue to maintain a 
vigilant watch on Estate Tax levels and concepts to allow for 
small businesses to continue to grow and pass from one 
generation to the next without fear of losing the business from 
a tax liability incurred by the death of an owner.

    Following the recession a decade ago, financing for my 
business became very difficult. Credit lines were cut or closed 
and it was nearly impossible to find a bank that was able to 
write a loan for small business. I have been fortunate to have 
a local community bank to work with--one who knows us as people 
and a business, not just an account number. Policies should 
encourage the continuity of small and local banks as a 
financing partner for small business.

    While Congress has passed legislation over recent years to 
help small business, the work remaining is immeasurable. I 
implore the Committee to be our voice in Washington and to 
craft legislation to address some of the concerns that I have 
shared with you.

    Small businesses should not be punished by their own 
government for contributing to economic growth and hiring 
employees.

    I am hopeful that this Committee and this Congress will act 
to give a degree of certainty and clarity to business and to 
craft and pass legislation which will lead small business into 
a new era of prosperity. I am hopeful that my great-
grandchildren will be able to take the reins of the family 
business 94 years from now. I know that my 5-year old is 
already considering joining the business.

    Thank you again for giving me the opportunity to present 
this testimony before the Committee.
    Statement of David Borris, Main Street Alliance Executive 
Committee Member and Business Owner For House Committee on 
Small Business Hearing on ``Making Washington Work for 
America's Small Businesses.''

    Wednesday, March 22, 2017

    Chairman Chabot, Ranking Member Valezquez, and members of 
the committee:

    Thank you for the invitation to testify today regarding the 
ways our federal government can work for small business owners.

    My name is David Borris and I serve on the Executive 
Committee of the Main Street Alliance, a national network of 
small business owners. Our network creates opportunities for 
small business owners to speak for ourselves on matters of 
public policy that impact our businesses, our employees, and 
the communities we serve.

    I've been a small business owner for 32 years. My wife and 
I opened a homemade food store in 1985, and over the years have 
expanded into a full service catering company with 33 full-time 
employees and up to 80 more part-time and seasonal workers. We 
take great pride in what we do.

    Businesses need safety, transparency, and predictability in 
order to thrive. For today's discussion, I would like to focus 
on what Washington and the federal government can do to help 
ensure that those basic vital conditions are met so that my 
business, and small businesses across the country, can succeed.

    This starts with ensuring that my employees, my family, and 
I can access affordable, high-quality health coverage. With the 
passage of the Affordable Care Act (ACA), premium increases for 
my company stabilized immediately. My company is no longer 
vulnerable to dramatic spikes in premiums based on the health 
condition of a single employee, and there are now basic 
standards of accountability and coverage to ensure that my we 
are getting a fair deal. Instead of spending my time sifting 
through insurance plans or acting as an H.R. Director, I can 
devote my resources to innovating, growing my business, and 
producing more jobs.

    Second, the federal government has to ensure that we have 
sensible, protective regulations in place. My business relies 
entirely on a fundamental confidence that the food and water we 
consume is safe because of government regulations and effective 
oversight. Small business owners like myself also benefit from 
federal financial protections, which, as we know, are even more 
scarce for us than on the consumer side.

    Finally, what businesses like mine require more than 
anything from our federal government are evidence-based 
policies that keep overall consumer demand strong. In short, I 
need the bell on the front door to keep ringing, and that 
depends on a prosperous middle class with enough disposable 
income to spend on my goods and services. Policies like a fair 
$15 minimum wage, strong federal investment in infrastructure, 
and comprehensive immigration reform.

    Small Businesses Need Affordable, High Quality Health Care

    In 1992, when we began offering health care, we had grown 
to 8 full time employees, and felt a moral obligation to do 
right by the people who were making our life's work theirs as 
well. We implemented a structure whereby employees would 
contribute 50% of the premium in their first year of coverage, 
and Hel's Kitchen would pick up the entire program thereafter. 
We continued to grow and expand, and this structure worked well 
for some time.

    Beginning around 2002, though, we began to experience a 
series of annual, often volatile, premium increases. In 2004, 
it was a 21% increase; in 2005, 10%; 2006, 16%; 2007, 17%; and 
a change in carriers to avoid the quoted 26% increase. And in 
2008, we were finally forced to ask long time employees to 
contribute more again because the 17% increase was simply too 
much for us to absorb. In 2008, I spent almost 13% of my 
covered employees' payroll on health insurance premiums. Now, 
that is down to a little over 9%.

    Runaway health care rates were a significant drain on my 
resources, as I witnessed insurance costs consuming an ever-
increasing share of my business income. But even more 
challenging was the unpredictability of our premiums. Premiums 
could vary wildly from year to year depending on weather a 
single employee or family member had an expensive illness.

    For example, one of our lower wage employees, a dishwasher, 
was great at his job, but suffered from a malady that required 
kidney dialysis. When I met with my insurance broker to discuss 
the premiums for the upcoming year and I asked about the steep 
rise in my firm's premiums, he attributed the spike to the 
illness of that one single employee.

    The ACA has helped stabilize these costs and correct the 
market failures that have disproportionately burdened small 
business owners. This is one of the most direct ways to protect 
small businesses and help us do our part to create jobs and 
grow the economy. Insurers now are required to set rates using 
a single risk pool that includes all enrollees across their 
small group plans in the entire state. This means that my 
business is no longer vulnerable to sharp swings in my rates 
based on the health of a few employees.

    Furthermore, insurance companies can no longer underwrite 
based on health status--so no more charging higher premiums to 
groups with employees who have a condition requiring expensive 
treatment. Those costs now get spread over a much larger pool. 
And, after years of enduring double-digit rate increases with 
no recourse, insurers are now required to provide justification 
for unreasonable rate hikes. And, because of Medical Loss Ratio 
limits, insurance companies must pay back any excess premiums 
collected at the end of the year. The health insurance industry 
is unique in its high level of market concentration, but now 
true competition--competition based on consumer value rather 
than cherry-picking risk pools from year to year--is now 
possible, because of the ACA.

    I see these gains in my bottom line. My company has 
witnessed an unprecedented slowdown in rate increases. Since 
the passage of the ACA, our average annual increases are a 
fraction of what they were before, averaging 4.6% for the seven 
years from 2010 to 2017. I am saving money on premiums, and I 
am plowing those savings back into business investment and job 
creation.

    The ACA also established minimum standards of coverage and 
clarity in the benefits of our plan. As a caterer, I am a 
foodservice professionals, not an insurance expert. I don't 
have the time or bandwidth to pore over countless health 
insurance plans. I want to know that any plan I purchase is a 
fair deal--and that means it covers the basic needs of my 
employees and my family, without surprises. Because of the 
changes brought by the ACA, I have the security to know that 
any plan I select will cover essential health benefits, 
including maternity care, mental health and substance use 
treatment and prescription drugs. My employees are now more 
likely to have affordable access to health care that can keep 
them healthy, and I can devote my time to growing my business 
instead of administering health care.

    Finally, I would be remiss if I don't address the enormous 
gains in insurance coverage outside of the small group market. 
For many of my colleagues just starting out their own 
businesses, the risks they are taking on the chance to succeed 
are daunting. But, thankfully, they no longer shoulder the 
added anxiety of being deemed uninsurable.

    The ACA and the individual marketplace it established are 
freeing aspiring entrepreneurs to go out on their own. They are 
taking advantage of this option. One in five Marketplace 
enrollees is a small business owner or sole proprietor, and 
small business owners are three times more likely to purchase 
Marketplace insurance. This, plus the expansion of Medicaid, 
has also provided insurance coverage to many employees working 
in small businesses, particularly those in the lower-wage 
service and food industries like mine.

    Currently, 6.1 million people who work in small businesses 
are enrolled in Medicaid, and 1.4 million employees have gained 
coverage through the Exchange. These coverage gains are 
significant steps to fostering an environment in which small 
businesses can grow. It means we have a healthier workforce. 
There is less demand on us as small business owners to 
administer health insurance programs--valuable time we can 
spend on improving our products. Most of all, the ACA has given 
businesses the freedom to choose what makes the most sense for 
their companies.

    Small Business Owners Need Sensible Regulations to Protect 
Them and Ensure Level Playing Field

    Ideological rhetoric blaming government regulations for 
slow small business growth is at an all-time high. Washington 
has introduced numerous bills and executive orders aimed at 
curbing regulations, saying that cutting them will be a 
stimulus to our economy. Yet, as a small business owner who 
deals with regulations on a daily basis, I believe these overly 
broad attacks on regulations are actually harmful for small 
business owners. An educated, more nuanced approach is deeply 
warranted.

    Let me begin with an obvious example close to home. I make 
my living in the catering industry. On a daily basis, multiple 
vendors deliver poultry, beef, and dairy products and fresh 
produce to my back door. While I'm careful to check the 
quantity or weight as it is delivered, and make certain the 
quality is high, I know that I can trust that safety of the 
food itself because of strong national industry regulations. If 
I served tainted food at a catering event, people would be 
hurt, my reputation would be shattered, and my business 
destroyed. And foodservice operations are some of the largest 
consumers of water in the country. We need powerful oversight 
of food and clean water regulations to stay in business. If 
Northbrook, Illinois were to ever go through what Flint, 
Michigan went through, I would be out of business the next day.

    The same holds true for my fellow small business owners who 
operate toy stores, appliance showrooms, and machine shops. 
Both they and their customers trust that the products they sell 
are not defective or toxic, thanks to wise regulations. 
Regulations provide the market with an undergirding of 
confidence, a basic level of certainty to ensure we are 
protected from tainted food, unsafe drugs, poisoned water, and 
polluted air. We should not take these things for granted. We 
see the problems that occur in other countries lacking the 
stringent regulations that protect the public from the avarice 
of those who would compromise public safety for a little more 
short-term profit.

    There are other regulations that help small business owners 
by leveling the playing field against larger, more politically 
connected, businesses. Anti-trust laws, for instance, give 
small companies like mine a chance to compete by addressing 
price discrimination, price fixing, and other unfair business 
practices. And other regulations enforced under the Small 
Business Administration ensure that small businesses are 
prioritized for a certain set of government contracts.

    Financial regulations that protect small business owners 
are equally vital. Many, small business owners use consumer 
financial products to fund their businesses, particularly 
through temporary slow periods. Small business owners turn to 
those types of loans, which are largely unfavorable and often 
predatory, in times of desperation. It is vital that we have 
transparent repayment terms, accurate credit reporting, and 
fair mortgage and short term lending rates.

    This doesn't mean the regulatory environment cannot be 
improved. Navigating the bureaucratic and legal obstacles to 
obtaining requisite permits or licenses is often difficult and 
burdensome. But most of these regulatory challenges reside at 
the local level. Cities, counties, and states have convoluted 
and slow processes for new businesses, often designed for far 
larger firms. Easing the burden will entail more coordination 
among the various government agencies to determine whether any 
processes can be combined. Washington can help by working with 
state governments to provide clearer, accessible resources for 
business owners seeking licenses and permits, and consolidating 
this information into a single source of access. It can also 
help by creating one-stop electronic filings of government 
paperwork. But all of this should be done in a careful manner 
that streamlines burdensome processes without stripping away 
vital protections for us, our employees, and our customer base.

    Small Business Owners Need Policies that Keep Consumer 
Demand Strong

    I would like to close by saying that I run my business in a 
local way. My entire client geography exists within a 150-mile 
radius of my central office. The single most important thing 
small business owners need to be successful and to create more 
jobs is more customers--more demand for our products and 
services. Not tax breaks. Not fewer regulations. Not less 
oversight. More customers.

    Thus we need evidence-based policies that ensure our local 
communities have a growing, thriving middle class that is not 
weighted down with excessive debt. These policies include a 
fair $15 minimum wage, strong federal investment in 
infrastructure, and reasonable immigration reform.

    While the off-shoring of jobs and a shift to overseas 
markets have helped large corporations capture record profits, 
a company like mine can't simply pull up stakes and relocate 
somewhere across the globe. The health of my business is tied 
to a healthy economy that has money circulating in a virtuous 
cycle of rising wages, consumer demand, and job creation.

    To accomplish this, we need, first and foremost, to raise 
the federal minimum wage. Henry Ford understood the link 
between well-paid employees and paying customers more than a 
century ago when he recognized his business would only succeed 
if his workers earned enough to buy the cars they were 
building, and he doubled their wages overnight.

    In our local economies, that same link applies: my 
business' fairly paid employee is my neighbor business' paying 
customer. When people in my neighborhood can't earn enough to 
keep up with the basics--things like buying food, making car 
repairs, or taking their family out to eat for a birthday or an 
anniversary--the entire local economy becomes unstable. And 
those families certainly aren't going to spend money on a 
caterer. That's bad for small businesses like mine, and that's 
bad for the economy as a whole.

    Second, the federal budget needs to prioritize adequate 
investment in local communities. This means putting dollars 
into regional infrastructure, funding trainings for the 
workforce, and creating financial stability for middle class 
families. But that spending needs to drive long-term dollars 
into the pockets of community workers. That is, it should not 
be spent on low-wage labor that scrapes more profit off the top 
because that profit is taken out of the community when the 
project is complete. With these types of balanced, regulated 
investments in our infrastructure, we'll have a stronger 
customer base and more resources, which creates a positive 
multiplier effect for small businesses everywhere.

    Unfortunately, the President's budget blueprint does little 
in this respect. It dramatically cuts infrastructure funding in 
the Department of Transportation, the Department of Housing and 
Urban Development, and the EPA; defunds job-training programs; 
and underfunds after-school care, higher education training, 
and childcare for working families. These cuts are concerning 
for the future of my business and my community. I urge you to 
reverse these proposed cuts, and to instead adequately fund 
national programs that boost the economy.

    Finally, sensible, comprehensive immigration reform is 
important for an inclusive, healthy middle class. This country 
is built on the innovation and drive of immigrants, and the 
foodservice industry relies on the labor of my peers from all 
over the world. In the 10th District of Illinois, there are 
172,729 immigrant residents, including 5,766 entrepreneurs, 
paying $1.7 billion in taxes and with a spending power of $4.5 
billion.

    Our current immigration and visa policies not only 
discourage international tourists and business travelers, but 
also hinder businesses from finding the workers on which their 
industry relies. Most of my hourly workforce are immigrants. We 
start them at 30% over the Illinois state minimum wage, and not 
only retain most workers for many years, but also give them a 
solid start to becoming powerful consumers in our local 
economy.

    Conclusion

    Small business owners are the engine of our economy, 
creating two-thirds of all new jobs. The role of Washington is 
to help create the basic market conditions so that small 
businesses like mine can thrive and compete on a level playing 
field with our larger competitors. It's hard to envision a 
future in which small businesses will continue to be the job 
creators and innovators of America without the basic conditions 
I've touched on here today. These include quality, affordable 
health care, protective regulations, and federal policies that 
support a strong middle class. We need Washington to maintain 
and build on the gains of recent years, especially in health 
care, in order to ensure that the small businesses like mine 
can continue to flourish.

    Thank you again for the opportunity to testify. I look 
forward to your questions.

                                 [all]