[Congressional Record Volume 141, Number 95 (Monday, June 12, 1995)]
[Senate]
[Pages S8183-S8184]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         ADDITIONAL STATEMENTS

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                       SMALL BUSINESS TAX ISSUES

 Mr. BOND. Mr. President, a few weeks ago the Senate made good 
on its historic opportunity to balance our Nation's budget, and we 
voted to save our children and tomorrow's children from a burden that 
they did not cause and do not deserve. The American people made their 
position on this issue crystal clear--a balanced budget is their top 
priority.
  Even many of those who have long-standing interests in tax relief, 
including the small business owners that I hear from as chairman of the 
Committee on Small Business, do not want tax cuts at the expense of a 
balanced budget. One poll conducted by a nationwide organization 
representing over 600,000 [[Page S8184]] small businesses showed that 
95 percent favored a constitutional amendment requiring the Federal 
Government to balance the budget and that 88 percent believed Congress 
should focus its attention primarily on deficit reduction.
  The Senate listened to the American people on this issue. We worked 
hard, debated earnestly, made difficult decisions, and fulfilled our 
obligation by voting to bring the budget into balance by the year 2002. 
The result of that work is not only a better financial legacy for 
America, but the production of an economic dividend of approximately 
$170 billion over the next 7 years.
  When the opportunity for tax cuts arrives as a result of our control 
over budget deficits, Congress should view the economic dividend as a 
young, growing business would view a small influx of cash. It should be 
invested very carefully. I strongly believe that some tax relief needs 
to go to families with children. I also believe, however, that we 
should use a portion of the dividend in a way that will create jobs and 
stimulate investment and growth in our economy by providing tax cuts 
for small businesses.
  Year after year small businesses generate a significant number of new 
jobs, even while corporate America downsizes. In fact, according to the 
Small Business Administration, small businesses provided 100 percent of 
the net new jobs from 1987 to 1992. By targeting some of the tax cuts 
toward small business we will not be spending the dividend but rather 
reinvesting it in our economy. That way, all Americans will benefit 
through an improved standard of living. Small businesses need cash to 
meet payroll, pay their day-to-day bills and to invest in capital 
improvements. In a recent study, small business owners identified tax 
burdens as their No. 1 problem. The economic dividend provides us with 
an opportunity to rectify the single most important concern of that 
portion of our economy that can contribute to America's economic 
growth.
  When the Committee on Finance is determining what tax cuts should be 
enacted as a result of the budget resolution and the economic dividend, 
I strongly encourage the members to include on the priority list at 
least the following four targeted tax cuts to promote economic growth 
and job creation by American small business.
  First, increase the small business expensing provision. Allowing a 
current deduction for newly purchased assets improves the cash flow of 
a small business. It also would encourage a small business to invest in 
new equipment which in turn helps manufacturing and related industries. 
This is a formula for maintaining and enhancing job growth.
  Second, provide a 100-percent deduction for the health insurance 
costs of the self-employed. With the passage of H.R. 831 earlier this 
year, we gave the self-employed a permanent but only a partial 
deduction for health insurance. Corporate employers already are able to 
deduct the full cost of health insurance. This disparity in treatment 
continues to put the entrepreneurs of America at a disadvantage--23 
percent of the self-employed are uninsured today. About 4 million of 
the uninsured are in families headed by a self-employed worker. A 100-
percent deduction will make their insurance more affordable and help 
these families purchase the health insurance coverage they need and 
deserve.
  Third, estate tax relief targeted specifically for small business. 
Generally, this would be a tax deferral for a family owned and operated 
business that is passed to heirs who continue to own and operate the 
business. As you know, this is a vital change because some owners of a 
small family businesses find they cannot afford to pass the business on 
to their children simply because they cannot afford to pay the estate 
taxes. A recent survey of family businesses showed that a mere 57 
percent of owners planned on keeping the business in the family; taxes 
were cited as one of the prime reasons for their plans to sell out. 
Unfortunately, our system of taxation is working against us here. 
Rather than promoting and stimulating business growth, the law is 
forcing people to make decisions to sell or close what otherwise could 
be a viable enterprise.
  Fourth, cut the capital gains tax rate and index it for inflation. In 
order to unlock built up asset values. Entrepreneurs that have become 
successful might repeat their job-creating activities in a new company 
if it were not for the disincentive in the tax laws against realizing 
and reinvesting these gains. The effect of permitting all capital gains 
to be reinvested more freely would be to give our economy a boost that 
it otherwise would not enjoy, and much of this reinvestment likely will 
be directed at small business. Simply said, a reduction in the capital 
gains rate will expand economic activity so all Americans will be able 
to reap the benefit of that growth by additional jobs and an improved 
standard of living.
  As chairman of the Committee on Small Business, I urge my colleagues 
to look at tax-cutting opportunities as a way to make an intelligent, 
long-term investment in our small business sector but will benefit the 
entire economy.


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