[Congressional Record Volume 150, Number 34 (Wednesday, March 17, 2004)]
[House]
[Page H1203]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   TAX CUTS ARE WORKING IN TENNESSEE

  (Mrs. BLACKBURN asked and was given permission to address the House 
for 1 minute and to revise and extend her remarks and include 
extraneous material.)
  Mrs. BLACKBURN. Mr. Speaker, today I rise to talk about jobs and to 
talk about the success that we are seeing from the Bush tax cuts that 
this body passed last spring. The child tax credit, marriage penalty, 
expensing, depreciation, those are working for small businesses. They 
are working for entrepreneurs. They are working for the people that 
make this economy grow.
  I want you to take a look at this article. I found it this weekend 
when I got home sitting on the top of my desk: ``Boom times ahead. LLC 
Formations Soar.'' What it tells us is that in Tennessee where these 
tax cuts are working, the State registered 15,064 new corporations, 
LLCs, limited partnerships. That topped the previous high of 14,500 in 
1997 and is up 22 percent.
  Now, jobs growth is working for small business. This is working for 
women, because the fastest growing sector of small business growth is 
women, women-owned businesses.
  Tax cuts are working in Tennessee. I commend this body and the 
President.

         [From the Nashville Business Journal, March 17, 2004]

                 Boom Times Ahead? LLC Formations Soar

                           (By Holly Dolloff)

       The formation of limited liability companies in Tennessee 
     has soared over the past two years, a trend that could mean 
     the region's bleak jobs picture may soon brighten 
     considerably.
       The Tennessee Secretary of State Division of Business 
     Services registered 7,412 LLCs last year--500 more than were 
     formed in 1998, the previous high mark, and 49 percent more 
     than in 2001.
       The number of LLCs registered last year was more than 
     double the number of 1995, when companies first gained that 
     option from the state. Local attorneys attribute the recent 
     boom to several factors, from increased comfort levels with 
     the process to a sluggish economy.
       ``The LLC has come into its own,'' says Leigh Griffith, an 
     attorney at Waller Lansden Dortch & Davis. ``It's the entity 
     of choice for closely held companies.''
       Total for-profit business formation also set a new high. 
     The state registered 15,064 new corporations, LLC, limited 
     partnerships or limited liability partnerships. That topped 
     the previous high of 14,565 set in 1997 and was up 22 percent 
     from 2001.
       Griffith speculates the 2003 boom may have resulted from 
     the down-turn that began in 2001.
       ``As the economy gets softer, people get laid off and start 
     their own businesses,'' he says.
       A very similar dynamic applies to higher education and 
     particularly graduate and professional programs. When the 
     economy goes south, enrollment very often will rise as out-
     of-work professionals seek new opportunities or new skills.
       Though their greater numbers may often be attributable to 
     past bad news, new LLCs could end up improving the local and 
     state economic picture as they grow into bona fide businesses 
     with multiple employees.
       At this point, it is very unlikely that many of the new 
     companies are being counted in the local or state economic 
     statistics that show a stagnant job market despite optimism 
     from both consumers and business owners.
       The record number of LLC formations last year also marked 
     only the second time--1998 was the first--that Tennesseans 
     created more LLCs than for-profit corporations. The year saw 
     7,209 corporations formed, up less than 1 percent from 2002 
     and 5 percent below their 2000 level.
       Fellow Waller attorney Michael Yopp, who recently published 
     ``Tennessee Limited Liability Companies: Forms and 
     Practices'' (DataTrace Publishing, 2004), says the 1996 
     renovations of state law facilitated understanding and 
     increased employment of the structure.
       ``Fairly extensive'' litigation involving LLCs in the late 
     '90s has also contributed to the higher numbers, he says.
       Yopp is part of a group of attorneys currently revising the 
     LLC statutes.
       Griffith was a prime author of the original statutes 
     creating LLCs and remains a proponent of them. He says the 
     most obvious benefit of an LLC is limited responsibility for 
     liabilities incurred by others, particularly in small 
     businesses.
       ``When you realize the fate of your company is in the hands 
     of a 19-year-old delivery boy who may be hung over from the 
     night before, and he hits someone with the delivery vehicle, 
     your house is on the line,'' says Griffith.
       Partners in LLCs could lose their businesses in a smaller 
     situation, but their personal property is immune from 
     seizure. And the LLC format offers breaks from the taxes and 
     red tape that corporations incur.
       ``You don't have to have annual meetings and you're covered 
     by operating agreements and not by-laws or restrictive 
     stock,'' says Larry Papel, managing partner at Baker Donelson 
     Bearman Caldwell & Berkowitz, who has registered several LLCs 
     for clients.
       One such client was a restaurant group with multiple 
     locations. Papel says such businesses may be better off 
     registering each entity separately, an assessment with which 
     Griffith agrees.
       ``If each restaurant in a chain is an LLC, they won't all 
     suffer if one has a problem,'' Griffith says.

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