[Congressional Record Volume 155, Number 48 (Thursday, March 19, 2009)]
[Senate]
[Pages S3382-S3383]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               THE BUDGET

  Mr. ENZI. Mr. President, this morning I want to address the budget a 
little bit, and to all Americans, I want to be clear: I want to work 
with the President to get our economy back on track. I want to fix 
housing, reform the financial markets, and help every citizen get 
access to high-quality, affordable health care. I want our President to 
succeed in leading our Nation out of this economic crisis.
  But I draw the line with President Obama's idea of raising taxes. He 
may think it is a great idea to raise taxes in the midst of a 
recession, but I surely don't. The President's proposed tax increase is 
a whopper--$1.4 trillion in new taxes, which is equal to the annual 
economic output of all of Spain.
  Despite the White House rhetoric, these taxes will hit all Americans. 
No one is spared. This budget raises taxes on energy. If you drive a 
car or heat your home, your taxes are going to go up.
  This budget raises taxes on small business. More than half of small 
businesses that employ between 20 and 500 employees--that is the 
Federal definition of ``small business,'' 20 and 500 employees--will 
see their tax bills rise and jobs eliminated.
  This budget raises taxes on senior citizens who are dependent on 
dividend and capital gains income for retirement income.
  This budget raises taxes on charitable contributions. Just the 
announcement that it will happen, we have already seen decreasing 
charitable contributions. Of course, a lot of those charitable 
contributions are ones that come from these small business employers 
who have single proprietorships or small business corporations where 
they have to pay their taxes right away, even though they have to put 
all that money back into the company. I will talk about that later.

[[Page S3383]]

  This budget reinstates the death tax, making it harder to keep the 
family farm, the family ranch, or the family business in the family.
  This budget simply taxes too much. I heard lots of complaints from 
Wyoming ranchers about the President's tax increase. Many of our 
ranches and farms are structured as S corporations or limited liability 
corporations, and this tax hike would hurt them.
  The President will say his proposal to let some 2001 tax cuts expire 
will affect only 3 percent of all taxpayers, but this statistic 
obscures the fact that these taxpayers employ the most number of 
workers and generate the most economic activity of all small business 
entities.
  According to a 2007 Treasury Department report, over 30 percent of 
all business income comes from passthrough entities, such as S 
corporations, partnerships, and limited liability companies. That means 
it goes right back in to take care of the business.
  Last weekend, I was in Wyoming. I visited Sanford's restaurant in 
Gillette, WY. They started with one restaurant and now they have eight 
different locations. At the location I went to, one of the owners 
happened to be there. He said proudly, and he should: We started this 
business on $2,000. Now we have eight stores, and we still only have 
$2,000. That is because everything has been plowed back into the 
business, which results in more jobs for more people.
  That is what we are talking about. We want this economy to grow. 
Small businesses are the ones making this grow. It is the guys and 
women with an idea they can take their last $2,000 and put it into 
something productive and they can grow it. The problem is, when they 
grow it, they pay the taxes on it immediately. They pay the taxes as 
though it actually flowed into their pocket. But it doesn't. As a 
result, some of these people who have been successful who are creating 
all these jobs make more than $250,000 a year. They don't get to keep 
it. That is the important part. They don't get to keep it. They have to 
pay taxes on it right away. That puts them into this new higher tax 
bracket.
  It is going to have a devastating effect. Suddenly, the house they 
own--they are not going to have the same kind of house deduction, as if 
they didn't have a business at all.
  Charitable contributions--it is the small businesses that keep the 
towns going. It isn't the big corporations that buy the ads in the 
yearbooks. It isn't the big corporations that make a donation when 
somebody comes around because there has been a fire. It is those little 
businesses that want to grow. They are growing, but they have to put 
everything they have back into it. I know small businessmen who have 
been able to pay everybody who works for them but not themselves.
  We are not talking about the big corporations with the big bonuses. 
We are talking about the little corporations that are family. By 
``family'' I mean every employee who works for them understands how 
difficult the business is, how close to not succeeding the business is, 
and because they want their job, they help the business to succeed. As 
a result, they are included in ``the family.'' All of those people are 
going to suffer.
  Because 30 percent of all business income that comes through these 
passthrough entities, such as S corporations, partnerships, and limited 
liability companies, these small businesses that are hiring people--
they are hiring people; they are not laying them off. The unemployment 
would be tremendously higher if it were not for this 30 percent of all 
business income that gets passed through and back into the business.
  Over 70 percent of that income is concentrated in the top two 
marginal income-tax rates. They pay the highest rate we have because 
they did business and because the business is making money. But it 
isn't money they get to put in their pockets; it is money they put back 
into the business. So nearly a quarter of all business income would be 
subject to higher taxes under this budget.
  Let me repeat that. Nearly a quarter of all business income would be 
subject to these higher taxes under this budget. According to a 2007 
survey completed by Gallup for the National Federation of Independent 
Businesses, 50 percent of all businesses that employ between 20 and 499 
workers will face higher taxes if the 2001 rate reduction in the top 
two rates is allowed to expire. Fifty percent of all businesses that 
employ between 20 and 499 workers will face higher taxes if we do not 
change that, if we allow it to expire. And the plan, according to the 
budget, is to let it expire, to shove these taxes off on these small 
businesses, the ones that are still doing well, the ones that have not 
succumb to the greed, the ones that have been doing the right thing, 
particularly with their community. Raising taxes on our Nation's job 
creation engine at any point in the business cycle is just bad economic 
policy.
  The key to our Nation's economic growth and our ability to recover 
from a crisis such as this one is the flexibility and the vibrancy of 
our non-corporate sector. Small business is the incubator for 
entrepreneurship, and we should protect it and nurture it, not tax it.
  For example, many in the companies that fueled the economic growth of 
the 1990s and beyond started as passthrough entities: For example Yahoo 
and Microsoft, just to mention a few that the President mentioned 
earlier in the week when he was talking about the importance of helping 
out small business and said all the right things about small business.
  I am encouraged by what he said. I am encouraged by the differences 
he is going to make in the way the Small Business Administration works. 
But it is going to come back again in the way of higher taxes for those 
same people. We need to encourage, not discourage, those people.
  When I was in Wyoming, I had a procurement conference. That is where 
the Federal Government comes to Wyoming and talks to my businessmen to 
see if small business can't provide for some of the Government 
contracts. Every year it is a huge success. People from all over the 
Nation, not just Wyoming, are able to take advantage of that sort of 
thing.
  At that conference, a guy in Montana was talking about the need for 
some liquidity so he could get a loan--a loan, not a bailout--a loan so 
he could grow his business. As we learned at the White House summit on 
Monday, the banks do not have a secondary market for their loans. That 
means when they make the loan, they cannot turn around and sell the 
loan to free up the capital to make another loan. When that happens, 
these small businesses cannot get loans, and a lot of them need short-
term credit.
  You have to order your inventory a year ahead of time often. When it 
gets there, you have to pay for it, and then you sell it. A lot of them 
need just a kind of cashflow loan, one that will pull them through that 
time when all the inventory hits and gets paid off and the time the 
inventory gets sold.
  A guy in Montana talked to a guy in Wyoming who talked to me and 
proposed several different ways that I have passed on to the White 
House and to Secretary Geithner that money could be freed up for these 
businesses to grow. I am encouraged and hope that will happen. I hope 
it is not reversed by these new taxes.
  I will fight to preserve low taxes for our Nation's small business, 
and I am prepared to offer an amendment to any legislation that 
attempts to raise taxes on small business income.
  I have pledged to work with the White House to fix housing, to reform 
our financial markets, and to help every citizen get access to high-
quality, affordable health care. My question today is: Will the White 
House work with me to protect small business from the harmful effects 
of this budget's tax increase?
  This budget taxes too much, spends too much, and borrows too much.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Pryor). The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I ask the Chair to let me know when 9 
minutes has elapsed.
  The PRESIDING OFFICER. The Chair will so notify the Senator.

                          ____________________