[Congressional Record Volume 156, Number 156 (Thursday, December 2, 2010)]
[Senate]
[Pages S8380-S8381]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           EXTENDING TAX CUTS

  Ms. COLLINS. Madam President, unless Congress acts, this new year 
will begin with the imposition of an onerous new tax burden for 
American families. They will face an automatic tax increase of nearly 
$2.7 trillion--one of the largest tax increases in history--when the 
2001 and 2003 tax laws expire.
  This tax increase will hit all American earners regardless of their 
income level and regardless of whether they are married or single, 
retired or working or salaried or hourly employees.
  It is my judgment that the 2001 and 2003 tax relief laws should be 
extended for all Americans. With the economy still weak, and with 
unemployment persisting at nearly 10 percent, now is not the time to be 
raising taxes on anyone.
  Some argue that Americans in the higher tax brackets should not be 
protected from this tax increase. But that argument for higher taxes 
come January 1 ignores the fact that a tax increase on top earners is a 
tax increase on small businesses and, thus, a tax on jobs at a time 
when we should be doing everything possible to stimulate the creation 
of more jobs.
  As you are aware, most small businesses are passthrough entities. 
They are sole proprietorships, partnerships or S corporations that must 
report their earnings on their owners' individual tax returns. 
According to the Joint Committee on Taxation, there are some 750,000 
passthrough small businesses in the top two tax brackets. Higher taxes 
hurt these small companies by taking away capital they need to grow and 
to add jobs.
  In Maine, there are numerous small businesses that would be hurt by 
this tax increase. One is D&G Machine Products, a precision design 
machining and fabrication operation located in Westbrook, ME. Founded 
in 1967, this company now has more than 130 highly skilled and 
dedicated employees. When I visited this company in August, the owner, 
Duane Gushee, expressed to me his concerns about the impact higher 
taxes would have on his growing business. He explained that D&G 
competes with companies all over the world for markets and customers. 
Without constant innovation and investment in cutting-edge technology, 
D&G would lose its customers and the jobs of its employees would be in 
jeopardy. The tax increase that would go into effect unless we act 
would hit D&G on January 1 and would take money out of its bottom 
line--money that is needed to upgrade its equipment and stay ahead of 
foreign competition.
  Another business that would be hit hard is Pottle's Transportation, a 
trucking company headquartered in Hermon, ME. This company was founded 
in 1972 and now has more than 200 employees with 150 trucks.
  Barry Pottle, who runs this business, tells me that Pottle's needs to 
purchase 25 to 30 trucks every year just to maintain its fleet. New 
trucks used to cost the company about $100,000. But in the past few 
years, the cost has escalated by another $25,000. The tax increase 
scheduled for January 1 would make it difficult, if not impossible, for 
Barry to make these investments.
  Other Maine businesses have come forward to highlight the impact a 
tax increase would have on their ability to grow their businesses and 
to add much needed jobs.
  One of these is Allagash Brewing Company, a craft brewery located in 
Portland, ME. Founded in 1994, Allagash has grown to 28 employees and 
has established a reputation for uncompromising quality as one of the 
finest producers of Belgian-style beers in North America.
  Similar to most small businesses, Allagash relies on its retained 
earnings to finance investment and growth. As Rob Tod, the co-owner of 
Allagash puts it:

       There's plenty of demand for our product, but we can't fill 
     demand without equipment, and we can't buy equipment without 
     money.

  When small businesses cannot invest and grow, they cannot add jobs, 
and that is what our focus needs to be on: the creation of policies 
that will help the private sector to create jobs.
  Rob estimates that every 1 percent increase in Allagash's tax rate 
means one fewer worker for 5 full years. Stated another way, the tax 
increase slated to occur on January 1 would wipe out jobs for five 
workers for 5 years just at this one brewery. If that is the impact at 
one small business in Portland, ME, imagine what the impact would be on 
jobs lost nationwide.
  Other small businesses in my home State have expressed their 
frustration at the uncertainty Washington is creating by leaving these 
tax hikes hanging over their heads. As one small business starkly put 
it to me:

       The increases in personal taxes reduce the amount of money 
     I have available for investments of all kinds. I am not 
     investing in my business. I am not hiring workers. I am not 
     considering starting anything new. I am waiting. There is no 
     way to know what Washington is about to do to me, but I 
     expect it will be nasty and brutally unfair. In response, I 
     am holding my ground and preparing for the worst.

  That is an exact quote from an entrepreneur in my State. As if the 
testimony of these small businesses were not enough, there is a second 
reason to support extending the 2001 and 2003 tax relief for all 
Americans: A tax increase at this time on top earners would reduce 
consumer spending dramatically, cutting demand, and costing jobs at a 
time when our fragile economy can least afford it.
  We have only to look at Peter Orszag's column in the New York Times--
he was President Obama's former Budget Director--to underscore this 
point. He wrote that failing to extend the existing tax relief would 
``make an already stagnating job market worse.'' He then went on to 
say:

       Higher taxes now would crimp consumer spending, further 
     depressing the already inadequate demand for what firms are 
     capable of producing at full tilt.

  Mr. Orszag is not alone in this view. Economist Mark Zandi has 
estimated that raising taxes on top earners would cost us 770,000 jobs 
and four-tenths of 1 percent of our GDP over the next 2 years. He 
cautions that earners in the top brackets are responsible for ``one 
fourth of all [U.S.] Personal outlays,'' and that a pullback in 
spending by these taxpayers could ``derail the recovery.''
  In light of this risk, Mr. Zandi has called the President's plan to 
raise taxes an ``unnecessary gamble.'' Mr. Zandi suggests that a middle 
ground where no one's taxes are increased until the recovery is firmly 
in place is where we should go.
  That is essentially what I recommended to this body in September. I 
urged the Senate to take up legislation to extend the 2001 and 2003 tax 
relief for 2 more years. That is a middle ground. Surely, we ought to 
be able to come together and embrace that compromise. That will get us 
through the recession. It will send a strong signal to the business 
community to invest and create jobs. It would remove the uncertainty.
  Here is my suggestion for what we should do during that 2-year 
period, since I see my colleague, Senator Wyden, on the floor. During 
that time we could undertake comprehensive tax

[[Page S8381]]

reform to make our system fairer, simpler, and more progrowth. I know 
that has been a passion of Senator Wyden's for some time. That is what 
we could use those 2 years to work on.
  So I am once again going to ask my colleagues on both sides of the 
aisle--there are some on this side who want to make all the relief from 
the 2001, 2003 laws permanent; there are some on the other side of the 
aisle who want to increase taxes for the top two rates and just extend 
the tax relief for those making up to $250,000--let's instead extend 
the tax relief for everyone right now for 2 more years, remove the 
uncertainty, encourage businesses to create new jobs, stop penalizing 
small businesses, do not put a damper on consumer spending at the worst 
possible time, and then let's use those 2 years productively to rewrite 
the Tax Code, to make it simpler, fairer, and more progrowth.
  I think that is a reasonable plan. Let's abandon any approach of 
raising taxes at this critical time.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.

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