[Congressional Record Volume 163, Number 57 (Monday, April 3, 2017)]
[Senate]
[Pages S2172-S2173]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MAIN STREET FAIRNESS ACT
Ms. COLLINS. Mr. President, I wish to speak in support of the Main
Street Fairness Act, which will help to create tax parity for
passthrough companies, the significant majority of which are small
businesses. I was very pleased to be joined by my friend and colleague
from Florida, Senator Nelson, in introducing this bipartisan bill.
[[Page S2173]]
Small businesses are our Nation's job creators. According to the
Small Business Administration, small businesses employ more than half
of all workers and have generated two-out-of-three net new jobs since
the 1970s.
Small businesses also make an outsized contribution to our Nation's
economy, generating half of our Nation's GDP, 54 percent of all U.S.
sales, 41 percent of private sector payroll, and one-third of our
Nation's export value. Their success is critical to the health of our
economy.
Unfortunately, our Nation's small businesses face a higher tax burden
that affects their ability to compete with large firms in the
marketplace. In fact, a recent survey by the National Federation of
Independent Business, NFIB, found that concerns about Federal taxes on
business income ranked third on the list of the top 10 problems facing
small businesses.
Nearly all of our Nation's small businesses are organized as
passthroughs, meaning that their profits are passed on to their owners
and reported on individual income tax returns. This means that small
business income is subject to taxation at individual rates, which can
be as high as 39.6 percent at the Federal level and can exceed 50
percent in some States. If we want our small businesses to grow and
create jobs, we must reduce these high marginal rates.
I believe Congress should undertake comprehensive tax reform to make
our Tax Code simpler, fairer, and more progrowth. As we do so, we must
make sure American businesses of every size are given the opportunity
to compete. Aligning the tax rate for passthroughs with our corporate
tax rate will ensure small businesses are not left behind. That is why
Senator Nelson and I introduced the Main Street Fairness Act, which
will link the tax rates of passthrough entities and large corporations,
to ensure that small businesses never pay a higher tax rate than large
companies.
This simple change will help make sure that small businesses remain
healthy and strong, so they can continue to serve as our Nation's job
creators, as they have for so many years. I would note that the Main
Street Fairness Act has been endorsed by the NFIB, the leading voice
for America's small businesses, and I urge my colleagues to join us in
supporting it.
I ask unanimous consent to have a letter of endorsement from the NFIB
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
National Federation of
Independent Business,
Washington, DC, April 3, 2017.
Hon. Susan Collins,
U.S. Senate, Dirksen Senate Office Building, Washington, DC.
Hon. Bill Nelson,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senators Collins and Nelson: On behalf of the National
Federation of Independent Business (NFIB), the nation's
leading small business advocacy organization, we write in
strong support of S. 707--The Main Street Fairness Act. This
legislation would reduce taxes on pass-through businesses and
make them more competitive, and ensure that all businesses,
large and small alike, compete on a level playing field going
forward.
The vast majority of small businesses are organized as
pass-through entities, which pay tax on business income at
the individual tax rates, which are currently as high as 39.6
percent, and not at the corporate tax rate, which is
currently as high as 35 percent. Such entities include any
company organized as a sole proprietorship, partnership, LLC,
or S-Corporation. The Main Street Fairness Act would ensure
that those pass-through businesses never pay a higher tax
rate than businesses organized as C-Corporations, and
immediately reduce the tax rate on pass-through businesses
currently paying more than 35 percent.
Small businesses are the major source of growth and job
creation in our economy. In fact, according to the Small
Business Administration (SBA), small businesses account for
64 percent of the net new private sector jobs created in
America and make up 99.7 percent of U.S. employer firms. The
high tax burden currently facing small businesses holds back
investments, growth, hiring, and entrepreneurship. One in
five small businesses struggles with cash-flow, which is
needed to not only run their businesses but also support
their families. Specifically, after-tax income is an
especially important source of capital for small businesses.
High tax rates mean less money that small business owners
have to reinvest back into their business.
Because of this, small businesses strongly support tax
reform that simplifies the tax code, lowers tax rates on
businesses, and promotes economic growth. The Main Street
Fairness Act will help ensure that all businesses, regardless
of how they organize, enjoy the benefits of any reduction in
tax rates that would be included in tax reform. We appreciate
your continued leadership on this key issue and look forward
to working with you as Congress considers tax reform.
Sincerely,
Juanita D. Duggan,
President & CEO.
Mr. NELSON. Mr. President, today I want to join my friend Susan
Collins and talk about why I support the Main Street Fairness Act. I am
glad to partner on this bill with the Senator from Maine.
The bill does one simple thing: It ensures small businesses don't
have to pay higher taxes than the largest corporations. This is the
type of common sense that we need more of in Washington.
There are 2.3 million small businesses in Florida, employing around
43.2 percent of the State's workforce. They are the primary engine of
job growth in the country, and are a proven means for economic
mobility.
Under most circumstances, small businesses are subject to the same
rules as large corporations but are treated differently under the Tax
Code. They already have a hard enough time competing with large
multinational corporations, which can hire an endless stream of high-
priced tax lawyers to shift their income abroad and avoid U.S. taxes.
We should be doing all we can to put small businesses on a more level
playing field. Part of that starts with this bill, but it doesn't end
here. We need to do comprehensive tax reform.
This bill should be part of that conversation, as one way we could
help small businesses. It is not the only way, and I am certainly open
to other ideas, but we need to have a serious talk about how we are
going to freshen up the Tax Code and help the economy grow.
I know a lot of my colleagues have different ideas about what tax
reform should look like, but I think we should all be able to agree
that it needs to be real reform, not just a temporary tax cut. It needs
to support a technology-driven economy and help us transition to a
greener, fairer economy--with a lot less disparity.
Tax reform should also generate enough added revenue to pay for the
infrastructure we desperately need. That includes the crumbling roads
and bridges that threaten the safety of millions of Americans and are a
tax on small businesses. We also need to invest in our water
infrastructure, energy infrastructure, ports, railways, public schools,
and affordable housing infrastructure.
At the same time, tax reform needs to be deficit neutral. You might
ask, how are we going to pay for all this? Well, we can start by
getting rid of outdated special interest tax breaks that are no longer
needed or don't make sense in the 21st century.
We can also eliminate tax loopholes that allow companies to shift
profits abroad and lead to corporate inversions.
This bill, the Main Street Fairness Act, is a good start, but it
shouldn't end here. We need to have a serious, deliberative effort to
develop a bipartisan tax reform package.
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