[Congressional Record (Bound Edition), Volume 156 (2010), Part 11]
[Senate]
[Pages 16137-16139]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             RAISING TAXES

  Mr. KYL. Mr. President, we continue to have a discussion about 
whether there should be a tax increase on Americans and, if so, which 
ones. We are not sure whether the Senate is going to vote on one of 
those propositions before the elections, but there appears still to be 
a chance we would do that.
  I found it of interest that a couple surveys--one of economists and 
one of Americans generally--throw more cold water on the idea that we 
should be raising taxes on any Americans.
  I wish to report, first of all, a CNBC poll which just came out 
today. The headline is ``Most Americans Want All Bush Tax Cuts 
Extended.'' Well, that is another way of saying: We should not raise 
taxes on any Americans. I will just quote from two lines:

       In the new poll released this week, 55 percent said that 
     ``increasing taxes on any Americans will slow the economy and 
     kill jobs''. . . .Only 40 percent said the Bush-era tax cuts 
     should be canceled for higher earners. . . .

  One other interesting statistic is that the poll showed that ``55 
percent of Americans said [President] Obama's overall economic plans 
have made things worse so far.''
  This poll is consistent with every other we have seen. Most Americans 
do not believe we should be raising taxes on anyone--on the wealthy, on 
businesses, on others, on anyone. I think most of them get the fact 
that if you start raising taxes, particularly in the middle of a 
recession, you are going to kill economic recovery and certainly slow 
the creation of more jobs.
  Well, that was also the opinion of a group of economists who were 
surveyed by CNN. They surveyed 31 different economists and had a 
variety of options. They asked: What should the Senate and the House 
do? In this survey, 18 of the economists said we should not raise taxes 
on anyone--in other words, extend the tax rates that have been in 
effect for the last 10 years for everyone, continue to extend them. 
There were only three of the economists, incidentally, who said: No, we

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should differentiate, extend for some but not extend for others. In 
other words, it is OK to go ahead and raise taxes on the so-called 
wealthy.
  I noted also today that the National Taxpayers Union released a 
letter with 300 economists saying the same thing, that we should not 
raise taxes on anyone. Finally, I noted in comments I made Monday that 
Secretary Geithner had said what we should be doing to preserve jobs in 
America is to promote savings and investment. That is, of course, 
precisely what we should be doing. Unfortunately, that is exactly the 
opposite of what would happen if we raised the taxes on the so-called 
upper two brackets because that is how small businesses, by and large, 
pay their taxes.
  Fifty percent of the approximately $1 trillion of business income 
will be reported on returns that have a marginal rate in the top two 
brackets. That is another way of saying, if you increase the tax in 
those top two brackets, you are going to dramatically impact small 
businesses that create about 25 percent of the total workforce here in 
the United States.
  In testimony before the Finance Committee, on which I sit, the former 
Director of CBO, Doug Holtz-Eakin, testified that an increase in the 
top effective marginal income tax rate would reduce the probability 
that a small business entrepreneur would add to his or her payrolls by 
roughly 18 percent. I suggest it may even be more than that.
  What I would like to do is quote from comments from a few small 
business folks as to the effect of the tax increase on them. If the tax 
increase were to be voted on by this body and the House of 
Representatives and adopted into law or if the current tax rate is not 
extended for everyone, here is what a few small business folks say 
would happen to them. Some of these examples come from the Chamber of 
Commerce, some from the National Federation of Independent Business.
  For example, Mark Clinton of Decisive Management in Little Rock, AR: 
Last year, he says, he paid about half his business's income back in 
taxes. He has a small business that meets this threshold I mentioned 
before, and he said any tax increase would effectively kill his 
business. I thought it was interesting. He gets frustrated, he said, 
when he hears the top-tier tax cuts referred to as tax cuts for ``the 
rich.'' He said:

       These are employers who work hard to balance their budgets 
     and make ends meet. They need money to sustain their 
     businesses. Do you want someone who is broke as your 
     employer? No. You want someone who is able to pay their bills 
     and pay your salary.

  Here is another example of someone who says he would be hurt if his 
taxes are raised: Jim Murphy, from the firm EST Analytical, in 
Cincinnati, OH. If taxes go up above the $250,000 threshold, the bottom 
line of his business will suffer and he will be forced to make serious 
business decisions to make up for the lost income. He just recently 
lifted a pay freeze that has been in place for almost 18 months. His 
company suspended the 401(k) contributions at the same time, and that 
likely will have to continue into the future. So instead of potentially 
hiring more people, he is definitely not going to make any new hires. 
He said that the threat and uncertainty of health care costs going up 
next year is also a great concern.

       So instead of purchasing needed capital equipment and 
     generating economic activity for other businesses, I will 
     have to make do with what we have.

  I will just mention a couple more.
  Ron Hatch of Hatch Furniture in Yankton, SD, said his business, which 
is a furniture store, has struggled. He has seen his business fall by 
25 percent. He had to close one of his two stores. His business is 
heavily dependent on capital, and he says any tax increase would 
inhibit his ability to compete and force him to lay off more workers. 
If the current tax rates are allowed to expire, he says he might well 
have to go out of business.
  Steve Ferree, who owns a Mr. Rooter Plumbing in Gladstone, OR, says 
he has been lucky his business has been able to survive so far but that 
increasing his tax rates, the rate at which he pays--just what we are 
talking about here--would directly impact his business. He would not be 
able to consider hiring a new employee or buying new equipment should 
the tax hike take effect.
  There are several from the printing industry. I will just quote from 
one.
  Mike Nobis of JK Creative Printers in Quincy, IL, makes the point 
that the tax increases hurt his clients which then, in turn, hits him. 
He talks about the fact that his clients are having to cut back their 
budgets and that this has had an impact on him. He said that increasing 
taxes will be especially hard-hitting for his clients. As a result, he 
is going to continue to lose customers, and with that loss of customers 
combined with the tax increase hitting his own budget, he will be hit 
from both sides. The looming tax increase and uncertainty with 
forthcoming health care mandates have left him in a position where he 
is hesitant to take on risks and grow his business.
  Another example from the printing industry: Frank Goodnight of 
Diversified Graphics in Salisbury, NC. Another from the real estate 
industry--a lot of examples there--Curt Green from Curt Green & Co. in 
Texarkana, AR.
  Let me close with two examples that show other indirect effects.
  Steve Walker from Walker Information in Indianapolis, IN, talks about 
one of the indirect consequences of his firm having to pay more in 
taxes, his small business. It is a family business. He said: We have 
always taken care to give back to our community in Indianapolis and 
central Indiana. Here is a direct quote:

       If Congress increases taxes, it will directly affect the 
     extent of our charitable work, in addition to impacting our 
     company's bottom line. I look at pretax dollars as a pie 
     chart. Right now, Uncle Sam gets 35 percent. If Uncle Sam 
     gets 39.6 percent, then 4.6 percent will come from other 
     uses. For us, those uses are as follows: Reinvest in the 
     business, give to charity, and meet capital obligations.
       Meeting capital obligations are fixed, so the impact of a 
     tax increase will reduce the amount available for charity 
     first and investment capital second. I have already made 
     plans assuming that some sort of tax increase is coming.

  And he talks about how that will drop his contributions to United 
Way, for example.
  He concludes by saying:

       I think Congress needs to have a much greater appreciation 
     for the direct and indirect consequences a massive tax 
     increase would have on businesses and the communities that we 
     and our employees live and work in.

  Finally, noting a physician who has a business in Chicago, Dr. Herb 
Sohn of Strauss Surgical Group makes another point not just about 
marginal income tax rates but capital gains and dividends as well. 
Remember that these taxes would also be increased under the Democrats' 
proposal. He says that increases in dividends and capital gains taxes 
will prevent his patient care business from expanding to provide 
quality care to more patients. He talks about having practiced medicine 
since the early 1970s in the Chicago area. His focus is on his 
patients, but he says:

       Unfortunately, the impending tax increases will impair our 
     ability to focus on patients and their care. The increases in 
     capital gains taxes and dividend tax rates will impact our 
     business, derailing our opportunities to expand our 
     operations.

  Finally, he notes that he is structured as a passthrough entity. And 
that is how a lot of these small businesses pay their taxes. That is 
why they are impacted by an increase in the top two marginal income tax 
rates. He says:

       If Congress increases the marginal income tax rates, that 
     means we will have less money to expand and reinvest in our 
     business, which, again, is focused on patient care.

  He concludes by saying:

       I'm not a tax expert, but I do have a straightforward 
     diagnosis on this issue--Congress needs to keep all the tax 
     rates at their current levels and not slap us with a bigger 
     tax bill.

  My point is this: The American people, by a wide margin, believe we 
should not increase taxes on anyone. Economists, by a wide margin, 
agree. We should not increase taxes on anyone. And the several examples 
of owners of small businesses who would be the first to be impacted by 
an increase in the upper two marginal income tax

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brackets have made it very clear--every one of them--that it will have 
a direct impact on their ability to hire people, to expand their 
businesses, or to continue in business, and an indirect impact on the 
customers they serve, who then, in turn, would have less business for 
these small businesses.
  All in all, it is a bad idea to even think about increasing taxes on 
any Americans, let alone small businesses. We should make it clear 
right now that these folks do not have anything to worry about; they 
are not going to be hit with a big tax hike.
  The PRESIDING OFFICER (Mr. Merkley). The Senator from Utah.
  Mr. BENNETT. Mr. President, I had originally anticipated speaking for 
15 minutes. I understand that the speaker intruded into the 
Republicans' time, for which I do not complain, but I ask unanimous 
consent that I be allowed 15 minutes even though the time would 
normally expire at 3 o'clock.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BENNETT. Thank you, Mr. President. I appreciate that and the 
courtesy of my colleagues.

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