[Congressional Record (Bound Edition), Volume 157 (2011), Part 1]
[Senate]
[Pages 669-671]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       AMERICA'S COMPETITIVENESS

  Mr. JOHANNS. Mr. President, as we look forward to tonight's State of 
the Union Address, we are hearing a lot of talk about jobs and the 
United States being more competitive. Unfortunately, the American 
people have heard the talk, they have heard the rhetoric, but they do 
not see the concrete action that is going to make a difference. The 
time for talk really is over.
  Today, I am introducing three concrete measures to unleash American 
competitiveness and lift barriers to American job creation.
  First, we must unbridle our job creators from the onerous 1099 tax 
paperwork mandate that is buried in section 9006 of the health care 
bill. Behind the scenes, for the past few weeks there has been growing 
bipartisan support for this important piece of legislation. In fact, 
now I can report that 50 Senators have signed on as cosponsors, 
including, I believe, 10 or 11 of my colleagues from across the aisle. 
Successful passage of this repeal would send an enormously powerful 
message. It would declare that the 112th Congress will come together to 
remove barriers to job creation. Left unabated, though, this avalanche 
of paperwork will simply bury businesses. If a business purchases more 
than $600 of goods or services from another business, it will be 
required to provide the business and the IRS with a 1099 tax form. This 
new mandate will affect all kinds of businesses in the country. It also 
will include nonprofits, churches, local governments. This small 
section of this 2000-plus page bill is causing massive confusion and, I 
might add, outrage across the country.
  Although this mandate was included in the health care law, it has 
absolutely nothing to do with improving health. Rather, section 9006 
was included because it would supposedly generate money to help pay for 
the bill. But the National Taxpayer Advocate, a division of the IRS, 
does not buy it. Their analysis took all the air out of the argument by 
concluding that the IRS would ``face challenges making productive use 
of this new volume of information.'' The analysis adds that the IRS 
likely would ``improperly assess penalties that it must abate later, 
after great expenditure of taxpayer and IRS time and effort.''
  This mandate was ill-advised, and it is not responsible policy. We 
can do better, and the time is now. The President himself is talking 
about ridding the books of outdated regulations. We should not overlook 
this new regulation that will smack businesses if we fail to repeal it. 
It will inflict a mountain of paperwork on an estimated 40 million 
business owners across this Nation, and it stands in the way of job 
creation.
  It is going to have an impact in Nebraska, there is no doubt about 
that. In fact, as I have traveled back home, I have been inundated with 
stories about business owners who are bracing for the impact.
  Jeff Scherer of Smeal Manufacturing Company in Snyder, NB, says the 
bill will lead to an additional $23,000 in accounting costs. Being able 
to invest that $23,000 into a company will go a long way toward helping 
justify business expansion.
  Another real-life example from Nebraska is a company called 
Hayneedle. Hayneedle is an online retailer of home furnishings and 
other home products located in Omaha, NB. Hayneedle employs 400 people. 
Prior to the 1099 tax reporting mandate, Hayneedle issued approximately 
150 1099 forms annually. Now this great company will be required to 
issue thousands more tax forms every year. They will be required to 
track payments for everything from a computer to rent to office 
supplies. Simple expenses such as food purchases for employees would 
have to be counted and traced. The company estimates that the annual 
cost of compliance will exceed $100,000--useless paperwork. That 
$100,000 would go a long way toward hiring more workers.
  In addition, the thousands of Hayneedle's vendors will be required to 
complete and return to Hayneedle a form W-9. This means Hayneedle will 
be required to review and process and oftentimes correct those forms 
and then issue a 1099 to the vendors. It is a mad circle for no good 
even.
  If the 1099 law is not repealed, it will waste vast quantities of 
capital and human resources. Squandering these resources will stunt 
their ability to grow their businesses. Our Nation needs more employers 
like Hayneedle and Smeal Manufacturing to continue growing and putting 
people to work. Considering the high unemployment rate plaguing every 
State in the country, it is incomprehensible that we keep this in 
place.
  This new 1099 reporting requirement will have an especially 
detrimental effect on small businesses in our local communities. For 
example, the new 1099 reporting requirements create a

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perverse incentive to consolidate suppliers, which leaves Main Street 
businesses out in the cold. You see, businesses will likely reduce the 
number of vendors they work with to reduce the paper transactions to 
avoid the $600 limit and avoid the paperwork.
  When suppliers are consolidated, you can bet that suppliers will lose 
out. Kentucky Fried Chicken restaurant owner Dale Black of Grand Island 
says it best. He says this: He ``wants to be a good corporate citizen 
in the communities I have restaurants, but the 1099 forces me not to 
hire local vendors and tradesmen in my community; instead giving work 
to a single regional contractor.''
  The IRS's own Taxpayer Advocate appears to agree, saying:

       Small businesses may lose customers, leave the economy with 
     more large national vendors and less local competition.

  Now, I am certain the goal was not to strangle small-town economies, 
but it is the unintended consequence and reality of this new mandate. 
We need to look for ways to help small businesses, not hamper them. But 
there is no way to talk around this provision, to spin it. It is simply 
brutal for the American business community.
  Businesses cannot afford the new burden. They are imploring us to 
help them. That is why the Small Business Paperwork Mandate Elimination 
Act, introduced today with that many cosponsors, simply needs to become 
the law. Repealing this mandate is going to be a joint effort of all of 
us in the Senate, and my hope is it will be done.
  In fact, there is something else we can support to create an 
estimated 27,000 new jobs, and it does not cost taxpayers anything. I 
am referring to the second piece of my American competitiveness and 
jobs package, our three pending trade agreements. Unfortunately, with 
our economy struggling, this issue has been given lip service for the 
past couple of years. Although our President mentioned this topic 
almost 1 year ago, we have seen virtually no action. During last year's 
State of the Union Address, the President boldly stated:

       We have to seek new markets aggressively, just as our 
     competitors are. If America sits on the sidelines while other 
     nations sign trade deals, we will lose the chance to create 
     jobs on our shores.

  I could not agree more with his statement. The next day I offered a 
letter to the President with 17 Senators offering our help and our 
support. But, unfortunately, a year later, there has been little 
action. The White House has not sent to us the three trade agreements 
that are sitting on the shelf collecting dust. It is an unfortunate 
squandering of a sorely needed opportunity.
  So with 14 million Americans still unemployed, our country will tune 
in to the State of the Union tonight with keen ears for ideas that 
create jobs, that boost the economy. But our three negotiated trade 
deals continue to sit there. It is unacceptable, and it needs to 
change. By this July, the European Union and South Korea will have 
implemented their own free-trade agreement, putting U.S. business at a 
competitive disadvantage.
  The Korea-U.S. Free trade Agreement fixes that. Our friends to the 
north in Canada and south in Mexico have trade deals in place with 
Colombia. While our agreement languishes, their exports are winning the 
marketplace. Imagine how our exporters feel watching their competition 
move to the front of the line, knowing that the agreements put them 
ahead.
  If we fail to act on the agreement, it is clear that our U.S. 
producers will fall behind. It is happening. Thus, today, some of my 
colleagues and I introduced a resolution pushing for the approval of 
the Korea, Colombia, and Panama trade agreements. Our President and 
this Congress hold the keys to unlocking the benefits.
  According to the U.S. International Trade Commission, these 
agreements would increase new U.S. exports between $10 and $12 billion, 
reducing the U.S. trade deficit and boosting the economy. In addition, 
these new U.S. goods exported to South Korea, to Colombia, to Panama 
would yield 27,000 new jobs. Overall this means an estimated gain in 
GDP of over $12 billion from net exports annually.
  This would be music to the ears of our exporters and those looking 
for work. Their government should similarly be chomping at the bit to 
get this done. It is within our grasp. American workers and businesses 
are essentially pleading for us to move forward. The folks on the 
production line, in our fields, those seeking employment, are the ones 
with true skin in the game.
  We need to unleash their potential by unleashing the pending 
agreements with South Korea, Colombia, and Panama. These agreements 
will level the playing field and eliminate barriers for U.S. goods. Our 
workers are always ready to roll up their sleeves and do what they can 
to start producing.
  Recently our Federal Reserve Chairman, Ben Bernanke, said: Our 
current pace of hiring will require 4 to 5 years to reach normal 
unemployment levels. Now, 4 to 5 years is too long to wait. We need to 
do everything we can to change that picture. So imagine the impact of 
immediately eliminating tariffs on 80 percent of U.S. exports to South 
Korea. Remember, only 13 percent of our goods and services are 
currently exported tariff free. How about immediately eliminating 
tariffs on U.S. exports to Colombia for more than 77 percent of 
agricultural goods and 76 percent of industrial goods. Consider a 
whopping 90 percent of Colombian imports already enter our country duty 
free under the Andean Trade Preference Act. This leveling of the 
playing field is sorely needed.
  To be clear, I do not oppose helping our neighbors, and the Andean 
agreement was designed to do that. But should we not at least seek the 
same treatment for our businesses and our workers?
  Almost 1 year ago today we heard the President speak about 
aggressively expanding the marketplace in the international market. 
These agreements would do that. I hope tonight he reaffirms his 
commitment.
  Finally, the third pillar of the competitive package that I 
introduced today will lower our corporate tax rates 20 percent. For 
many years, the United States has had the second highest corporate tax 
rate in the world--second highest corporate tax rate in the world--
second only to Japan. Japan has now announced that they will reduce 
their corporate rate for 2011. With this reduction, the United States 
will have the highest corporate tax rate of anyone in the entire world. 
That means the U.S. tax environment for our job creators will be the 
least attractive in the entire world.
  Here is the math: When you take into account a Federal corporate tax 
rate of 35 percent and the average State corporate tax rate, the 
combined U.S. corporate tax rate totals more than 39 percent, nearly 
40. This combined rate soars above those of other countries with which 
American businesses compete. That makes absolutely no sense. Is it any 
wonder that jobs are leaving this country to go to other competitive 
countries? Our Nation should be encouraging business creation and 
growth, not putting our job creators at a disadvantage with this 
extraordinary, No. 1-in-the-world tax rate.
  At least 27 of 34 nations in the Organization for Economic 
Cooperation and Development have cut their general corporate income tax 
rates since 2000. These countries have benefitted from increased 
capital investment, and--get this--they have seen their corporate tax 
revenues, as a share of GDP, actually increase even with the lower rate 
because they are expanding the base.
  According to a July 2010 analysis by PricewaterhouseCoopers, the U.S. 
would have to reduce its Federal rate to 20.3 percent to match the 
average corporate rate of other OECD countries. Thankfully, many 
recognize the need to bring our corporate tax rate in line with those 
of other industrialized nations. In fact, in December, the President's 
Export Council recommended the corporate tax rate be reduced to 20 
percent. This will stimulate job creation across the country, all 
sectors of the job market.
  Washington cannot continue to say one thing and do another. That is 
why today I am introducing the Restoring

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America's Competitiveness in Enterprise Act of 2011. This legislative 
package, the 1099 repeal, the resolution supporting the trade 
agreements, the bill to reduce the highest--soon to be the highest--
corporate tax rate in the world will provide a solid foundation for our 
country to move forward.
  It will send a powerful message that this 112th Senate supports job 
creation and is committed to unleashing America's competitiveness. I am 
hopeful that my colleagues will join me in supporting this important 
package. We are off to a good start, and I thank my colleagues on both 
sides of the aisle who have joined me in this effort.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. JOHANNS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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