[Congressional Record (Bound Edition), Volume 157 (2011), Part 3]
[Senate]
[Pages 4283-4284]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               SBIR/STTR

  Mr. BROWN of Massachusetts. Mr. President, I rise in support, strong 
support of the SBIR bill. As many of you know, the SBIR bill and the 
STTR Programs provide vital resources to small businesses, not only in 
Massachusetts but throughout the country. This reauthorization is 
incredibly important to not only businesses in my State but businesses 
in everybody's State.
  This compromise bill has been under development and negotiation long 
before I got here. I applaud Senators Landrieu and Snowe, our chair and 
ranking member on the Small Business Committee, for their persistence 
in pushing this bill through. As a matter of fact, I have two 
amendments that are in the bill that is before us now. I will be 
offering, not today but in the near future, an amendment which I am 
about to talk about.
  As a small business owner myself for many years, and a longstanding 
member of many Chambers of Commerce, I believe the Massachusetts small 
businesses and businesses throughout this country are the economic 
engine that will help get us out of this economic slowdown we are in. 
They have the potential to grow, to expand and hire, unlike many 
businesses throughout the country. Massachusetts is widely regarded as 
the center for innovation in biotechnology. We are a small State but we 
have received the most SBIR awards, only after California. That goes to 
show how important our State is when it comes to creating small 
businesses. The success of the SBIR Program serves as a reminder that 
government can play a role in the business community. But it also needs 
to know when to step out of the way and allow businesses to grow and 
actually create jobs.
  I want to speak about an amendment I filed, amendment No. 212. It is 
based on S. 164, the Withholding Tax Relief Act of 2011, which enjoys 
bipartisan support and is critically needed now. The ranking member of 
the Small Business Committee, Senator Snowe, is a cosponsor. I am 
looking forward to getting many other cosponsors and working very 
closely with the chair on this timely piece of legislation.
  We need once and for all to repeal an onerous and costly unfunded 
mandate that directly affects businesses, not only in my State but 
throughout the country. This is a jobs amendment, plain and simple. It 
would repeal part of our Tax Code that absolutely promises to kill 
jobs, jobs that these young people up here could someday have. If we do 
not act soon, section 3042(t) would require, beginning January 12, 
Federal, State, and local governments to withhold 3 percent of nearly 
all contract payments made to private companies as well as Medicare 
payments, farm payments, and certain grants. It is an arbitrary tax and 
it is nearly impossible to actually implement it. It is one of the 
things we have done that makes absolutely no sense. It has been delayed 
many times.
  The Government Withholding Relief Coalition, a coalition of more than 
100 members encompassing a cross section of America, has estimated the 
combined total 5-year cost to the State and Federal Government of 
implementing this legislation could be as high as $75 billion.
  That makes a lot of sense? That $75 billion is coming out of those 
coffers at a time we can least afford it, and it is estimated only to 
bring in about $7 billion over that same time period. It makes 
absolutely no sense. It is absurd. Any tax that costs more to implement 
than it actually brings in makes no sense at all. I hope with your 
leadership and many other Senators' leadership on this issue we can 
attack these bad laws that are about to click in. It should be repealed 
immediately. As a matter of fact, last week I received a letter from 
Massachusetts State Secretary of Finance Jay Gonzalez, warning Congress 
of the inevitable threat to small businesses' ability to survive in 
this tough economic climate if we allow the continuation of what I 
consider a stealth tax. We cannot discuss the health of small 
businesses on the floor without acknowledging that these very same 
small businesses we aim to help with the SBIR Program, the bill before 
us now, will be suffocated by this 3-percent withholding tax. For some 
businesses it may be the entire net profit of what they make per year.
  I ask unanimous consent to have the letter from Secretary Gonzales 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         The Commonwealth of Massachusetts, Executive Office for 
           Administration and Finance,
                                       Boston, MA, March 11, 2011.
     Hon. Max Baucus,
     Chairman, Committee on Finance, U.S. Senate, Washington, DC.
     Hon. Orrin G. Hatch,
     Ranking Member, Committee on Finance, U.S. Senate, 
         Washington, DC.
     Hon. Dave Camp,
     Chairman, Committee on Ways and Means, House of 
         Representatives, Washington, DC.
     Hon. Sander Levin,
     Ranking Member, Committee on Ways and Means, House of 
         Representatives, Washington, DC.
       Chairman Baucus, Ranking Member Hatch, Chairman Camp, and 
     Ranking Member Levin: As Secretary for the Executive Office 
     of Administration and Finance for the Commonwealth of 
     Massachusetts, I am writing to express my strong support for 
     legislation to repeal Section 511 of the Tax Increase 
     Prevention and Reconciliation Act (TIPRA) of 2006. Section 
     511 amends the Internal Revenue Code by adding a provision 
     mandating

[[Page 4284]]

     that government entities with greater than $100 million in 
     annual spending withhold three percent on payments made for 
     most goods and services, including Medicare payments and 
     certain grants. That three percent is allocated toward the 
     vendor's tax liability. S. 89 and S. 164, currently pending 
     in the Senate, and H.R. 674, currently pending in the House, 
     would eliminate Section 511.
       As a state finance official, I strongly support enhanced 
     transparency and tax compliance; however, I am very concerned 
     about the impact of Section 511 on the Commonwealth of 
     Massachusetts' accounting and procurement systems. 
     Specifically, compliance with Section 511 will require that 
     the Commonwealth devote personnel and other resources to 
     overseeing collection and remittance of the fees, thus 
     causing administrative and financial burdens. The 
     Commonwealth and its municipalities likely will face 
     increased costs to purchase affected goods and services, as 
     vendors can be expected to raise prices to recoup their own 
     added costs or simply refrain from doing business with 
     government purchasers. The negative impact of Section 511 may 
     be particularly acute for women and minority owned businesses 
     as well as small businesses, since it will affect cash flow, 
     their ability to raise capital and to pay subcontractors.
       I strongly encourage you to support repeal of Section 511 
     and to visit the Government Withholding Relief Coalition's 
     website at www.withholdingrelief.com to see the number of 
     government associations and businesses that support 
     abolishing this mandate.
           Sincerely,
                                                     Jay Gonzalez,
                                                        Secretary.

  Mr. BROWN of Massachusetts. The Department of Defense alone has 
estimated this provision will cost about $17 billion to comply with 
over the first 5 years. Unfortunately, there are many other provisions 
and reasons why this provision should be repealed as soon as possible. 
At a time when State and local governments are under extreme fiscal and 
financial stress, why? I don't get it. Why would we actually start to 
put in and enforce another unfunded, costly mandate on them to recover 
minimal funds for the Federal Treasury? This is a question of the 
Federal Government seeking more funds to pay its bills. Only in 
Washington--and I have been here a little over a year, very similar to 
what the Presiding Officer has--only in Washington can they try to 
convey that something like this is good when they actually spend $10 of 
everybody's money, nearly, to recoup a dollar. It makes absolutely no 
sense to me at all.
  Many businesses that contract with the government will simply pass 
this provision on, as we know, back to the government in the form of 
higher bids on contracts. So having a bid on a contract here, when this 
particular tax is implemented--it is going to be here and is ultimately 
going to cost every single one of us more money to do the same thing.
  I listen to the administration, I listen to all the political 
pundits, I listen to everybody talk about the fact that we need to get 
our fiscal and financial house in order. We are in trouble fiscally. 
This country, if we do not do something quickly, is going to be in deep 
trouble. Here we are. We have an unfunded mandate, something that is 
going to add to the cost of doing business, and here we are. Are we 
going to take it up and vote on it? I hope we do. I am looking forward 
to the bipartisan leadership from the Presiding Officer and others on 
this very important issue.
  Many businesses that contract with the government, as I said, will 
merely pass this on. It will crush them and restrict a critical 
cashflow and discourage them from participating in government 
contracts. They will go other places.
  Members of the construction industry are also worried that the 
provision will tax away all of their anticipated profit on government 
contracts, hence diminishing competition and actually raising costs to 
the government at a time we cannot afford it.
  This provision passed in 2005, long before we got here--but we, as 
the new breed of Senators, recognize we need to get our house in order. 
There is a reason the implementation of this has been delayed over and 
over. Everyone knows it can never go into effect. We will be back on 
the floor later this session, because we need to repeal this tax. We 
can do it in the next weeks. I appreciate the effort of the majority 
leader to now include us in the amendment process so we can actually be 
part of the process and come up with new ideas, from new people, to 
look at things in a different way and actually solve problems. That is 
what this amendment offers. I plan to offer it. I welcome everybody's 
support.
  Before I conclude, I want to wish everybody a happy St. Patrick's Day 
and I appreciate your listening.
  I yield the floor.
  Mr. REID. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill 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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