Grassley Receives Small Business Group’s Rare Award for Leadership, Efforts to Support Small Businesses
WASHINGTON -- Sen. Chuck Grassley of Iowa just received the Small Business Council of America’s Special Congressional Appreciation Award, which has been given only a handful of times over the last 26 years. Grassley received the award for his “outstanding leadership and efforts on behalf of small businesses in the country,” according to the organization.
“I’m grateful to receive this award,” Grassley said. “It’s a no-brainer to work to strengthen small businesses. They create 70 percent of jobs. Their innovation and services are felt every day. Economic recovery and success depend on the ability of small businesses to preserve and create employment opportunities.”
As ranking member or chairman of the Committee on Finance over the last 10 years, Grassley has been in a position to oversee tax and health care policy with an eye toward small business growth and preservation. The Small Business Council of America describes itself as a national nonprofit organization that represents more than 20,000 small businesses in the retail, manufacturing, and service industries on federal tax, health care, and employee benefit matters.
The group said it singled out Grassley for special recognition for his dedication to small businesses, his understanding of the health care and estate tax challenges facing such businesses, and especially his efforts to correct the disproportionate penalties placed on small businesses under a tax shelter crackdown meant to capture large corporations.
For months last year, through the end of the congressional session, Grassley protested the IRS’ placement of liens on small businesses that unknowingly invested in prohibited tax shelters. Some of these businesses were assessed tax penalties as high as $300,000 per year but received a tax benefit for as little as $15,000 from the transaction. Grassley, joined by colleagues, fought to persuade the IRS to provide temporary relief to small businesses facing these penalties until Congress could enact bipartisan, bicameral legislation to fix the penalty structure. Last December, Grassley announced he would hold up all Treasury nominees until the IRS agreed to suspend its enforcement actions. The IRS agreed to suspend collection enforcement action, and legislation making a permanent fix is advancing through Congress.
Grassley acted out of concern that the Treasury Department gave favorable tax treatment to government bailout participants, including Citigroup, while placing liens on small businesses contrary to congressional intent.
Similarly, the $800 billion stimulus bill was enacted hurriedly in February 2009 with less than one-half of one percent of the bill as tax relief for small businesses. Grassley protested the lack of consideration for small business. Last year, he introduced S. 1381, the Small Business Tax Relief Act of 2009. “This legislation contains a number of provisions that will leave more money in the hands of small businesses so that they can hire more workers, continue to pay the salaries of their current employees, and make additional investments in their business,” Grassley said.
Several provisions in Grassley’s bill are under consideration for inclusion in a small business tax relief bill under development in the Senate. The National Federation of Independent Business strongly supports the Grassley bill, writing, “To get the small business economy moving again, small businesses need the tools and incentives to expand and grow their business. S. 1381 provides the kinds of tools and incentives that small businesses need.”
In addition to his legislative efforts, Grassley has worked and continues to work to educate Congress and the public about the impact of various policy proposals on small businesses. For example, the President and Democrats in Congress have proposed increasing the top two marginal tax rates from 33 and 35 percent to 36 and 39.6 percent, respectively; increasing the tax rates on capital gains and dividends to 20 percent; fully reinstating the personal exemption phase-out, known as PEP, for those making over $200,000; and fully reinstating the limitation on itemized deductions, which is known as Pease, for those making over $200,000.
Proponents say those increases would hit only “wealthy” individuals and only a small percentage of small businesses. Grassley has explained in numerous speeches on the Senate floor and elsewhere that according to the Joint Committee on Taxation, 47 percent of all flow-through business income would be subject to the tax rate hikes. This hits small businesses especially hard, because most small businesses are flow-through entities, which are S corporations, partnerships, limited liability companies and sole proprietorships. Grassley frequently uses data from the Joint Committee on Taxation and the Congressional Budget Office, the nonpartisan, official scorekeepers, to underpin his analysis.
Similarly, during the health care reform debate, Grassley highlighted the cost of various proposals on small businesses, both in terms of their ability to provide health care to their employees and the regulatory burden imposed on them by the new health care regime.
“Just this week, the Treasury Department said hiring by small and mid-size businesses remains stagnant even though large firms have seen an uptick in employment over the last six months,” Grassley said. “If we don’t look out for small businesses, we’ll be shooting ourselves in the foot and letting down the scores of people who work hard and deserve secure employment.”
The Small Business Council of America said it gave the award to Grassley this year “in appreciation and recognition of ongoing, outspoken, and effective legislative efforts on behalf of Small Business in connection with federal tax matters as well as sustained and consistent support of America’s private enterprise system.”
Acceptance Remarks of Senator Chuck Grassley
Delivered Wednesday, May 5, 2010
Thank you. I am honored to receive this award. For almost ten years now, I have served as either Chairman or Ranking Member of the Senate Finance Committee. During this time, I have learned a lot about the valuable role that small businesses play in our economy – and have become concerned about their growth.
Everyone acknowledges that small businesses are the engines of our economy. When they move forward, they pull the rest of the country with them. Despite this acknowledgement, it seems that small businesses are increasingly disadvantaged by laws and regulations.
Health care reform is a perfect example. As you all know, on March 23rd, the President signed the health reform bill into law. I voted against the underlying Senate reform bill and the reconciliation bill. I see them leading to higher health care costs, higher insurance premiums, higher taxes, and decreased access to health care providers. That’s not just my assessment. That’s the opinion of non-partisan experts at CBO and the White House’s own chief actuary.
I was concerned about this outcome from the start. That’s why more than a year ago, and for nine months, I started working to see if it was possible to develop a bipartisan piece of legislation that would bring about responsible reform. Unfortunately, the White House and majority leadership decided to move ahead in a partisan way with a controversial bill that did not attract broad-based support.
And as you may already know, this new law could hit small businesses pretty hard. The new tax on health insurance will just end up being a tax on small businesses. CBO and The Joint Committee on Taxation have confirmed time and time again that health insurers won’t end up paying these new taxes – health care customers will. In addition, certain employers will be subject to a tax if they don’t provide affordable insurance. Yet, the law does not do enough to address underlying health care costs. If we can’t control those costs, we can’t expect to see any relief from out-of-control premiums.
It is troublesome that small businesses have to now figure out what affordable insurance means and then likely be subject to a penalty as premiums continue to go up and up. Medical malpractice reform, interstate competition and small business health plans have been shown to address underlying costs, but these proven policies were not included in the new law.
The new health care law does offer a tax credit for certain small businesses that provide health insurance for their employees. But, this tax credit is temporary and very limited. In the end, it does not appear that the tax credit will help struggling small businesses with the cost of health care. Again, that’s not my assessment. CBO tells us so.
Aside from health care reform, I worry about the regulatory burdens small businesses face, especially with the IRS. I was shocked to learn that the IRS overwhelmingly assessed the 6707A tax shelter disclosure penalty on small businesses. When I authored that provision, I intended to shine a light on the activities of large corporations that purposefully engaged in tax shelters.
My inquiry into the IRS’s assessment of these penalties also taught me about the IRS’s use of liens. I am worried about the IRS’s disregard for the impact on a taxpayer’s credit rating from an unnecessary lien filing.
It does not appear that small business has much of a voice with the IRS. I am considering whether a small business taxpayer bill of rights is needed as a result. But, I understand that legislative uncertainty can wreak just as much havoc as the IRS.
The Finance Committee is hoping to mark up a small business tax relief bill. The 6707A fix has passed the Senate but has not been in a bill that’s made it to the President. I hope to include it in the Finance Committee’s small business bill. And I am working to ensure that the provisions in my small business bill that I introduced last summer are included.
In the area of the estate tax, I continue to work with Chairman Baucus and Senators Lincoln and Kyl on a path forward. We are working to achieve a permanent tax rate of 35 percent and an exemption amount of $5 million. There is also support for re-unifying the estate and gift tax unified credits, and providing portability of the exemption between spouses. Unfortunately, the estate tax legislation is caught up in the conversation on “pay-fors” or “offsets”. The small business tax relief bill, the annual tax extenders bill and the extension of the 2001/2003 tax relief are caught up in the same discussion. I, and many of my colleagues, are frustrated that tax relief must be offset with tax increases but spending increases don’t have to be offset with spending decreases. So it is still unclear on when we will reach consensus in the hyper-partisan political environment.
But I want to let you know that I understand that you want certainty in the law. You want certainty that will help promote small business. I know that you want certainty as it relates to the marginal tax rates, and the overall regulatory environment for small business. Please know that I will remain one of small businesses’ strongest advocates. We have to keep up the fight. Lower taxes, lower health care premiums, and more certainty in the law are the least Congress can provide to small businesses, the engines of our economy. Thank you again for this award.
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