Senator Collins Reiterates Call for 2 Year Extension to Bush Tax Cuts
WASHINGTON, D.C. – U.S. Senator Susan Collins spoke on the Senate floor late Thursday to express her support for extending the 2001 and 2003 tax relief laws for all earners for two more years.
The full text of her remarks follows as delivered: (CLICK HERE to Watch Video)
“Unless Congress acts, the New Year will begin with the imposition of an onerous burden for American families. They will face an automatic tax increase of nearly $2.7 trillion – one of the largest tax increases in our history – when the 2001 and 2003 tax laws expire.
“This tax increase will hit all American earners, regardless of their income level, and regardless of whether they are married or single, retired or working, or salaried or hourly employees.
“It’s my judgment that the 2001 and 2003 tax relief laws should be extended for all Americans. With the economy still weak, and with unemployment persisting at nearly 10 percent, now is not the time to be raising taxes on anyone.
“Some argue that Americans in the higher tax brackets should not be protected from this tax increase. But that argument for higher taxes come January 1st ignores the fact that a tax increase on top earners is a tax increase on small businesses and thus, a tax on jobs, at a time when we should be doing everything possible to stimulate the creation of more jobs.
“Most small businesses are pass-through entities such as sole proprietorships, partnerships, or S- corporations which must report their earnings on their owners’ individual tax returns. According to the Joint Committee on Taxation, there are some 750,000 pass-through small businesses in the top two tax brackets.
“Higher taxes hurt these small companies by taking away capital they need to grow and to add jobs.
“In Maine, there are numerous small businesses that would be hurt by this tax increase. One is D&G Machine Products, a precision design machining and fabrication operation located in Westbrook, Maine. Founded in 1967, the company now has more than 130 highly skilled and dedicated employees.
“When I visited the company in August, owner Duane Gushee expressed his concerns about the impact higher taxes would have on his company. He explained that D&G competes with companies all around the world for markets and customers. Without constant innovation and investment in cutting edge technology, D&G would lose its customers, and the jobs of its employees would be in jeopardy. The tax increase that would hit D&G on January 1st unless we act would take money out of its bottom line — money that is needed to upgrade equipment and stay ahead of foreign competition.
“Another small business that would be hit hard is Pottle’s Transportation, a trucking company headquartered in the Bangor area. This company was founded in 1972, and now has more than 200 employees with 150 trucks.
“Barry Pottle, who runs this business, tells me that Pottle’s needs to buy 25 to 30 trucks every year just to maintain its fleet. New trucks used to cost the company about $100,000, but in the past few years, the cost has escalated by another $25,000. The tax increase scheduled for January 1st would make it difficult, if not impossible, for Barry to make these investments.
“Other Maine businesses have come forward to highlight the impact that a tax increase would have on their ability to grow their businesses and add much-needed jobs.
“One of these is Allagash Brewing Company, a craft brewery located in Portland, Maine. Founded in 1994, Allagash has grown to 28 employees, and has established a reputation for uncompromising quality as one of the finest producers of Belgian-style beers in North America.
“Like most small businesses, Allagash relies on its retained earnings to finance investment and growth. As Rob Tod, the co-owner of Allagash, puts it: ‘There’s plenty of demand for our product, but we can’t fill demand without equipment, and we can’t buy equipment without money.’
“When small businesses can’t invest and grow, they can’t add jobs. And that’s what our focus should be on – the creation of policies that will help the private sector to create jobs. Rob estimates that every one percent increase in Allagash’s tax rate means one fewer worker for five full years. Stated another way, the tax increase scheduled to occur on January 1st would wipe out jobs for five workers, for five years, just at this one brewery. If that is the impact at one small brewery in Portland, Maine, imagine what the impact would be on jobs lost nationwide.
“Other small businesses in my home state have expressed their frustration at the uncertainty Washington is creating by leaving these tax hikes hanging over their heads. As one small businessman starkly put it: ‘The increases in personal taxes reduce the amount of money I have available for investments of all kinds. I am not investing in my business. I am not hiring workers. I am not considering starting anything new. I am waiting. There is no way to know what Washington is about to do to me, but I expect it will be nasty and brutally unfair. In response, I am holding my ground and preparing for the worst.’ That’s an exact quote from an entrepreneur in my state.
“As if the testimony of these small businesses were not enough, there is a second reason to support extending the 2001 and 2003 tax relief for all Americans: a tax increase on top earners would reduce consumer spending dramatically, cutting demand and costing jobs at a time that our fragile economy can least afford it.
“Peter Orszag, President Obama’s former OMB Director, has underscored this point. In a New York Times op-ed in September, he argued that failing to extend existing tax relief would ‘make an already stagnating job market worse.’ He went on to say: ‘Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt.’
“Mr. Orszag is not alone in this view. Economist Mark Zandi has estimated that raising taxes on top earners would cost us 770,000 jobs, and four-tenths of one percent of our GDP, over the next two years. He cautions that earners in the top brackets are responsible for ‘one fourth of all U.S. personal outlays,’ and that a pullback in spending by these taxpayers could ‘derail the recovery.’
“In light of this risk, Mr. Zandi has called the President’s plan to raise taxes an ‘unnecessary gamble.’ Mr. Zandi suggests a middle ground where no one’s taxes are increased until the recovery is firmly in place is where we should go.
“That is essentially what I recommended to this body in September, when I urged the Senate to take up legislation to extend the 2001 and 2003 tax relief for two years. That’s a middle ground – surely we ought to be able to come together and embrace this compromise. That will get us through the recession and send a strong signal to the business community to invest and create jobs. And here’s my suggestion of what we should do during that two-year period: we could undertake comprehensive tax reform to make our system fairer, simpler, and more pro-growth.
“There are some on this side of the aisle who want to make the 2001 and 2003 tax relief laws permanent, and there are some on the other side of the aisle who want to increase taxes for the top two rates and just extend the tax relief for those making up to $250,000. Let’s instead extend the tax relief for everyone right now for two more years, remove the uncertainty, encourage businesses to create new jobs, stop penalizing small businesses, not dampen consumer spending at the worst possible time, and then let’s use those two years productively to rewrite the tax code to make it simpler, fairer, and more pro-growth.
“I once again ask my colleagues to come together around this reasonable compromise, and abandon any approach to raise taxes at this critical time.