Small Business Lending Fund Act Of 2010

Floor Speech

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Mr. WYDEN. I thank my colleague. I especially appreciate his kind words about a piece of legislation Senator Gregg and I sat for the better part of 2 years working on. I think everyone appreciates colleagues supporting their legislation. I appreciate the Senator's kind words.

I think he is right with respect to the relief, and colleagues will see that, whether it is the Heritage organization or the Brookings Institution or the various analyses that have been done by other groups. But I think it is especially important, even apart from our piece of legislation, that we get at the central question the Senator's talking about, which is, the current tax system is broken. It is broken, and we are not going to get the country where we need to go by just kind of tinkering here and tinkering there.

I wish to give a couple examples because I think the central question is, Are we going to make a break with a broken system and look forward or are we going to do what has been done year after year after year, which is to just to tinker with a broken system and cause more problems?

Here is the heart of it. What we are seeing today is that every few years there are thousands of changes in tax law. So that means all the small businesses--and you were a small business leader before you came to the Senate--all those small businesses, trying to compete in the tough global market, incredibly competitive markets, do not even have any certainty and predictability of what is ahead. They are not in a position to be able to know what the Federal Government and particularly the IRS is going do in terms of taxes, and that drains additional chances for them to make changes in their production, in their workplace, productivity areas. It defies common sense. So the fact that there are these thousands of changes every few years, in my view, is very antibusiness, and particularly antismall business.

Then, the second point that the Senator touched on deals with individuals. The reality is, today, the current tax system is so complicated that most Americans do not even know when a tax break has been extended to them.

The Senator and I have talked about it. It seems to me Senator Begich made the central point here. In the stimulus legislation, in the Recovery Act, there were $300 billion worth of tax cuts put into that legislation--$300 billion worth of tax cuts. If we left today and walked the streets in Anchorage or Portland or Gresham or wherever and asked people about the stimulus legislation, people would know virtually nothing about any tax incentives.

Mr. BEGICH. If I may interject.

Mr. WYDEN. Please.

Mr. BEGICH. That is actually right. One thing I thought, wow, $300 billion tax relief, predominately for middle-class America. I thought my phone would be ringing off the hook with people saying: Wow, what a great relief. If we got 1 e-mail on this out of the 1,000 or so e-mails and phone calls we get every single week, I would be surprised.

Because, as the Senator said, it is a complicated system we have, and when we do relief, no one will even notice it. That is why I was so attracted to Senator Wyden and Senator Gregg's proposal, because it is reform. It is changing the system for the better. It is ensuring that middle-class America, making sure small businesses benefit.

That is when I was shocked, actually. I know if I was back in the mayor's office when we did the small business relief, making sure 90-plus percent of our small businesses did not have to fill out the paperwork anymore and got relief, I heard from them because they were very appreciative because they could reinvest it. But we made it real because we reformed it, not just tinkered with it as you talk about how the past Congresses have done.

Mr. WYDEN. The other aspect of the Recovery Act, I think, that reaffirms this point with respect to the complexity is the Internal Revenue Service puts out what they call their annual ``oops'' list. This is the list of the 10 most common mistakes made by taxpayers when filing. The ``oops'' list released this past March included, for example, one of the principal credits in the Recovery Act because people simply were unable to figure out how to make it work on their 1040EZ forms. So the fact is, the Tax Code today is anything but an easy system. It is quite the opposite.

To further support the point with respect to the complexity, this year individuals and businesses are going to spend 10.6 billion hours to comply with the code. If the tax compliance sector were an industry, it would be one of the Nation's largest, requiring a full-time effort of 3.8 million people to get done that 7.6 billion hours.

The cost of compliance is jaw-dropping, $200 billion a year, 15 percent of all tax revenue the IRS collects each year. So the point of this is, we are at a fork in the road. We can either look to the kind of approach that a Republican President, Ronald Reagan, and a number of Democrats talked about one-quarter century ago and move in and drain the swamp, Democrats and Republicans together, taking on these special interest groups that have hijacked the Tax Code or the Congress can continue, as Senator Begich has said, to keep fiddling with one provision or another, making the Tax Code even more complicated, running what amounts to a full employment program for tax preparers or we can take steps that will make the code fairer and more progrowth.

I also think it is worth noting that in the last round of tinkering, 2001 and 2003, for much of that period we had stagnant economic growth. So we were not doing what the country needed in terms of fairness for the middle class, nor was the country doing what was essential in terms of promoting more high-skill, high-wage jobs.

You and I know, for example, if you take away the tax breaks for shipping jobs overseas, you can use that money to lower the cost to manufacture in this country. I see Senator Casey. He comes from the State of Pennsylvania. He has done terrific work because I have heard him on the floor talking about the importance of manufacturing.

This is one of the issues relating to the question of tax reform. Right now there are tax breaks in the code that reward companies for closing U.S. operations and moving them overseas. Why would not Democrats and Republicans want to go to a more simple system, as Senator Begich is talking about? That would be in the interest of fairness for all but also one that is likely to create more good-paying manufacturing jobs in Pennsylvania and other parts of the country, by taking away the tax break for shipping the jobs overseas and use those dollars to hold down costs for manufacturing red, white, and blue here in the United States. So I am very much appreciate Senator Begich taking this time. He has been awfully kind with us. I appreciate the kind words about the bill and having him on it. But I especially appreciate him outlining what this problem is all about in terms of starting--with getting beyond the tinkering and the complexity to real reform that works for all Americans.

I thank my friend.

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