DeFAZIO
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PETER DeFAZIO | | |
| Fourth District, Oregon | | |
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| Small Business Small Business Facts: There are 23 million small businesses in the U.S., representing 99.7 percent of all employers and 44.3 percent of total U.S. private sector payroll. Small businesses generate three-fourths of all new jobs and employ more than half of all private sector employees. Small businesses account for more than half of our GDP, including 37 percent of all manufacturing receipts and 90 percent of businesses located in rural America. Sixty-seven percent of Americans receive their first paycheck from a small business, reflecting how much the future of the American workforce relies on today's small businesses. Small companies are the technology trailblazers, producing 13-14 times more patents per employees than large firms. Small companies employ 40 percent of high-tech workers. Forty percent of all long-term financing for small businesses is provided by the SBA. For less than $2 for every $100 loaned, the SBA can finance about 50,000 small businesses a year, create more than 600,000 jobs and generate millions in tax revenue. Small Business in Oregon: In 2002, the number of small businesses in Oregon increased by 0.8 percent to100,726. In Oregon 97.6 percent of businesses are classified as small businesses (with fewer than 500 employees). Small businesses in Oregon employed 55.9 percent of the state's 1,355,442 non-farm sector employees. Between 1999-2000 (last year data is available), small businesses added a net total of 15,319 employees, representing 68 percent of the net non-farm employment change in Oregon. Useful links: It can be daunting to start and operate a small business. These resources can help answer your questions about how to start, survive and even thrive as a small business: House Small Business Committee: http://wwwc.house.gov/smbiz/ HSBC Democratic Site: http://www.house.gov/smbiz/democrats/ Small Business Administration: http://www.sba.gov SBA Office, Portland, Oregon: http://www.sba.gov/or/ Oregon Small Business Development Centers: http://www.bizcenter.org Starting a Small Business: http://www.sba.gov/starting_business/index.html Financing Your Small Business: The Basics: http://www.sba.gov/financing/index.html Snapshot of SBA loan programs: http://www.sba.gov/financing/sbaloan/snapshot.html SBA Report on Small Business Friendly Banks: http://www.sba.gov/advo/stats/lending/2002/bk_tor.pdf Managing a Small Business: http://www.sba.gov/managing/index.html SBA Federal Government Contracting Information: http://www.sba.gov/gcbd/ SBA Grant Programs: http://www.sba.gov/expanding/grants.html U.S. Export Assistance Centers: http://www.sbaonline.sba.gov/oit/export/useac.html Department of Commerce Export Assistance: http://www.export.gov/ IRS Small Business Information: http://www.irs.gov/businesses/small/index.html Small Business Issues: Health Care The rapidly rising cost of health care is consistently one of the key concerns of small business people I meet. The Kaiser Family Foundation recently reported that in 2003, health care premiums rose by double-digit percentages for small businesses for the third consecutive year. Of the estimated 43 million uninsured Americans, nearly 60 percent work for a small business or have a family member who does. I am a cosponsor of H.R. 3607, legislation to provide a refundable tax credit for small businesses to purchase health insurance for their employees. The credit equals 40-60 percent of the cost of insurance, depending on the size of the company. I also support H.R. 4356, the Small Business Health Insurance Promotion Act. Similar to H.R. 3607, this bill would make small businesses or self-employed individuals eligible for a 50 percent tax credit to defray the cost of health insurance. It would create state and national multi-insurer pools to provide comprehensive and affordable health insurance choices to small employers and the self-employed. To receive the tax credit, participating employers must offer all of their employees coverage through either the qualified state or national health insurance pools. These purchasing pools would ensure comprehensive and affordable health insurance. Participants would receive a choice of plans very similar to those available in the Federal Employees Health Benefit Plan (FEHBP). Prescription drugs are one of the driving forces behind escalating health care costs. I support a multi-pronged approach to end the prescription drug price gouging: (1) allow the reimportation of affordable FDA-approved prescription drugs from Canada and other industrialized countries; (2) permit Medicare to negotiate lower prices on behalf of the American people; and (3) establish "fair pricing" clauses for drugs developed with taxpayer money that are then licensed to drug companies for production and marketing. Some small business owners have asked me to support legislation to create Association Health Plans (AHPs), or federally regulated insurance pools for small businesses. I have serious reservations about AHPs.
Second, exempting AHPs from state consumer protection laws could expose Oregonians in these plans to a lower standard of care. For example, AHPs would not have to comply with protections in Oregon law that: require coverage for mental health parity, substance abuse and alcohol treatment, and mammography screenings; require emergency services a "prudent layperson" thought necessary; prohibit "gagging" doctor-patient communications; provide a right of appeal for denied claims; and prevent insurers from setting premiums based on your health status or increasing premiums more frequently than once a year. Third, AHPs might "cherry-pick" the healthiest individuals while refusing to cover those who actually need insurance, increasing premiums for those outside of AHPs. The Congressional Budget Office estimates that individuals insured by non-AHP plans will see their premiums increase by two percent, or $800 million a year as a result of AHP cherry-picking. A study by Mercer Consultants concluded non-AHP employer costs would increase 23 percent. Fourth, AHPs will do little to reduce the number of uninsured in our country. A recent study by Mercer Consultants found the number of uninsured would increase by one million as employers find it more difficult to afford increased costs in the non-AHP market. The Congressional Budget Office estimates that only 600,000 of the 43 million uninsured would be provided coverage under AHPs. The rest of the participants in AHPs will merely shift from other health plans. Taxes I support reducing taxes on small businesses. The first bill I introduced this session was an economic stimulus bill that included payroll tax relief for individuals and employers. My bill, H.R. 396, included an exemption for the first $10,000 in wages from the Social Security payroll tax -- both the employee and employer share. This would provide a tax cut for small businesses of $620 for each employee earning at least $10,000. I am also a cosponsor of legislation introduced by Representative Hooley, H.R. 3608, which provides a $5,000 tax credit for the creation of new jobs during the current recession. As detailed in the health care page of this small business section, I am a cosponsor of H.R. 3607, legislation to provide a refundable tax credit for small businesses to purchase health insurance for their employees. The credit equals 40-60 percent of the cost of insurance, depending on the size of the company. I am also a cosponsor of bipartisan legislation, H.R. 1769, the Job Protection Act, which would lower the corporate tax rate on businesses who manufacture in the United States. To date, the tax cuts pushed by the Bush Administration have tended to favor large multinational corporations and wealthy individuals, not small businesses. In fact, the President's tax cuts have exacerbated the challenges faced by small that need access to adequate capital to operate and expand. Let me explain. The President proposed eliminating taxation of dividends and lowering the tax on capital gains. Because these tax cuts make investments in corporations more attractive, small businesses (which don't generally pay dividends and offer lower gains to investors) will have to pay higher interest costs to attract increasingly scarce capital. Similarly, the President's tax cuts have led to the reemergence of massive federal budget deficits. Budget deficits hurt small businesses. As the federal government becomes of very large borrower of private capital, the government attracts capital that would otherwise be available for private investment, including in small businesses. Government deficits raise interest rates and borrowing costs for small businesses. The Administration argues that its reductions in the top income tax brackets benefit small businesses. However, only one percent of small business owners benefit from the reduction in the top income tax rate. Over half of small businesses will receive less than $500 under the President's plan. Some 36 percent will receive less than $100. One way we can lower the tax burden faced by small businesses is to make sure large corporations pay their fair share. That is not the case today. The General Accounting Office (GAO) reported in February 2004 that 60 percent of U.S. corporations failed to pay any federal taxes from 1996-2000, even as corporate profits were soaring. An astonishing 95 percent of corporations paid less than 5 percent in taxes. Similarly, Citizens for Tax Justice reported that 41 of the top 250 profitable U.S. corporations paid less than zero in federal income taxes in at least one year in the late 1990s. More than half of the companies paid at less than half of the statutory 35 percent corporate tax rate. According to the Congressional Budget Office (CBO), as recently as 1960, corporate taxes accounted for nearly one quarter of all revenue taken in by the federal government. Today, corporate taxes account for only ten percent of federal revenue. As a percentage of the economy, corporate tax payments have plummeted to the second lowest level in the last 60 years. I am a cosponsor of legislation, H.R. 737, the Corporate Patriot Enforcement Act of 2003, which prohibits companies from taking advantage of tax havens like Bermuda to avoid income taxes on their overseas and/or domestic profits. I am also a cosponsor of H.R. 1555, the Abusive Tax Shelter Shutdown and Taxpayer Accountability Act of 2003. This legislation would eliminate abusive corporate tax shelters that have no economic rationale, but rather are accounting schemes designed solely to avoid U.S. taxes. Finally, I have been asked by a number of small business owners to support a permanent repeal of the estate tax. I agree that small businesses and family farms should not have to be divided up or sold to pay estate taxes. However, instead of permanently repealing the entire estate tax beginning in 2011, I voted in favor of an alternative bill to immediately exempt the first $6 million of an estate from taxation. This would exempt 99.7 percent of all estates from taxation beginning next year, including farms and small businesses. By contrast, the Republican plan doesn't repeal the estate tax until the next decade and then reinstates it a year later. Total elimination of the estate tax is not affordable. A total repeal of the estate tax would cost nearly $100 billion a year, every single year in perpetuity. In just two years, the federal budget has gone from a $5.6 trillion projected surplus to a $5 trillion projected deficit, a $10 trillion reversal, the worst reversal in history! The budget deficit this year alone is likely to be close to $700 billion, which is another record. Lifting the exemption to $6 million, as I've proposed, would mean about 20 Oregon estates would be subject to the tax. By comparison, there are 570,000 Oregonians who depend on Social Security. Nationwide, around 3,300 estates would be subject to the tax with the $6 million exemption. Some have argued the estate tax is unfair because it represents "double taxation." That is misleading. A significant portion of the largest estates have never been taxed as income because they are in the form of unrealized capital gains. The estate tax prevents the wealthiest Americans from avoiding taxation all together, as corporations have been doing by setting up fake headquarters in tax havens like Bermuda. Finally, the repeal of the estate tax could actually lead to INCREASED taxes on heirs due to the "carry-over basis" changes enacted by Republicans. Under current law, heirs who sell an inherited asset owe capital gains taxes only on the increase in the value of the asset that occurred AFTER they inherited it. If the estate tax is eliminated, this would change. Under the 2001 estate tax provision proposed to be made permanent, heirs will have to determine the original purchase price of an inherited asset and pay capital gains taxes when the asset is sold on the entire increase in value since the deceased purchased the asset! In other words, if an heir received a farm that was originally purchased in 1932, then sold it in 2007, the heir would have to pay the capital gains taxes on the appreciated value of the farm over 75 years! That would be a very high tax bill. Infrastructure Infrastructure development is friendly to business. Well-maintained roads, ports, bridges, and airports make a state a good place to do business and also promote the interstate and international commerce vital to the growth and prosperity of small businesses. The first bill I introduced this year was an economic stimulus bill, H.R. 396, which included $50 billion to repair and upgrade our nation's crumbling transportation and water infrastructure. Infrastructure investment provides contracting opportunities for small businesses and represents a much greater economic return for each dollar spent than any other option. Each $1 billion spent on infrastructure yields 47,500 jobs and $6.1 billion in economic activity. I am also a cosponsor of other bills to improve our nation's infrastructure, including:
I am also a strong advocate of federal funding to dredge Oregon's small ports, which is critical to the economic viability of Oregon's coastal communities. Dredging of small ports like Coos Bay and Gold Beach has been under constant attack by the Bush Administration. The President has repeatedly zeroed out funding in his budgets. I have successfully fought to restore funding during the congressional appropriations process in previous years and will do so again this year. Funding for SBA Loan Programs I oppose the cuts to the Small Business Administration (SBA) that have been proposed by the Bush Administration. SBA loan programs fill a void in private sector financing. Forty percent of all long-term financing for small businesses is provided by the SBA. For less than $2 for every $100 loaned, the SBA can finance about 50,000 small businesses a year, create more than 600,000 jobs and generate millions in tax revenue. The President's FY02 and FY03 budgets proposed funding reductions for the SBA of 40 and 56 percent, respectively. The FY05 budget isn't much better. The President asked for $700 million, a 10.4 percent cut from the previous year. The Administration also proposed eliminating funding for the SBA's most popular lending program, 7(a) loans, and reducing the maximum loan size. According to the American Small Business Alliance, the Administration's cuts would undermine economic growth, cost $6.2 billion in lost investment in small businesses, and contribute to 189,000 fewer small business jobs. This year, the Administration also proposed eliminating funding for (1) the Small Business Innovative Research Program technical assistance and the SBIR Federal and State Technology Partnership program (known as "FAST"). SBIR helps with technology R&D; for small businesses, contributes to the transfer of university developed technology to small businesses and helps commercialize such technology developed by small businesses and universities; (2) New Market Venture Capital program; and (3) PRIME (Program for Investment in Microentrepreneurs) technical assistance. This program provides federal funds to community-based, regional and national organizations that in turn will offer training and technical assistance to low-income and very low-income entrepreneurs with small businesses of five employees or less. Also of note, President Bush demoted the head of the SBA from a cabinet-level position. I will do what I can to restore funding for these important programs. Trade I have been a long-time critic of NAFTA, the WTO, MFN for China, fast-track and the rest of the corporate trade agenda. These trade deals have failed to open significant markets for U.S. goods. Instead, they have largely served to promote the export of American jobs by multinational corporations to low-wage countries like China. These corporations then export products back into the U.S. It is virtually impossible for small businesses manufacturing and/or selling U.S. made goods to compete with products made by multinational corporations with Chinese labor. I have also been a critic of Canadian softwood lumber practices. Government subsidies have allowed Canadian producers to undercut U.S. producers, driving hundreds of small mills out of business in the U.S., including in Oregon. I introduced bipartisan legislation during the 107th Congress, H.R. 2181, the Softwood Lumber Fair Competition Act, to require the imposition of tariffs to offset the Canadian government subsidies. Fortunately, the Bush Administration finally imposed tariffs of around 20 percent in 2001. However, these tariffs, which have served to protect American jobs, are under attack by WTO and NAFTA appeals panels. I have also been waging a battle on behalf of Videx, a technology firm based in Corvallis, whose intellectual property was stolen by a Chinese company. I have supported strong "Buy America" provisions in defense legislation that benefit titanium producers in Albany undercut by unfair dumping from Russia. Energy Energy costs are rapidly rising across-the-board. Electricity prices are up 50 percent since 2001. Natural gas prices are soaring. Oil and gasoline prices are at record levels. Energy prices are squeezing profit margins and causing some small businesses to close their doors. I have been a long-time opponent of electricity deregulation schemes. I was one of only a handful of Members of Congress to vote against the 1992 Energy Policy Act, which deregulated wholesale electricity markets. I warned that deregulation would lead to higher prices, increased volatility, reduced reliability, and worse customer service. All have come to pass. In response, I introduced legislation in the 107th Congress to restore cost-based rates. I have been a leading critic of FERC's efforts to deregulate and the deregulation provisions in the President's massive energy package. As co-chair of the Northwest Energy Caucus in the House, I have pressured the Bonneville Power Administration to hold down rates and protected our low-cost hydropower resources from federal regulators, members of Congress from the Northeast and Midwest, and others who want to dismantle the system through market-based rates, elimination of preference for public utilities and for Northwest consumers, and promotion of additional deregulation schemes. I am also a strong proponent of investing in renewable energy and conservation technologies. I have pushed for funding during the appropriations process and offered amendments to transfer research and development subsidies from oil, coal, and nuclear power to renewable energy. I also support a Renewable Portfolio Standard (RPS) that would require 20 percent of our energy to come from renewable sources by 2020. This would jumpstart R&D; and deployment of renewable energy technologies. Research and marketing of such technologies is a growth industry for small businesses in the Northwest (Example, Idatech, a hydrogen fuel cell manufacturer based in Bend). About gas prices, Energy Secretary Spencer Abraham has said the U.S. will not “beg OPEC” for oil. We don’t have to. Here are a few ways to get gas prices under control:
Paperwork Reduction Another common complaint I hear from small businesses is the time and money it takes to comply with federal regulations. The SBA's Office of Advocacy commissioned a study that found for firms employing fewer than 20 employees, the annual regulatory burden was nearly $6,975 per employee - almost 60 percent higher than firms with over 500 employees. According to the non-partisan General Accounting Office, 2002 was a record year for increased paperwork and regulations with federal agencies producing 80,000 densely packed pages of new rules, notices, and advisories. The GAO also reported that since the Bush Administration took office, regulations and legislation have added over 720 million compliance hours per year. I support efforts to reduce the paperwork burden on small businesses. I voted in favor of H.R. 327 in 2002 (P.L. 107-198), the Small Business Paperwork Relief Act, which requires OMB to make resources available for small businesses with questions about regulatory compliance, requires each federal agency to establish a single point person to act as a liaison with small businesses, and requires each agency to reduce the paperwork burden on small businesses. I also voted in favor of H.R. 205, the National Small Business Regulatory Assistance Act of 2003, which directs the SBA's Small Business Development Centers to serve as clearinghouses for confidential regulatory compliance assistance to small businesses. The bill is still awaiting action the Senate. Federal Contracting Winning federal contracts can be an important source of revenue and innovation for small businesses. As it currently stands, however, less than two percent of U.S. companies receive more than 77 percent of all federal contracts. This lack of competition hurts small businesses and means taxpayers are not likely to get the best deal for their money. Federal agencies consistently fail to meet congressionally imposed goals for granting contracts to small businesses, a failure that has cost small businesses almost $40 billion in lost contracting opportunities. I want to limit contract bundling by federal agencies. Contract bundling combines several smaller contracts into a single, large contract that is too large for a small business to handle and bid on. In addition, I supported efforts during consideration of the President's spending packages for Iraq to open up the bidding process and increase transparency so small businesses can compete. I have worked to secure federal dollars for Oregon's small businesses. I helped secure $3 million for On Time Systems, Inc., a Eugene software company with a program to save the Navy money on construction projects by more efficiently scheduling labor. I have also supported the Navy Sealion Program, a special forces semi-submergible ship, made by Oregon Ironworks. And, I have been working with Hydration Technologies, a company in Albany with a unique water filter that has homeland security, military, and foreign aid applications. Other Issues of Interest Federal Prison Industries (FPI) -- I have heard from many small business owners concerned about FPI, a government-owned corporation operated by the Bureau of Prisons that uses low-wage prisoner labor for government contracts. I voted in favor of legislation last year, H.R. 1829, which would block FPI from being a mandatory source for government contracts. This will allow small businesses to compete for these contracts. The bill has not been acted on by the Senate. Private Property Rights -- I am a strong supporter of private property rights. For example, I opposed the Bush Administration's effort to provide FERC with eminent domain authority to seize private property in order to construct electricity transmission wires. I also authored an amendment to block the Coast Guard from establishing a museum on land taken from private property owners in New London, Connecticut. My amendment was endorsed by conservative organizations like Americans for Tax Reform and National Taxpayers Union. Small Business Liability -- I voted in favor of H.R. 1831, the Small Business Liability Protection Act, in the 107th Congress. This legislation would protect small businesses that legally contributed small amounts of hazardous waste to a Superfund site from EPA action and third-party lawsuits. Motor Vehicles Owner's Right to Repair Act (H.R. 2735) -- I am an original cosponsor of H.R. 2735, which has been endorsed by the National Federation of Independent Business (NFIB). This legislation restores the right of consumers to have their vehicle serviced at a repair facility of their choice and to decide whether they would like their car fixed with original or aftermarket automobile parts. | | ||||
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