Riots vs. Jobs

There are riots in Greece.  The economies of Britain, Italy and Spain are not bouncing back from the Great Recession like they did after the Great Depression. Why?  Because the governments in these countries opted for austerity and deficit reduction instead of investing in jobs as a way out of the recession.

Which brings us to President Obama’s proposed 2013 budget released yesterday. 

As you might recall, I serve as Vice Chair of the American Sustainable Business Council.  That organization and Business for Shared Prosperity put out a press release yesterday to discuss some of the President’s budget items.  The release (below) was picked up by some of the national media (here and here).

Happy Valentine’s Day!

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February 13, 2012

Small Business Owners Support President’s Budget on Taxes, Infrastructure

Majorities favor higher taxes on wealthy, closing corporate loopholes, investing in infrastructure

Washington, DC – Small business owners favor key provisions of the President’s 2013 budget designed to support domestic job creation, modernize infrastructure and raise needed revenue with fairer taxes. These include increasing taxes on the wealthy, eliminating hedge fund manager tax breaks, ending tax deductions for shipping jobs overseas, closing corporate loopholes, investing in infrastructure, and keeping first responders and teachers on the job.

"Small business owners struggled through a recession we didn't cause yet we still lead the economy in job creation. So it's good to see the President propose steps that small business owners know will really jumpstart the economy – investing in infrastructure to create blue-collar jobs, keeping valuable service providers on the job, bringing manufacturing jobs back home and covering the cost by asking the wealthiest and big corporations to pay their fair share in taxes,” said Frank Knapp, President and CEO of the South Carolina Small Business Chamber of Commerce and Vice Chair of the American Sustainable Business Council. “Austerity plans, like those that are causing riots in Europe, are wrong for America. We need investment in job growth. We are the 'job creators' – listen to us."

Small business owners made their views clear on taxes and investment in a recent nationwide survey in which 50 percent of respondents identified as Republican or independent-leaning Republican; 32 percent as Democrat or independent-leaning Democratic; and 15 percent as independent. Majorities in the scientific poll commissioned by the American Sustainable Business Council, Main Street Alliance and Small Business Majority, said the following:

Taxes

·   57 percent said individuals earning more than $1 million a year should pay a higher tax rate on the income over $1 million.

·   81 percent favor hedge fund managers paying taxes at the ordinary income tax rate, which currently tops out at 35 percent, rather than the 15 percent capital gains rate they pay now.

·   91 percent said that U.S. multinational corporations’ use of accounting loopholes to shift their U.S. profits to their offshore subsidiaries to avoid taxes is a problem.

·   When asked what would do the most to create jobs, small business owners chose eliminating incentives to move jobs overseas.

·   51 percent say tax cuts on taxable household income over $250,000 a year should expire (only 40 percent believe they should be extended).

Infrastructure and other Investment

·   69 percent of small business owners support committing $50 billion to new and existing infrastructure projects that would generate jobs—such as making improvements to road, bridge and water systems.

·   59 percent favor creating a nationwide wireless network and improving the accessibility of high-speed wireless services.

·   59 percent support creating a National Infrastructure Bank to help fund infrastructure, like roads, bridges, and water systems, via private and public capital.

·   53 percent favor spending $35 billion to prevent layoffs of police officers, teachers, and firefighters.

Read the poll reports here:

Small Business Owners’ Views on Taxes and How to Level the Playing Field with Big Business

Small Business Owner Opinions on Access to Credit and Proposals to Boost the Economy

“The American Sustainable Business Council supports the sensible tax and investment provisions in the President’s budget,” said David Levine, CEO of the American Sustainable Business Council. “The smart use of public funds for job creation, education, infrastructure and scientific research is crucial to restoring American leadership in world-class innovation, services and manufacturing.”

“As a successful corporate executive, I recognize that our tax code is unfair and replete with tax shelters and loopholes favoring the wealthy,” said Jack Kintslinger, chairman emeritus of KCI Technologies, Inc. and a member of Business for Shared Prosperity. “Most wealthy business executives I know are prepared to contribute more in taxes if the additional revenues are spent wisely. They know that they can spare paying higher taxes and that the nation desperately needs more revenue for essential services.”

“The combination of a hurting middle class, crumbling infrastructure and irresponsibly low taxes on the biggest corporations and richest Americans is no recipe for innovation, employment and national success,” said Jody Gorran, owner of Aquatherm Industries Inc., a manufacturer in New Jersey. “It’s time for big corporations and wealthy Americans to stop passing the buck, pay their fair share in taxes, create jobs here at home and invest in our nation’s future.”

Poll results reported in this statement represent findings from a scientific nationwide survey of 500 small business owners, commissioned by the American Sustainable Business Council, Main Street Alliance and Small Business Majority, and conducted by Lake Research Partners. The survey was conducted in December 2011 and January 2012. It has a margin of error of +/- 4.4%.

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The American Sustainable Business Council is a growing coalition of business networks representing over 100,000 companies and 200,000 business leaders. ASBC advocates for public policies that meet the realities of the 21st century global economy. www.asbcouncil.org

Business for Shared Prosperity is a national network of forward-thinking business owners, executives and investors. BSP is a member of the American Sustainable Business Council. www.businessforsharedprosperity.org

Raising revenue OK with SC Republicans

Thank goodness South Carolina Representative James Clyburn is on the Super Committee otherwise the results of a recent poll might not get to his fellow Committee members.

A just released Winthrop University poll has found that 73.2% of South Carolina Republican or Republican-leaning voters receiving Social Security or Medicare do not want those benefits cut to reduce the national deficit.  Of the same group who are not receiving those benefits 53.6% don’t want those programs cut.  And 52.9% of all of these South Carolina GOP voters do not want the defense budget lowered for deficit reduction.

A plurality in this Republican-only voter’s survey, 46.6%, said that it is not possible to address the deficit problem without a tax increase.

If protecting Social Security, Medicare and defense by increasing revenue to reduce the deficit is OK here in South Carolina, the Super Committee’s job should be easier than we thought it would be.

Report: Majority of Congress with no education in business

The Hill
8/23/11

By Mike Lillis

Almost 80 percent of lawmakers have no academic background in business or economics, even as Congress grapples with deficits, unemployment and other economic issues of tremendous complexity, according to an independent analysis released Tuesday.

The Employment Policies Institute (EPI) found that only 8.4 percent of lawmakers majored in economics or a related field, while just 13.7 percent studied topics related to business or accounting.

"This research suggests that our elected Representatives may want to dust off their Econ 101 textbook (if they have one) before trying to tackle weighty questions about the impact of taxes, spending, and debt on our economy and the labor market," EPI's release warns.

Most Capitol Hill lawmakers (55.7 percent) focused their studies on government, law or the humanities, EPI found, while 11.5 percent majored in science- or technology-related fields.

The report arrives as Congress continues to joust over deficit reduction, spending cuts, tax reform, and the role of the federal government in pulling the country out of a prolonged jobs crisis.

Republicans argue that the size of government – combined with enormous levels of federal spending – have contributed both to the recent recession and the slow pace in pulling out of it. They want to cut taxes, slash spending and scale back regulations they say are strangling private sector job creators.

Democrats, on the other hand, see the government playing an active role in bolstering the economy. They're pushing proposals designed to create jobs by increasing infrastructure spending, lending a lifeline to states and hiking taxes on corporations that outsource jobs.

Michael Saltsman, a researcher at EPI, was quick to concede that the lack a formal background in economics or business does not automatically preclude lawmakers from making informed choices about economic policy.

"There are plenty of people who have done it well," Saltsman said.

But given the intricacy of the economic issues lawmakers are tackling this year, a formal introduction to those topics "would certainly help them to evaluate these things better," Saltsman added.

In crunching its figures, EPI excluded nonvoting members, such as those representing Guam and the District of Columbia. The group also did not take into account those lawmakers without business or economic degrees who nonetheless launched business careers.

Source:
http://thehill.com/homenews/news/177897-report-three-fourths-of-congress-has-no-education-in-business-economics

Illinois Dems weigh in on job creation and deficit reduction

With all the national attention being focused on the nation’s lack of jobs and deficit reduction, this week two Illinois U.S. House members put forward their plans to help the country.  Both have some great ideas.

Yesterday, Representative Mike Quigley released his 60-step blueprint he hopes the new Congressional deficit reduction Supercommittee will follow.  His plan calls for reducing deficit spending by $2 trillion over the next ten years and includes:

--$700 billion in savings by reducing U.S. troops in Europe, Iraq, Afghanistan and other Asian
   countries
--allowing the federal government to negotiate with pharmaceutical companies for drugs   
   purchased through Medicare
--raising the income level subject to Social Security payroll tax
--cutting subsidies to oil companies
--closing corporate offshore tax haven loopholes
--ending tax credits for vacation homes

On Wednesday, Representative Jan Schakowsky released a proposal that she says will create 2.2 million jobs over the next two years at a total cost of $227 billion.  The following jobs would be created under her plan:

--400,000 construction and 250,000 maintenance jobs for public school rehabilitation improvements
--100,000 jobs for youth between the ages of 16 and 25 to work on conservation projects on public
   lands
--250,000 par-time jobs for college students under the Federal Work Study Program
--300,000 teachers, 40,000 new police officers, and 12,000 firefighters
--40,000 health care providers for underserved rural and urban areas
--100,000 early childhood care and education jobs
--750,000 jobs to do housing rehab, weatherization, recycling and rural conservation

Deficit reduction achieved

We’ve found the solution to decreasing the country’s deficit spending—more revenue!

According to a report yesterday from the U.S. Treasury Department, the federal government decreased deficit spending by 6% ($70 billion) in 2011 to date compared to the same period in 2010.  If we continue to do that for the rest of the year that will mean we reduced the anticipated deficit by $120 billion in 2011--all due to more revenue coming in and not from cutting any spending that will hurt Main Street’s economy.

Extend this trend line out for the next decade and we will have cut the projected federal deficit by $1.2 trillion.  All the Congressional  deficit-reduction supercommittee, scheduled to find $1.5 trillion in reduced spending over the next 10 years, needs to do is find some additional revenue. 

No problem.  Make the multinational corporations pay their taxes by ending offshore tax have abuse or let the Bush tax cuts on the wealthy expire and “poof” the job is done.    

But there is another way we can do even more deficit reduction as the Treasury news indicates—create more revenue by creating jobs.  More people working means more workers paying taxes. 

That’s exactly why U.S. Representative John Larson of Connecticut wants to create another “supercommittee” for job creation.  He plans to do this next month by introducing an amendment to the legislation creating that other supercommittee.   

More jobs also mean more consumers for our small businesses.  That’s what we really need to grow our economy back to a balanced budget.

Debt Ceiling Deal

Below is a statement on the debt ceiling deal from Citizens for Tax Justice released 8-2-11.
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President Obama Breaks His Promise on Taxes Again

The so-called “Budget Control Act” that President Obama signed into law today to increase the federal debt ceiling and reduce the federal budget deficit marks the second time the Obama administration has capitulated on tax policy to the most extreme elements in Congress, those who are least in touch with the American people and most willing to risk economic disaster to get their way.

While our political leaders should be doing all they can to boost consumer demand and create jobs, the administration and Congress have instead agreed to slash public services without guaranteeing any increase in revenue.

To be sure, a revenue increase could result from the process established under this deal, despite Republicans’ claims to the contrary. But anti-tax lawmakers have already demonstrated that they will risk everything — including economic catastrophe — to block any and all revenue increases. As a result, we believe the only hope for a balanced approach depends on President Obama finding the courage (which he has lacked so far) to allow all of the Bush tax cuts to expire at the end of 2012.

Read the full statement.

Fair and balanced???

The FOXNews of budget agreements. That’s the best description of the debt ceiling compromise passed by the House yesterday and by the Senate today.

No matter how many times FOXNews calls itself “fair and balanced”, the hard evidence tells the real story of slanted and faux news at the Murdoch network.

The same PR charade was used by President Obama to sell the bi-partisan compromise on lifting the debt ceiling. All his talk of a balanced approach that called for shared sacrifice for all turned out to be the equivalent of the “fair and balanced” FOXNews mantra.

The $1 trillion immediate deficit reduction in the agreement is all spending cuts. We’re told that the “balanced and shared sacrifice” part of deficit reduction will come from the special joint committee to be established to shave off another $1.5 trillion from the deficit. Don’t hold your breath.

The wealthy and multinational corporations have a firm grip on both parties (especially the Republicans) in Congress and the President. The big campaign contributions and highly paid Washington lobbyists will make sure that we don’t close the abuse of offshore tax havens by multinationals that will cost us $1 trillion in lost revenue over the next 10 years. Another $700 billion over the next decade will be lost because we won’t ask the wealthiest in the country to simply pay the same level of taxes from the 90’s (the last time we had a balanced budget).

And while the wealthiest Americans and multinational corporations are required to sacrifice, the rest of us, small businesses and our whole economy will feel the pain of our sacrifice.

I spoke with Christian Dorsey of the Economic Policy Institute yesterday. His organization projects that just with the first $1 trillion in spending cuts our nation will lose up to 2 million jobs over several years. The reason—unemployment benefits won’t be extended and the payroll tax holiday will end. That will mean a lot less money flowing into the pockets of consumers who will then spend less. Less consumer spending means hard times for small businesses and fewer jobs.

Add another $1.5 trillion in spending cuts according to this deal and here comes another recession. The wealthy will survive just fine and so will the multinational corporations. The rest of us—not so much.

God made them do it

Please call South Carolina Congressmen Jeff Duncan, Tim Scott and Mick Mulvaney and tell them that God did not tell them to oppose Speaker Boehner’s deficit reduction plan, Senator Reid’s plan or anything dealing with the fiscal integrity of our country. These gentlemen need to quit hiding behind God for their partisan decisions. I am quite confident that She doesn’t like it.

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Politico
July 29, 2011
South Carolina vs. the world in House

By: Marin Cogan and Jonathan Allen

The delegation that prays together stays together — just ask South Carolina’s House Republicans, a bloc of five lawmakers that have proved some of the toughest votes to crack as GOP leaders push to flip votes for their deficit reduction package.

Early Thursday evening, three of the South Carolina freshmen — Jeff Duncan, Tim Scott and Mick Mulvaney — convened in a small chapel adjacent to the Capitol Rotunda to talk and pray about the vote.

Rep. Joe Wilson, the only senior colleague in the group, entered the speakers office around 6 p.m., around the same time Republicans were supposed to bring their bill to the House floor. The South Carolina freshmen were in and out of Majority Whip Kevin McCarthy’s office throughout much of the night, as leaders tried to determine what, if anything, could be done to change their minds.

Scott emerged briefly before 10 p.m. to tell reporters he was still a no. Not long after, leadership canceled the vote for the night.

As freshmen members of Congress, the close ties among the South Carolina freshmen stand out. They regularly pray together and are in near constant communication with one another about their votes. They dine together on Capitol Hill and play basketball in the House gym. Two of them, Duncan and Scott, share an apartment.

Their bonds developed before they came to Washington. Duncan, Scott and Mulvaney served together in the state legislature and both Scott and Gowdy belonged to the South Carolina-based Liberty Fellowship before their election to Congress.

The freshmen are some of the most conservative members of their class—Mulvaney proposed an amendment to the Defense Appropriations bill two weeks ago to freeze defense spending at FY 2011 levels and was soundly defeated by members of his own party. Last month, he opened up to POLITICO about his delegation’s “South Carolina versus the world” mentality.

“I know it’s been frustrating to our leadership sometimes, because they look at South Carolina and say, ‘What are these crazy guys going to do now?’ But all we’re doing is being true to our state,” Mulvaney said.

Duncan said at that time that their leadership had “gotten the message very clearly early on from us. They know we’re going to talk; we’re going to try to be like-minded when it comes to representing South Carolina.”

The positions taken by Sen. Jim DeMint — a conservative powerhouse nationally and especially in the state — undoubtedly loom large over the House delegation. The House freshmen periodically put DeMint on conference call to seek his advice on votes. DeMint was a strong opponent of the Boehner plan, appearing at a Tea Party rally Wednesday to urge members of Congress to “hold the line” against any vote but the Cut, Cap, and Balance plan passed in the House. The four freshmen insisted they were “no” or “lean no” votes throughout the week.

Asked whether divine intervention might hit during prayer Thursday night, Scott said: “Divine inspiration already happened. I was a lean no, and now I’m a no.”

'Shared sacrifice' in debt reduction should include international tax loopholes

By Rep. Lloyd Doggett (D-Texas) 
The Hill's Congress Blog
July 26, 2011

As Washington considers solutions to our debt crisis, I believe a fundamental principle -- before we consider cutting vital programs or raising tax rates—is ensuring everyone pays their fair share. I always find it impossible to explain why a pharmacist in Lockhart, Texas, or a small retail store in San Marcos has to pay more in taxes because some multinational can duck and dodge its obligations by moving money to Bermuda or the Cayman Islands.

Closing loopholes that allow billions in tax dollars to slip through the cracks each year would restore much-needed revenue, and would also help our economic growth by leveling the playing field for small business and improving public confidence in our tax system. In particular, the widespread use of international tax games in offshore tax havens costs the U.S. Treasury an estimated $100 billion each year in lost tax revenues. Our failure to close these tax loopholes means we are forced to borrow more from foreign creditors or make hardworking families and small businesses pick up the slack. Equally important, international corporate tax loopholes provide incentives to invest abroad instead of at home, shipping jobs offshore and harming our local communities. The Stop Tax Haven Abuse Act that I am introducing again this Congress with Sen. Carl Levin (D-Mich.) takes aim at these abuses.

This bill will stop some of the most egregious offshore shenanigans and provide powerful new tools to combat tax abuses and reduce the incentives to send U.S. jobs and money offshore. With this economy still precarious, what better source for needed tax revenue than those who are shifting jobs abroad to avoid paying taxes at home? America needs the revenue and American firms who play by the rules deserve a level field.

Unfortunately, while most of America understands this self-evident proposition, there are still many, aided by well-paid lobbyists, who are pushing in the opposite direction. Among the giveaways they advocate is a so-called “corporate repatriation tax holiday” that would reward multinational corporations for stashing billions in tax havens by giving them a $79 billion tax break on this overseas money. While billed as a job creation measure, prior attempts in 2004 amounted to a massive windfall for a few multinationals and their shareholders, while doing nothing to create jobs or stimulate the economy.

Even worse, this corporate tax holiday encourages corporations to shift even more jobs and profits overseas hoping for the next tax giveaway. Remarkably, the proponents’ audacity is not limited to a temporary tax holiday; some would go even further, pushing for a permanent tax exemption on foreign profits. It is not hard to see how a system that lets investment overseas completely escape U.S. taxes is a recipe for job creation abroad and more layoffs at home.

We hear a lot these days about shared sacrifice, but usually from people who expect the most from those that have the least. Before we ask for greater sacrifice from hard-working families and small businesses, we should first ask these multinational corporations to sacrifice their international tax loopholes and we should refuse to open new ones. Providing a level playing field and expecting everyone to pay their fair share should be the foundation of our tax system, and closing these tax loopholes — through legislation like the Stop Tax Haven Abuse Act — should be a critical element of any deficit reduction package.

Don't talk about it....do it

Last night we heard from President Obama and Speaker Boehner about their ideas for addressing deficit reduction and raising the debt ceiling. The President spoke about the need to close corporate tax loopholes and end offshore tax haven abuse—issues that you have heard me talk about many times.

Unfortunately, neither deficit reduction plan on the table from Democrats or Republicans addresses the crucial problem of U.S.-based multinational companies avoiding paying taxes.

This afternoon I took part in a conference call media briefing with Texas Congressman Lloyd Doggett who is introducing his “Stop Tax Haven Abuse Act” in the House today. Two weeks ago I was in DC doing the same thing in person with Michigan Senator Carl Levin.

Below are the remarks I made today.  Click here to hear the audio from the media briefing.
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I’m Frank Knapp, president, CEO and co-founder, of the South Carolina Small Business Chamber of Commerce. I am also speaking on behalf of the national coalition, Business and Investors Against Tax Haven Abuse (www.businessagainsttaxhavens.org).

Last week I received a call from a reporter from The Hill and he wanted to know what the Administration and Congress could do to really help small businesses.

I told him that the number one thing that Washington can do is to help create more consumers. But instead of putting more money into our state and local economies that will create jobs and thus more customers for the goods and services of small businesses, today we are discussing cutting the federal budget which will take more money away from Main Street.

It is my understanding that both the Republican and Democratic deficit reduction plans call for $1.2 trillion in discretionary spending cuts over the next decade. Fortunately the Democratic plan doesn’t touch Medicare, Medicaid and Social Security—programs that pump money directly into our local economies and thus help our small businesses.

But both plans fail to pick the low hanging fruit of an estimated $1 trillion that could be used to reduce the deficit without cutting any non-defense discretionary spending which has already been cut.  I’m talking about corporate tax loopholes and overseas tax havens used by U.S.-based multinational corporations to avoid paying taxes. The President talked about the need to address this problem last night, but putting words into action at this time is not on the table.

We’re talking about $1 trillion of taxes not being collected to help pay for our national defense, infrastructure, courts and education system. That means that small businesses and individual taxpayers pay more taxes to subsidize these giant corporations that depend on these government services. This unfair situation has small businesses and all Americans angry and demanding change.

In addition, multinational corporations not paying their fair share of taxes gives them an unfair competitive advantage over our small businesses because we pay our taxes.

Both political parties need to wake up and start listening to Representative Lloyd Doggett and Senator Carl Levin about what is vital in a deficit reduction plan—tax reform that makes multinational corporations pay their taxes.

It's time to close the tax loopholes and tax havens that deprive us of much needed revenue and reward big corporations for hiding profits and exporting jobs that we all know American workers and our economy need now more than ever.

"Gang of Six" tax plan--sacrifice for all but multinationals

OK. I admit that I got my hopes up upon hearing that U.S. Senate Democrats and Republicans were talking nice about the Gang of Six deficit reduction outline that included revenue increases as well as budget cuts.

But as they say—the devil is in the details. And the details in the Gang of Six proposal are sketchy to say the least.

But here is what we can garner from what has been made available to the public.

If you like U.S.-based multinational corporations using offshore tax havens and tax loopholes to avoid paying taxes, then you’ll like the Gang’s plan.

If you like these multinationals shipping U.S. jobs overseas, then you’ll like the Gang’s plan.

If you want to keep the inequity of our tax system that favors corporate giants and the wealthiest in our country, then you’ll like the Gang’s plan.

The Gang’s plan projects to increase federal government revenues by $1 trillion over 10 years. But instead of asking those not paying their fair share of taxes ($1 trillion over the next decade is the projected amount of taxes not being paid due to corporate tax havens and loopholes); the proposal suggests reducing tax deductions for employers offering health insurance, charitable giving, home mortgages and other middle class breaks.

That short term lifting of the debt ceiling combined with some budget cutting all of the sudden doesn’t look so bad. At least then we’ll still have a chance for common sense revenue enhancers that treat small businesses and hard-working Americans fairly.

Balanced deficit reduction

As the debt ceiling debate rages on, it appears that Congress and the President are looking at a plan to simply raise the debt ceiling enough to allow the federal government not to default for a short period of time and do some budget cuts along with it. What a tremendous waste of an opportunity to address the issue of multinational corporations using tax loopholes and offshore tax havens to avoid paying their fair share of taxes.

There is an estimated $1 trillion dollars of taxes over the next decade that these multinationals should be paying but won’t if we don’t change our corporate tax laws. That equals 1/4th of the debt reduction goal President Obama said he wanted. It’s low hanging fruit that these corporate giants and their advocates like the U.S. Chamber won’t let us pick because of all the campaign contributions and lobbyists at their command.

Fortunately there are other business organizations that understand the need for a balanced approach to deficit reduction that includes both budget cuts and responsible, common sense revenue increases.

Below is a letter from the American Sustainable Business Council being delivered today to House Speaker John Boehner and Majority Leader Erick Cantor. Copies are being given to the President and other Congressional leaders.
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July 19, 2011

RE: Debt Ceiling, Taxes and Deficit Reduction Approaches

Dear Speaker Boehner and Majority Leader Cantor,

The American Sustainable Business Council is a network of business associations and companies representing over 100,000 businesses across the nation. Our members are part of a growing force within the U.S. economy that understands that financial success requires balancing economic, social and environmental needs.

We see an enormous opportunity in the public debate over the budget and debt, for fundamental reforms to grow our economy and strengthen our country. However, we do not believe the conversation is heading in the right direction. We are concerned that offshore tax havens, growing income inequality, rollback of environmental and safety regulations, and divestment from infrastructure and workforce development, present serious challenges to our global competitiveness. The continued practice of discounting externalities, subsidizing highly profitable mature industries, and rewarding off-shoring of U.S. jobs has contributed substantially to the national debt and undermined the health of the U.S. economy.

As businesspeople, we also believe that the tax code needs to be significantly modified so that small and mid-sized companies and middle class families, are not asked to pay a disproportionate amount of taxes. We are quite willing to pay our fair share, but find it troubling that many of the nation’s largest companies pay an effective marginal rate far, far less than we do.

We write to ask you to re-examine your basic assumptions of what is required to stabilize the U.S. economy and address the budget deficit. Please understand that not all business leaders agree with many of the points you make daily in the name of defending the private sector. It is inaccurate to lump together large and small business—and businesses in every sector of the U.S. economy--as if all of our interests were exactly the same. Some might see this as a strategy to use the halo of small business to camouflage the excesses of big business.

We do agree with the U.S. Chamber of Commerce and the Business Roundtable that we must raise the debt ceiling, and soon. However, we find that a diversity of business voices is not being heard on the specifics of the current budget debate. Many business leaders believe that raising revenues through tax code modifications, and supporting federal government services, is critical for economic health. Cuts to programs for the young, old, disabled and unemployed will hurt not only our customer base, limiting their capacity to buy our products, but our nation as a whole.

Further, we disagree with the perspective that any tax increase destroys jobs. We believe that there are important distinctions to be made between good taxes and bad taxes, between incentives that create jobs and real value for the economy and those that don’t. There are expenditures that are critical to improving productivity and the nation’s infrastructure and those that are a waste of money. Removal of certain subsidies for mature industries, in our view, does not constitute a tax increase but rather a smart business decision. This is how we run our companies – moving resources towards areas of greatest need in a constantly changing marketplace.

We would point out that during the 1980’s, President Reagan raised taxes many times and unemployment continued to fall. And, when President Clinton raised taxes in 1993, unemployment fell and investment expanded. We would like to see the discussion of job creation using proven methods re-elevated in the national debate, including government investment in areas of significant national interest, such as renewable energy development, manufacturing, education, high speed rail and basic R&D. The private sector and federal government must work together to ensure that America not only remains an economic powerhouse, but also a nation built on principles of fairness.

We have two other important concerns: (a) the largest companies rarely pay the statutory rate, instead often paying half that in practice while small businesses, who account for most of the net job growth, consistently pay higher tax rates; (b) job creation in America is our top priority. To that end, we need to ensure that reduced tax rates actually result in jobs being created here at home, rather than being shipped overseas.

As this crisis is turning on fixing the Federal budget, we would highlight that the tax burden is being described as if the prosperous—whether individuals or corporations—are paying taxes at the highest marginal rate. A few of the nation’s wealthiest citizens claim that they are paying 50% of their income in federal or federal and state taxes. They are not.

In fact, the effective rates of taxation—the real rates that wealthy individuals and corporations pay—are half the highest marginal rate or less. Corporate taxes as a share of federal government receipts are at their lowest level since the 1950’s. Fixing these distortions and closing huge tax loopholes and subsidies in our Federal budget to generate revenue should be at the heart of resolving the current crisis.

With this as background, we offer a set of principles and solutions that our members see as essential to getting our country back on track:

Principles

• Taxes have a critical role to play in funding research to generate innovation and growth, providing for our national defense, and creating an equitable economy.

• Raising revenue to fulfill essential obligations, such as maintaining/improving infrastructure is smart policy, as are taxes that fund workforce investments.

• The national burden for debt reduction should not fall on small companies.

• Small and mid-sized businesses use their assets to reinvest in their communities and workforce. They are the backbone of the U.S. economy, creating most of the net new jobs over the past decade.

• Regulations are needed, as the marketplace isn’t perfect. We find that carefully crafted regulations can save more money than they cost, as evidenced by the inadequacy of banking regulations that cost our nation over one trillion dollars in lost assets.

Solutions

• Reducing the budget deficit should not be achieved exclusively by reducing public expenditures, many of which improve the nation’s competitiveness. Drastically cutting expenditures will also likely increase the unemployment rate. Revenue enhancements should be a key part of proposals for deficit reduction.

• Taxes that assure a stable middle class and maintain consumer demand—key to our economic future—are welcome.

• An effective and graduated Corporate Alternative Minimum Tax could assure that companies pay their fair share of taxes. Small businesses pay on average far higher effective rates than most Fortune 100 multinationals because of widespread use of tax havens. The Stop Tax Havens Abuse Act of 2011 would go far to close these loopholes. We must stop subsidizing the largest and wealthiest corporations at the expense of our domestic businesses and the national economy.

• Corporate subsidies should be limited to spurring innovation, preserving the environment and public health, hiring veterans and minorities, and other job creating initiatives. Initiatives such as the Small Business Jobs Act are relatively inexpensive ways to continue to spur growth.

• America’s wars should either be paid for by surtax or by adjusting the defense budget. The defense budget should not be immune from cuts. Due to deficiencies in the federal contracting process, which appear to favor a few large corporations, we believe there is room for substantial savings.

We have not endorsed any comprehensive deficit reduction package, however select policy solutions in line with these principles have been proposed by groups as diverse as the Congressional Progressive Caucus, the Cato Institute, and the Bowles-Simpson Commission. Estimates suggest that enacting policies in line with these principles could easily save upwards of $2.75 trillion dollars over a decade, without cutting into essential federal programs on which this nation was built.

A ‘sustainable’ economy focuses on building long-term value and assets. It invests in next generation ideas and technologies while contributing to the well-being of our communities. We believe these ideas and policies to be consistent with a fair marketplace, represent the views of thousands of small businesses across the country, and will foster long-term economic prosperity.

Thank you for your consideration and interest.

Sincerely,

David Levine, Executive Director
American Sustainable Business Council