Senator Warren Delivers Remarks on Devastating Impact of GOP Tax Plan on Small Businesses
Warren: "If the Republicans in Congress think this plan helps small businesses, then they don't know anything about small businesses."
Washington, DC - U.S. Senator Elizabeth Warren (D-Mass.) today delivered remarks at an event hosted by the Center for American Progress on how the Republican tax plan will hurt small business owners, instead of leveling the playing field.
Following her remarks, Senator Warren participated in a panel discussion with small business owners from around the country, including Beverly Armstrong, the founder & CEO of the Massachusetts-based Brazo Fuerte Artisanal Beer.
The full text of her remarks, as prepared for delivery, is available below.
Remarks by Senator Elizabeth Warren
*As prepared for delivery*
November 14, 2017
Good afternoon, and thank you Neera for the introduction. It's great to be back at CAP.
It's especially great to be here with small businesspeople from around the country: ReShonda Young from Iowa, who owns Popcorn Heaven; David Borris, from Illinois, who owns Hel's Kitchen Catering; Deborah Field, from Oregon, who owns Paperjam Press; and Bev Armstrong, from the great Commonwealth of Massachusetts, who owns Brazo Fuerte Artisanal Beer.
I really, really hope all of you brought some samples from your business to share. I'm not leaving until I get some popcorn - and some beer!
What I love about small business owners is that they actually look like America. You can see that here today. A report by the Small Business Administration showed that women owned or co-owned nearly half of all small businesses and 30% of small businesses had minority owners. Nearly 10 percent of small businesses are owned by a veteran. If only the big corporate board rooms and corner offices looked like that, right?
Anyway, I'm here to talk about America's small businesses and the Republican tax plan. Republicans are running around town saying that their plan is great for the economy. Well, their plan can't be great for the economy if it isn't great for small businesses. There are 29.6 million small businesses in the United States and they employ 58 million workers. Since 1993, small businesses have created more than 60 percent of all new jobs. Small businesses grow our economy.
I've seen the grit and hard work is takes to run a small business up close. When I was 13, I started waiting tables at my Aunt Alice's restaurant. Aunt Alice had been widowed in her early 50s. She hadn't worked before Uncle Claude died, but she pulled up her socks and did what she knew how to do - cook. The place didn't make a lot of money, but she lived in the back of the restaurant, and she got by. I spent summers and holidays working for her and living in the back myself, and I saw firsthand the kind of commitment and energy it takes to launch a small business and to keep it going. Six days a week, from early morning until late evening, Aunt Alice did everything from arguing about the produce delivery to filling in for the dishwasher who didn't show up. On the seventh day we scrubbed floors on our hands and knees and got ready for the next week.
It was that same kind of special spark that drove my brother David to start a small business when he got out of the military. And when that one didn't work out, he started another one. Because he couldn't imagine a world where he wasn't living by his wits every day.
These days, it's really hard for small businesses to compete - because they're not competing on a level playing field. The average small business pays about the same tax rate as the average American family - around 17.5 percent. But here's the trick: they have to compete with big guys who hire tax wizards to use tricks and loopholes to make their tax bills disappear.
In fact, we have some small business owners here, so let's do an experiment:
How many of you tried to avoid paying taxes by executing a tax inversion and relocating your corporate headquarters to Bermuda? Ireland? The Caymans?
How many of you small business owners executed a reverse hybrid mismatch to cut down on your tax liability?
How many of you engage in earnings stripping by having your foreign subsidiary make a loan to your American company so you can deduct your interest payments from your American tax bill?
I didn't think so. Now raise your hand if you feel like you don't have a fair shot to compete against big corporations who can do all of that?
Getting rid of the loopholes in our tax code and making it a fair fight is something I can stand behind.
But the Republican tax plan doesn't do that. The loopholes for giant corporations are still preserved in the tax code - and even the so-called small business breaks were really just giveaways for huge companies in disguise.
Republicans have a handful of proposals out there for what they're calling small business tax cuts, but it's clear that their hearts are really in it for the big businesses. The proposals all focus on changing the tax rates for passthrough businesses which include a lot of small businesses but also some giant companies like oil pipelines, Amway - owned in part by Education Secretary Betsy Devos - and, yes, the Trump Organization.
Take the bill before the Senate now. All passthrough owners get to deduct a set percentage of their business income from their tax bill. That means that if you own a gigantic oil pipeline with a lot of income, you get to shield a giant lump of money from being taxed, but if you run a small startup that's just breaking even, you will only see a little tiny tax change.
But it's even worse than that - the Republicans are creating a maze of rules that small business owners will have to navigate. That means hiring lawyers and accountants and spending long hours trying to figure what is taxed at this rate or that rate. Remember when Republicans said their goal was simplifying the tax code? Yeah, the small business tax rules are about as simple as the manual for an Ikea dresser.
The bill moving through the House is even more upside down. Here's just one example: if you're a wealthy passive investor in a business, you get a better tax rate than if you're the one actually running the business, busting your tail like my Aunt Alice or the small business people here with us today. This isn't just a tax cut for rich people - it's a tax cut for rich people who spend all day at the luxury spa while other people work.
And what about the individual taxes that entrepreneurs pay? Here too the Republicans have woven a web of hikes and cuts and loopholes that will make accountants' mouths water. It's confusing and complicated - some in the middle class may get a modest break, but many won't. The story is a little different in the clubhouse at Mar-a-Lago - where the giveaways are big and juicy. Hmmm, I wonder how that happened?
If the Republicans in Congress think this plan helps small businesses, then they don't know anything about small businesses. This plan does nothing to level the planning field and it does nothing to address the real problems that small businesses face. In fact, it makes their challenges harder.
The Republican plan will explode the national debt. And we all know what's next. Republicans will say, "boy, our national debt is too high, we sure need to take a sledgehammer to Medicaid, and Medicare, and Social Security, and investments in infrastructure and housing." Mitch McConnell, Paul Ryan, and top economic advisor Gary Cohn have said as much already. In fact, the Republican budget they just passed already assumed trillions in cuts to exactly those programs.
If Republicans can push through those cuts, it will be devastating to small businesses. For small businesses to be resilient and sustainable, they need customers with money in their pockets. Roads and bridges are important for getting goods to market. Good schools and good healthcare are important to make sure employees are prepared to do their jobs and be healthy, productive workers. The health of small businesses depends on the vibrancy of their communities and the wellbeing of their workers. By that measure, this plan is a disaster.
The Republican plan showers $1.5 trillion on giant corporations. Just imagine what we could do with that money instead.
We could pour it into infrastructure investments, creating millions of good-paying, new jobs immediately and making the entire economy more competitive worldwide.
We could pay down every penny of student loan debt in the country.
We could invest in pre-kindergarten for 3- and 4-year-olds and childcare for younger children that would make it easier for mamas and daddies to work and help prepare the next generation of workers.
All of those things - any of those things - would boost our small businesses more than the GOP corporate tax giveaway.
The road to real small business tax reform starts by defeating this GOP bill. But, I'll tell you, it's not going to be easy. The halls of Capitol Hill are swarming with lobbyists who represent the big corporations and they are hell bent on slamming this plan through Congress. The only way we can beat this thing, move on to actually leveling the playing field for small businesses, and invest in the communities they serve, is with your help.
I'm here, I'm ready to fight. I'm ready to stand with small businesses. Together, we can beat this plan and build an economy that works for small businesses and hard-working families all across this country.
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