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Mr. ISAKSON. Mr. President, if the distinguished whip will remain on the floor for a second, as I was passing through listening to his speech, I wanted to add some meat on the bones of this business of passthrough income and the 940,000 American small businesses that will be affected dramatically by the President's announcement today.
For 22 years, I ran a subchapter S corporation. A subchapter S corporation passes through its revenues to its investors who pay it at the ordinary income tax rate of an individual. Now, $250,000 is not an inordinate amount of a number for somebody to have passed through to them in the ownership of a subchapter S corporation.
I passed the money through and paid them back based on the investment they made in the company I ran. When you raise the tax on the individual rate, then for a subchapter S corporation and limited liability corporation, for a limited partnership, you have two decisions to make as the runner of that operation: Do you reduce your retained earning investment in your company to maintain the return to your investors at the same level or do you continue to wind your company down because you cannot distribute at the rate you used to distribute?
It is very important to understand that whichever decision you make has a direct negative impact on future hiring in that company. The Congressional Research Service estimates 940,000 businesses will be affected. But listen to this number. As the leader has said, 53 percent of all passthrough income becomes subjected to the higher tax rate--53 percent, over half. That is American small business. So I want to commend the leader, because he has hit the heart of the story. This is a tax on what we need the most; that is, reinvestment of earnings to hire more people to build more businesses in America. This has the exact opposite effect on the middle class that the President described.
The second thing I will point out is that today America suffers economically from the uncertainty of what is going to happen postelection. With this proposal, the President has now made a recommendation that would extend that uncertainty for another year. The last thing American business needs is to have that uncertainty about when the next shoe is going to drop in terms of taxation on the middle class--or any class.
I commend the assistant leader for coming to the floor and telling the story about American business. We are not here to try to shelter the rich. We are here to empower business, to have more employees in the United States, and to empower our economy. Again, I commend the whip on his remarks on the Senate floor.
I yield the floor and suggest the absence of a quorum.
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