“You know, PNC Bank does a survey every year.  They’ve done one for nine years in Ohio, where they’ve never seen the levels of optimism as high in small and medium sized businesses. And NFIB, which represents the smaller businesses we talked about earlier.  They’ve never seen more interest in investing in the history of their survey, as they do now. In terms of this issue of optimism, again, they’re seeing it off the charts. Now, again, that’s because small businesses are taking advantage of this and, to the comments earlier about how complicated this is, I think Senator Cardin got it right, we had to do something. We knew the corporate rate had to come down to be competitive, highest in the world. You would have had to choose the disparity between the C corporation rate, which employs about half of American workers but is only about 10 percent of the companies, and the pass-through rate which is a subchapter S, pass-throughs, sub-proprietors, all them, or small businesses, which is a vast majority of businesses.  So we had to do something and it is tough to make these decisions. 1202 is what they used, to Senator McCaskill’s point, which was part of law for a long time, internal revenue code, and 1201 says, ‘yeah, if you’re providing a professional service then you’re not going to get the same benefit under Section 199’, which is what the 20 percent was meant to deal with. 

“Also, for smaller businesses, as talked about earlier, people say, ‘well these businesses average in my state only making $50,000 a year.’ Well, if you’re under $315,000 a year, you’re not subject to any of that complexity. I would just tell the small businesses out there that are truly small, you’re not subject to a lot of what we heard about here today in terms of complexity. Finally, this notion of if you make a million bucks a year that means you must be really rich, if you’re a small business you may not be because it’s a pass-through. In other words, if your business is making a million bucks a year and you’re the sole shareholder, you’re making a million bucks a year, even though, I would say Mr. Cranston, in your case, I’m not a good lawyer because I shouldn’t ask you a question I don’t already know the answer to, but I would guess that you used your dividend from your company to pay your taxes, and the rest of it got reinvested back into the business. Is that right?” 

Mr. David Cranston, President of Cranston Material Handling Equipment Corporation: “That’s correct.”

Portman: “Did you hear what he said? I didn’t know what his answer was going to be. In other words, I don’t know what you’re earnings were, maybe they were a million dollars last year in your business, so you’re a millionaire, congratulations. What did you get out of it? Whatever your salary was. You got nothing else out of it because you used it to pay your taxes, the rest you reinvested in your business. You know, I grew up in a small business like that, it was also a material handling business like yours. My dad started it with five people, my mom was the bookkeeper. We lost money the first few years, we struggled, but you know what, we finally found our niche. That’s what we did. We put the money back in the business, so my dad might look like a millionaire to some, but he sure didn’t feel like it because the million dollars was just a reflection of what the business made that year, not what he was making. 

“That’s the way our tax system works, so I just hope that as we’re looking at this, we try to be fair, and look at what’s really happening out there. I’ve done 15 visits now with businesses around Ohio, we’ve had another half dozen roundtables with small businesses, and I can’t find one who is saying this is not good for them. I can’t find one. I guess I would ask a question to Mr. Holtz-Eakin, because he’s been on the spot here today about, you know, does this pay for itself or not. If you have better economic growth because of these tax cuts and the tax reforms,  --and the reforms are, I think, equally important if not more important for investment,  --how much new growth would you have to have to be able to pay for, in essence, the trillion dollars that was in this tax cut? How much more growth over 10 years?” 

Dr. Douglas Holtz-Eakin, President of the American Action Forum:  “If you were to get a half of a percentage point, probably four-tenths.”

Portman: “Four-tenths or a half percentage point. What did we just learn for this year? What did CBO just say for this year”

Dr. Holtz-Eakin: “They marked it up by a full 1.2 percent.”

Portman: “1.3 percent. From two percent to 3.3 percent. Not four tenths, not five tenths. Now I’m not saying it’s going to continue for the next 10 years for sure, nobody can tell you that even though CBO has projections, they have to make them, but I really do believe in my heart that if this thing works the way it’s intended to, which I see happening all over my state, then four tenths percent or five tenths percent is absolutely in the realm of possibility. In fact I think it is much more likely to happen than the other way around. In other words, the difference in the economic growth is going to be at least that much, so I just have to tell you, if you look at the CBO report recently, a lot of people talked about it today, you didn’t hear that full expensing will increase tangible investment in the United States. They said tax reform alone is going to result in 1.1 million new jobs over the next 10 years and they also said the growth rate for the last two quarters last year went up, I think, largely because of expectation of some of these pro-growth policies, including I think regulatory reform too, but four tenths percent to 2.6 percent. This year, they just increased it from two percent to 3.3 percent. I’m getting close to the end of my time, but I’m going to follow the edict that I’ve asked other people to do and come back for the second round, but I do think we need to be sure that we’re looking at this in terms of the real world impact and what’s happening, certainly, in my state amongst small businesses.”

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