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S. HRG. 113–283 

SMALL BUSINESS TAX REFORM: MAKING THE 

TAX CODE WORK FOR ENTREPRENEURS AND 

STARTUPS 

ROUNDTABLE 

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND 

ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JULY 17, 2013 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED THIRTEENTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

JAMES E. RISCH, Idaho, Ranking Member 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

MARIA CANTWELL, Washington 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY R. HAGAN, North Carolina 

HEIDI HEITKAMP, North Dakota 

EDWARD J. MARKEY, Massachusetts 

DAVID VITTER, Louisiana 

MARCO RUBIO, Florida 

RAND PAUL, Kentucky 

TIM SCOTT, South Caarolina 

DEB FISCHER, Nebraska 

MICHAEL B. ENZI, Wyoming 

RON JOHNSON, Wisconsin 

JEFFREY S. CHIESA, New Jersey 

JANE CAMPBELL, Democratic Staff Director 

SKIFFINGTON HOLDERNESS, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Risch, Hon. James E., Ranking Member, and a U.S. Senator from Idaho ......... 3 

Scott, Hon. Tim, a U.S. Senator from South Carolina ......................................... 4 

Enzi, Hon. Michael B., a U.S. Senator from Wyoming ......................................... 8 

Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire ............................ 9 

WITNESS TESTIMONY

Arslan, Kristie, President and CEO, National Association for the Self-Employed .................................................................................................................... 3 

Canty, Kenneth, President and CEO, Freeland Construction Company ............ 4 

Eckert, Mike, Vice Chairman, Angel Capital Association .................................... 5 

Edwards, Chris, Director, Tax Policy Studies, CATO Institute ........................... 5 

Hodge, Scott, President, Tax Foundation .............................................................. 5 

Keeling, Michael, President, The ESOP Association ............................................ 6 

Nellen, Annette, Director, San Jose State University Graduate Tax Program .. 6 

Nelson, Greg, General Manager, Brown Rental Inc. ............................................ 6 

Randolph, Bill, Director for Business and International Taxation in the Office 

of Tax Policy, U.S. Treasury Department .......................................................... 7 

Sullivan, Ann, President, Madison Services Group, Inc. ...................................... 7 

Zinman, Sanford, Tax Policy Chair, National Conference of CPA Practitioners ................................................................................................................... 7 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Acadian 

Prepared statement .......................................................................................... 108 

Arslan, Kristie 

Testimony .......................................................................................................... 3 

Prepared statement .......................................................................................... 44 

Association for Enterprise Opportunity 

Prepared statement .......................................................................................... 81 

Cantwell, Hon. Maria 

Prepared statement .......................................................................................... 42 

Canty, Kenneth 

Testimony .......................................................................................................... 4 

Biographical sketch .......................................................................................... 48 

Coalition of Small Business Innovators 

Prepared statement .......................................................................................... 110 

CompTIA 

Prepared statement .......................................................................................... 102 

Credit Union National Association 

Prepared statement .......................................................................................... 114 

Eckert, Mike 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 49 

Edwards, Chris 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 54 

Enzi, Hon. Michael B. 

Opening statement ........................................................................................... 8 

Employee-Owned S Corporations of America 
Page

IV 

—Continued 

Prepared statement .......................................................................................... 84 

Hodge, Scott 

Testimony .......................................................................................................... 5 

Biographical sketch .......................................................................................... 57 

Keeling, Michael 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 58 

Landrieu, Hon. Mary L. 

Opening statement ........................................................................................... 1 

Louisiana Bankers Association 

Prepared statement .......................................................................................... 120 

Louisiana Credit Union League 

Prepared statement .......................................................................................... 122 

National Restaurant Association 

Prepared statement .......................................................................................... 93 

Nellen, Annette 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 62 

Nelson, Greg 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 65 

One Voice 

Prepared statement .......................................................................................... 89 

Professional Beauty Association 

Prepared statement .......................................................................................... 123 

Randolph, Bill 

Testimony .......................................................................................................... 7 

Risch, Hon. James E. 

Opening statement ........................................................................................... 3 

Scott, Hon. Tim 

Opening statement ........................................................................................... 4 

Shaheen, Hon. Jeanne 

Opening statement ........................................................................................... 9 

Small Business Investor Alliance 

Prepared statement .......................................................................................... 125 

Small Business Majority 

Prepared statement .......................................................................................... 87 

Sullivan, Ann 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 67 

Witness biographies ................................................................................................. 76 

Zinman, Sanford 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 74 
(1) 

SMALL BUSINESS TAX REFORM: MAKING THE 

TAX CODE WORK FOR ENTREPRENEURS 

AND STARTUPS 

WEDNESDAY, JULY 17, 2013 

UNITED STATES SENATE, 

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, 

Washington, DC. 

The committee met, pursuant to notice, at 3:08 p.m., in Room 

428, Russell Senate Office Building, Hon. Mary L. Landrieu (chair 

of the committee) presiding. 

Present: Senators Landrieu, Shaheen, Risch, Scott, and Enzi. 

OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, 

AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good afternoon, everyone. Welcome to our 

roundtable on Small Business Tax Reform: How to Make the Tax 

Code Work for Entrepreneurs and Startups. I really appreciate the 

members joining me for this roundtable this afternoon. 

As the title indicates, the topic is extremely important. The 

venue is a little less formal than a regular hearing and we specifically wanted this subject to be considered in a roundtable format 

so we could encourage a lot of back-and-forth discussion and free, 

open dialogue. Of course, any written statements will be submitted 

for the record but this is a roundtable and the title suggests informality. A lot more informal. 

I am going to start with a short opening statement, and then 

turn to my Ranking Member for a short opening statement. Of 

course, we will recognize members as they join us. They may not 

be able to stay through the whole two hours but I will, of course, 

recognize them. 

But, then we are going to go through a series of questions and 

comments and have a free flow of information which I find very, 

very helpful; as it helps us to build a record on the subject of tax 

reform that we can then move to the Finance Committee. 

I want to say to begin with that I am very happy that three 

members of the Small Business Committee are senior members of 

the Finance Committee. Senator Enzi. So thank you, Senator, for 

joining us today. Senator Cantwell, who may be joining us later, 

and has submitted some questions and statements for the record. 

And, Senator Cardin who we are expecting today. 

So, we have got three members; and for many years my Ranking 

Member, Senator Snowe, who is no longer here but served as a 
2 

member of the Finance Committee and had lot of impact on small 

business tax policies. 

Senator Risch and I are happy for you all to join us. Let me just 

begin with a brief statement. I thank you for being an important 

part of this debate, and being a part of this roundtable. I thank especially those of you that traveled all the way from the West Coast. 

It is a long way to come to Washington but we do want to hear 

views, of course, outside of the Beltway and from the West Coast. 

I am pleased to welcome so many small business owners, investors, and experts. We have experts from Louisiana, Idaho, South 

Carolina and all the way from California, again a very strong, wide 

spectrum of small business owners; and this Committee has been 

and will continue to be the place for your voices to be heard here 

in Congress. 

As many of you know, last month the Senate Finance Committee 

Chair, Senator Baucus, and Ranking Member Hatch sent a letter 

to all Senators requesting ideas and our partnership in the effort 

to get tax reform over the finish line. 

There are few matters more important to small businesses in 

America than the taxes that they pay and the records they are required to keep to support their filings. In-line with this Committee’s long tradition of working to enlighten and inform the Senate 

on matters of concern to small business from immigration to health 

care to other important issues, this roundtable is designed to get 

your views on tax reform. 

I am looking forward to hearing from all of our participants and, 

of course, we will share the record if this roundtable with the Finance Committee, and they are well aware of our hearing today. 

In addition to ideas of how we can simplify the tax code, I also 

want to hear if you all agree or disagree with the three principles 

of tax reform laid out in the letter from the Chairman and Ranking 

Member of Finance to us; and also Rep. David Camp expressed 

these ideas in a Wall Street Journal op-ed on April 8. 

The first principle of tax reform this bipartisan leadership group 

identified is to protect the middle class and ensure taxes are not 

increased for working or middle class families. 

The second principle of tax reform they outlined is to level the 

playing field for U.S. employers to ensure tax reform makes U.S. 

companies more competitive in the global economy. 

The third principle they are committed to pursuing in tax reform 

and the one most relevant to our discussion today is parity for 

small business, to ensure that any tax reform plan does as much 

to help start up businesses create jobs, family businesses to be created, sustained, and grow as desired and compete as equally on 

that level playing field with large companies, whether privately or 

publicly owned, whether domestic or international. 

Are there other principles that you all would like us to consider 

as we move forward, and if so, what are they? 

Some discussion topics we are going to talk about today are do 

you agree or disagree with the principles outlined, do you have 

other suggestions, are there new and innovative ideas that you can 

throw on the table to accelerate startups, or increase angel investment that we should know about? What would a new reformed tax 
3 

code designed to help American small business to employ more people and grow look like? 

In addition to the overall complexity of the tax code, are there 

specific provisions that seem particularly unfair and burdensome to 

you that you would like to jettison or to moderate or modify? 

So again, I am going to turn this over to my Ranking Member. 

I thank him for his participation and hopefully he can stay through 

most of the meeting today and I would be happy to turn the mike 

over to Senator Risch. 

OPENING STATEMENT OF HON. JAMES E. RISCH, RANKING 

MEMBER, AND A U.S. SENATOR FROM IDAHO 

Senator RISCH. Thank you, Madam Chairman. We are making 

progress here. Usually you get to make a long opening statement 

and then you turn it over to me for a short opening statement. So, 

it sounds like we are on parity now. 

Chair LANDRIEU. That is great. 

Senator RISCH. Wonderful. 

Thanks all, and I want to thank all of you for coming today on 

what is a serious subject and something that is important obviously 

for those of us who are members of the Small Business Committee. 

I preach here all the time that the biggest problem that faces 

small business in America today is the Federal Government and 

the regulatory structure that it heaps on small businesses day after 

day after day. Obviously, the tax code is one of the most serious 

offenders, so we want to hear what you have to say about that. 

We are interested in that and we will hopefully have some substantial input as the Finance Committee writes a new tax code. We 

are aware, of course, that most small businesses are pass-through 

entities, and we are going to insist that be considered as tax reform 

goes forward. 

I have to warn you that there are people here in the Congress 

who do not look at this necessarily as an opportunity to help you, 

but rather to help themselves; that is, they want to do tax reform 

so that they can extricate more money out of small businesses. 

And, a number of us are going to insist that it be revenue neutral, that is, that it not be the situation where they do tax reform 

and at the end of the day small businesses say ‘‘Oh, look, the Federal Government got another trillion dollars.’’ So, we are going to 

be watching that as we go forward. 

So again, I thank all of you for coming. I know being small business people it is difficult to get away from your businesses so we 

appreciate that. We understand it, and thank you, Madam Chairman. 

Chair LANDRIEU. Thank you very much. As a tradition of our 

roundtables, I would like everyone to go around and just introduce 

themselves very briefly and provide literally 30 seconds about what 

makes you excited to be here today. We will start with you, Kristie. 

You have got to speak right into your mic. It is a little difficult and 

make sure your button is pressed. 

Ms. ARSLAN. Sure. Thank you for having me. I am Kristie 

Arslan. I am the president of the National Association for the SelfEmployed, and I am also a small business owner. My husband and 
4 

I are new business owners. We own a gourmet popcorn company 

in Alexandria, Virginia that has been open for about 15 months. 

So, the NASE represents America’s smallest businesses, the selfemployed and micro businesses, those with 10 or fewer employees; 

and so obviously tax reform is a very big concern because the tax 

code either hinders people from starting a business or is their top 

priority. 

Chair LANDRIEU. How many members do you all have? 

Ms. ARSLAN. We have 150,000 member businesses. 

Chair LANDRIEU. Great. 

Ms. ARSLAN. There are 22 million self-employed Americans nationwide. 

Chair LANDRIEU. Mr. Canty. 

Mr. CANTY. Good afternoon. My name is Kenneth Canty. I am 

the President and CEO of Freeland Construction Company, 

headquartered out of Charleston, South Carolina, and also with offices here in Bethesda and at Bowie. 

I am excited to be here to have somebody actually listen to our 

concerns and our frustrations regarding in the tax code and how 

burdensome it is too small businesses. 

Chair LANDRIEU. And your Senator wanted to welcome you personally and I would like to call on him now. 

Senator Scott. 

OPENING STATEMENT OF HON. TIM SCOTT, A U.S. SENATOR 

FROM SOUTH CAROLINA 

Senator SCOTT. Thank you, Madam Chairwoman. 

One of the things that excites me about having Kenneth with us 

here today is that not only—you want the microphone on really. 

Okay. We will do it your way then. 

[Laughter.] 

One of the things I find exciting about having Mr. Canty, Kenneth, here with us today is the fact that not only is he a small business owner but his track to a small business ownership is so consistent with the story of the American dream. 

Mr. Canty was a leader of a demolition project on one of the largest projects South Carolina’s history, the replacement of the Cooper 

River Bridge, the now infamous Ravenel Bridge in South Carolina, 

a $750 million project. 

He was working very hard on that project. At the end of that 

project, he got laid off; and like many people do when they find 

themselves in dire straits when they are laid off from a position, 

they decide, they scratch their head, pull their hair out and they 

make the decision to—it is gone now, he did a good job—they make 

the decision to go forward and start a business. 

Mr. Canty was in a position where in 2008 he was able to successfully acquire a business and he has grown that contracting 

business from $1 million to $10 million in sales, gross sales from 

2008 to 2013. So, just in five short years he has had tremendous 

success. 

But, we ask ourselves, and I asked him as well, what is the secret sauce; and he says you have to be diligent. You have to be on 

the marketing trail all the time. 
5 

I said, well, what are the impediments to your success? And certainly, he named a number of things. The tax code happens to be 

one of the impediments to his success. 

So, as we hear from Mr. Canty and other small business owners, 

not only today but into the future, we will find very consistently 

that the question of whether or not the tax code encourages success, encourages risk-taking or not his a simple answer. The answer is no. The tax code is an impediment to it. 

I think Mr. Canty’s example and his story is one that we all 

share as small business owners. We are so happy to see your success as small minority businesses from South Carolina are rarer 

than they should be and your success is quite amazing. Thank you 

Chair LANDRIEU. Thank you. Let us continue the introductions. 

Mr. ECKERT. My name is Mike Eckert. I am Vice Chairman of 

the Angel Capital Association. I am an entrepreneur. I have started three businesses. I am now a very active angel investor, limited 

partner venture capital funds, invest heavily. I live in New Orleans, invest heavily in New Orleans and in the Atlanta marketplace. 

Our concern relative to tax policy is ensuring that certain incentives are available to angel investors which are the primary funding source of startup companies and small businesses in America. 

Chair LANDRIEU. Thank you so much. 

Mr. Edwards. 

Mr. EDWARDS. I am Chris Edwards, Director of Tax Policy Studies at the CATO Institute, and I am honored to be here today and 

particularly honored to be amongst all of these great entrepreneurs. 

When I think of entrepreneurs and the tax code, I think of capital gains taxes and I have been very concerned that we have recently raised our federal capital gains tax rate from 15 up to 24 

percent. If you had state and local taxes on top of that, you get a 

U.S. long-term capital gains rate of about 28 percent. 

The average rate in the OECD countries, the high income countries, is only 16. So, other countries have figured out that there are 

a lot of good reasons to keep capital gains tax rates low, and one 

of them is is the importance of capital gains for the funding of 

high-growth entrepreneurial companies. I think we need to keep 

that in mind. 

Thank you. 

Chair LANDRIEU. Thank you. 

Mr. Hodge. 

Mr. HODGE. Thank you, Madam Chairman. 

My name is Scott Hodge and I am President of the Tax Foundation. The Tax Foundation is one of the Nation’s oldest tax research 

groups. We spend our energies looking at the economics of taxation, 

trying to make sure that tax reform is done right, not just the 

arithmetic of tax reform but the economics of tax reform. 

I think it would be a shame to have a simpler tax code that actually leads to higher capital costs and slower economic growth. 

So, the real idea here is to have a tax system, a new tax system, 

that is conducive to long-term economic growth, not just for small 

businesses but all businesses and all Americans. 
6 

That should be the goal. We should be very careful in how we 

get there because there are lots of ways in which we can streamline 

the tax system, broaden the tax base, but a lot of those ways will 

actually harm economic growth not improve it. 

So, we need lower rates but we also need lower costs of capital 

and less regulations that make it easier on small businesses to 

thrive and grow. 

Chair LANDRIEU. Thank you. 

Mr. Keeling. 

Mr. KEELING. Thank you. I am Michael Keeling, President of The 

ESOP Association, and I am excited to be here because I get to 

show you something. 

You can see this chart I hold up. There is a red bar and there 

is a blue bar. The general social survey shows that during the 

great recession conventionally-owned companies laid off employees 

at a rate of over 12 percent—the red bar. Employee stock-owned 

companies laid off employees at a rate of 2.6 percent—the blue bar. 

We hear people talk jobs, jobs, jobs, jobs. Our nation has a policy 

that lets people keep their jobs, pay taxes, pay Social Security, pay 

Medicare taxes; and that policy is what I am excited about. The 

policy is in the tax code and we need to keep the policy encouraging 

employee ownership and perhaps expand it. 

A sidebar: This little green book I hold up is a transcript of a 

hearing the Small Business Committee of the Senate held on February 27, 1979 on employee ownership. 

Chair LANDRIEU. Great. I am glad we are following in such good 

stead all these years. 

Go ahead, Ms. Nellen. 

Ms. NELLEN. I am Annette Nellen, a tax Professor at San Jose 

State University. I am pleased to be here to talk about one of my 

favorite topics, tax reform. For many years I have been a tax professor with the last 10 plus years focused on tax reform and how 

we can have tax reform that follows principles of good tax policy 

and modernizes our tax system. 

I would be pleased to talk about that when we get into the conversation. Thank you. 

Chair LANDRIEU. Great. 

Is it Mr. Nelson and I think you wanted, Senator, to do the honors. 

Senator RISCH. Yes, thank you. I want to introduce Greg Nelson, 

who is the General Manager of Brown Rental, Incorporated, and 

about to become the owner of Brown Rental Incorporated, at least 

a substantial portion of it. 

First of all, Mr. Nelson has owned other companies and is now 

looking forward to taking on part of this company. Brown Rental 

has been around for a long, long time. They are a classic small 

business operation. 

Essentially they rent construction tools and other types of equipment to the community. It is really a poster child for small business in America. I am sure that Greg will be happy to enlighten 

us on his thoughts on tax reform. Thank you. 

Mr. NELSON. Thank you very much. I am glad to be here. Yeah, 

what Senator Risch was saying kind of continue with that. I have 
7 

grown up in Idaho my whole life. I have had two businesses that 

I did successfully and sold. I am in my third adventure now. 

Some of the problems that I do see right now is a lot of the tax 

issues that I am dealing with. I am having to hire people to interpret it. I am having to have accountants kind of go through. I am 

in the middle of SBA right now and that is real difficult for just 

a regular business guy out there. I have to run my business, I work 

in the business, and now I am having to learn a whole new part 

or side of the business and that is difficult for me. 

I have kind of name that some of the unintentional consequences 

that role downhill to me. What happens up here it seems like 

sometimes it, it makes sense on paper up here but by the time it 

gets to me, man alive, it is tough. 

Chair LANDRIEU. Great. 

Mr. NELSON. It is. 

Chair LANDRIEU. Thank you so much. 

Mr. NELSON. You bet. 

Chair LANDRIEU. Next. 

Mr. RANDOLPH. Thank you for inviting me. I am Bill Randolph. 

I am here from the Treasury Department. I direct the Business and 

International Taxation, Office of Tax Policy. I am an economist. 

I am actually very excited to be here to hear especially from people, business people outside the Beltway who know the problems 

that small businesses face. We are very well aware that small businesses face a very unduly complex tax code and face a disproportionate share of complying with that code; and we really are happy 

to take part in discussions about tax reform that can try to make 

the tax system simpler for small businesses and also increase the 

incentives for investors in new startups and try to take, try to 

make it so that businesses can spend more time on their business 

and less time on, you know, reading the tax code. 

Chair LANDRIEU. Thank you. 

Ms. Sullivan. 

Ms. SULLIVAN. Hi, I am Ann Sullivan. I am representing Women 

Impacting Public Policy. WIPP represents a million women business owners across the country and has 71 organizations in the coalition. 

I am excited to be here today because the thought of simplifying 

the tax code and making it fairer is something that is very attractive to the folks that I work with. 

Chair LANDRIEU. Thank you. 

Mr. Zinman. 

Mr. ZINMAN. Thank you for inviting me to participate today. I am 

the Tax Policy Chair of the National Conference of CPA Practitioners, NCPAP. NCPAP members serve over 1 million businesses 

and individuals throughout the country. 

We are the professional acting as the CFOs for those small businesses. We clarify confusing rules in the tax code, answer questions 

about employment and sales taxes. 

Small business owners often pay a disproportionate amount for 

legal and tax services. They rely on outside advisers to ensure that 

they are receiving the benefits of available tax credits while guaranteeing they are following the tax code regulations. 
8 

Small business owners want to healthy economy. Tax incentives 

to help them grow their businesses, a tax code that is understandable, and a government that allows them to succeed. 

Thank you. 

Chair LANDRIEU. Excellent. Senator Enzi, as you know, is a 

member of the Finance Committee, and we would like him to say 

a word, and I really appreciate his help and attendance today. 

Senator ENZI. Thank you, Madam Chairman. I appreciate being 

on this Committee and its emphasis on small business. I have been 

on it ever since I came to Washington, and it does make a difference. 

Of course, I also enjoy being on the Finance Committee. I am 

looking forward to some real tax reform, and we have to do the corporate and the individual at the same time so that the passthrough corporations are not left at a disadvantage. 

I go home to Wyoming almost every weekend and travel a different part of the State so I get to know as many of my folks as 

I can, and I always try to get into a small business because if there 

is a small business that you have not worked in, it will look pretty 

simple; but when you get to talk to the people that are having to 

make those decisions on a daily basis, you find out that the simple 

decisions are really pretty complicated and affect a lot of people 

and have an ever widening circle of people that they affect. 

I once held a small business hearing in Wyoming courtesy of this 

Committee and I thought the room was pretty well packed but 

afterwards the media came up to me and they said, gee, not many 

people showed up, did they. I said, well, I am in small business and 

you know in small businesses if they have enough people to send 

them to something like this, they got too many people so they will 

get rid of them. 

[Laughter.] 

So, I appreciate having some expertise. I appreciate that you are 

doing a roundtable for this. That is an opportunity for everybody, 

hopefully a short bursts, to talk about pet peeves or pet solutions 

or that sort of thing, and then even have an interaction between 

the panelists. I find that it really works well. 

The current tax code does not work and I have reintroduced 

some different portions of bills that I think will help. One of them 

is logical tax return date schedules. I have got some bipartisan support on this side of the Hill for it and on the other side it has already round up in a bill. That will help to make the filing a lot 

easier. 

Besides being a former small business owner, I am an accountant. I love the numbers and I know that the current tax code is 

too complex. It is causing a domino affect of problems. It can be 

simpler. It can be fairer, and I think it is imperative that we reform both codes at the same time, and I just cannot thank the 

Chairman enough for having this roundtable so that we can learn 

a few more things from the people who are actually having to work 

with it. 

So, thank you for being here. 

Chair LANDRIEU. Thank you all very much. I would like to recognize Senator Shaheen who has joined us and also to notify—do you 

want to say anything? 
9 

Senator SHAHEEN. No. 

Chair LANDRIEU. Okay. And to notify everyone we may have a 

vote that is called, but we are going to work through the vote and 

we will just come and go to vote and make sure that we get our 

votes in on time. They may call the vote in the next few minutes 

but we are going to continue forward with our roundtable. 

Now, this is how this works. You have a placard in front of you. 

When you want to speak, it is very simple. You do not have to raise 

your hand. You can just put your placard up. Try to turn the name 

to me so that I can see it and recognize you. Please jump in and 

offer your suggestions. 

I am going to kick it off with a couple of questions; and I would 

love to start, if I could, with Mike Eckert, who represents the angel 

investors. 

I was very, very taken in with your statement, Mike, that in 2012 angel investors invested $23 billion in approximately 67,000 

early stage companies, and that angel investors provide seed stage 

equity at any rate that is 20 times higher than the number of companies financed by venture capital. 

I am not sure that people in Washington know that. I did not 

know it. I am happy to know it. So, can you elaborate on that and 

say how the tax code either encourages or discourages that and 

what are some of your ideas about what we should be thinking 

about. 

I do know that getting capital into the hands of the small businesses that need it is essential, and I do know, because every 

roundtable we have had has had people up here saying if I could 

just get my hands on some capital, I could grow my business; and 

so, we really are pushing that very hard through our Committee. 

So, why do we not begin with you. 

Mr. ECKERT. Thank you, Madam Chairman. The Angel Capital 

Association—— 

Chair LANDRIEU. Try to lean into your mic. I am sorry it is a little awkward. 

Mr. ECKERT. Is this better? 

Chair LANDRIEU. Yes, better. 

Mr. ECKERT. 200 member groups that are populated by about 

10,000 angel investors who are all accredited investors. They write 

individual checks. This $23 billion is a real number. It came from 

individuals throughout the country. The angel investors provided 

about 90 percent of the capital to start up companies in America. 

Right now one thing that benefits angel investors who are generally high net worth individuals is incentives. It keeps them in the 

game. Angel investing is a very high risk investment class. Fifty 

percent of the deals in which we invest fail. Our objective is to keep 

people in the game and even send them. 

The hundred percent exemption from capital gains tax has been 

very, very important in keeping angel investors investing. That tax 

provision is due to sunset at the end of this year. We really are 

hoping that that can be made permanent. 

There are also two facets of Section 1202 that we are talking 

about here. The current holding period is five years. We are hoping 

that it can be reduced to two years because the dynamics of exiting 

investments for angels has been reduced. The IPO market is over. 
10 

We are seeing a lot of larger companies come in and acquire the 

smaller companies that we have started and that we mentor and 

coach and grow exiting sooner. We think that five years may not 

be as practical. 

We also think that another facet of Section 1202 should be adjusted. Currently, Section 1202 only contemplates C Corporations. 

In many of the deals in which angel investors invest are LLCs, limited liability companies, and we would love to see those included 

in Section 1202’s exemption. 

We are very worried that, if Section 1202 is not extended, that 

we are going to see hundreds and maybe thousands of angels fall 

out of the system which will preclude capital for a lot of the people 

like these in this room who are starting companies. 

Chair LANDRIEU. I would like someone else to comment on this 

particularly the CPAs. Go ahead. 

Mr. ZINMAN. I would be happy to. 

Chair LANDRIEU. And anybody that wants to speak just put your 

placard up. 

Mr. ZINMAN. As Mike was speaking, I wrote down a quick note 

that what I found over the years is the biggest problem for getting 

money from a bank is you cannot get it if you need it; and generally the small businesses, even with the SBA, are having problems, especially post the recession. 

There are a lot of businesses, a lot of individuals who put their 

houses up to mortgage so that they can finance their businesses 

and keep it going through the recession. Well, now they have come 

to the end of the rope. It is potentially a successful business but 

they need just that small extra infusion in capital. And, because of 

banking regulations possibly, because of conservativism, the small 

business owners do have to go and are happy to go to the angel 

investors because those are the ones that are able to make this 

happen. 

Chair LANDRIEU. And can I—go ahead, Ann, I am going to get 

you in but let me ask something and you all just jump in here if 

you have any comments. 

But, one question comes to mind. How do, Sandy, some of the 

people that you help know about angel investors and how do your 

angel investors know about small businesses? I am assuming you 

have a online network sort of like eHarmony.com or something like 

that. 

Mr. ZINMAN. Well, I will let you answer that question because 

you are better at it. My answer is we tried to network a lot. We 

spent a lot of time networking because we become the voice of the 

small business. But I will let you answer that. You are even better 

than me at that. 

Mr. ECKERT. Thank you, Sandy, but I thought your answer was 

pretty good as well. 

Most angel investing occurs on a local basis. So, in the different 

markets in which I invest we are looking at local businesses to help 

create jobs, create companies in our local communities. 

Once an angel group is formed, entrepreneurs will find us; and 

we will also hold events to attract entrepreneurs to make them 

aware of what we do, the investment criteria that our groups re-
11 

quire as we determine whether we are going to invest in a deal or 

not. 

So, it is not difficult for an angel investor, I mean, for an entrepreneur to find an angel investor; but also we angel investors want 

them to find us because we are seeking those kinds of investments. 

Chair LANDRIEU. Ms. Nellen and then Ann. 

Ms. NELLEN. I think it is a great equity point being raised here, 

equity in terms of treating people similarly. With 1202 I think it 

should be expanded to cover more than just an investment in a C 

Corporation. 

And then there are other provisions. We hope everything goes 

well, but there is also, for example, a Section 1244 provision that 

only applies for a C Corporation investment and that would allow 

for, if things do not go so well, up to $100,000 of an ordinary loss. 

That should be expanded to other types of entities besides just C 

Corporations. There are a few rules that should be broadened beyond just C Corporations for equity purposes. 

Chair LANDRIEU. Ms. Sullivan. 

Ms. SULLIVAN. Women have understood the importance of family 

and friends and more organized investors like angel investors for 

a long time. 

We have supported legislation to give them a big tax credit I 

would say 10 years ago because that is where women get a lot of 

their money. I would say the way that our members find them is 

mostly through organizations like WIPP or other organizations 

rather than individually. They look to their associations to help 

them find you. 

Chair LANDRIEU. Mr. Hodge, I want to ask you that—go ahead, 

Mr. Edwards, and then I have a question for Mr. Hodge. 

Mr. EDWARDS. The point about Section 1202, I noticed the 

Kauffman Foundation did a study recently about the importance of 

expanding Section 1202, extending the 100 percent exemption 

under Section 1202; and they tried to model exactly the economic 

impact of that. 

What has always struck me about angel investment, entrepreneurs, and the high growth companies in the United States is 

that it is very difficult for any economist to model the impact of an 

Apple or an Amazon or a Facebook. 

Some of these companies that have got angel and VC investment, 

they are hugely important for innovation. Almost all new innovation, if you look over the last century in the United States, has 

been pioneered by new companies, not existing ones. 

So, you know, IBM did not invent the PC. It was new companies 

like Apple and Microsoft that pioneered it. So, in thinking about 

angel and venture capital entrepreneurs, we have to think about 

the long term. We need to think about the next generation of these 

usually important companies. 

Chair LANDRIEU. I think that is an excellent point. 

Mr. Hodge, I wanted to ask you on your point that you made in 

your opening about making sure the focus is not only simplification 

but amplification of the economic power of entrepreneurship or 

business start ups. 

Do you want to add anything? 
12 

Mr. HODGE. Well, there are kind of two elements of it. One is the 

overall tax rate, and right now entrepreneurs are facing a higher 

tax rate than the largest corporations in America. As you know, the 

U.S. has the highest corporate tax rate in the industrialized world 

at 35 percent; but many of our pass-through businesses are paying 

a tax rate of over 40 percent. 

Those high tax rates are called success taxes, and they are a tax 

on our most successful businesses, and that is simply not only unfair but it is also bad economics. 

There is a second level of this is that as we try to lower the corporate tax or all the tax rates through tax simplification, we have 

to be careful about how we broaden the tax base; and there are 

some key elements here such as 179 expensing, accelerated depreciation, and other things that not only help us identify what is taxable income but also help us identify what is the tax base and 

lower the cost of capital. 

And, if we move away from these things toward longer depreciation lives, even while we are lowering tax rates, we can increase 

the cost of capital and that undermines the economic growth that 

you achieve through lower rates; and we have modeled this with 

our macroeconomic model; and we have found that even if you 

lower rates and move toward longer depreciation lives, you actually 

neutralize the economic benefits that you get from a lower rate. 

Chair LANDRIEU. You know, there is a lot of talk up here about 

lowering the corporate tax rate. The President has even endorsed 

such an idea and there are Republicans and Democrats who support that. 

But when you lower the corporate tax rate, does that do anything 

specifically for small businesses generally? 

Mr. HODGE. Well, you have to be careful again in how you get 

that and how you broaden the base because the majority—— 

Chair LANDRIEU. I am just talking about lowering the corporate 

tax. That in itself if you just lowered it does not really target small 

business, does it? It is the larger corporations. 

Mr. HODGE. But it helps the broader economy. It adds about two 

percent to GDP and that helps all businesses. 

Chair LANDRIEU. Sandy. 

Mr. ZINMAN. So many of these small businesses are LLCs, S Corporations, partnerships; and in fact, Mr. Hodge is absolutely right, 

you need Section 179, but these individuals and if you take it up 

to the Northeast, they are paying in excess of 50 percent when they 

get hit with the AMT, when they get hit with the state and local 

taxes. 

To the extent that sometimes, and I think it is counterproductive, some individuals want to find a business that is losing 

money because they can save some tax money. That is not a good 

reason to go into business. You should be going into business to 

make money; and when you are paying 50 percent, if you are putting in a lot of sweat equity, there is a disincentive to be making 

money. 

Chair LANDRIEU. Excellent. Ms. Arslan. 

Ms. ARSLAN. Yes. You know, obviously I think tax rates, especially for the self-employed, are very important. Our members are 
13 

also proprietors, LLCs, partnerships but I cannot, you know, do not 

want to—— 

Chair LANDRIEU. If you speak into your mic. 

Ms. ARSLAN. I do not want to de-emphasize the importance of 

compliance and simplification because one of the biggest barriers or 

what stops people in their tracks from starting their businesses is 

the overwhelming burden of how am I going to figure this all out. 

So, you know, we can lower the rates, but if it is not simple, it is 

still going to prohibit people from starting businesses. 

And, I think in terms of corporate tax reform I think business, 

even our small businesses, the self-employed, see business as an 

ecosystem; and it is the reason why we think any kind of reform 

needs to be done together because healthy big businesses will help 

small business. 

You know, a lot of our members contract with larger companies, 

corporations. So, if they are not in a good financial state, and we 

saw that with the recent recession, they cut their contractors; and 

a lot of our members were hit by that. 

And so, we want a healthy corporate environment as well; but it 

cannot be done separately. It has to be done together so all business benefits from comprehensive tax reform. 

Chair LANDRIEU. I think that is an excellent point, and I think 

sometimes we do not think about that. We think in terms of big 

versus small or small versus big; but the fact is it makes up the 

ecosystem; and the healthier everyone is and the better it really 

helps to create that synergy that is important. 

Go ahead, Mr. Canty. 

Mr. CANTY. Yes, I would like to just address the topic of what 

lowering the corporate tax, how that could effectively affect a small 

business. 

I own a construction company, and the thing that runs a construction company is bonding. Everybody is probably pretty familiar with that, and typically five to ten percent of your net worth 

is what your bonding level will be. So, if you have $10 million of 

bonding, you need to have usually $500,000 to $1 million of net 

worth. 

Well, every time you go to pay, if you make money one year and 

let us say you are paying, you have to send a check in, to make 

the math easy, for $50,000 in taxes, that comes right out of your 

retained earnings. 

So, the bonding company can go back and look at you and decrease your bonding limit at that present moment when you pay 

those taxes in April. What else happens in April? 

Well, if you are a federal contractor, typically that is the time 

when your federal contracts are flowing the slowest. Usually 

around the springtime it tends to be a little bit slow until the summer time, and the Congress sets their budget and the contracting 

officers start putting out work. 

So, it is really a double whammy. So, when you pay those taxes 

on money as an owner that you really never, ever put it in your 

pocket, it is coming out of your retained earnings and affecting you 

negatively. 

Chair LANDRIEU. So, what you are saying is if there would be a 

way to have a different timing on the taxes that are owed quar-
14 

terly, particularly that quarter, that would be the second quarter 

of the year? Or? 

Mr. CANTY. I would say that as a short-term but really what I 

would say—I guess as of this conversation goes it is appropriate to 

say this—is going away from, going away from the tax code we 

have now to more of a consumption-based tax code, because as a 

small business I am going to keep growing and growing and growing whether it is by the size of my company of geographically, and 

the more consumption I have maybe instead of the more profit I 

make the more consumption I have; and that goes back to the argument of spreading the base. The more we consume, our tax code 

should be based on that, from my viewpoint. 

Chair LANDRIEU. No, and this is exactly appropriate to speak 

about that. That is what you want to talk about is you would rather have a consumption tax than a tax on your income. 

Mr. CANTY. Yes, ma’am. 

Chair LANDRIEU. So, it is the tax on the income as well as the 

timing. 

Senator Enzi, this must be familiar to you. Can you add any wisdom? I am sure this is what you all talk about or I hope this is 

what you talk about in the Finance Committee. I do not know since 

I am not on it but I am hoping that this is what you are talking 

about. 

Senator ENZI. Well, you have been doing a marvelous job with 

the questions. I can give you a little bit of relief I think with perhaps asking a couple of questions. 

There are some expiring tax provisions, and we seem to hold 

businesses hostage with those on a regular basis. Are there any expiring tax provisions that add uncertainty to what any of you or 

your associations are doing that you would like to suggest that they 

be put on a longer basis? Yes. 

Ms. ARSLAN. All of them, but largely, you know, based on what 

our members are saying what really is frustrating and hurtful to 

their business is Congress’s inability to create long-term tax policy 

and it has just gotten worse. 

It has gone from, we will extend this provision for two years to 

a year, to six months, to three months. It is really hindering small 

business’ ability to plan. It is actually affecting our members, based 

on our polling data, and it is affecting their sales, especially when 

they do business to business, business to business customers. 

So, that is really the larger issue. Obviously for our members, big 

deductions or things like the start up deduction expired, but the 

ability to deduct your health care costs if you are self-employed as 

a business expense, depreciation expensing, all of those items are 

key but just the fact that Congress is doing it so piecemeal and for 

such short a period of time that we have to ramp up for another 

battle on these tax provisions, every few months has been a big 

challenge for business owners. 

Chair LANDRIEU. Mr. Nelson. 

Mr. NELSON. Yeah, I just kind of wanted to finish off what 

Kristie is saying. I am not a member of hers but I am like that. 

I am that guy. 

Right now I am going through and buying a business, and the 

amount of work just going through the SBA put on is ridiculous, 
15 

I think. It is just hours of just reports and numbers and things like 

that; and I understand you have to have them but the in depth 

that we are going through is amazing to me. 

It seems a little bit over the top. One of the other things that 

would help me would be definitely to simplify our tax codes because 

again I have to hire people to go out and interpret it for me and 

tell me if I am compliant and tell me if it is right. 

And, I am not that type of person. I would rather do it myself 

but I cannot understand it and I do not have the time to get into 

it to understand it. 

Another thing that would help, especially in my industry, is the 

Ways and Means Committee Chairman Camp has put together a 

bill for Section 179. What that does for us is help when I am buying equipment right now. I am trying to project what my next couple of years are going to be out there for the SBA. 

But there is no consistency. Like Kristie was saying, taxes 

change every year. They changed in 2006. They changed in 2008. 

It has changed in 2009. It has changed again. And so, SBA is asking me to put together five years, and three to five years, and a 

changing tax code makes it real difficult. 

So, at that point now I am hiring another person to help me do 

something. To get my SBA loan put together, I am hiring four people basically to help me put this together. 

Representative Camp has put a proposal, and it is not in the 

numbers that I would like to see, but it would work for us. It would 

be great because it levels the playing field for us and I know where 

I am at for the next couple of years down the road, and to me that 

seems like that would be a very important thing to have happen 

is to get that section of 179 put through just for me as a small business guy out there. 

I have talked to a few other people in my neighborhood and they 

are in the same boat. It is too hard to predict what is going on 

right now and give us any type of projection. 

So, I think getting that Section 179 made permanent would 

make a real big difference in my business. It helps me know where 

my capital is, how much capital I will have. I will be able to buy 

more equipment than I usually can which I can use for doing more 

jobs, hiring more people, growing from the grass up. That is kind 

of where I am coming from on that. 

Senator SHAHEEN. Thank you. I know Senator Enzi had another 

question that he wanted to ask but let me just follow-up on what 

you have said. 

Senator ENZI. I better go vote. 

Senator SHAHEEN. Yes, you better. 

Senator ENZI. I will be back. 

Senator SHAHEEN. Eighty percent of all of the paperwork that is 

done by small businesses is around tax compliance. So, it is no 

wonder that everybody feels this burden because it is real; and in 

the past 10 years alone there have been more than 4400 changes 

to the tax code. So, that is about one day for the last 10 years. 

So, clearly this is something that we need to address as part of 

any tax reform I think is to simplify the tax code. 

So, Mr. Edwards, let me call on you next. 
16 

Mr. EDWARDS. Two quick points to follow up on what Mr. Nelson 

said. There is this data out there that show that tax compliance 

costs for small business are much larger as a share of assets or 

whatever compared to large business; but what always strikes me 

listing to entrepreneurs is that it is the headache costs which are 

unquantifiable that are really important. 

Large corporations can go and they can hire a lot of more accountants and stuff and the CEO can remain focused on investments and the big picture stuff. 

For the entrepreneur, it is the paperwork costs, the tax cost, the 

health care compliance costs. Those are real headache costs that 

sap their strength to do what they should be doing which is, you 

know, building a better company. 

The second thing I would point out, and Senator Enzi mentioned 

are expiring provisions. I think this Section 179 expensing is really 

important as is expensing in general. 

The issue with capital investment, it seems to me, is that when 

companies go out and they buy new equipment, they are not just 

replacing the same equipment they had with the same new equipment. 

Capital investment incorporates new innovations. When companies go out and buy new machines, they buy better, faster, more 

high tech machines than they had before. So, capital investment 

and innovation are really the same things. 

I often see discussions about the R and D tax credit with respect 

to innovation, and that is fine and that is important. But, capital 

investment is very important for large and small businesses to 

move them ahead technologically. 

Senator SHAHEEN. Thank you. Mr. Hodge, then Ms. Nellen and 

Mr. Eckert. 

Mr. HODGE. Thank you. I would like to amplify a couple of the 

points that have been made here in particular on the compliance 

side and then on the expensing issue. 

The SBA in 2011 issued a report trying to estimate the compliance costs of the tax system for small business pass-throughs in 

general, and they found out the total cost or estimated the total 

cost at about $52 billion a year for pass-through businesses. 

And, if you think about that in economic terms, it is the equivalent of adding a couple of percentage points to the top marginal 

rate. If you could monetize that and capture that, you could actually cut the top marginal rate on small businesses by a couple of 

percentage points and that would do them all the better. 

On the issue of expensing which Chris mentioned, unfortunately 

Congress has treated expensing as a stimulus plan rather than 

long-term tax policy; and the unfortunate thing is that expensing 

is viewed by the Joint Committee on Taxation as a revenue loss for 

the Treasury when, in fact, it is critically important for lowering 

the cost of capital and improving long-term economic growth. 

We actually modeled this and that is in terms of making expensing permanent, and we found that over the long-term not only 

would it increase GDP by about two percent, it would actually pay 

for itself in increased federal tax revenues. 

It is a good deal for the economy. It is a good deal for the Treasury, and unfortunately we are treating it as temporary and we 
17 

keep trying to renew it each and every year which undermines the 

benefit of it. 

Senator SHAHEEN. Right. 

Mr. HODGE. As Mr. Nelson has found, it adds a tremendous 

amount of headache for small businesses. 

Senator SHAHEEN. Can I just ask you? Is that a report that is 

recent and is it something that you can share with the committee? 

Mr. HODGE. We would be delighted to certainly. 

Senator SHAHEEN. That would be great. 

Mr. HODGE. Sure. 

Senator SHAHEEN. Ms. Nellen. 

Ms. NELLEN. In addition to the temporary measure which makes 

it difficult to plan, the additional problem is a lot of times they do 

not get renewed until very late in the year. 

For example, CPAs may have been telling their clients, you 

know, the 50 percent bonus depreciation is going to expire; the 

higher 179 amount is going to expire; you better get something before the end of the year, only to find out the last day of the year 

that it got renewed which causes tremendous problems regarding 

trying to budget, trying to plan, puts the CPA in a bad position. 

So, that is another unfortunate part of temporary provisions besides the one mentioned here. It’s that they often get renewed so 

late in the game. 

Senator SHAHEEN. Mr. Eckert. 

Mr. ECKERT. From the angel investor perspective beyond extending the hundred percent exclusion on capital gains which we spoke 

to earlier, what we hear from the companies in which we invest as 

many of us sit on boards of these companies or advised them and 

it relates to some of the things that you are hearing from the business people here, one general theme is certainty. 

Things are just so uncertain that they have difficulty planning 

their businesses, and that is a particular challenge for them. 

The other is related to what Mr. Nelson said. Many of them complain about the bureaucracy and paperwork burden related to these 

things because what these entrepreneurs are good at is their business, their market, whatever they make or sell or the services they 

provide; and they are not good at this stuff and they incur costs 

and time and that time takes them away from operating their business which in turn has a negative ripple impact on their business. 

So, it is not necessarily the law of unintended consequences. Everybody knows that, but it really is a fact that it impacts these entrepreneurs heavily. We see it everyday. 

Senator SHAHEEN. You know, I certainly could not agree more 

and I would bet that that is the sentiment on the part of everyone 

on this Committee, and what I hear from businesses, many businesses in New Hampshire, is, you know, we can live with whatever 

you do, just tell us what it is going to be so we are not dealing with 

it at the 11th hour that we do not know how to plan. 

I believe one of the most important things we could do here in 

Washington is to come up with a long-term budget agreement that 

does provide some certainty for folks and that does include tax reform as part of that. 

So, I could not agree more with what you are saying. 

Now, Mr. Canty, Ms. Sullivan, and Mr. Zinman. 
18 

Mr. CANTY. One of the things we were just talking about was the 

time it takes small business owners to make sure they abide by the 

law. 

I think this is something probably everybody on this Committee 

but particulate Mr. Nelson would understand is I spend a lot of my 

time trying to make sure I comply with the law so it takes me 

away from other things I could be doing, and I am paying my CPA 

to make sure everything is correct. 

Now, if the tax law, code was different one might say, well, that 

means you are going to be putting the CPA out of business. I said 

no, because I am going to be using him for something else as I 

grow to plan and everything else. 

But, the most insidious part of the whole thing is if I even unintentionally messed up my taxes or not pay or do something, I could 

go to federal prison. 

I am held at the point of a gun to pay these taxes essentially to 

comply with it when I could be spending my time growing my business. I have grown my company from four people, we were at 33 

at the end of last year. Because of sequestration, we backed down 

to 25. 

I could spend my time figuring out how to employ people at 60, 70,000, $80,000 a year so that is one family that could be self-sufficient. 

I would rather spend my time doing that as well as other people 

on this Committee than worry about, I think that they said the tax 

code is actually thicker than the bible. I need to spend my time 

worrying about how to grow my business, not how to pay my taxes. 

Senator SHAHEEN. I know that the two of you want to comment 

on this discussion. What can I ask a question as well? That is, you 

talked about, I think, Mr. Nelson, you talked about the importance 

of making the expensing provisions permanent. 

Are there other provisions in the tax code that you think would 

be helpful to small business in terms of increasing innovation and 

improving your ability to grow your business? 

Ms. Sullivan, I do not know if you want to comment on that or 

you want to comment on the other discussions but please feel free 

to do either. 

Ms. SULLIVAN. I just wanted to say that I am a little disheartened by the fact that we are jumping into discussions of ‘‘do you 

like the current Section 179 expensing’’ because women business 

owners see this as an opportunity to get rid of all of those tax 

breaks. We have polled them and the majority keeps on saying 

‘‘just give us a lower tax rate. You can have all the rest of the deductions and credits.’’ 

We care about the cash. We care about the money in our pocket. 

So, we can all sit here and talk about the 20 small business tax 

credits and deductions, all of which serve a purpose if you are talking about the current tax system. But, I guess we were kind of hoping that the Congress was serious about dialing it back. 

The other part that is really troublesome for businesses is just 

the formation of business and the complexity of forming them. We 

have to go to a CPA to figure out what formation our company 

ought to be, whether it should be a C, an S, an LLC. There are 

so many forms of business that you can choose. 
19 

It seems to us that if you are thinking about simplifying the tax 

code, you might simplify the way you think about forming them. 

And then, one extra point was Senator Landrieu’s question: does 

lowering the corporate tax rate have any effect on small business. 

I think the numbers show somewhere between 15 and 19 percent 

of all C Corporations are small businesses. 

In fact, I have my own company and I am a C Corporation. There 

are those of us who are ‘‘C’s’’ but there are not very many. That 

is a pretty low number. 

So, you are really not doing much if you are just thinking about 

lowering the C Corporation rate. We go back to the principle, business is business, right? Why does it matter if you are self-employed, a C, S, I mean, why should it matter? You should have a 

standard set rate. You should have the same rules, and that is 

really what we are hoping a redo of the tax code could achieve. 

Senator RISCH. You know, what she said brings up more discouraging thoughts about what is going to happen with tax reform. One 

of the things that surprised me when I got here, not much has surprised me, but one of the things that surprised me when I got here 

is how members of Congress have lost sight of the purpose of the 

federal tax code. 

The federal tax code is meant to raise sufficient money to do the 

limited things that the Founding Fathers thought that a Federal 

Government should do. But, instead of that, what it has become is 

a social engineering tool. 

There are 535 members of the Congress and lots and lots and 

lots of them think that they know a lot better what you should be 

doing than you. As a result of that, they put things in the code that 

either encourage you to do things like buy an electric car because 

they think you should be driving an electric car, or to punish you 

for doing things that they think that you should not be doing. 

There are all kinds of examples of this. 

But, the federal tax code, as long as it continues to be used as 

a social engineering tool, is going to be the mess that it is today; 

and every time they pass something like that, the law of unintended consequences, which my experience tells me is present in 

every single bill that passes, comes right around and bites you 

when you do not want to get bit. 

Senator SHAHEEN. Mr. Zinman. 

Mr. ZINMAN. I just want to tag on two quick things in the discussion that has gone around. First is the idea of permanence, that 

we fix the tax code. 

Honestly, every time the discussion on the Hill goes on about reforming taxes, I make more money, because everybody turns to me 

and says just check the law and the changes that they make. Make 

it permanent. Let me do my business the right way. 

The other point that I want to emphasize, writing tax law is sort 

of like comedy. Timing is everything. A good law written in February can be a good law. If it is written in December and we have 

learned of this, is going to be God-awful. 

And, it is so important to enact the rule at a time when people 

can understand. The IRS can give guidance. Maybe there are some 

tax cases that will come down the pike and we understand what 

is going on. Rather than relying on computers to churn out num-
20 

bers really quickly, we need people to understand the law, to develop the law and it does take time to do that. 

Senator SHAHEEN. Thank you. I do not know who was first but 

Mr. Edwards and then Ms. Nellen. 

Mr. EDWARDS. Just a quick comment to amplify a couple of 

points that Senator Risch made. You know, it is interesting you say 

that because you look back the night in 1980 last big tax reform 

1986, there was general agreement leading up to that tax reform 

to get rid of a lot of the loopholes and use the money to lower the 

rates. 

The majority leader, Dick Gephardt, wrote an essay for the 

CATO Institute at the time. It could have been written by, you 

know, a sort of an extreme libertarian. It was a fantastic piece. 

He said all the social engineering in the code is ridiculous. We 

need to get rid of it. Use the money to lower the rates. So, I think 

back in the 1980s there was more of a general agreement that that 

is where we ought to be going. Have a revenue neutral bill, get rid 

of a lot of the loopholes. 

The other thing I would note about—— 

Senator RISCH. You know, that is gone today. I mean, you never 

hear anybody here complain about that at all. 

Mr. EDWARDS. Right. 

Senator RISCH. It is never even discussed. It is just, well, we can 

make people do this if we just tax them this way or give them this 

credit. 

Mr. EDWARDS. Right, right. 

The other thing I would point out about that is that a lot of these 

scandals that have happened in the tax code most famously with 

Enron were caused, it seems to me, substantially by the use by corporations that are bending the rules on the special provisions that 

were supposed to be for something but the corporations have combined all of these different elements that were supposed to 

incentivize certain people and mix them up in a big stew and come 

up with this, you know, this financial engineering that was what 

Congress never intended. 

So, the social engineering is not just bad from an economic efficiency point of view, it is also bad in terms of, you know, corruption 

and scandal on the part of businesses cheating, it seems to me. 

Senator SHAHEEN. Go ahead. 

Senator RISCH. You know, there is a poster child for that right 

now. I sat here and watched people pass tax incentives to build 

windmills in order to generate electricity. 

Well, you know, from an economic standpoint that is ridiculous. 

I mean, you are talking 24 cents compared to four cents for traditional ways of making electricity, but by golly the people here insisted they were going to force Americans to use green power and 

they were going to have them build the windmills. 

So, the way to do it is to give tax incentives for people to build 

windmills. Well, lo and behold, people went out and took advantage 

of the tax code and companies like General Electric Corporation 

paid no taxes. Why? Because they took advantage of the law that 

this Congress passed. 

And the exact same people who were saying, ‘‘By golly we need 

this tax incentive to go out and build these windmills,’’ are now 
21 

complaining that these rich corporations are not paying taxes. 

Well, who did they expect were going to build the windmills, you 

know, people without any money that did not pay taxes? Does not 

make sense. But anyway that is a perfect example of exactly what 

you are talking about there. 

Senator SHAHEEN. I think there are probably a lot of other loopholes in the tax code that allowed GE to not pay any taxes but I 

do think that that is one of the challenges that I hear from small 

business in New Hampshire because they say, look, we have got 

these big corporations that are not paying any taxes because they 

can afford to have 2- and 300 lawyers and I have got, you know, 

my five or 10 or 20 employees and I cannot afford to have that kind 

of scrutiny of my taxes and so I am paying my fair share and other 

people are not, and I think it really does contribute to frustration 

that people have about the tax code. 

Ms. NELLEN. 

Ms. NELLEN. On both these items, what should be made permanent and also on the tax expenditures, a couple of things that have 

come up is one on 179 I think that should be made permanent for 

the certainty. 

It is labeled as a tax expenditure; but as Mr. Hodge noted, when 

you talk about depreciation, there is an additional inflation, interest factors that are not being weighed into that. 

So, that is the way a tax expenditure is. It is something that is 

certainly needed to measure net income. What are we going to do 

with the fixed assets we get, what kind of write-off, is it an immediate write-off, or depreciation. But it is not honestly always a tax 

expenditure because you are going to have to, I mean, as opposed 

to giving some extra credits for, you know, a windmill, this is something you need to measure net income. 

179 should be made permanent, but I think it also needs to be 

updated. It focuses on tangible property. There is a temporary provision that has allowed software to be written off but today companies could be buying a variety of intangibles including just buying 

a business where one of the assets today is going to be a domain 

name. That is an intangible asset that would not fall under 179 

today. 

But, to really make it simple, modernize it, 179 should cover all 

tangible and intangible, personal property purchased by a business. 

And, whether that is a tax expenditure could be questionable as opposed to something that is just, you know, some bonus you are getting, but that one actually is obviously to measure your net income. 

One other one that for some small businesses would be important 

would be the research credit. Now, is that just a giveaway? There 

are some other elements of some expenditures you are going to 

need to look at because a research credit has recognized some spillover effect that when the person is incurring the R and D there are 

benefits also being achieved from that by other companies that did 

not have to invest in it. 

And, the competitive pressure unfortunately to not have a research credit when most countries do, it does factor into decisionmaking maybe not so much always for small business but certainly 

for medium to larger businesses. The research credit does not work 
22 

probably as effectively today as it should because it has always 

been a temporary provision in the law. 

But, those would be two I think of for innovation, 179 and the 

research credit, but probably not in their current form. 

Senator RISCH. I would think that the research credit you are 

going to have trouble getting rid of. I mean, that is, as you point 

out there are legitimate deductions, not tax expenditures. These 

are legitimate deductions. A legitimate deduction is a cost of doing 

business. 

We have Micron Technology in Boise, Idaho, and I guarantee you 

if they did not have a full-time, robust R & D enterprise in the 

basement turning out new things to make, they would not be in 

business in six months. It is a legitimate cost of doing business I 

would think. 

I do not think they are going to have any trouble separating the 

cost of doing business versus the social engineering kinds of things 

that you are talking about. 

Senator SHAHEEN. I had asked before you got here if there were 

recommendations to try to incentivize innovation and help the businesses grow. So, I think you were talking about that in response 

to that. 

Ms. NELLEN. That was a temporary measure. 

Senator SHAHEEN. Sure. Right. 

Ms. Arslan, then Mr. Canty. 

Ms. ARSLAN. You know, I think for America’s smallest businesses 

is really the equity issue. I think that the tax code in particular 

is one of the biggest contributing factors to this Main Street versus 

Wall Street, you know, head to head battle royal, because, you 

know, our members cannot afford to, most of them do their taxes 

themselves. They do it with fear that they are going to make a mistake. 

Two, they cannot afford the teams of lobbyists to come up here 

and put in all of these different nice loopholes and credits that 

would benefit them and their business. And so, it creates a strong 

sense of frustration amongst these business owners who are playing by the rules, who are paying these exorbitant tax rates which 

inhibits them are growing their business and do not get the same 

benefits. 

In terms of provisions, you know, for our members it is just being 

treated as an equal business owner. Why is it that a self-employed 

business owner is treated less than a business owner who owns a 

C Corporation? Why cannot they have the exact same benefits, the 

exact same deductions just because of business structure? And so, 

those are some issues. 

So, one of the big provisions is just simply changing the definition of employee for a business and allowing the self-employed 

business owner to be considered an employee of their business. 

It would change everything. It would allow them to deduct their 

health care costs which every other business gets to do. It allows 

them to participate in their retirement plans, in their HRA plans. 

That goes a long way for parity. So, that one simple change in the 

tax code would make a big difference for the 22 million self-employed Americans. 
23 

Senator SHAHEEN. I certainly appreciate that. Back when I was 

in the State Senate in New Hampshire, I tried to change our state 

law to help self-employed people qualified for workers compensation; and because of the federal law, we could not do it. It does not 

make sense when you think about the requirements and the needs 

that self-employed business people have. 

Mr. Canty. 

Mr. CANTY. Yes, one of the issues here that I hear and I just 

heard from my colleague here is a lot of this ends up being cultural. 

Number one, what is a small business? A small business, in my 

NASE code it is actually less than $33 million a year. And then, 

what is a wealthy person? That is one of the things that has always divided us. I think the latest tax code, I think they bumped 

it up 250 to 400 K. 

Well, if I am a small business and I am doing 20 million a year 

and I am doing five percent, and that is $1 million, 5 percent, just 

to be even very conservative gross and the net I am doing 2 and 

a half percent, well, then that is $500,000 of income to me as an 

S Corporation owner that again is flowing through me. 

Then, I am all of a sudden part of this wealthy class of people 

when, in fact, I am not. I am the same guy who puts his feet on 

the ground and goes to work every day and starts solving problems 

as soon as he wakes up and everything else. 

Yet when we go to certain members of Congress, and I say that 

because you guys are the ones who make the laws and we abide 

by them, well, then we are being told, well, you do not have anything to complain about. You are rich. What do you have to complain about? I am not rich at all. I drive a Ford Explorer. I live 

in a decent neighborhood. My kids go to public school and everything else. I am not a wealthy person. 

Wealthy to me, just for me to set the record straight for myself 

is when you can reach into your pocket and whatever you want to 

buy, the money is in your pocket. You never have to worry. That 

is being wealthy, and that is a very few percentage of the United 

States. 

But small business owners are being put into that high tax 

bracket being called a wealthy. WE really need to stop doing that 

because what it does is that it separates us, and then it takes away 

the logic out of the argument and then becomes completely emotional. That is something I would love to see from you guys. 

Senator RISCH. You know, you do not know the half of it. 

[Laughter.] 

I get in these arguments up here all the time and this business 

about, well, they can afford to pay more taxes. But, you know, the 

tax policy in this country is such that it absolutely amazes me. 

Sometimes I think they have quit teaching economics in the public 

school system. 

But, if you tax people who are at the upper end of the spectrum, 

can they afford it? Absolutely they can afford it. In fact, they do 

not even know it. Their accountant usually writes the check and 

they have no idea. But, where is that money coming from? Is it 

going to come out of their richness that a lot of people around here 
24 

love to hate? Is it going to come out of their lifestyle, their car, 

their house, or their trips? Of course not. 

Do you know where it is going to come out of? It is going to come 

out of the money that they used to invest that makes America 

work. It is going to come out of the money that they use to build 

buildings, to build infrastructure, to hire people to run businesses. 

That is where that money is going to come from and guess where 

it is going to go? 

It is going to go to the United States government. What could 

possibly go wrong there? I mean, you are taking it from the most 

productive group of Americans, handing it over to the Federal Government, and taking it out of the working capital in this country. 

This business of, ‘‘Oh, well, we will just take it from them; they 

can afford it,’’ is just nonsense, absolute nonsense. 

Senator SHAHEEN. Mr. Zinman. 

Mr. ZINMAN. I do not want to lose what Mr. Canty said. I think 

he is 100 percent correct. There are so many people that I personally, small businesses that my members all talk about who are 

making the $500,000 and just getting by. These are not rich people 

but they are being taxed at the alternative minimum tax, and then 

in my New York metropolitan area you add on a second layer of 

state and local taxes. These people are between FICA and the federal taxes and then the state and local taxes, they are just getting 

by. They are not living high on the hog. They are getting by. 

And, Mr. Canty, you are absolutely right. A lot of people are in 

your same boat and perhaps some of these folks over here in D.C. 

do not understand it but we do. 

Senator SHAHEEN. Thank you. 

Before I call on Mr. Hodge, I want to go back to Mr. Keeling, and 

I may have missed this when I was going to vote but one of the 

things that you talked about when we went around for introductions was the way that ESOPs were able to continue to employ people throughout the recession. I wonder if you could talk a little bit 

about how that has happened and how they have been able to continue to build the wealth of their employees. 

Mr. KEELING. There are no set theorem as to why jobs were so 

stable in employee-owned companies during the Great Recession. I 

have my own idea. I have been around ESOP companies since 

1981. I have visited over 500 ESOP companies in my career. 

One unpublished study showed that ESOP companies are rightsized to begin with. 

Senator SHAHEEN. Can you explain what you mean by rightsized? 

Mr. KEELING. I will with my left hand parallel to the desk. The 

study showed that if one took a line represented by my left hand 

and the hand is the number of employees at a beginning point the 

companies that were not employee-owned added employees when 

times were good—up where my right hand is. Then when times 

were bad their employment level was down here. The same study 

of employee-owned companies and the number of employees stayed 

pretty much the same, in good times and in not so good times. 

The theorem is, and the book ‘‘Shared Capitalism at Work’’ contains 100,000 points of data. People who feel ownership monitor 

one another. There is an attachment I have to my testimony that 
25 

cites recent research about the growth of employee-owned companies during the great recession. 

But, I think much of their impressive low layoffs is because 

ESOP companies were right-sized to begin with and thus maintained a level workforce. 

For example, I think of a company in New Hampshire, where 

times became challenging. Instead of laying off people, employees 

mowed the yards out in front of the building. They mopped the 

floors and swept the floors versus saying we are going to lay off 

people. They kept employees and cut down other expenses because 

the company believed in saving jobs. 

That is the best I can do with it. I just cannot come in and say 

blah blah blah. I gave you my thoughts, my anecdotal experience 

on the topic. 

Senator SHAHEEN. Thank you. 

Senator RISCH. We have to go vote. 

Senator SHAHEEN. Yes. Senator Risch and I need to go vote. 

Chair LANDRIEU. I am here. 

Senator RISCH. The A team is back 

Senator SHAHEEN. You are back. Very good. 

Chair LANDRIEU. Thank you all so much. Mr. Nelson. 

Mr. NELSON. Yes. First of all, I just want to say thank you for 

inviting me here today. It has been a real pleasure. I do have a 

plane I have to go catch, get back to Idaho, get back to work. 

So, I am going to leave you with a couple of my last thoughts 

here. I agree with most everybody what they are saying. We need 

to simplify this a lot and make it an equal playing surface for all 

companies. I think that would help tremendously in my experience 

looking over it all. 

I want to be clear that, you know, in my business it is very capital intensive. I need to get something like that 179 on a permanent basis. That lets me know where I am coming from, lets me 

project my futures. I can spend more money than I normally would 

to regain and get back some of those costs that I am not getting 

now if I can buy some equipment. 

So, I guess the bottom line is there if I get something like the 

179 permanent, I can grow my business. I have every intention. I 

plan on taking over Brown Rental probably in the next 30 days. 

Within the first two years, we are going to put up about three more 

locations. 

That is more families that I am taking care of, more people, more 

jobs. And so, that is why it is really important, in my eyes, to get 

some of these things simplified and yet some permanence going. 

Chair LANDRIEU. Thank you very much. Excellent points. If you 

have to excuse yourself, please do. 

We are going to go on until five o’clock. Okay. 

I walked in when you were speaking, Michael, and I did not 

want to miss what you said. I will come back to you in a minute. 

But, Mr. Hodge, you wanted to say something. 

Mr. HODGE. Yes, Senator, thank you. One of the issues I think 

affecting small businesses the most in the tax system we have not 

talked about is the estate tax. 

It is kind of interesting to hear Senator Risch talk about Micron 

Technologies. Sadly, the Chairman of micron technologies died in 
26 

a plane crash a few years ago; and although he had increased the 

value of the company tremendously during his reign, it did not cost 

the company a cent in estate taxes when he died because it is a 

publicly traded company. 

And yet, if a private business owner, such as Mr. Canty, passed 

away, his family would probably have to sell his business in order 

to pay the 35 percent federal estate tax and probably much more 

at that. 

And so, I think this is one of the untold issues in the tax system 

that secretly and stealthily is affecting the long-term prospects of 

small businesses as they tried to grow into larger businesses. 

Chair LANDRIEU. Do you know what portion pay an estate tax, 

what portion of businesses in the country are subject to it? 

Mr. HODGE. Not off the top of my head. 

Chair LANDRIEU. Okay. We will try to find out. Please continue. 

Go ahead. 

Mr. HODGE. No. That was my basic point. I think the research 

is pretty clear on the estate tax that, number one, its effects on the 

economy are much greater than what it actually collects in revenues for the Federal Government. 

The compliance costs alone, from the estimates I have seen, actually probably equal to some degree the amount of revenues that it 

produces for the economy. As we have estimated in our economic 

models, if you were to eliminate the estate tax overall, it would 

boost GDP in the long-term by as much as $128 billion a year. It 

would probably end up generating more revenues for the government because of increased economic growth. So eliminating the estate tax would probably be one of the best things we could do to 

help small businesses. 

Chair LANDRIEU. Wonderful. Okay. Go ahead. 

Mr. HODGE. Thank you. Since we opened up the door on other 

taxes, I would like to add the issue of sales taxes that affects so 

many of the brick-and-mortar businesses and so many of the small 

businesses because they do have a difficulty in competing with 

some of these Internet companies that are avoiding the sales tax. 

Now, it is an interesting thing because if you look at it on the 

revenue side, if you try to score it, you cannot. But the reality is 

if the states and local governments wind up collecting more revenue because the sales tax is properly being accessed and the 

Internet companies are competing honestly with the brick-and-mortar companies and the states wind up generating a certain amount 

more revenues, theoretically they need less from the Federal Government. 

Chair LANDRIEU. I am very glad you raised that, because that is 

an issue. I do not know if Senator Enzi wants to add anything to 

this, but that is an issue that is under consideration right now. You 

know, the Senate passed the Marketplace Fairness Act, and I think 

both of us supported it. 

Mr. ZINMAN. NCPAP also supported it strongly. 

Chair LANDRIEU. Good. I supported it for exactly that reason because in the event that we do move to a more, even if we stayed 

where we are, I think it is fair but if you move more to a consumption tax, you want to make sure that everybody is paying their fair 

share and if you do not, then local governments end up not col-
27 

lecting that tax and end up to make up the revenues elsewhere, either cutting services below where it should be or raising taxes on 

income which gets back to what you said, Mr. Canty, that that is 

the last thing you want to be doing is raising taxes or putting more 

burdens on income. 

You want to take that income and those profits, I think, and reinvest back in your business. Was that not the comment that you 

made? 

So, Ms. Nellen, let us get to you and then Ms. Arslan and then 

Michael, I would since ESOPs are one of my favorites too, I would 

like to hear what you had to say to Senator Enzi. 

Ms. NELLEN. Well, in the context of this multistate issue being 

raised, that is something I had on my list to address in that there 

are some issues that Congress will need to address besides federal 

tax reform, and I think today a trend you would see in even a 

small business is they are going to have most likely international 

and multistate operations. 

That might not have been the case 10 years ago but certainly 

today, I mean, they can start selling online and customers could be 

anywhere. So in addition to the sales tax issue to resolve, there is 

also income tax nexus that needs to be clarified and modernized. 

And then also, the mobile employees and where they need to file. 

I am a small company, my employee did travel and visit customers 

in some state, the small business has to deal with the complexities 

of the rules on withholding being different among the states. 

So, I think there are, besides the federal tax reform, there are 

some multistate areas where Congress needs to step in. 

They have been lingering for some time. They are not easy ones 

because the government and the businesses do not seem to agree 

on what they want. But, they would be impediments to small and 

medium-size businesses. 

So, it is the sales tax. It is modernizing Public Law 86–272, and 

addressing some uniformity for the withholding rates when you 

have got employees working or traveling through different states. 

Chair LANDRIEU. And I do not know if the Finance Committee 

has reached out. I think it has been right now to Senator Enzi just 

to us but I am sure they must be reaching out to the National Governors Association, the national mayors, you know, the leadership 

conference of mayors, and NACO, which are the County commissioners I would imagine for some of the things that Ms. Nellen talk 

about. 

Are you familiar with any of that coordination that may be going 

on? 

Senator ENZI. Yes, of course, a lot of it is the same letter that 

went to all Senators explaining that it was going to be a blank 

piece of paper that we would start with and then they would come 

up with a tax rate and then we would have the opportunity to add 

back in anything, some people call them tax expenditures, some 

call them tax loopholes, some people call them tax incentives. It all 

depends on which side of the table you are on. And, every time one 

is added back in, it would be added back in with those votes being 

on it knowing what the cost of that would be. 
28 

I do not think that it will actually start as a completely blank 

piece of paper. I think charitable contributions and home mortgages are pretty sacrosanct. 

But, beyond that there will be a debate on almost every other 

piece of the tax code I think. So, if there are things that you currently enjoy or your association currently enjoys, you should make 

known to us. And, if there are things that we could get rid of that 

would also help you, it would be helpful to know that as well. 

Chair LANDRIEU. To really have the small business community 

which, you know, we have a range here in our hearing but, you 

know, there are thousands of other types of businesses and associations. I mean, you are just a representative group. 

But, if there could be any kind of coalescing of major organizations, Senator Enzi, that really focused on small business to try to 

give a unified voice which may be too difficult or too complex to do 

but that is part of what this hearing is about, to put in order or 

in priority some of the things that are really, really, really important to startup entrepreneurs, to sustain that economic growth, to 

simplify, make it remove barriers to starting businesses and keeping businesses, that I think will help everybody. 

Now, whether there are a small short list of those things, I do 

not know but that is what we are trying to dig for here. 

Senator, go ahead. 

Senator ENZI. I am just very impressed with the diversity that 

you have among your panelists, between them and the people that 

they know, we ought to be able to get a lot of suggestions. 

And, even if you do not feel comfortable putting them in under 

your name, I am sure that either through this Committee or 

through myself or through the Chair, that we would be happy to 

submit those things. 

One of the questions, of course, that is always asked is how public will the letters be. Everybody is a little bit concerned about that 

because Senators all have constituents and they come down on all 

sides of issues. But, it is my understanding that the Chair and the 

Ranking Member are going to take whatever information they get, 

keep it anonymous, not even let the NSA have it. 

[Laughter.] 

And during August kind of work out a bill that, following the August recess, we in the Finance Committee can start working 

through as kind of a skeleton of what we are going to be working 

on. 

Chair LANDRIEU. Well, that is very good insight because I have 

been struggling with this as the Chair of this Committee. I mean 

I have certain views as a Senator from Louisiana, and then I have 

certain views that I think is my responsibility to try to communicate to the Finance Committee as the Chair of the Small Business Committee. 

So, our staff is going to be working on that exact thing and how 

we put something together from this roundtable. The problem with 

not putting anything together is the voice is not heard. Do you see 

what I am saying? So, let us keep going because we are making 

a lot of progress here. Thank you, really. 

Senator ENZI. Another important thing on any suggestions that 

you have if there is something that you need in the tax code, be 
29 

sure and explain why it is important; and if you have some stories 

that can be used to explain that, that that is even more helpful. 

Chair LANDRIEU. And of course, the broader the application of it, 

the better. That is why I am so excited to hear from our CPA group 

because you all really get such a broad, you know, you are a touchstone for so many different kinds of businesses. 

Since I was State Treasurer, I learned to rely a lot on the CPAs 

who help me out when I got in trouble with the numbers. So, I 

really have come to appreciate, and you are not political in the 

sense. You are very apolitical. It is just like the Senator said, it is 

about numbers. It is about you know what is working, what is not 

working, and I think you can give a lot of good advice to us on this. 

Michael, let us go to you and then I will come back through. We 

are going to wrap up in about 10 or 15 minutes. 

Mr. KEELING. I will be brief. One thing about employee ownership and ESOPs that is overlooked in our discussion is if you read 

our founding fathers, Hamilton and Jefferson and a few others, 

they emphasize that broadened ownership of property was absolutely essential to a free society and democracy. 

I would submit that ownership of land was the prime measure 

of wealth in our nation when they wrote. Now ownership of productive property is the prime creator of wealth. Having ownership be 

broad-based is important. 

And, the ESOP community would like to see retained the laws 

encouraging the creation and operation of ESOPs, which were 

added primarily in the 1980s under the leadership of, of course, 

Russell Long; but there was a fellow named Ronald Reagan that 

had much to do with the inclusion of pro-employee ownership in 

tax laws. 

The employee ownership movement really grew California from 

a libertarian thought and many of that group became the kitchen 

cabinet for Governor, then President, Reagan. 

There is a book coming out in September by Yale press—I wished 

I had a copy with me—that will talk about how the first Congress 

of the United States dealt with an economic crisis in the whaling 

industry, and one of their solutions was to put some criteria in a 

law that helped the whaling industry which, by the way, was the 

oil industry back when the United States began insisting that the 

sailors on the ships that were harvesting whales share in the ownership of the profits of the whaling ships. 

So, I would submit that we will be asking, Senator Enzi, for, in 

essence, the three remaining special laws in the tax code that promote ESOPs. And, plus Chair Landrieu has cosponsored legislation 

with Senator Cardin that will add one more tax benefit. My statement, to the Committee and the staff, specifies these laws and the 

one proposal. 

But, I emphasize that the roots of the idea of more ESOPs also 

includes one that was added by a man named Senator John 

Breaux, that you may be familiar with. 

But having said that, the roots of the concern of Senator Long 

when he learned about the idea of broadened ownership was the 

idea of income inequality, or quote, ‘‘the rich getting rich and the 

poor getting poorer.’’ 
30 

And, income inequality in society creates a bad atmosphere of us 

versus them. Us versus them is not good in our homes. It is not 

good in our companies. It is not good in our states, and it is not 

good in a democracy based republican form of government. 

And, I think—the Chair said one of the criteria we were to base 

our statements on was the idea of parity. The greatest system 

known to mankind in terms of an economy is a free enterprise 

economy. 

You need to make it be all it can be. Otherwise, you get into us 

versus them leading to entitlements that have gone out the door 

in terms of being over broad, or the awful system of the government taking ownership and trying to make things fair. 

That is the roots of what we come forward to the Small Business 

Committee, because most businesses in the world are small business. I do not care what country you are in. 

Chair LANDRIEU. Michael, I really appreciate your advocacy and 

passion, and you know I support a lot of what you all have advocated. I hope you gave them your best line which is if you want 

to have a capitalist system, you need to have more capitalists. 

Mr. KEELING. Right. 

Chair LANDRIEU. And one of the best ways to have capitalists is 

to get people to help to own their own businesses just like land 

ownership is important. Being an owner of a business or an investor in the business really helped change a persons mind set. 

Mr. KEELING. Right. 

Chair LANDRIEU. And I think our country should be leading the 

world in that. I mean, I think our country is so strong because of 

that. When I travel, I do not see that in many places. I mean, one 

of the most startling things to me, not the filibuster here because 

we are not supposed to do that anymore around here, is, you know, 

one of the most startling things I see is the lack of individual ownership of land. 

When I travel to places like Guatemala where 1 percent of the 

people own everything and 99 percent of the people do not own 

much, it is not that the 99 percent are not hard-working, smart, 

and want to work, they own nothing to leverage their finances to 

either start a business, buy a house, et cetera, et cetera. 

One of the great, I think strongest pieces of our government has 

been private ownership. It is broadly spread in America. I think 

about that the same that you do if we could allow the barriers to 

be lower and let people rise on their merit to become capitalists 

and to be business owners and own parts of businesses, that would 

have the same breathtaking impact that private ownership of land 

has had which I would say is breathtaking. I mean, it is breathtaking as relative to other places in the world. 

And so, I cannot be more eloquent than you on your subject but 

it is important to think about. It is simplification, what are the 

barriers that help people really get capital and build wealth. 

So, the government is not redistributing it, the government is 

helping people to build it. I mean, I think that is a good principle 

to think about particularly in this Committee. 

Chris, go ahead and then we will get you, Ms. Arslan. 

Mr. EDWARDS. Yes, I think your comments are spot on; and in 

fact, to go on a bit of a tangent, this is the crucial problem with 
31 

American Indian reservations, of course. The folks do not own the 

land. They do not have entrepreneurs because they do not own 

anything. That is a huge problem but, of course, not under this 

Committee’s jurisdiction. 

Chairwoman Landrieu, you asked about startups. There was an 

excellent piece in the Washington Post the other day by Bob Samuelson, who had some very disturbing statistics about how the rate 

of business startups in the United States has declined. That is a 

real problem. 

Chair LANDRIEU. But declined over what time? Has it been reclining since the recession? 

Mr. EDWARDS. The last half of the decade he is talking about. 

Chair LANDRIEU. So in the recession period? 

Mr. EDWARDS. Yes. 

Chair LANDRIEU. But what was it doing before then? It was 

growing? 

Mr. EDWARDS. I do not know the answer to that but, you know, 

the unemployment rate is staying high because we do not have new 

startups hiring new people. 

Chair LANDRIEU. Right. 

Mr. EDWARDS. One small item that I think this Committee could 

address and the Finance Committee could address in tax reform is 

the issue of startup expenses. 

I am not an expert on this but it has always struck me that, you 

know, I think current laws you can expense about $5,000 of startup 

expenses. But above and beyond that you have to amortize the 

startup expenses over 15 years. That strikes me as crazy. We want 

Americans to start firms. 

Chair LANDRIEU. Maybe startups should be free. 

Mr. EDWARDS. Absolutely. 

Chair LANDRIEU. Maybe startups should be completely free. You 

do not pay any tax for the first year until you get yourself going, 

and then you will be much better and able to pay taxes later on. 

I have had any number of my constituents come up and ask me 

that. Why, if I am starting this business, why would I have to pay 

all these taxes initially? Why do we not just let us start up the 

business? We will be more profitable, and then we are happy to pay 

a fair share. 

Mr. EDWARDS. Right. 

Chair LANDRIEU. I think that is kind of an interesting principle. 

I do not know how far, I am wanting to throw a lot of new ideas 

on the table. 

Ms. Ashton. 

Ms. ARSLAN. One of the things our members have been saying is, 

you know, the tax code does not need to incentivize them to be a 

business owner. 

Chair LANDRIEU. Right. They are going to be one whether—— 

Ms. ARSLAN. Exactly. 

Chair LANDRIEU. They are entrepreneurial. 

Ms. ARSLAN. They are entrepreneurs by nature. They will find a 

way in any economic climate, environment to be a business owner, 

to start their business, to try and be successful and make a go of 

it. 
32 

But, what it must do is not disincentivize them, not create barriers and roadblocks for them to be successful by being so complicated, by being so costly, and so that is one of the big messages 

that they wanted to put forth is that, you know, the way the tax 

code is set up right now it is a huge disincentive for them to grow, 

you know, more employees, more problems, more money, more 

problems. 

It is also a big disincentive for people who are thinking about 

starting a business because of that regulatory burden. You know, 

and when we talk to them, you know, Mr. Enzi had said, when we 

talk to them about if we could throw everything out, what would 

be the things you would definitively want to keep? 

It was four things. It was deduction for charitable contributions, 

a deduction for their health insurance costs, the mortgage interest 

deduction, and the home office deduction. Those are the only four 

things that if they could have a lower individual tax rate, they 

would scrap everything. Those were the only four things they cared 

about. 

Chair LANDRIEU. Excellent. Excellent. I want everybody to get 

that on the record. If you have your two things or three things you 

want to get on the record, get them. 

Ms. Sullivan. 

Ms. SULLIVAN. I just wanted to put some numbers to your idea 

about startups which SBA says the average cost to start a business 

is $30,000 and the average microloan when they are starting a 

business is $13,000. So, if you are thinking about a deduction for 

startups, I hope that puts it in context as maybe what we are talking about. 

Earlier, I said, you know, our members would just like to start 

from ground zero, ‘‘give us a lower tax rate.’’ You can take all the 

other credits and deductions. 

Especially those lower income entrepreneurs who cannot afford a 

CPA. They do not even take advantage of them anyhow, those 20 

or so deductions that are right now all on the books. You have to 

know to be able to take advantage of it. 

If we are going to add back into the tax code some deductions 

and credits, we are thinking about principles. The first one was, 

and I think it was Mr. Edwards who said, an incentive for new 

businesses to remove financial barriers for business creation. We 

just want to make sure that we could have a one-time tax deduction. 

The other principle is that if you want to add things back in, you 

should think about encouraging investment in small businesses 

like angel—— 

Chair LANDRIEU. Angel investors, et cetera. 

Ms. SULLIVAN. Right. And then third, we really like the idea of 

rewarding employer ownership, employee ownership because we 

see it as a way to keep your business going and to keep it beyond 

the owner, the original owner. 

So, those are kind of our three principles going forward that if 

you wanted to add anything back in, that those principles be 

thought about in terms of the tax code. 

Chair LANDRIEU. Mr. Eckert. 

Mr. ECKERT. I am—— 
33 

Chair LANDRIEU. Would you speak into your mic. 

Mr. ECKERT. That is a constant problem I have today. 

Related to the number of startups and relative to the past and 

going forward, interestingly we are seeing a new class of entrepreneur emerging in America coming out of the recession, and that 

is, people who were laid off or who lost their jobs and who could 

not find other jobs but who had an entrepreneurial instinct or had 

the need because they simply required livelihood, and we are seeing many of them come to us now with business ideas and we are 

funding them. 

That complements the classic entrepreneur that we see and read 

about. Just a point, they are driving more startup companies. 

Chair LANDRIEU. And you know, necessity is the mother of invention. 

Mr. ECKERT. That is right. 

Chair LANDRIEU. People have been unemployed so long. There 

are no jobs like the one they had, and so people are just like, okay, 

I have got a family to raise, I have got notes to pay, I have got to 

create my own job. And, they are getting about doing it because 

that is what Americans do. We do that very well. 

Interestingly enough, this health care debate which has not gotten much coverage at all, if you think about, not to get into a debate on the Affordable Care Act here. 

But, one of the interesting benefits to it, why I voted for it, and 

why many people did, not all, if we could ever get it to work, is 

because you can disassociate your insurance from your employment; and in some ways, it can incentivize entrepreneurship because the idea is your insurance travels with you. 

In the old days, it was connected to your employment. Under the 

Affordable Care Act, although for large companies you can still get 

your insurance if you do from your employment, the idea is to connect it to yourself. 

So, wherever you go, you have your insurance that is affordable. 

That is a principle of the Affordable Care Act that I do not think 

gets talked about, but it really is a pro-entrepreneurship idea. 

Now, how we can get it to work, because there are lots of problems with the subsidies and the exchanges and everything but that 

was a very powerful idea of the underlying bill that I do not think 

has been talked about enough. 

We are going to just have one more, anybody else, we are going 

to wrap up in just a second so put your placard up if you have one 

more thing to say. 

Let us do wrap-up comments. We will get everybody to do a oneminute wrap-up comment. 

Go ahead. 

Ms. NELLEN. One really big topic that I do not think we spent 

enough time on, I do not want to overlook it, is simplification. That 

is really kind of around the edges of many things we talked about. 

But, I think really a big emphasis on that would be very important. Basically, I think if you cannot describe in a few simple sentences how a rule works or it requires alternative calculations, the 

rule is not simple and it needs to be revised or repealed. 

Some areas they just kind of bring out complexity. One, for example, that small businesses face is worker classification. You 
34 

want to hire somebody, not sure if they are a contractor or an employee, you could struggle over that and then the risk of getting it 

wrong can be high. 

Why not just have, you know, like a five-question check list. If 

you honestly answered all of these questions yes and you then treat 

them as a contractor, you are fine. If it is determined it is wrong 

going forward, you can fix it. 

I think you need to think of new ways to address some of these 

things that otherwise have been decades-long complexity that do 

not tend to get resolved. 

Also, another area of complexity businesses face is when there is 

regulations on something that are very complicated. Right now, 

small businesses are facing a set of regs regarding repair versus 

capitalization. 

They are 64 pages long. They are incredibly complicated. I would 

like to see maybe if there is some way that if that happens, if we 

have a very complicated set of regs, there has to be a backstop, 

some safe harbor, as another way that a small business of a certain 

size could come in and deal with that. 

I think you need to find ways for the states to be joining with 

you because you put certain simplifications in place and the states 

do not follow them, then the complexity remains at the state filing 

level. 

Chair LANDRIEU. 30 more seconds. 

Ms. NELLEN. Okay. The blank slate. Small business would want 

to have use of the cash method, Section 179 expensing, retirement 

plan provisions, and the self-employed medical insurance deduction 

but also for self-employment tax; but all of these need to be modified in some way for further simplification. 

Thank you. 

Chair LANDRIEU. Thank you. Very good. Thank you so much. 

Last words, we are just going to go around. 

Kristie, starting with you. 

Ms. ARSLAN. I just want to leave you with facts because often 

people get confused about the self-employed, but there are 22 million self-employed Americans; and when you look at them as a percentage of the small business population, 78 percent of all small 

businesses are self-employed. 

So, they are a very important demographic and thus the tax code 

and any tax reform really needs to be representative or be of help 

to this particular demographic. As we all know, all businesses start 

small. So, let us be sure to focus on tax bills or tax reform that 

really does help all businesses, especially the smallest. 

Chair LANDRIEU. Thank you. 

Mr. Canty. 

Mr. CANTY. You know, this is very real to me in terms of paying 

the taxes. I remember when I had that AMT bill in 2009 that I still 

do not understand what it is. I have two children who are, my 

daughter is severely disabled with autism and my son has a highfunctioning form of autism; and as anybody who is familiar with 

that, there are a lot of different intricate medical bills that are associated with that. 

Well, I had to take that money I had set aside for the taxes and 

pay some of our bills. So, I got a tax lien. I am still paying for that 
35 

tax lien. Our friends at the IRS really did not care about that. I 

mean, that is what I said before about the IRS. They do not care 

if you cannot pay or what your excuse is. 

So, there is a real detrimental effects of this to small business, 

to myself notably; and I will be submitting that story for the 

record. But, that needs to be considered, cases like that, for small 

business owners. 

Chair LANDRIEU. Absolutely. Thank you. 

Mr. Eckert. 

Mr. ECKERT. We worry that if the 100 percent capital gains exclusion is not extended and made permanent that significant dollars will fall out on the system and that large numbers of startups 

will not be funded, companies will not be created, jobs will not be 

created. 

We also feel that by shortening the holding period from five 

years to two will help the system and keep capital in the system 

and we think by including LLCs in the law in 1202 that it will help 

everybody. 

Chair LANDRIEU. Thank you. 

Mr. Edwards. 

Mr. EDWARDS. I would just encourage Congress to focus on tax 

reform for small businesses and overall, look at ideas that would 

make the code both simpler and more efficient. 

So, you know, the capital expensing is one of those ideas. Section 

179, expand it. It makes life much simpler for small business and 

it is more efficient. I mention, for example, startup expenses. Why 

are we amortizing those. That just complicates the code. Let us expense them. 

With capital gains, I agree with Mr. Eckert’s view about 1202. 

We probably should expand it. It would be simpler rather than 

doing that just to lower the overall capital gains tax rate. So, think 

things that are simpler and more efficient. 

Chair LANDRIEU. Mr. Hodge. 

Mr. HODGE. Well, there is a simple adage in economics that 

when you tax something, you get less of it, and high taxes on passthrough entities gives us less entrepreneurship, less investment, 

less risk taking, and ultimately less job growth and job creation. 

And so, while we all want to wipe the slate clean, we want a 

blank slate, there are certain provisions in the tax code that help 

us define the tax base and help us define taxable income, things 

like expensing, accelerated depreciation, and so forth. 

So, we need to be very, very careful as we reform the tax system, 

that we do not undermine and take away the things that improve 

economic growth and reduce the cost of capital and ultimately lead 

us to a more prosperous economy. 

Chair LANDRIEU. Michael. 

Mr. KEELING. I put it in my prepared statement that you have, 

I will personalize them a bit. Number one, we want to save the 

Breaux approach to S Corporations with ESOPs, and then save 

these Long-Reagan proposals having to do with exiting shareholders being able to keep their companies going by transferring it 

to the employees and not having to pay that capital gains tax 

under certain circumstances. 
36 

Then addressing the two income, issues that attracted Senator 

Long having the dividends be deductible. It is paid in cash to the 

employees. 

And then of course, we would like to add a provision in the tax 

arena, in the Cardin bill that you are a cosponsor of along with 

several of the colleagues on this Committee. 

Then there are other ideas that we can throw out but I just hit 

the top four that we listed out to our written statement. 

Chair LANDRIEU. Thank you very much, Michael. You did your 

wrap up. Mr. Nelson had to leave early. So we are down to our last 

three. Go ahead. 

Mr. RANDOLPH. Thank you. I am happy to be part of this discussion. A lot of the tax reform discussion for business focuses on large 

businesses and multinationals and a lot of the discussion is about 

broadening the base and lowering the corporate rate, and we have 

to make sure that small businesses do not get caught in the crossfire of that discussion. 

Chair LANDRIEU. Thank you. 

Mr. RANDOLPH. Some of those broadening measures, as Mr. 

Hodge points out, such as for depreciation, would affect small business as well. So, we need to really focus on that. 

But going beyond that the discussion really needs to, and that 

is where this discussion fits in, really needs to focus also on the 

problems that small businesses face. I am really happy to hear that 

there are constant calls for permanence, because that is really important. 

Specific things we need to focus on are a permanent extension 

and expansion of 179. Cash accounting the same thing. I echo that 

again and also the incentive for startups in Section 1202, the 100 

percent exclusions and so on. We need to focus on that. 

And, we need to focus on things that generally make life simpler 

for small businesses—you know, cash accounting is one of those 

types of things—and not try to pepper the tax code with a lot of 

very complicated incentives at the same time. 

Chair LANDRIEU. Thank you so much. I hope you take those 

ideas back to Treasury and let them know you heard from the 

Small Business Committee. 

Ann. 

Ms. SULLIVAN. A lot of people touched on this. Our tax code is 

really outdated. It is really thinking about business in a very traditional way. As Kristie pointed out, there are 23 million self-employed. You said people are creating their own jobs, a do-it-yourself 

economy basically. We have access to world markets. Our consultants are all over the place. 1099s are now a way that we do business by being able to employee those folks rather than trying to 

skirt employer obligations. 

There is just a whole different way of looking at business and 

how business is conducted, and so we are really hoping that when 

Congress thinks about redoing the tax code it thinks about how 

business is done today versus how it was 50 years ago and how 

this complexity has built upon itself. 

Chair LANDRIEU. Ann, I think that is so excellent. I am going to 

make that I think the heading of my letter to the Finance Com-
37 

mittee. We are operating in a do-it-yourself economy. Let us have 

a tax code that helps us do it. 

Ms. SULLIVAN. Yes. 

Chair LANDRIEU. I mean think about that, I mean, because it is 

absolutely, it is just breathtakingly different than it was 20 or 30 

years ago. I mean, this Internet and the way people conduct business today is so different. We have a tax code that was built for 

the last century. This is a very exciting opportunity. Whether we 

can get it done or not, I do not know. 

Go ahead, Sandy. 

Mr. ZINMAN. Well, to add on to what can just said, too much of 

the current tax code is burdensome and confusing. The compliance 

issues are difficult. We need to have an understandable tax code 

with some amount of permanence. 

Granted we live in a dynamic economy but we have always lived 

in America in a dynamic economy. So, we need to have some 

amount of permanence so business owners can feel that they know 

where they are going. Also, one last thing is we do need to coordinate with state and local governments because we seem to step on 

each other. 

Chair LANDRIEU. Excellent point. 

Senator Enzi might have a few closing remarks and again thank 

you so much for being here. I mean we are so happy to have a 

member of the Finance Committee, because whatever letters we decide to send or not send, we have had a good solid member here 

listening to this and I think it will really help. I hope it was helpful 

to you, Senator. 

Senator ENZI. It was. And of course, this was my first Committee 

and it took me a long time to get on the Finance Committee as 

well. So, I am pleased on there. I guess they did not want an accountant on there. So, that explains a lot on balancing budgets and 

fixing taxes. 

Chair LANDRIEU. It explains why we are in the trouble we are 

in. 

Senator ENZI. And, I just appreciate all of the comments. There 

have been a lot of really valuable suggestions here that I have 

done, that I have written down. 

For the small businesses, I like that do-it-yourself economy. That 

is the small businesses. Of course, unfortunately our definition of 

a small business is five hundred or less employees, and this Committee, I have always said that my definition of a small business 

is where the owner of the place sweeps the sidewalk, cleans the toilets, does the bookkeeping, and waits on customers, and definitely 

not in that order. 

That is who we have got to keep in mind when we are doing this. 

When I talked to big businesses, I say find a small business that 

has got the same problem that you have got and help them to be 

able to explain it and it will fix it for both of you. One of the problems with small businesses is not having the time to find out their 

problem exactly and then to explain that. 

I appreciate the comments on ESOPs. Be sure and watch out for 

the new fiduciary rules on valuing the ESOPs. For everybody I suggest that when I first was coming back here, there was a company 

in Missouri that made, redid farm implements. They did a little 
38 

audiotape called ‘‘The Great Game of Business’’ about how these 

people that had never owned a business, never really understood 

their own finances took over an implement business and were able 

to set it up very competitively and keep it going which was one of 

the ESOPs. 

When we are talking about forms, if you have some suggestions 

or questions about why anything is on a form. Some of the forms 

that we have are not very explanatory. In fact, the form 5500 that 

people have to fill out for health care and insurance, the questions 

do not match up with the form. When I asked about it, they said, 

well, if we change the form, then we get penalized under the Paperwork Reduction Act so we just go with the old form and we add 

to the manual, and that is a problem we have got with a lot of 

forms. 

I was able to change the student aid form from 12 pages down 

to two just by asking a bunch of questions about, you know, who 

uses that information. 

So, if you can supply that on any of the business forms you have 

to do, and I am sorry that Mr. Nelson is gone with his small business application that he is trying to do. 

There is a Small Business Advisory Committee that works under 

the SEC. Any time there are regulations that deal with small businesses that amount to $1 million in cost, almost everything 

amounts to $1 million in cost, this advisory Committee reviews it 

and helps to decide whether it is a worthwhile rule or not. So, take 

advantage of that. 

In all the states, there is a tax advocate as well. So, if you are 

having problems that Mr. Canty mentioned, the problems where 

you had some kids that had some extra bills and stuff, sometimes 

the state tax advocate can help on that at least illuminating penalties. And I like the suggestion for cash accounting on the small 

business too. I have a whole pile but I will not go through them 

all. 

Chair LANDRIEU. Thank you. 

Senator ENZI. Thank you for having this hearing. 

Chair LANDRIEU. Senator Risch. 

Senator RISCH. Well, thank you very much all of you for coming. 

I think this has been informative and I think everybody has come 

away with some different ideas. 

I hope you have taken away from this that there are people up 

here that actually care about what you do. I know before I got here, 

I always thought what are these people thinking up there. 

Well, now that I am here I can see why a little bit, but there are 

people here who are actually very considerate of what goes on outside these walls and we appreciate what you do. Keep doing the 

best you can and we will keep doing the best we can. 

Thank you so much. 

Chair LANDRIEU. Thank you. I am going to end with one of the 

most interesting articles that I have read in the Washington Post 

in a long time. I do not know if you all got to see it. 

The headline, and my Ranking Member will love this, watch him 

pull a USDA-mandated rabbit disaster plan out of his hat. Did you 

all see that? Now, it should be the subject of the regulatory oversight that we are going to do but it has reference here. 
39 

This summer, Marty the magician got a letter from the U.S. government. It began with the six ominous words. Dear Members of 

our Regulated Community. Washington had questions about his 

rabbit again. He has been regulated under a regulation that had 

to do with zoos and circuses; but since Marty has one rabbit, they 

decided to ask him about his rabbit. 

So, we did not get to the rabbit today but we will but we got to 

a lot of other good things. 

So, thank you all very much for coming. 

[Whereupon, at 5:04 p.m., the roundtable was adjourned.] 

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