Confronting Congress Featured

9:52am EDT July 22, 2002

The Washington, D.C.-bound Butler Motor Transit bus pulled into the shopping center parking lot at about 7:15 a.m., parking next to the bus that would be taking senior citizens to Atlantic City.

As tempted as many of the business owners — all members of local business association SMC Business Councils — say they were to board the seaside casino-bound bus that early summer morning, they dutifully climbed aboard the motor coach that would take them to the steps of the U.S. Capitol building.

From there, these local business people would spend two days knocking on the doors of local congressional leaders. Their mission: to make sure the voice of small business is heard by those making important national decisions that can have a profound effect on their companies.

For members of the 5,000-member SMC Business Councils, it’s far more than a two-day field trip to our nation’s capital. Rather, it’s an annual trek which puts business owners in front of the likes of U.S. Sen. Rick Santorum, Rep. Ron Klink and Rep. Frank Mascara, among others, with sharp opinions about business-related issues such as bankruptcy, tort and estate tax reform, job training, minimum wage and self-employed health care insurance deductions, coming before Congress. (See sidebar for the latest issues.)

According to Cliff Shannon, president of SMC Business Councils, it’s an effort in which all business owners should participate in one form or another if they want to have a say in the decisions that can make or break their livelihoods.

“It matters two ways,” Shannon says. “First, I know first-hand that a motivated group of constituents commands more attention when they appear before elected officials, and they make a bigger impression.”

Shannon would know. Prior to becoming SMC president, he was chief of staff for the late Sen. John Heinz and later a Texas senator.

“Second, it boosts the notion in the minds of business owners that they can see officials face to face, and they can make a difference,” he adds.

In the association’s latest organized trip, led by Shannon and Janice Lanyon, the association’s vice president and director of federal government relations, 40 local business owners took their views on 14 major issues to at least a half-dozen congressional leaders with whom they had official appointments.

The only congressman who didn’t show up for the meetings was Rep. Mascara of Washington County. Even then, the business owners sat with Mascara’s staffers, who begrudgingly listened to their concerns.

Like Shannon, Lanyon says she believes more business owners should be communicating regularly with government leaders.

“It puts a face to the name on both sides,” she says. “I think that’s important. It’s a one-on-one thing which I don’t think you can do any other way. People ought to realize how important it is to the future of their companies to get one-on-one. It may change their way of voting [for their government leaders].”

Does such grassroots activism from local business owners make a big difference? Shannon thinks it does.

“Are we going to change a lot of yes votes to no, or a lot of no votes to yes?” he asks. “Not often, but if we can just persuade someone to listen ...” Daniel Bates (, who took the SMC trip to Washington, D.C., this summer, is editor of SBN magazine.

The issues you should pay attention to

SMC Business Councils has prepared a booklet on what it considers the 14 most important issues to watch, along with the stance you should be taking on them. Among them are the following, taken from the booklet:

Bankruptcy reform

For the small business community, the most important issues are protection from frivolous bankruptcy filings and ensuring that affected small businesses recover as much money as possible when a customer/client files for bankruptcy.

Current law heavily favors the interests of larger businesses over small businesses, in that representation on the vital unsecured creditors committee is limited to the handful of creditors that are owed the most money. Although this makes superficial sense, large and small businesses often have very different interests in such situations.

The stance: Small businesses should have fair representation on creditor committees and a greater voice in bankruptcy proceedings. SMC strongly supports the floor amendment authored by Congresswoman Nydia Velasquez which was added to H.R. 833, the Bankruptcy Reform Act of 1999. This amendment authorizes bankruptcy courts to compare the amount of a business claim as a proportion of its grow annual revenue to determine if the business is disproportionately affected and should be added to the creditors committee.

It also assures that affected small businesses will receive timely access to critical information about the committee’s actions.

Estate tax reform

The Joint Economic Committee found that 28 percent of family-owned companies subject to the Federal Estate and Gift Tax during the 1990s were sold or discontinued, in part to meet estate tax obligations. An estimated $6 billion is spent annually on accountants, lawyers and life insurance to comply with and minimize estate taxes.

This hidden tax punishes savings and subtracts from the capital and energy that small businesses have to succeed and grow.

The fact is, the FEGT brings in less than 1 percent of annual federal revenues. Most experts agree that the amount of federal tax revenue lost due to business liquidations to pay estate taxes exceeds the total amount of estate taxes collected.

To spur economic and job growth, and to encourage entrepreneurship and savings, SMC contends, the outdated estate tax should be eliminated.

The stance: SMC supports legislation authored by Congressman Christopher Cox (H.R. 86) which would repeal the FEGT immediately. If that measure doesn’t win sufficient support in the 106th Congress, SMC advocates the incremental repeal encompassed in legislation sponsored by Congresswoman Jennifer Dun and Congressman John Tanner (H.R. 8).

The Dunn-Tanner bill would: 1) eliminated the top estate tax rate of 55 percent by 2010, and 2) reduce the estate tax by 5 percent each year, beginning in 2000.

Job training

Skilled employees are at a premium in every segment of the economy. The challenge is particularly difficult, says the SMC, for small businesses, which typically lack the resources to recruit and train new employees.

The stance: SMC supports H.R. 1824, which would give small employers (those with fewer than 250 workers) a $15,000 annual tax credit applicable to the costs of training an individual in a highly skilled apprentice program. As drafted, the bill would directly affect training of highly skilled metalworking workers, where the shortage of skilled workers is particularly acute.

Minimum wage

Even in this growing, dynamic economy, some old rules still apply. Raise employment costs, and the result will be less employment. A higher minimum wage won’t, by itself, reduce current employment, the SMC contends, but it will cut the growth of entry-level jobs and hurt those who are just starting out.

The stance: SMC believes that Congress should not increase the federal minimum wage further at this time. To do so would be flawed economic and social policy.

Self-employed health care deduction

Current federal law doesn’t allow sole proprietors, partners and S Corporation shareholders to deduct the entire amount of their own health care costs. Current law allows for incrementally increasing percentages of their health care costs to be deducted, reaching 100 percent by 2003.

Meanwhile, all other types of businesses today are permitted under federal law to deduct 100 percent of health care costs. Says the SMC: “That successive Congress es since the 1980s have failed to deal resolutely with this indefensible situation is an outrage.”

The stance: SMC supports congressional approval of S. 343, introduced by Sen. Kit Bond. This legislation would accelerate the health care deduction to 100 percent as of Jan. 1, 1999. S. 343 also would make an important technical change to current law relating to sole proprietors and spousal eligibility for health care benefits through his or her own separate employer. For a copy of SMC’s complete 1999 Washington Presentation to Congress, call SMC at (412) 371-1500.