U. S. Sen. Dick Durbin Guest Speaker at CBA's Monthly Meeting
U.S. Senator Dick Durbin (IL-D) was the guest speaker at the Chatham Business Association’s (CBA) Monthly membership meeting on Tuesday where he spoke on various current issues including legislation and policy matters that impact small businesses.
CBA Executive Director, Melinda Kelley invited Sen. Durbin out to speak to the CBA membership.
“When I hear feedback from businesses about what’s working and what’s not working, a lot of it is tied to legislation and policy and the fact that the senator is here, means that he cares,” Kelly told the CBA membership who gathered at the QBG and Chicago Citizen Newspaper Headquarters at 806 E. 78th St. "…Their job is to empower us to empower you so that you can improve the quality of the communities that you serve," Kelly continued.
Durbin shared stories about his earlier political campaigning and the lessons he learned from a failed business.
Elected to the U.S. Senate Nov. 5, 1996, and re-elected in 2002 and 2008, Durbin fills the seat left vacant by the retirement of his long-time friend and mentor, U.S. Senator Paul Simon whom he said advised him to be honest and help others.
“The, be honest part of it for Paul Simon was to make income and tax disclosures every year so people don’t think you’re a crook. I did that every year so about five years ago, my bookkeeper calls and said Sen., I’m getting ready to put out your tax returns to publish them and asked if I wanted to pay the taxes I owed for Internet purchases and I said yes, how do you do that?”
On the Illinois State Income Tax form, there’s a line where you declare how much you purchased the previous year on the Internet and you do the calculation on how much you owe in sales tax.
Durbin said he went to Amazon, Lands’ End and all the places a guy his age hangs out on the Internet and figured out he spent roughly $600, adding that only 5 percent of the people in Illinois fill out that line information and that it’s a huge federal issue.
“Congress has to set up a system for Internet sellers to collect sales taxes in each state,” Durbin said. “I dived into this issue with a number of my colleagues, republicans and democrats. We call it the Market Place Fairness Act (passed last year by the U.S. Senate and referred to the U.S. House of Representatives) and it says if you’re going to sell on the Internet, you have to collect sales tax and remit the sales tax proceeds to the Illinois Department of Revenue. For example, in Chatham, some of that sales tax is going to go to Cook County and some to the City of Chicago…based on your zip code and where you purchased it.”
Durbin said it’s a big deal because big box companies like Best Buy are losing out to Internet businesses that don’t have sales tax.
“It will level the playing field for bricks and mortar businesses in collecting Internet sales taxes. Revenue coming back to the City of Chicago is worth $20 million a year, $55 million a year for Cook County and almost $400 million a year for the state of Illinois. We’re hoping this bill passes in the House by the end of this year.”
Durbin also addressed the debit card, swipe or interchange fees that are charged to retailers whenever someone uses their bank cards.
“The Banks take a percentage of the transaction when you use your debit card. So I thought it was an interesting issue because most people in businesses don’t have the power to negotiate with the banks that issue the debit cards. They are told by the banks what the interchange fee is going to be, take it or leave it. So we went through a big investigation and found the processing fee at the bank was two pennies to process a check whether it was $5,000 or $5, it was two cents to process. Now comes the debit card which replaces the check, doing the same thing a check always did and the average charge to process is .41 a transaction it adds up to $8 billion a year for the biggest banks in America who issue these debit cards.”
Durbin said an investigation was then launched into the cost of the bank’s processing the debit transactions and found that it actually cost about .11 to process.
“We said you’ve got to build that transaction fee into that swipe fee,” Durbin said.” “Big companies, such as my friends at Walgreens told me this is like another expense for their business. So we put in the bill to change it and the Federal Reserve is monitoring it. The big Wall Street banks hate me for it and it says to them you’ve got to reduce this fee and we put a cap on it of .22 cents. It could have been 11 cents put the Federal Reserve picked 22 cents. So it gives smaller businesses a fighting chance.
The Sen. mentioned the big fight with Bank of America over the Interchange fee saying the bank executives were angry that he limited their interchange fee and threatened to charge their customers, $5 a month to use a Bank of America Debit Card.
“All heck broke loose,” Durbin recalled. “People all of the United States said they we’re leaving Bank of America. They (Bank of America) quickly said we are removing the $5 fee and we don’t want to talk about it anymore.
Durbin also talked about the Walgreens plan to leave the country.
“The last point I want to make is about my friends at Walgreens and they are my friends,” Durbin said. “This is an Illinois company that started right here...by Charles Walgreen, in 1901 who opened the drug store at Bowen and Cottage Grove Avenues. ...The idea that they were going to pick up and leave the country, and stop paying taxes in the United States, I didn’t like that idea much because I thought 24 percent of Walgreens revenue comes from Medicare and Medicaid, tax supported programs…you can’t have it both ways. They called me last week, and said we’re staying. It’s the right decision for Walgreens and the right decision for America because if more and more companies pick up and go, it puts a greater tax obligation on those who remain paying taxes in the United States.
Following is an excerpt from Sen. Durbin’s Q&A session with the CBA membership:
Bruce Montgomery, Founder, Producer & Host of Technology Access Television: I know that you are supporting the future project in downstate Illinois, (FutureGen 2.0, a first-of-its-kind, near-zero emissions coal-fueled power plant project in cooperation with the U.S. Department of Energy, located in Meredosia, Ill.) this is a billion dollar project…with all of the things that get government incentive to bring these projects on line. I want to know if in these projects, there’s an inclusion, because when people hear about digital manufacturing, or FutureGen, when do we get a chance to participate and are there small businesses and minority provisions in these projects that will allow us to be part of these billion projects?
Sen. Durbin: The challenge to America, global warming caused by more carbon dioxide going into the air, the use of coal to generate electricity, natural gas, what goes up in the air and contributing to global warming. (WGN weather man) Tom Skilling decided to speak up about climate change and said it’s real and it’s happening. So this project FutureGen, is going to take a coal burning electric power plant and capture what’s coming out of the smoke stack and sink it into the earth, bury it, carbon capturing, over a mile down... This is not a dangerous gas, it doesn’t burn or explode, but keeping it out of the air is what we’re trying to do here and reducing the emissions that go up. So we want to prove that we can do it down there and then replicate it. Bruce to your point, who’s going to do the work, the good news is we have a local project labor agreement so it’s going to be local workers. When it gets down to the contracts, you bet, we’ve got to include and make sure we include minority and disadvantaged businesses as such, with their fair share of the work. When it comes to the crafts we have to keep pushing minorities forward so they can get into the crafts so they are part of the future and earning good wages.
George Williams of PMI Energy Solutions, LLC: Is there any effort by Congress right now to come up with fair corporate taxes to keep businesses here. Right now you got a lot of companies wanting to take their businesses out of the U.S. and every state with various different corporate tax structures, is there any effort by Congress right now to come up with what you feel is a fair corporate tax to keep businesses here?
Sen. Durbin: It’s a question asked by Walgreens and others, what are you going to do about corporate income tax and tax reform. Our corporate income tax is 35 percent, the highest in the world, but the real effective marginal rate is 25 percent. The thing that really troubles me is the biggest corporations in America like General Electric, pay no corporate income taxes and you think to yourself, what’s going on here, why are the medium and smaller size corporations paying a higher tax rate than the biggest corporations. They’ve found a way to get out of it. A CEO of a big company said to me, ‘you know I hire an army of accountants and lawyers to try and figure out how to keep my tax bill low and I’m sick of it. So we’ve got to try and figure it out and it isn’t easy. If I told you that we for example, have a tax code that says about $1.2 trillion is not paid in taxes because of deductions and credits, what’s the number one most expensive thing that is a deduction where you don’t have to pay your taxes…the number one thing is employer exclusion of health insurance premiums. When you pay the health insurance of your employers, it’s excluded from your income tax. Number two is deferral of income taxes on retirement, 401Ks, IRAs…charitable deductions, long term capital gains, mortgages...all those things I just mentioned, has a powerful political force behind it. When you deal with each one of these, each one is a big fight and it isn’t easy but we’ve got to fix it.
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