[Congressional Record Volume 161, Number 184 (Thursday, December 17, 2015)]
[Senate]
[Pages S8750-S8752]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROTECTING AMERICANS FROM TAX HIKES ACT
Ms. COLLINS. Mr. President, tomorrow the Senate will vote on the
Protecting Americans from Tax Hikes Act of 2015, which will provide
needed tax certainty and predictability for our Nation's small
businesses, enabling them to create more jobs and boost our economy.
Several months ago, on April 30, I was joined by my friend and
colleague from Pennsylvania, Senator Casey, in introducing the Small
Business Tax Certainty and Growth Act of 2015. Our bill aimed to help
small businesses invest, grow, and create jobs by providing needed tax
relief and certainty. Senator Casey has been a true partner in
advancing this bill, and we are so pleased that the Protecting
Americans from Tax Hikes Act takes three key provisions from our
bipartisan bill. These provisions include, first, the permanent
extension of section 179 expensing, indexed for inflation, which will
allow small businesses to write off up to $500,000 of the cost of
certain equipment. I would note that this provision is so important to
our smaller businesses that it is the No. 1 tax priority of our
Nation's largest small business advocacy group, the National Federation
of Independent Business. Second, the bill includes the permanent
extension of the 15-year deduction period for restaurants and retailers
to improve their space and to buy new equipment. This is so important
because otherwise the Tax Code reverts to a 39-year depreciation
schedule. That is totally unrealistic. No restaurant could wait 39
years before investing in new flooring, new equipment, and other kinds
of renovations and expect that customers will still come flocking to
their doors. The third provision of our bill would be an extension of
so-called bonus depreciation to allow companies to deduct the cost of
certain equipment and software.
These three provisions will give our small businesses the
predictability they require to plan for capital investments that are
vital to expansion and job creation.
I know I don't have to tell the Presiding Officer that small
businesses create the majority of new jobs in this country. According
to the Bureau of Labor Statistics, small businesses generated 63
percent of net new jobs that were created between 1993 and 2013. Even
the smallest firms had a notable effect on our economy. The Small
Business Administration data indicate that businesses with fewer than
20 employees accounted for 18 percent of all private sector jobs in
2013.
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Recent studies by the National Federation of Independent Business
indicate that taxes are the No. 1 concern of small business owners and
that the constant change in our Tax Code is among their chief concerns.
I know this to be true from the many conversations I have had with
small business men and women throughout the State of Maine. It is so
frustrating to them because they don't know what the Tax Code is going
to provide from year to year, making it nearly impossible to plan. This
has the effect of freezing their investment decisions, and that in turn
affects their ability to hire more workers.
The long-term solutions provided in this bill will provide the
certainty small businesses need to create and implement long-term
capital investment plans that are vital to growth and job creation. For
example, section 179 of the Tax Code allows small businesses to deduct
the cost of acquired assets more rapidly. The amount of the maximum
allowable deduction, however, has changed three times in the past 8
years and has often been addressed as a year-end ``extender,'' making
this tax benefit unpredictable from year to year and therefore
difficult for small businesses to take full advantage of in their long-
range planning.
Let me give a concrete example. Earlier this year I spoke to Patrick
Schrader from Arundel Machine, a precision machining business in
Southern Maine. He told me that the uncertainty surrounding section 179
has hindered his ability to make business decisions. The high-tech
equipment he needs requires months of lead time. For a small business
like Patrick's, it is very risky to increase spending to expand and
create new jobs when the deductibility of those investments remains
unknown until the very end of the year. For business planning, this is
information that is vital to have at the beginning of the year, not at
the end. This uncertainty has a direct impact on hiring decisions.
I wish to give another example of what the small business expensing
provisions can mean. Maine has become well known for its high-quality
craft beers. Dan Kleban founded the Maine Beer Company with his brother
in 2009. In 6 short years his business has added more than 20 good-
paying jobs with generous health and retirement benefits, and they want
to add even more. Dan noted that his company's business decisions have
been directly affected by the availability of section 179 expensing.
This provision fueled their expansion by allowing them to reinvest
their capital into new equipment to produce more great beer and hire
more great Maine workers. In the last 3 years, they have taken the
maximum deduction allowed under section 179 to acquire the equipment
needed to expand their business. This year they hope to use the
provision to finance the cost of a solar project that will offset
nearly 50 percent of their energy consumption. If the business had been
forced to spread these deductions over many years, its owners simply
would not have been able to create the new jobs as they have.
This economic benefit is multiplied when you consider the effect of
the investment by Maine Beer Company and Maine's many other small
brewers and other kinds of small businesses on equipment manufacturers,
on the transportation companies needed to haul that new equipment, and,
in the case of craft beers, on the suppliers, the supply chain,
including farmers who are providing the materials needed to brew these
outstanding beers.
In February, NFIB released new research that backs up this claim with
hard numbers. NFIB found that simply extending section 179 permanently
at the 2014 level could increase employment by as many as 197,000 jobs
during the 10-year window following implementation. U.S. real output
could also increase by as much as $18.6 billion over the same period. I
mention those numbers because it shows how beneficial this provision of
our Tax Code can be when it is made permanent, when the uncertainty
about whether it is going to be available and at what level goes away.
In light of the positive effects these provisions would have on small
businesses, on jobs, and on our economy, I urge my colleagues to
support the tax relief package.
I am pleased to yield to my cosponsor and colleague Senator Casey.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. CASEY. Mr. President, I commend and salute the work done by
Senator Collins. I am grateful to have this opportunity to reiterate
some of the great features of this legislation as it relates to these
tax provisions. If I had to summarize it in a couple of words, it would
probably be the following: certainty for small businesses--maybe just
those four words.
Senator Collins, when we talk about reaching across the aisle, I am
one desk in from the aisle and you are almost on the aisle. It is
almost literally reaching, you are so close. But I am so grateful for
your work on this issue for several years now. And with all the
difficulties in Washington where often folks don't come together on
these and other issues, we can show that we can work together and we
can make progress on something, giving certainty to small businesses.
That is a pretty big deal. In our State we have something on the order
of 2.5 million people working in small businesses, so this is the core
of our country in the Commonwealth of Pennsylvania and across the
country.
I would reiterate and maybe even incorporate by reference Senator
Collins' review of the provisions. I would highlight two of them. The
15-year depreciation schedule for restaurants and other leaseholds and
other businesses--if you have a restaurant and you can get the benefit
of depreciation--figuratively speaking, a slice or a piece of
depreciation year after year--it is a lot better if you can get the
benefit of those slices or pieces over 15 years--one per year, or one
benefit of depreciation--rather than having to wait 39 years for little
tiny pieces over those 39 years. That is a simplistic way of explaining
it, but it is a vital injection of support for small businesses.
On section 179, I think what Senator Collins said makes a lot of
sense because a lot of these businesses would see, well, in this
particular year, the value of that maximum allowable deduction is at a
certain number, a couple hundred thousand dollars. In the next couple
of years it could change. Having that certainty of knowing what that
benefit will be over time is of enormous significance. The same is true
of the benefits that come from bonus depreciation.
Mr. President, as I said, I rise today to discuss some critical tax
provisions which Senator Collins and I worked to include in the end of
year tax package soon to be considered by the House and the Senate.
This is a day we fought long and hard for--a day to bring our small
businesses and entrepreneurs the certainty they need to invest in their
companies, grow and create the jobs our economy needs.
As a member of the Senate Finance Committee, I understand that one of
the best policy tools we have at our disposal to support small
businesses is the tax code, which directly affects businesses' bottom
lines.
Business owners need certainty about tax policy. That is why I am
proud to have worked with Senator Susan Collins to introduce bipartisan
legislation that would allow small businesses to plan for capital
investments that are vital for job creation, and am thrilled to see
provisions from this commonsense proposal included in the end of year
tax package. Their inclusion will increase certainty for businesses,
increase economic activity and increase the pace of job creation.
Small businesses are vital to our economy. In Pennsylvania small
firms comprise more than 98 percent of all employers, nearly 2.5
million Pennsylvanians work for small businesses. Across the country,
small firms employ just over half of the private-sector workforce,
according to the Small Business Administration.
In the past, many of the tax provisions affecting small businesses
have been enacted on an unpredictable and temporary basis; that changes
with this bill. That uncertainty directly hindered economic growth and
job creation. When businesses don't know how their investments will be
taxed, they cannot make long-term planning decisions with confidence.
This bill, with the policies I championed with Senator Collins, will
change that.
This end-of-year package includes several provisions which, through
their
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being made permanent, will immediately reduce uncertainty about the Tax
Code and encourage businesses to grow, invest and hire.
A key provision of our bill would make permanent the maximum
allowable deduction under section 179 expensing rules. Section 179
allows taxpayers to fully deduct certain capital asset purchases in the
year they make the purchase. This type of expensing provides an
important incentive for businesses to make capital investments. Without
it, taxpayers would have to depreciate those asset purchases over
multiple years. By making the maximum allowable deduction permanent and
indexing it to inflation, our bill would provide the kind of certainty
that businesses need to take full advantage of section 179.
A second provision--bonus depreciation--will help businesses in much
the same way that the expensing rules do. Bonus depreciation allows
companies to expense half the cost of qualifying assets that they buy
and put into service in the same year.
The bonus depreciation provisions will provide 5 years of certainty
to our businesses, creating an added incentive that makes a real
difference in small business investment. A 2013 U.S. Treasury report
concluded that 50-percent bonus depreciation lowers the cost of capital
by 44.1 percent. These figures illustrate the tremendous benefit these
policies can bring to our job creators.
One additional measure, which I would like to touch on for a moment,
is the provision to make 15-year straight-line depreciation schedule
for restaurants, leaseholds, and retail improvements permanent.
This February, Senator Cornyn and I introduced legislation to make
the 15-year cost recovery provision permanent. I am glad to see its
inclusion in the end of year tax package.
These provisions together will encourage business owners to make key
capital investments, and allow for faster cost recovery that goes
directly to a company's bottom line, thus freeing up cash that can be
used to expand operations and hire more workers.
Making these measures either permanent or long-term creates the kind
of tax certainty that is critical for all our businesses, but is
especially important for small businesses.
These are commonsense provisions that both parties can support. They
will improve our business environment and ease the tax burden on small
businesses. Most importantly, they will directly encourage the
investment and job creation that our economy needs.
I wish to commend and salute the work Senator Collins did. We are
glad there is some certainty as a result of these business tax
provisions.
I yield the floor.
The PRESIDING OFFICER. The Senator from Iowa.
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