[Congressional Record Volume 146, Number 5 (Monday, January 31, 2000)]
[Senate]
[Page S147]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 REPEAL OF THE EFFECTIVE CAPITAL GAINS TAX INCREASE IN THE TAX RELIEF 
                         EXTENSION ACT OF 1999

  Mr. ABRAHAM. Madam President, I rise today to speak in favor of S. 
2005 which would repeal the effective capital gains tax increase 
contained in the Tax Relief Extension Act of 1999. This legislation 
would protect small business owners from paying taxes on money not 
actually received.
  Overlooked in last year's legislation was a provision that repealed 
the installment method for accrual method taxpayers when assets or 
entire businesses are sold. Under this new method, the seller of an 
asset or business is required to pay taxes on total gains in the first 
year of the sale, no matter when the actual proceeds are received. S. 
2005 would revert this practice to its previous method in which the 
seller of an asset only paid taxes on the profits from the installment 
received in that year if he or she should receive payments in 
increments.
  While this tax measure provides for only modest tax revenue, the 
negative impact on small business owners that this measure affects is 
quite significant. In effect, this tax increase cripples seller 
financing of small businesses and prevents thousands of men and women 
from purchasing small businesses. By potentially reducing the sale 
price of small businesses by up to 20 percent or more, small business 
owners will be much less likely to sell their businesses. Larger 
publicly traded corporations are not impacted as they tend to use other 
financing methods involving cash or stock transactions. So, this tax 
increase unfairly targets small business owners already overwhelmed 
with federal taxes and regulations.
  Madam President, it makes common sense that taxes should only be paid 
when profits are realized--and not on money that will not be collected 
for years to come. Small businesses are an important provider of new 
jobs and a driving force in this nation's economy. We must not penalize 
or restrict such a vibrant source of innovation, invention and 
creativity that has enabled the United States to realize previously 
unimaginable prosperity.
  I urge my colleagues in the Senate to join me in support of this 
legislation so essential in the success of this great nation.

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