[Congressional Record Volume 147, Number 156 (Tuesday, November 13, 2001)]
[Senate]
[Pages S11720-S11721]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY:
  S. 1676. A bill to amend the Internal Revenue Code of 1986 to provide 
tax relief for small business, and for other purposes; to the Committee 
on Finance.
  Mr. KERRY. Madam President, today I am introducing a package of 
targeted, affordable tax relief provisions designed to help the 
Nation's small businesses during this time of economic distress. While 
the Finance Committee has recently reported a more general stimulus 
bill to the full Senate, that measure only contains a few items that 
will help small businesses, which are the lifeblood of our Nation's 
economy, creating the majority of new jobs. As the Chairman of the 
Senate Committee on Small Business and Entrepreneurship, I believe that 
I have an obligation

[[Page S11721]]

to do more for small businesses, and I hope that several of the 
provisions in my bill may be accepted by the Finance Committee's 
Chairman and Ranking Member as the stimulus bill nears Senate passage.
  As many of my colleagues are aware, I have also introduced an 
emergency small business relief bill, S. 1499, which would provide 
assistance to small business concerns adversely impacted by the 
terrorist attacks of September 11. That bill currently has 51 
cosponsors, including 15 Republicans. S. 1499 provides loan and 
investment assistance, as well as other programmatic relief, to small 
businesses impacted by the attacks, but it does not contain tax 
provisions. I am introducing this new bill today to complement what I 
have tried to accomplish with S. 1499. Given that my emergency bill has 
such widespread support, I plan on offering it as an amendment to the 
economic stimulus package when it reaches the Senate floor, and I hope 
that it will be added to the package before it reaches the President's 
desk. This important legislation has been held hostage to someone 
else's political agenda for too long one way or another, it's important 
that we pass it and achieve the agenda of small businesses hurting 
across this country.
  I have titled the bill that I am introducing today ``The Affordable 
Small Business Stimulus Act of 2001.'' Before outlining the contents of 
the bill, I want my colleagues to know why I have selected this 
``affordable'' approach.
  During this session of Congress, some in Congress have supported what 
I might call the ``kitchen sink'' approach. It includes everything on 
small business's tax wish list, often also including a number of items 
that do not directly relate to small business, such as a complete 
repeal of the individual Alternative Minimum Tax. As a result, that 
approach is very expensive, and not something that could be enacted 
today given the changed budgetary situation and the fact that we are at 
war.
  I call my bill an ``affordable'' stimulus package for small business 
because it is very targeted in the policies that it includes, and, as a 
result, it will spend our limited resources wisely. It does not include 
everything that I would like to do for small business on the tax side, 
but it includes enough to help stimulate this essential component of 
our economy. Moreover, the bill will help address the tax complexity 
that many small businesses face because it includes the Single Point 
Tax Filing Act that has passed the Senate on two previous occasions.
  Let me briefly explain the contents of my bill.
  First, as in other Senate proposals, my bill increases the expensing 
limitation for small businesses. My bill raises it to $35,000, and it 
increases the phase-out level, above which expensing is not allowed, to 
$350,000. The stimulus package that I recently voted for in the Finance 
Committee temporarily increased these amounts to $35,000 and $325,000, 
respectively. The increases in my bill, however, would be permanent, 
and both the $35,000 and $350,000 limits would be increased annually 
for inflation beginning in calendar year 2003.
  Second, my bill modifies and expands a provision that was signed into 
law in 1993 regarding new equity investments in small businesses' 
stock. Under my bill, new investments in companies with capitalization 
of up to $100 million at the time of investment will have a 75 percent 
capital gains exclusion if the investments are held at least three 
years. The exclusion for such investments will be 100 percent if they 
are made in a business involved in ``critical technologies,'' as 
defined by the Commerce Department, or in technologies related to 
transportation security, personal identification, anti-terrorism, 
pollution minimization, remediation, or waste management. The 100 
percent exclusion would also be allowed for investments in specialized 
small business investment companies, or SSBICs, which are private 
venture capital companies licensed by the SBA whose investments are 
made solely in disadvantaged small businesses. Both the 75 and 100 
percent exclusion levels would be available for investments made by 
both individuals and corporations. In addition, the rollover period for 
such investments would be increased from 60 days to 180 days. The 
provision passed in 1993 was too narrow, and I hope that this new, 
expanded capital gains treatment will help prompt new investments in 
small and entrepreneurial businesses.
  Third, my bill recognizes that the current depreciation schedules for 
high-tech equipment and software are out of date, given how quickly 
such items become obsolete in our fast-changing economy. My bill would 
reduce the recovery period for computers or peripheral equipment from 
five years to three, and for software from three years to two. This 
change would be permanent.
  Fourth, my bill would make the health insurance expenses of the self-
employed fully tax deductible. Under current law, 60 percent is 
deductible in 2001, 70 percent in 2002, and 100 percent in 2003. My 
bill would speed up the 100-percent deductibility to this year.
  Fifth, to simplify tax filing, my bill would include the Single Point 
Tax Filing Act. This section would simplify the tax filing process for 
employers by allowing the Internal Revenue Service and State agencies 
to combine, on one form, both State and Federal employment tax returns. 
This provision has been passed by the Senate twice before, but it has 
not yet become law. There is currently a demonstration project along 
these lines in Montana, which is working very well. I believe such 
authority should extend to all States.
  Sixth, my bill would extend the existing income averaging provisions 
to cover fishing as well as farming. In other words, the choice to 
average income from a farming trade or business under present law would 
be extended to cover income from the trade or business of fishing as 
well. Under my bill, a farmer or fisherman electing to average his or 
her income would owe the alternative minimum tax, AMT, only to the 
extent he or she would have owed AMT had averaging not been elected. 
This is an important change that will benefit not only people in my 
State, but also throughout New England and in other regions of the 
country where fishing is an important industry.
  Finally, my bill would modify the tax treatment of investments in 
debenture small business investment companies, or SBICs, so they are 
less likely to create unrelated business taxable income, UBTI, 
liability. The current tax treatment of money borrowed from the 
government by a debenture SBIC creates taxable income for an otherwise 
tax-exempt investor, which makes it almost impossible to raise capital 
from these investors. Free to choose, tax-exempt investors opt to 
invest in venture capital funds that do not create any UBTI liability. 
Therefore, my bill would assure that money borrowed from the government 
by an SBIC does not subject tax-exempt investors to UBTI. In so doing, 
the bill would encourage greater investment in SBICs, which provide 
critically needed venture capital to emerging small businesses. These 
venture capital funds are sorely needed in today's stalled economy.
  I believe that ``The Affordable Small Business Stimulus Act of 2001'' 
will provide a much-needed stimulus to small business in a way that we 
can afford. I look forward to working with the Chairman and Ranking 
Member of the Finance Committee to have some or all of its provisions 
enacted into law.
                                 ______