[Congressional Record Volume 157, Number 167 (Thursday, November 3, 2011)]
[Senate]
[Pages S7128-S7131]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE:
  S. 1801. A bill to amend the Internal Revenue Code of 1986 to extend 
certain provisions of the Creating Small Business Jobs Act of 2010, and 
for other purposes; to the Committee on Finance.
  Ms. SNOWE. Mr. President, today I introduce the Small Business Tax 
Extenders Act of 2011, targeted tax relief legislation to extend, for 
one year, the essential tax relief provisions that were included in the 
Small Business Jobs Act of 2010.
  When the Small Business Jobs Act was crafted, I worked closely with 
Finance Committee Chair Baucus and then Ranking Member Grassley to 
ensure the critical small business tax provisions that reflected our 
shared priorities were included in that legislation. I sincerely 
appreciate all of their hard work on that legislation.
  As the former Chair and now Ranking Member of the Small Business 
Committee, I am well aware of the urgent imperative of job creation in 
our country. According to the Bureau of Labor Statistics, the average 
annual unemployment rate for 2010 was 9.6 percent. For 27 out of the 
past 32 months the unemployment rate has been at 9 percent or above. 
About 45 percent of the unemployed have been out of work for at least 6 
months--a level previously unseen in the 6 decades since World War II.
  At a time when 14 million Americans are still unemployed, and have 
been so for the longest period since record keeping began in 1948, our 
government should be taking every possible step to ease the burden on 
job creators. We

[[Page S7129]]

must help create an environment that is conducive to small businesses' 
job creation. One critical way to do so is through targeted small 
business tax incentives.
  That is why as a senior member of the Senate Finance Committee, I 
have been urging this administration to champion tax reform and in 
fact, I led a panel on the issue as part of the Economic Summit at the 
White House more than 2 years ago.
  The individual income tax form has more than tripled in length from 
52 pages for 1980 to 174 pages for 2009. American taxpayers spend 7.6 
billion hours and shell out $140 billion, or 1 percent of GDP, just 
struggling to comply with tax filing requirements. This is not 
surprising as there has been 15,000 changes to the tax code since the 
last overhaul in 1986.
  Alarmingly, the tax code is also needlessly handcuffing our ability 
to compete in today's integrated global economy, as we strain under the 
second highest corporate tax burden in the industrialized world. While 
this administration and the Senate majority are pondering whether we 
should reform our tax code, small businesses continued to struggle with 
the current tax regime at the expense of creating more jobs and growing 
operations.
  While I continue to advocate for comprehensive tax reform, there are 
certain measures that, although not a silver bullet, should be passed 
right away to help improve the economic environment for small 
businesses. The Small Business Tax Extenders Act of 2011 is a critical 
example. This legislation contains provisions I have championed for 
years to provide small businesses greater cash flow, incentivizing 
their investments, and increasing tax fairness.
  The lifeblood of a small business is its cash flow and this bill 
contains several provisions to improve it. One of these provisions will 
address a fundamental injustice of the tax code by extending for 
another year deduction for health insurance premiums against not only 
income taxes but also against payroll taxes. At a rate of 15.3 percent, 
the self-employment, or SECA, tax is imposed on the health benefits of 
business owners. This is a costly injustice that makes health insurance 
just that much more expensive at a time when insurance costs are 
already prohibitively expensive.
  In the coming year we will certainly see health premiums rise, making 
it all the more onerous on small businesses to provide critical 
benefits to their employees. Allowing the full deduction for health 
insurance is critical for its affordability. I was thrilled that we 
were able to address this injustice in the Small Business Jobs Act of 
2010, and I sincerely hope that this provision can be extended for 
another year.
  This legislation will also extend for 1 year a provision permitting 
general business credits to be carried back 5 years and taken against 
the Alternative Minimum Tax, AMT. Before the enactment of the Small 
Business Jobs Act, a business's unused general business credit could be 
carried back to offset taxes paid in the previous year, and the 
remaining amount could be carried forward for 20 years to offset future 
tax liabilities.
  The 5-year carryback of credits will allow business owners to reach 
back to prior years when they had taxable income to offset prior tax 
liability with these credits and get immediate cash infusion. Business 
owners can use this cash as they choose, but as we have seen with net 
operating loss relief, they use these funds for anything from meeting 
payroll to investing in new equipment. The same principle applies with 
respect to the provision that allows credits to be used against the 
AMT.
  When Congress implements policies through the tax code, it is with 
intent that businesses will utilize such incentives to do what they do 
best--grow their operations which in turns leads to hiring additional 
employees. Unfortunately during a downward business cycle that we have 
been experiencing for more than two years, businesses do not have 
income tax liability that can be offset with a credit. It is rather 
simple: if you do not have enough revenue to claim a credit, that 
credit is of little use to you.
  An incredible benefit of the carryback and the use of general 
business credits against the AMT is to make the small business health 
insurance tax credits enacted earlier this year more effective and make 
health insurance more affordable for business owners to offer to their 
employees.
  This bill would also extend for 1 year the availability of the so-
called section 179 expensing to give businesses the option of writing 
off the cost of qualifying capital expenses in the year of acquisition 
instead of recovering these costs over time through depreciation, and 
allow businesses to take advantage of higher limits for the so-called 
section 179 expensing. Under this provision, up to $250,000 can be 
expensed for real property and up to $250,000 for equipment, or up to 
the full $500,000 for just equipment.
  Expanding Section 179 expensing has been a significant Small Business 
Committee bipartisan priority of mine, and former Small Business 
Committee Chair Kerry and current Chair Landrieu, as reflected in no 
fewer than three separate bills in the previous Congress: the Small 
Business Stimulus Act of 2009, S. 156, Snowe-Kerry-Landrieu; the Small 
business Expensing Permanency Act of 2009, S. 2822, Snowe-Landrieu; and 
the Small Business Job Creation Act of 2010, S. 3103, Snowe.
  I want my colleagues to understand that this provision is expected to 
confer a major economic boost because it certainly speeds up the 
recovery time on these investments. Extending this provision will help 
the businesses modernize while aiding construction firms and their 
employees.
  Additionally, the Small Business Jobs Act of 2010 provided for a 
temporary reduction in the recognition period for S corporation built-
in gains tax. When businesses move from being a corporation with two 
levels of tax to an S corporation, they have generally been required to 
hold their ``retained earnings'' for up to 10 years. This prevents 
owners from taking the retained earnings as distributions where only 
income taxes are owed rather than both corporate income tax at one 
level and then personal income tax at the second. Recent law changes 
have shortened this holding period to 7 years, but that is still too 
long.
  By infusing capital, of their own retained earnings, this provision 
in the Small Business Jobs Act enabled companies to reduce the holding 
period from 7 years to 5 years so that companies that made the 
conversion before 2006 can redeploy this capital for use in their 
business. Extending this provision also underscores how vital retained 
earnings are for small businesses.
  A final provision would extend for one year a complete exclusion on 
capital gains attributable to small business stock held for 5 years. 
Extending this measure will help further critical investment in our 
Nation's small businesses. This is a longstanding priority of mine and 
of Senator John Kerry, former Chair of the Small Business Committee and 
my fellow colleague on the Finance Committee. The Kerry-Snowe Invest in 
Small Business Act of 2009 included this exclusion, which we fought to 
incorporate into the Small Business Jobs Act.
  It is essential that we pass these small business tax extensions. I 
urge my colleagues to support this legislation so we can ensure that 
our Nation's small businesses and their employees are provided with 
much needed tax relief.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1801

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Jobs Tax Extenders Act of 2011''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; etc.
Sec. 2. Findings.

[[Page S7130]]

            TITLE I--EXTENSION OF SMALL BUSINESS TAX RELIEF

Sec. 101. Extension of temporary exclusion of 100 percent of gain on 
              certain small business stock.
Sec. 102. Extension of 5-year carryback of general business credits of 
              eligible small businesses.
Sec. 103. Extension of alternative minimum tax rules for general 
              business credits of eligible small businesses.
Sec. 104. Extension of temporary reduction in recognition period for 
              built-in gains tax.
Sec. 105. Extension of increased expensing limitations and treatment of 
              certain real property as section 179 property.
Sec. 106. Extension of bonus depreciation.
Sec. 107. Extension of special rule for long-term contract accounting.
Sec. 108. Extension of increased amount allowed as a deduction for 
              start-up expenditures.
Sec. 109. Extension of allowance of deduction for health insurance in 
              computing self-employment taxes.

                    TITLE II--OFFSETTING PROVISIONS

Sec. 201. Expansion of affordability exception to individual mandate.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) A vibrant and growing small business sector is critical 
     to the recovery of the economy of the United States.
       (2) Small businesses represent 99.7 percent of all employer 
     firms and generate approximately two-thirds of net new jobs.
       (3) Broadening the tax base and lowering statutory rates 
     through comprehensive tax reform is preferable to short term 
     tax rate extensions.
       (4) There is no consensus on Congressional passage and 
     implementation of such reform at this time; it is therefore 
     critical that tax relief for small businesses promulgated in 
     the Small Business Jobs Act of 2010 be extended.

            TITLE I--EXTENSION OF SMALL BUSINESS TAX RELIEF

     SEC. 101. EXTENSION OF TEMPORARY EXCLUSION OF 100 PERCENT OF 
                   GAIN ON CERTAIN SMALL BUSINESS STOCK.

       (a) In General.--Paragraph (4) of section 1202(a) is 
     amended--
       (1) by striking ``January 1, 2012'' and inserting ``January 
     1, 2013'', and
       (2) by striking ``and 2011'' and inserting ``2011, and 
     2012'' in the heading thereof.
       (b) Effective Date.--The amendments made by this section 
     shall apply to stock acquired after December 31, 2011.

     SEC. 102. EXTENSION OF 5-YEAR CARRYBACK OF GENERAL BUSINESS 
                   CREDITS OF ELIGIBLE SMALL BUSINESSES.

       (a) In General.--Subparagraph (A) of section 39(a)(4) is 
     amended by ``or 2011'' after ``2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to credits determined in taxable years beginning 
     after December 31, 2010.

     SEC. 103. EXTENSION OF ALTERNATIVE MINIMUM TAX RULES FOR 
                   GENERAL BUSINESS CREDITS OF ELIGIBLE SMALL 
                   BUSINESSES.

       (a) In General.--Subparagraph (A) of section 38(c)(5) is 
     amended by ``or 2011'' after ``2010''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to credits determined in taxable years beginning 
     after December 31, 2010, and to carrybacks of such credits.

     SEC. 104. EXTENSION OF TEMPORARY REDUCTION IN RECOGNITION 
                   PERIOD FOR BUILT-IN GAINS TAX.

       (a) In General.--Clause (ii) of section 1374(d)(7)(B) is 
     amended by inserting ``or 2012,'' after ``2011''.
       (b) Conforming Amendment.--The heading for section 
     1372(d)(7)(B) is amended by striking ``and 2011'' and 
     inserting ``2011, and 2012''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2011.

     SEC. 105. EXTENSION OF INCREASED EXPENSING LIMITATIONS AND 
                   TREATMENT OF CERTAIN REAL PROPERTY AS SECTION 
                   179 PROPERTY.

       (a) In General.--Section 179(b) is amended--
       (1) by striking ``2010 or 2011'' each place it appears in 
     paragraph (1)(B) and (2)(B) and inserting ``2010, 2011, or 
     2012'',
       (2) by striking ``2012'' each place it appears in paragraph 
     (1)(C) and (2)(C)and inserting ``2013'', and
       (3) by striking ``2012'' each place it appears in paragraph 
     (1)(D) and (2)(D) and inserting ``2013''.
       (b) Inflation Adjustment.--Subparagraph (A) of section 
     179(b)(6) is amended by striking ``2012'' and inserting 
     ``2013''.
       (c) Computer Software.--Section 179(d)(2)(A)(ii) is amended 
     by striking ``2013'' and inserting ``2014''.
       (d) Election.--Section 179(c)(2) is amended by striking 
     ``2013'' and inserting ``2014''.
       (e) Special Rules for Treatment of Qualified Real 
     Property.--Section 179(f)(1) is amended by striking ``2010 or 
     2011'' and inserting ``2010, 2011, or 2012''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2011.

     SEC. 106. EXTENSION OF BONUS DEPRECIATION.

       (a) In General.--Paragraph (2) of section 168(k) is 
     amended--
       (1) by striking ``January 1, 2014'' in subparagraph (A)(iv) 
     and inserting ``January 1, 2015'', and
       (2) by striking ``January 1, 2013'' each place it appears 
     and inserting ``January 1, 2014''.
       (b) 100 Percent Expensing.--Paragraph (5) of section 168(k) 
     is amended--
       (1) by striking ``January 1, 2013'' and inserting ``January 
     1, 2014'', and
       (2) by striking ``January 1, 2012'' each place it appears 
     and inserting ``January 1, 2013''.
       (c) Extension of Election to Accelerate the AMT Credit in 
     Lieu of Bonus Depreciation.--
       (1) In general.--Subclause (II) of section 
     168(k)(4)(D)(iii) is amended by striking ``2013'' and 
     inserting ``2014''.
       (2) Round 3 extension property.--Paragraph (4) of section 
     168(k) is amended by adding at the end the following new 
     subparagraph:
       ``(J) Special rules for round 3 extension property.--
       ``(i) In general.--In the case of round 3 extension 
     property, this paragraph shall be applied without regard to--

       ``(I) the limitation described in subparagraph (B)(i) 
     thereof, and
       ``(II) the business credit increase amount under 
     subparagraph (E)(iii) thereof.

       ``(ii) Taxpayers previously electing acceleration.--In the 
     case of a taxpayer who made the election under subparagraph 
     (A) for its first taxable year ending after March 31, 2008, a 
     taxpayer who made the election under subparagraph (H)(ii) for 
     its first taxable year ending after December 31, 2008, or a 
     taxpayer who made the election under subparagraph (I)(iii) 
     for its first taxable year ending after December 31, 2010--

       ``(I) the taxpayer may elect not to have this paragraph 
     apply to round 3 extension property, but
       ``(II) if the taxpayer does not make the election under 
     subclause (I), in applying this paragraph to the taxpayer the 
     bonus depreciation amount, maximum amount, and maximum 
     increase amount shall be computed and applied to eligible 
     qualified property which is round 3 extension property.

     The amounts described in subclause (II) shall be computed 
     separately from any amounts computed with respect to eligible 
     qualified property which is not round 2 extension property.
       ``(iii) Taxpayers not previously electing acceleration.--In 
     the case of a taxpayer who neither made the election under 
     subparagraph (A) for its first taxable year ending after 
     March 31, 2008, nor made the election under subparagraph 
     (H)(ii) for its first taxable year ending after December 31, 
     2008, nor made the election under subparagraph (I)(iii) for 
     its first taxable year ending after December 31, 2010--

       ``(I) the taxpayer may elect to have this paragraph apply 
     to its first taxable year ending after December 31, 2011, and 
     each subsequent taxable year, and
       ``(II) if the taxpayer makes the election under subclause 
     (I), this paragraph shall only apply to eligible qualified 
     property which is round 3 extension property.

       ``(iv) Round 3 extension property.--For purposes of this 
     subparagraph, the term `round 3 extension property' means 
     property which is eligible qualified property solely by 
     reason of the extension of the application of the special 
     allowance under paragraph (1) pursuant to the amendments made 
     by section 7(a) of the Small Business Jobs Tax Extenders Act 
     of 2011 (and the application of such extension to this 
     paragraph pursuant to the amendment made by section 7(c)(1) 
     of such Act).''.
       (d) Conforming Amendments.--
       (1) The heading for subsection (k) of section 168 is 
     amended by striking ``January 1, 2013'' and inserting 
     ``January 1, 2014''.
       (2) The heading for clause (ii) of section 168(k)(2)(B) is 
     amended by striking ``pre-january 1, 2013'' and inserting 
     ``pre-january 1, 2014''.
       (3) Paragraph (5) of section 168(l) is amended--
       (A) by striking ``and'' at the end of subparagraph (A),
       (B) by redesignating subparagraph (C) as subparagraph (B), 
     and
       (C) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) by substituting `January 1, 2013' for `January 1, 
     2014' in clause (i) thereof, and''.
       (4) Subparagraph (C) of section 168(n)(2) is amended by 
     striking ``January 1, 2013'' and inserting ``January 1, 
     2014''.
       (5) Subparagraph (D) of section 1400L(b)(2) is amended by 
     striking ``January 1, 2013'' and inserting ``January 1, 
     2014''.
       (6) Subparagraph (B) of section 1400N(d)(3) is amended by 
     striking ``January 1, 2013'' and inserting ``January 1, 
     2014''.
       (e) Effective Dates.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2011, in taxable years ending after such date.

     SEC. 107. EXTENSION OF SPECIAL RULE FOR LONG-TERM CONTRACT 
                   ACCOUNTING.

       (a) In General.--Clause (ii) of section 460(c)(6)(B) is 
     amended by striking ``January 1, 2011 (January 1, 2012'' and 
     inserting ``January 1, 2012 (January 1, 2013''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after December 31, 
     2010.

     SEC. 108. EXTENSION OF INCREASED AMOUNT ALLOWED AS A 
                   DEDUCTION FOR START-UP EXPENDITURES.

       (a) In General.--Paragraph (3) of section 195(b) is 
     amended--

[[Page S7131]]

       (1) by inserting ``or 2011'' after ``2010'', and
       (2) by inserting ``and 2011'' in the heading thereof.
       (b) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2010.

     SEC. 109. EXTENSION OF ALLOWANCE OF DEDUCTION FOR HEALTH 
                   INSURANCE IN COMPUTING SELF-EMPLOYMENT TAXES.

       (a) In General.--Paragraph (4) of section 162(l) is amended 
     by striking ``December 31, 2010'' and inserting ``December 
     31, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2010.

                    TITLE II--OFFSETTING PROVISIONS

     SEC. 201. EXPANSION OF AFFORDABILITY EXCEPTION TO INDIVIDUAL 
                   MANDATE.

       Section 5000A(e)(1) is amended by striking ``8 percent'' 
     each place it appears and inserting ``5 percent''.
                                 ______