[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
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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.
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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--
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(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''.
______