[Congressional Record Volume 158, Number 15 (Tuesday, January 31, 2012)]
[Senate]
[Pages S210-S212]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Ms. SNOWE (for herself, Ms. Landrieu and Mr. Brown of
Massachusetts):
S. 2050. 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, I rise to introduce along with Senator
Landrieu the Small Business Tax Extenders Act of 2012, that will
provide targeted tax relief legislation to small businesses and extend
the essential tax relief provisions that were included in the Small
Business Jobs Act of 2010, P.L. 111-240.
When the Small Business Jobs Act of 2010 was crafted, Senator
Landrieu and I worked closely with Finance Committee Chair Baucus,
then-Ranking Member Grassley, and now Ranking Member Hatch to ensure
the critical small business tax provisions that reflected our shared
priorities were included in that legislation. We sincerely appreciate
all of their hard work on that legislation.
As the former Chair and now Ranking Member of the Committee on Small
Business and Entrepreneurship, and along with current Chair Landrieu,
we are 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 2011 was 9 percent. For the past 3 years,
unemployment has been no lower than 8.3 percent, so we are far from
where we need to be in a recovery. 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 must help create an environment that is conducive to
small businesses' job creation. Our Nation's small businesses are the
engine of job creation, being responsible for at least 60 percent and
perhaps as many as \2/3\ of all new jobs created, and they should be
the focus of our support. One critical way to do so is through targeted
small business tax incentives.
The bill Senator Landrieu and I are introducing today provides those
targeted tax incentives that in the past have received bipartisan
support both in the Senate and in the House. These tax provisions
provide relief to small businesses in their capital investments and to
those willing to risk their own savings by investing in the small
business. The provisions provide relief to the self-employed as well as
to S corporations and partnerships. The success of these provisions
over the past
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several years is evident in the fact we noted above, about small
businesses being the one bright spot of job creation even in these
troubled times, and this bill will help them continue to grow and
continue to help provide jobs.
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 the
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 years 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 again
until we can find a permanent solution.
This legislation will also extend 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, and that is to grow their operations, which in turn leads to
hiring additional employees. Unfortunately, during a struggling
economic cycle that we have been experiencing for more than 3 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 health insurance more
affordable for business owners to offer to their employees.
This bill would also extend 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 Chair Landrieu's, as well as
of former Small Business Committee Chair Kerry, as reflected in no
fewer than three separate bills in the previous Congress.
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 convert from a C corporation to an S
corporation, they have been required to hold their appreciated assets
for a full decade or face a punitive level of double taxation. In such
instances, first the built-in gain corporate tax rate of 35 percent is
applied and then all other applicable federal, state and local
shareholder tax rates are applied, often totaling near 60 percent in
most states, including Maine. In effect, the built-in gain tax locks-up
businesses' own capital and forces them to look elsewhere--a particular
challenge for S corporations since closely-held businesses have limited
access to the public markets and therefore fewer options for raising
needed capital.
Recent law changes temporarily shortened this holding period to 7
years, but that is still too long. By infusing capital--that is,
releasing their own capital--this provision in the Small Business Jobs
Act, reducing the holding period from 7 years to 5 years, enabled
companies that have long been S corporations to redeploy this capital
to invest in and grow their businesses. Extending this provision also
underscores how vital access to capital is for small businesses, while
preserving the original policy intent of the holding period and making
it more reflective of the shorter business planning cycles of the 21st
century.
A final provision would extend a complete exclusion on capital gains
attributable to small business stock held for five 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. Chair Landrieu and I are
very pleased to take-up that mantle together and we are committed to
its extension.
But targeted small business tax provisions, for all their importance
and critical need, are not enough. 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 three 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 one percent of GDP--just
struggling to comply with tax filing requirements. This is not
surprising as there have been 15,000 changes to the tax code since the
last overhaul in 1986.
Alarmingly, the tax code is also needlessly restricting our ability
to compete in today's integrated global economy, as we strain under the
second highest corporate tax burden in the industrialized world. And
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 is a critical example:
this legislation contains provisions that Senator Landrieu and I have
championed for years to provide small businesses greater cash flow,
incentivizing their investments, and increasing tax fairness.
Mr. President, 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. 2050
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES.
(a) Short Title.--This Act may be cited as the ``Small
Business Tax Extenders Act of 2012''.
[[Page S212]]
(b) References.--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.
SEC. 2. 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. 3. 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 inserting ``, 2011, or 2012'' 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. 4. 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 inserting ``, 2011, or 2012'' 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. 5. EXTENSION OF REDUCTION IN RECOGNITION PERIOD FOR
BUILT-IN GAINS TAX.
(a) In General.--Clause (ii) of section 1374(d)(7)(B) of
the Internal Revenue Code of 1986 is amended by inserting
``2012, or 2013,'' after ``2011,''.
(b) Conforming Amendment.--The heading for section
1374(d)(7)(B) is amended by striking ``and 2011'' and
inserting ``2011, and 2012''.
(c) Technical Amendment.--Subparagraph (B) of section
1374(d)(7) of such Code is amended by striking ``The
preceding sentence'' and inserting the following: ``For
purposes of applying this subparagraph to an installment
sale, each portion of such installment sale shall be treated
as a sale occurring in the taxable year in which the first
portion of such installment sale occurred. This
subparagraph''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2011.
SEC. 6. 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)(1)(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. 7. 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, 2013 (January 1, 2014''.
(b) Effective Date.--The amendment made by this section
shall apply to property placed in service after December 31,
2010.
SEC. 8. EXTENSION OF INCREASED AMOUNT ALLOWED AS A DEDUCTION
FOR START-UP EXPENDITURES.
(a) In General.--Paragraph (3) of section 195(b) is
amended--
(1) by inserting ``, 2001, or 2012'' after ``2010'', and
(2) by inserting ``2011, and 2012'' 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. 9. 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, 2012''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2010.
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