[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.
                                 ______