[Congressional Record Volume 161, Number 64 (Thursday, April 30, 2015)]
[Senate]
[Pages S2571-S2572]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself and Mr. Casey):
  S. 1141. A bill to amend the Internal Revenue Code of 1986 to provide 
tax incentives for small businesses; to the Committee on Finance.
  Ms. COLLINS. Mr. President, I rise to introduce the Small Business 
Tax Certainty and Growth Act of 2015. I am very pleased to be joined by 
my friend and colleague from Pennsylvania, Senator Casey, in 
introducing this bipartisan bill.
  I know it will come as no surprise to the Presiding Officer that 
small businesses are our Nation's job creators. Firms with fewer than 
500 employees generate about 50 percent of our Nation's GDP, account 
for more than 99 percent of employers, and employ nearly half of all 
workers. According to the Bureau of Labor Statistics, small businesses 
generated 63 percent of the net new jobs that were created between 1993 
and 2013.
  Even the smallest firms have a notable effect on our economy. The 
Small Business Administration's data indicates that businesses with 
fewer than 20 employees accounted for 18 percent of all private sector 
jobs in 2013. Our bill allows small businesses to plan for capital 
investments that are vital to expansion and job creation. It eases 
complex accounting rules for the smallest businesses and it reduces the 
tax burden on newly formed ventures.
  Recent studies by the National Federation of Independent Business, 
NFIB, indicate that taxes are the No. 1 concern of small business 
owners and that constant change in the Tax Code is among their chief 
concerns, and that is certainly the case in the State of Maine. When I 
talk with employers across the State, they constantly tell me the 
uncertainty in our Tax Code and in the regulations that are coming out 
of Washington make it very difficult for them to plan, to hire new 
workers, and to know what is going to be coming their way.
  A key feature of our bill is that it provides the certainty that 
small businesses need to create and implement long-term capital 
investment plans that are vital to their growth. I will give an 
example. Section 179 of the Internal Revenue Code allows small 
businesses to deduct the costs of acquired assets more rapidly. The 
amount of the maximum allowable deduction has changed three times in 
the past 8 years. Making matters worse, it is usually not addressed 
until it is part of a huge package of extenders passed at the end of 
the year, making this tax benefit unpredictable from year to year and, 
therefore, difficult for small businesses to take full advantage of in 
their long-range planning. They essentially have to gamble that the tax 
incentive is going to be extended and that it is going to be made 
retroactive to the 1st of the year.
  Just recently, I spoke with Patrick Schrader from Arundel Machine, a 
small business in Maine. He told me that the uncertainty surrounding 
section 179 has hindered his ability to make sound business decisions. 
The high-tech equipment that he needs requires months of lead time. For 
a small business like Patrick's, it is very risky to increase spending 
to expand and create new jobs when the deductibility of the machinery 
that helps to make those jobs possible remains unknown until late 
December. For business planning, this is information that is vital to 
have at the beginning of the year, not at the end of the year. This 
uncertainty has a direct impact on hiring decisions and the ability to 
take advantage of business opportunities.
  Our bill permanently sets the maximum allowable deduction under 
section 179 at $500,000, indexed for inflation, and it is also 
structured in such a way that it is really targeted to our smaller 
businesses.
  Our bill will also permanently extend the ability of restaurants, 
retailers, and certain businesses that lease their space to depreciate 
the costs of property improvements over 15 years rather than over 39 
years. Think about that. What restaurant is going to be able to wait 39 
years before doing upgrades and improvements? What we are trying to do 
is to better match the depreciation schedule with the need to update a 
restaurant or a retail space.
  The Small Business Tax Certainty and Growth Act also allows more 
companies to use the cash method of accounting by permanently doubling 
the threshold at which the more complex accrual method is required from 
$5 million in gross receipts to $10 million. This includes an expansion 
in the ability of small businesses to use simplified methods of 
accounting for inventories.
  Our legislation also eases the tax burden on a new startup business 
by permanently doubling the deduction for those initial expenses from 
$5,000 to $10,000, and for a very small business, that is really 
important. Similar to section 179, this benefit is limited to small 
businesses and the deduction phases out for total expenses exceeding 
$60,000.
  Our legislation extends for 1 year a provision that provides benefits 
to businesses of all sizes, the so-called bonus depreciation.
  Let me make clear that I continue to believe Congress should 
undertake comprehensive tax reform, with three major goals. It should 
result in a Tax Code that is more progrowth, that is fairer, and that 
is simpler. I urge the Senate to undertake such a reform, but in the 
meantime, the provisions of our bill would make a real difference in 
the ability of our Nation's small businesses to keep and create jobs.
  I will give another real-life example of what the small business 
expensing provisions can mean. I am proud to say Maine is known for its 
delicious craft beers. Dan Kleban founded Maine Beer Company with his 
brother in 2009. In 6 short years, the company has added 21 good-paying 
jobs with generous health and retirement benefits. They plan to hire at 
least three more workers shortly. Dan noted that his company's business 
decisions were directly affected by section 179 expensing.

  Here is why. This provision allowed them to expand by reinvesting 
their capital in new equipment to produce more beer and hire more 
Mainers.

[[Page S2572]]

Those are both good outcomes. In the last 3 years, they have taken the 
maximum deduction allowed under section 179 to acquire the equipment 
they needed to expand their business. This year, they hope to use the 
provision to finance the cost of a solar project that will offset 
nearly 50 percent of their energy consumption.
  If their business had been forced to spread these deductions over 
many years, its owners would not have been able to grow the business as 
they have done nor create those good jobs. This economic benefit is 
multiplied when we consider the effect of the investment by Maine Beer 
Company and Maine's many other craft brewers on the equipment 
manufacturers, the transportation companies needed to haul the new 
equipment to their breweries, the increased inventory in their 
breweries, and the suppliers of the materials needed to brew the 
additional beer. So it has a ripple effect that benefits many other 
businesses and allows them to create more jobs as well.
  In February, NFIB released new research that backs up this claim with 
hard numbers. They found that simply extending section 179 permanently 
at the 2014 level could increase employment by as much as 197,000 jobs 
during the 10-year window following implementation. U.S. real output 
could also increase by as much as $18.6 billion over the same period.
  In light of the positive effects this bill would have on small 
businesses, on job creation, and on our economy, I urge my colleagues 
to join us in supporting the Small Business Tax Certainty and Growth 
Act. I would note that the bill has been endorsed by NFIB, the leading 
voice for small business.
  Mr. President, I ask unanimous consent that a letter of endorsement 
from the NFIB be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                            National Federation of


                                         Independent Business,

                                   Washington, DC, April 29, 2015.
     Hon. Susan Collins,
     U.S. Senate, Washington, DC.
       Dear Senator Collins: on behalf of the National Federation 
     of Independent Business (NFIB), the nation's leading small 
     business advocacy organization, I write in support of your 
     Small Business Tax Certainty and Growth Act, which would 
     provide certainty and permanency with regard to several 
     important tax provisions for small businesses.
       The most important source of financing for small business 
     is their earnings, i.e. cash flow. In fact, cash flow is 
     ranked 13th out of 75 potential business problems in NFIB's 
     Small Business and Priorities. This is why NFIB is 
     particularly pleased to see the inclusion of reformed Section 
     179 expensing and expanded eligibility for cash accounting in 
     your legislation.
       Expensing provides small businesses with an immediate 
     source of capital recovery and improved cash flow. 
     Unfortunately, small business expensing levels have only been 
     increased on a temporary basis, and at the beginning of this 
     year the limit reverted back to $25,000, which is highly 
     inadequate for the needs of small businesses. Unless Congress 
     acts, this lower expensing limit will mean that only 30 
     percent of NFIB members will receive the full benefit of 
     small business expensing in 2015. A 2015 NFIB Research 
     Foundation study shows that a permanent expansion of the 
     expensing deduction allowance limit to $500,000 could 
     increase employment by as much as 197,000 jobs. NFIB supports 
     permanently increasing expensing limits to $500,000 as well 
     as permitting taxpayers to expense the cost of some 
     improvements to real property. We appreciate you 
     accomplishing these goals in your legislation while also 
     permanently indexing this provision to inflation.
       Furthermore, small businesses would benefit from the 
     greater ability to use cash accounting for tax purposes. This 
     simplified accounting process would alleviate some of the 
     complexity of the tax code, which currently makes it very 
     difficult for small business owners to plan future 
     investments, hire new workers and grow their businesses. 
     Expanded cash accounting would help business owners manage 
     cash flow while better reflecting their ability to pay taxes.
       Thank you for introducing this important legislation. We 
     look forward to working with you to provide tax relief for 
     small businesses in the 114th Congress.
           Sincerely,
                                                    Amanda Austin,
                                    Vice President, Public Policy.
                                 ______