[Congressional Record (Bound Edition), Volume 147 (2001), Part 2]
[Senate]
[Page 1614]
[From the U.S. Government Publishing Office, www.gpo.gov]



               THE SMALL BUSINESS TAX RELIEF ACT OF 2001

  Mr. HUTCHINSON. Mr. President, as Congress considers President Bush's 
comprehensive tax relief plan in the coming weeks, I sincerely hope 
that we will examine ways to make the tax system more equitable to 
small business.
  As we look at the economic indicators, it is clear that the economy 
could use a boost. One way we can do this is to encourage the further 
growth and success of small businesses, which for decades have been the 
cornerstone of our growing economy.
  A proposal I would like my colleagues to seriously consider is the 
Small Business Tax Relief Act of 2001, which I introduced last week.
  Small businesses owners generally have restricted cash flow, as well 
as limited access to credit. Funds are not readily available to invest 
in new equipment that may be needed to operate the business 
effectively.
  Small businesses need to be allowed to expense a significant portion 
if not all of the costs for new equipment purchases in the year the 
purchase was made, rather than depreciating it over many years, which 
frees up necessary capital to make necessary investments and 
improvements.
  Specifically, the Small Business Tax Fairness Act provides small 
businesses relief from an outdated rule that currently only allows a 
business to expense $24,000 per year for new or used equipment. S. 236 
proposes two key changes to the equipment expensing rule that will ease 
the cost on small businesses when necessary updates are needed in their 
facilities:

       The bill increases the current $24,000 allowable equipment 
     expensing amount to $100,000; and
       It increases the cap beyond which limits the equipment 
     expense deduction from $200,000 to $400,000.

  Another important provision of this legislation directly impacts 
small businesses which are restaurants or franchises. Because 
restaurants find themselves at a competitive disadvantage with other 
businesses, such as convenience stores, which are allowed a 15-year 
depreciable life, the Small Business Tax Fairness Act would allow 
restaurants to depreciate the cost of their original building, and any 
subsequent renovations or improvements to the building, at a same rate 
of 15 years, instead of the current depreciation schedule of 39 years.
  Unlike other commercial buildings, restaurant buildings are 
specialized, single-purpose structures that are rarely converted to 
non-restaurant use. Restaurants also experience considerably more 
traffic, and remain open longer than most retail buildings. This daily 
assault causes rapid deterioration of restaurant properties, and forces 
restauranteurs to constantly repair and upgrade their buildings.
  Because restaurant facilities do have a much shorter life span than 
other commercial establishments, this bill would alleviate the punitive 
depreciation schedule for restaurants that currently exists.
  Similarly, most franchise contracts cover a span of 15 or 20 years. 
By reducing the depreciation period from 39 to 15 years for franchise 
and restaurant properties, this legislation more accurately reflects 
the true economic life of the properties.
  S. 236 is supported by the International Franchise Association, the 
National Federation of Independent Business, the National Association 
of Women Business Owners, and the National Restaurant Association. I 
urge my colleagues to support this important legislation.

                          ____________________