[Congressional Record (Bound Edition), Volume 153 (2007), Part 7]
[Senate]
[Pages 10499-10501]
[From the U.S. Government Publishing Office, www.gpo.gov]




  PROVIDING SMALL BUSINESSES WITH TARGETED TAX RELIEF AND REGULATORY 
                                 REFORM

  Ms. SNOWE. Mr. President, I rise today to commemorate ``National 
Small Business Week, which President Bush designated for April 22-28, 
2007. As ranking member of the Senate Committee on Small Business and 
Entrepreneurship, I simply cannot understate the vital role of small 
business in our Nation's economy. There was a time when ``what was good 
for General Motors was good for America.'' But the fact is what's truly 
good for this country--what built it, what sustains it, what drives it, 
and what represents its core--are the small businesses that each and 
every year create nearly three-quarters of all net new jobs. In my home 
State of Maine, small businesses comprise 97.5 percent of all 
businesses.
  First, I would like to discuss the unfair and onerous tax and 
regulatory burdens that continue to impede the ability of our Nation's 
small businesses to compete in an ever-increasing global marketplace. 
According to the Small Business Administration's Office of Advocacy, 
small businesses spend an astounding 8 billion hours each year 
complying with government rules and regulations. Eighty percent of this 
time is spent on completing tax forms. Furthermore, businesses 
employing fewer than 20 employees spend nearly $1,304 per employee in 
tax compliance costs,

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nearly 67 percent more than the comparable cost to larger firms. 
Despite the fact that small businesses are the primary job-creators for 
our economy, the tax system is not working because small companies 
spend their money and time satisfying their tax obligations.
  For that reason, I have introduced a package of proposals that will 
provide not only targeted, affordable tax relief to small business 
owners, but also simpler rules under the tax code. By simplifying the 
Tax Code, small business owners will be able to satisfy their tax 
obligation in a cheaper, more efficient manner, allowing them to be 
able to devote more time and resources to their business.
  I have introduced legislation, S. 269, in response to the repeated 
requests from small businesses in Maine and from across the Nation to 
allow them to expense more of their investments, like the purchase of 
essential new equipment. My bill modifies the Internal Revenue Code by 
doubling the amount a small business can expense from $100,000 to 
$200,000, and make the provision permanent as President Bush proposed 
this change in his fiscal year 2007 tax proposals. With small 
businesses representing 99 percent of all employers, creating 75 
percent of net new jobs and contributing 51 percent of private-sector 
output, their size is the only ``small'' aspect about them.
  By doubling and making permanent the current expensing limit and 
indexing these amounts for inflation, this bill will achieve two 
important objectives. First, qualifying businesses will be able to 
write off more of the equipment purchases today, instead of waiting 5, 
7, or more years to recover their costs through depreciation. That 
represents substantial savings both in dollars and in the time small 
businesses would otherwise have to spend complying with complex and 
confusing depreciation rules. Moreover, new equipment will contribute 
to continued productivity growth in the business community, which 
economic experts have repeatedly stressed is essential to the long-term 
vitality of our economy.
  Second, as a result of this bill, more businesses will qualify for 
this benefit because the phase-out limit will be increased to $800,000 
in new assets purchases. At the same time, small business capital 
investment will be pumping more money into the economy. This is a win-
win for small business and the economy as a whole and I am pleased to 
have Senators Lott, Isakson, Chambliss, and Collins join me as 
cosponsors of this legislation.
  Another proposal that I have introduced, with Senators Lincoln and 
Lott, the Small Business Tax Flexibility Act of 2007, S. 270, will 
permit start-up small business owners to use a taxable year other than 
the calendar year if they generally earn fewer than $5 million during 
the tax year. Specifically, the Small Business Tax Flexibility Act of 
2007 will permit more taxpayers to use the taxable year most suitable 
to their business cycle. Until 1986, businesses could elect the taxable 
year-end that made the most economic sense for the business. In 1986, 
Congress passed legislation requiring partnerships and S corporations, 
many of which are small businesses, to adopt a December 31 year-end for 
tax purposes. The Tax Code does provide alternatives to the calendar 
year for small businesses, but the compliance costs and administrative 
burdens associated with these alternatives prove to be too high for 
most small businesses to utilize.
  Meanwhile, C corporations, as large corporations often are, receive 
much more flexibility in their choice of taxable year. A so-called C 
corporation can adopt either a calendar year or any fiscal year for tax 
purposes, as along as it keeps its books on that basis. This creates 
the unfair result of allowing larger businesses with greater resources 
greater flexibility in choosing a taxable year than smaller firms with 
fewer resources. This simply does not make sense to me. My bill changes 
these existing rules so that more small businesses will be able to use 
the taxable year that best suits their business.
  To provide relief and equity to our nation's 1.5 million retail 
establishments, most of which have less than five employees, I have 
introduced a bill, S. 271, with Senators Lincoln, Hutchison, and Kerry, 
that reduces from 39 to 15 years the depreciable life of improvements 
that are made to retail stores that are owned by the retailer. Under 
current law, only retailers that lease their property are allowed this 
accelerated depreciation, which means it excludes retailers that also 
own the property in which they operate. My bill simply seeks to provide 
equal treatment to all retailers.
  Specifically, this bill will simply conform the tax codes to the 
realities that retailers on Main Street face. Studies conducted by the 
Treasury Department, Congressional Research Service and private 
economists have all found that the 39-year depreciation life for 
buildings is too long and that the 39-year depreciation life for 
building improvements is even worse. Retailers generally remodel their 
stores every five to seven years to reflect changes in customer base 
and compete with newer stores. Moreover, many improvements such as 
interior partitions, ceiling tiles, restroom accessories, and paint, 
may only last a few years before requiring replacement.
  Finally, I joined Senator Bond in introducing S. 296 that will 
simplify the tax code by permitting small business owners to use the 
cash method of accounting for reporting their income if they generally 
earn fewer than $10 million during the tax year. Currently, only those 
taxpayers that earn less than $5 million per year are able to use the 
cash method. By increasing this threshold to $10 million, more small 
businesses will be relieved of the burdensome record keeping 
requirements that they currently must undertake in reporting their 
income under a different accounting method.
  Earlier this year, I was very pleased when the Senate passed small 
business tax relief that included portions of my proposals on small 
business expensing, cash method accounting, and accelerated 
depreciation for improvements to retail-owned property. Sadly, I must 
report that on the very same week of ``National Small Business Week,'' 
cash method accounting and my proposal to bring depreciation equity for 
retailer-owned property were stripped from the small business tax 
relief package in conference negotiations between the House and Senate. 
This is extremely unfortunate especially when one considers that the 
Senate-passed package, which was fully offset, was both modest and 
fiscally responsible. In the coming months, I will continue to fight 
for these proposals and am hopeful that Congress will enact them into 
law.
  This package of proposals are a tremendous opportunity to help small 
enterprises succeed by providing an incentive for reinvestment and 
leaving them more of their earnings to do just that. Notably, providing 
tax relief by passing these simplification measures will also help us 
reduce the tax gap by increasing compliance. I urge my colleagues to 
join me in supporting these proposals.
  In addition to reforming the tax code, we in Congress should level 
the regulatory playing field for small businesses. Over the past 20 
years, the number and complexity of Federal regulations have multiplied 
at an alarming rate. For example, in 2004, the Federal Register 
contained 75,675 pages, an all-time record, and 4,101 rules. These 
rules and regulations impose a much more significant impact on small 
businesses than larger businesses.
  To illustrate this conclusion, a recent report prepared for the SBA's 
Office of Advocacy that said that in 2004, the per-employee cost of 
Federal regulations for firms with fewer than 20 employees was $7,647. 
In contrast, the per-employee cost of federal regulations for firms 
with 500 or more workers was $5,282, which results in a 44 percent 
increase in burden for smaller businesses compared to their larger 
counterparts. Clearly, we must find ways to ease the regulatory burden 
for our nation's small businesses so that they may continue to create 
jobs and drive economic growth. All too often, small businesses do not 
maintain the staff, or possess the financial resources to comply with 
complex Federal rules and regulations. This puts them at a disadvantage 
compared to larger businesses, and reduces

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the effectiveness of the agency's regulations. If an agency can not 
describe how to comply with its regulation, how can we expect a small 
business to figure it out?
  This is why I have offered bipartisan legislation, the Small Business 
Compliance Assistance Enhancement Act, S. 246, with Senators Kerry, 
Enzi, and Landrieu, which would clarify small business requirements 
that exist under Federal law. Our measure is drawn directly from 
recommendations put forth by the Government Accountability Office and 
is intended only to clarify an already existing requirement under the 
Small Business Regulatory Enforcement Fairness Act, SBREFA, which 
unanimously passed the Senate in 1996. Specifically, our bill clarifies 
when a small business compliance guide is required, how a guide shall 
be designated, how and when a guide shall be published, and that the 
agency make the guide available on the Internet. It would not create 
any new rules or requirements. This commonsense, good government reform 
would provide a major regulatory reform for small businesses at 
virtually no cost to the Federal Government.
  It is clear that in order to ensure our small businesses are able to 
grow, thrive, and, most importantly, create jobs, we need to simplify 
the tax code and reduce the regulatory burden. Over the coming months, 
I will continue to fight to accomplish these commonsense objectives.

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