Statements on Introduced Bills and Joint Resolutions

Floor Speech

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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.

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.

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