Protecting Americans from Tax Hikes Actby Senator Robert P. Casey, Jr.
Posted on 2015-12-17
CASEY. Mr. President, I commend and salute the work done by
Senator Collins. I am grateful to have this opportunity to reiterate
some of the great features of this legislation as it relates to these
tax provisions. If I had to summarize it in a couple of words, it would
probably be the following: certainty for small businesses--maybe just
those four words.
Senator Collins, when we talk about reaching across the aisle, I am one desk in from the aisle and you are almost on the aisle. It is almost literally reaching, you are so close. But I am so grateful for your work on this issue for several years now. And with all the difficulties in Washington where often folks don't come together on these and other issues, we can show that we can work together and we can make progress on something, giving certainty to small businesses. That is a pretty big deal. In our State we have something on the order of 2.5 million people working in small businesses, so this is the core of our country in the Commonwealth of Pennsylvania and across the country.
I would reiterate and maybe even incorporate by reference Senator Collins' review of the provisions. I would highlight two of them. The 15-year depreciation schedule for restaurants and other leaseholds and other businesses--if you have a restaurant and you can get the benefit of depreciation--figuratively speaking, a slice or a piece of depreciation year after year--it is a lot better if you can get the benefit of those slices or pieces over 15 years--one per year, or one benefit of depreciation--rather than having to wait 39 years for little tiny pieces over those 39 years. That is a simplistic way of explaining it, but it is a vital injection of support for small businesses.
On section 179, I think what Senator Collins said makes a lot of sense because a lot of these businesses would see, well, in this particular year, the value of that maximum allowable deduction is at a certain number, a couple hundred thousand dollars. In the next couple of years it could change. Having that certainty of knowing what that benefit will be over time is of enormous significance. The same is true of the benefits that come from bonus depreciation.
Mr. President, as I said, I rise today to discuss some critical tax provisions which Senator Collins and I worked to include in the end of year tax package soon to be considered by the House and the Senate.
This is a day we fought long and hard for--a day to bring our small businesses and entrepreneurs the certainty they need to invest in their companies, grow and create the jobs our economy needs.
As a member of the Senate Finance Committee, I understand that one of the best policy tools we have at our disposal to support small businesses is the tax code, which directly affects businesses' bottom lines.
Business owners need certainty about tax policy. That is why I am proud to have worked with Senator Susan Collins to introduce bipartisan legislation that would allow small businesses to plan for capital investments that are vital for job creation, and am thrilled to see provisions from this commonsense proposal included in the end of year tax package. Their inclusion will increase certainty for businesses, increase economic activity and increase the pace of job creation.
Small businesses are vital to our economy. In Pennsylvania small firms comprise more than 98 percent of all employers, nearly 2.5 million Pennsylvanians work for small businesses. Across the country, small firms employ just over half of the private-sector workforce, according to the Small Business Administration.
In the past, many of the tax provisions affecting small businesses have been enacted on an unpredictable and temporary basis; that changes with this bill. That uncertainty directly hindered economic growth and job creation. When businesses don't know how their investments will be taxed, they cannot make long-term planning decisions with confidence. This bill, with the policies I championed with Senator Collins, will change that.
This end-of-year package includes several provisions which, through their [[Page S8752]] being made permanent, will immediately reduce uncertainty about the Tax Code and encourage businesses to grow, invest and hire.
A key provision of our bill would make permanent the maximum allowable deduction under section 179 expensing rules. Section 179 allows taxpayers to fully deduct certain capital asset purchases in the year they make the purchase. This type of expensing provides an important incentive for businesses to make capital investments. Without it, taxpayers would have to depreciate those asset purchases over multiple years. By making the maximum allowable deduction permanent and indexing it to inflation, our bill would provide the kind of certainty that businesses need to take full advantage of section 179.
A second provision--bonus depreciation--will help businesses in much the same way that the expensing rules do. Bonus depreciation allows companies to expense half the cost of qualifying assets that they buy and put into service in the same year.
The bonus depreciation provisions will provide 5 years of certainty to our businesses, creating an added incentive that makes a real difference in small business investment. A 2013 U.S. Treasury report concluded that 50-percent bonus depreciation lowers the cost of capital by 44.1 percent. These figures illustrate the tremendous benefit these policies can bring to our job creators.
One additional measure, which I would like to touch on for a moment, is the provision to make 15-year straight-line depreciation schedule for restaurants, leaseholds, and retail improvements permanent.
This February, Senator Cornyn and I introduced legislation to make the 15-year cost recovery provision permanent. I am glad to see its inclusion in the end of year tax package.
These provisions together will encourage business owners to make key capital investments, and allow for faster cost recovery that goes directly to a company's bottom line, thus freeing up cash that can be used to expand operations and hire more workers.
Making these measures either permanent or long-term creates the kind of tax certainty that is critical for all our businesses, but is especially important for small businesses.
These are commonsense provisions that both parties can support. They will improve our business environment and ease the tax burden on small businesses. Most importantly, they will directly encourage the investment and job creation that our economy needs.
I wish to commend and salute the work Senator Collins did. We are glad there is some certainty as a result of these business tax provisions.
I yield the floor.
The PRESIDING OFFICER. The Senator from Iowa.