Protecting Americans from Tax Hikes Actby Senator Susan M. Collins
Posted on 2015-12-17
COLLINS. Mr. President, tomorrow the Senate will vote on the
Protecting Americans from Tax Hikes Act of 2015, which will provide
needed tax certainty and predictability for our Nation's small
businesses, enabling them to create more jobs and boost our economy.
Several months ago, on April 30, I was joined by my friend and colleague from Pennsylvania, Senator Casey, in introducing the Small Business Tax Certainty and Growth Act of 2015. Our bill aimed to help small businesses invest, grow, and create jobs by providing needed tax relief and certainty. Senator Casey has been a true partner in advancing this bill, and we are so pleased that the Protecting Americans from Tax Hikes Act takes three key provisions from our bipartisan bill. These provisions include, first, the permanent extension of section 179 expensing, indexed for inflation, which will allow small businesses to write off up to $500,000 of the cost of certain equipment. I would note that this provision is so important to our smaller businesses that it is the No. 1 tax priority of our Nation's largest small business advocacy group, the National Federation of Independent Business. Second, the bill includes the permanent extension of the 15-year deduction period for restaurants and retailers to improve their space and to buy new equipment. This is so important because otherwise the Tax Code reverts to a 39-year depreciation schedule. That is totally unrealistic. No restaurant could wait 39 years before investing in new flooring, new equipment, and other kinds of renovations and expect that customers will still come flocking to their doors. The third provision of our bill would be an extension of so-called bonus depreciation to allow companies to deduct the cost of certain equipment and software.
These three provisions will give our small businesses the predictability they require to plan for capital investments that are vital to expansion and job creation.
I know I don't have to tell the Presiding Officer that small businesses create the majority of new jobs in this country. According to the Bureau of Labor Statistics, small businesses generated 63 percent of net new jobs that were created between 1993 and 2013. Even the smallest firms had a notable effect on our economy. The Small Business Administration data indicate that businesses with fewer than 20 employees accounted for 18 percent of all private sector jobs in 2013.
[[Page S8751]] Recent studies by the National Federation of Independent Business indicate that taxes are the No. 1 concern of small business owners and that the constant change in our Tax Code is among their chief concerns. I know this to be true from the many conversations I have had with small business men and women throughout the State of Maine. It is so frustrating to them because they don't know what the Tax Code is going to provide from year to year, making it nearly impossible to plan. This has the effect of freezing their investment decisions, and that in turn affects their ability to hire more workers.
The long-term solutions provided in this bill will provide the certainty small businesses need to create and implement long-term capital investment plans that are vital to growth and job creation. For example, section 179 of the Tax Code allows small businesses to deduct the cost of acquired assets more rapidly. The amount of the maximum allowable deduction, however, has changed three times in the past 8 years and has often been addressed as a year-end ``extender,'' 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.
Let me give a concrete example. Earlier this year I spoke to Patrick Schrader from Arundel Machine, a precision machining business in Southern Maine. He told me that the uncertainty surrounding section 179 has hindered his ability to make business decisions. The high-tech equipment 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 those investments remains unknown until the very end of the year. For business planning, this is information that is vital to have at the beginning of the year, not at the end. This uncertainty has a direct impact on hiring decisions.
I wish to give another example of what the small business expensing provisions can mean. Maine has become well known for its high-quality craft beers. Dan Kleban founded the Maine Beer Company with his brother in 2009. In 6 short years his business has added more than 20 good- paying jobs with generous health and retirement benefits, and they want to add even more. Dan noted that his company's business decisions have been directly affected by the availability of section 179 expensing. This provision fueled their expansion by allowing them to reinvest their capital into new equipment to produce more great beer and hire more great Maine workers. In the last 3 years, they have taken the maximum deduction allowed under section 179 to acquire the equipment 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 the business had been forced to spread these deductions over many years, its owners simply would not have been able to create the new jobs as they have.
This economic benefit is multiplied when you consider the effect of the investment by Maine Beer Company and Maine's many other small brewers and other kinds of small businesses on equipment manufacturers, on the transportation companies needed to haul that new equipment, and, in the case of craft beers, on the suppliers, the supply chain, including farmers who are providing the materials needed to brew these outstanding beers.
In February, NFIB released new research that backs up this claim with hard numbers. NFIB found that simply extending section 179 permanently at the 2014 level could increase employment by as many 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. I mention those numbers because it shows how beneficial this provision of our Tax Code can be when it is made permanent, when the uncertainty about whether it is going to be available and at what level goes away.
In light of the positive effects these provisions would have on small businesses, on jobs, and on our economy, I urge my colleagues to support the tax relief package.
I am pleased to yield to my cosponsor and colleague Senator Casey.
The PRESIDING OFFICER. The Senator from Pennsylvania.