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Wyden Discusses EXPIRE Act Benefits for Small Businesses on Senate Floor
Mr. President, as the Senate debates the EXPIRE Act on the floor, the country happens to be celebrating National Small Business Week. In that spirit, I’d like to take a few minutes to talk about a few of the steps this legislation takes to help small businesses.
One example is that it helps small businesses hire new workers, which is extraordinarily important at a time of persistent unemployment. Today there are nearly 10 million Americans out of work and looking for jobs. The April unemployment rate in my home state of Oregon was 6.9 percent – well above the national rate. Congress’ top priority should be helping people find jobs, and the EXPIRE Act is a chance to do that, particularly with small businesses.
Consider the Work Opportunity Tax Credit, which encourages employers to recruit, hire, and retain people who often have trouble finding jobs. The EXPIRE Act will extend and expand it in a few key ways, so that the WOTC can help small businesses hire an even greater number of struggling Americans.
First, it’ll do more to help the long-term unemployed find work. Those are folks who are deeply at risk of slipping through the cracks. They need help. And second, it’ll preserve the credit for veterans returning from overseas, who we’ve seen packing job fairs in cities across the country in search of work. This bill will help them.
Small businesses that employ military reservists also currently get a wage credit when their employees get called up to active duty. Not only will the EXPIRE Act increase that credit, it will open the credit up to employers of all sizes to improve job security for even more reservists.
Next, take the tax credit for research and development. There are innovative firms of all sizes in this country. For many of them, having a strong R&D credit is absolutely essential. But the credit’s current structure keeps it from helping a lot of small businesses, and complicated rules buried in the tax code may erase any benefits they’d see. The EXPIRE Act will change that in some key ways. To start, it’ll expand the pool of small businesses who benefit. It’ll also allow start-up firms to use the R&D credit to help pay their employees’ salaries. And it will build a bridge to tax reform, so that Congress can improve the credit further and make it permanent.
The R&D credit is critically important to the future of innovation in the United States. What’s the common thread between many of the biggest, most successful companies of this era – Intel, Apple, Amazon, Microsoft and others? It’s that they all started as innovative American small businesses with their eyes trained on developing for the future. The EXPIRE Act is a step toward a stronger, permanent R&D credit that will help even more entrepreneurs in America grow their best ideas into successful businesses.
In the meantime, small businesses in Oregon and across the country are still recovering from the recession. They feel the effects of sluggish growth just like everybody else. In a stronger economy, healthy small businesses might have decided to turn higher profits into investments aimed at expansion. The improved R&D credit will help a lot of folks. But it won’t work for everybody. Some small businesses need help making capital investments in new machinery, vehicles or computers.
The EXPIRE Act will help them. This legislation will allow small businesses to expense up to $500,000 of equipment costs right away, and it indexes that dollar amount to inflation so that it grows in the future. It’s what people call section 179 expensing. If Congress fails to pass the EXPIRE Act, that limit will fall from half a million dollars to only $25,000. This legislation will continue to simplify recordkeeping for section 179, so that businesses can focus on their own growth instead of red tape.
A lot of small businesses have property that loses value over time, and they’re able to claim a deduction to compensate for it. The EXPIRE Act will extend a key provision that allows small businesses to expense up to half the cost of that property up front in the first year, rather than spreading it out over a long period. Both of these tax incentives – section 179 expensing and bonus depreciation – are powerful tools to encourage investment. They’re life lines for small businesses looking to grow, and the EXPIRE Act will protect them.
Small energy businesses are major players in the American energy industry, and the EXPIRE Act will protect the incentives those businesses rely on to grow. Take the Production Tax Credit as an example.
The wind energy industry, which benefits from the Production Tax Credit, supports more than 50,000 jobs. Many wind companies are small, and they require lots of capital and planning to bring to market. And their story illustrates why it’s important to end the cycle of stop-and-go tax policies that makes the tax code unnecessarily complex and uncertain. Growth in wind energy has leveled off over the last two years, largely because of the expiration and late renewal of provisions like the Production Tax Credit.
The EXPIRE Act also extends provisions to encourage production of alternative and renewable fuels like biodiesel, cellulosic ethanol, liquefied natural gas, and liquefied hydrogen. There are small businesses across the country that stand to gain, but they’ll lose out if the Senate doesn’t act.
Small businesses needs to be able to plan for the future – to chart a course from youth to maturity. Stop-and-go tax policies only make that more difficult. Even when well-intentioned, productive tax incentives go into the code, allowing them to expire over and over again undermines their effectiveness. Taxpayers – small businesses included – deserve predictability and certainty.
The Finance Committee gave the EXPIRE Act its name for a good reason, and that’s because it is going to end after two years.
I’ve heard my colleagues on the other side of the aisle over the last few days, and when it comes to the need for comprehensive tax reform, they have me at “hello.” We are going to get this extender bill passed, and then it is my intent to work with Senator Hatch and my other colleagues to put together a strategy for comprehensive tax reform.
There is a real opportunity now to break the gridlock on tax reform. There is an ideal window over the next year and a half for Democrats and Republicans here in the Senate to build a bipartisan coalition to pass comprehensive tax reform, and to work with colleagues on the other side of the Capitol who have expressed significant interest in tax reform.
We are going to focus on getting these extenders passed now, and speed is important so we don’t damage the ability of our businesses to create good-paying jobs. It is my intent to use every single day to make sure extenders pass quickly, and then to move on to bipartisan, comprehensive tax reform.
I’ve spent a decade working with colleagues from both parties to develop tax reform plans. Former Senator Judd Gregg sat next to me on the couch for more than two years working on reform. Senators Begich and Coats pitched in. And the end product was the Senate’s first bipartisan federal income tax reform plan in three decades. Senator Hatch and Ambassador Baucus also put in years of work and laid a strong foundation for tax reform. Once the Senate passes the EXPIRE Act, the Finance Committee is going to get to work on a bipartisan plan that will give small businesses and all Americans a chance to get ahead.
I’ve been on the floor about twenty minutes, and I haven’t said anything that isn’t about Democrats and Republicans coming together, first to pass this extenders package, and then to use every single day over the next year and a half to put together a bipartisan tax plan that will grow the economy.
But the Senate has to take this first step. It cannot abandon these tax incentives that are so important to small businesses across the country. That’s why I urge my colleagues to support small businesses and pass the EXPIRE Act.
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