In order for California”s rural cities and small towns to contribute fully to the nation”s economic recovery, we must enable small, mainstreet businesses to build a better future for themselves, their community, state and nation.
Representative Wally Herger (R-CA) and Representative Ron Kind (D-WI) have introduced legislation to do just that. Their Rural Micro business Investment Credit Act (HR 5990) is the first federal tax credit designed to meet the needs of small businesses in rural areas. It would provide a 35-percent tax credit ? up to $10,000 ? to start or expand owner-operated businesses with five or fewer employees.
In rural America creating your own job is a way of life. During recession, the reluctance of large businesses to add workers makes small businesses and self-employment even more important. During the 2000 to 2003 recession, micro-enterprise employment in California grew by 9-percent, while larger firms were still shedding jobs. Micro-enterprise led the economy out of recession. It can happen again, but entrepreneurs need and deserve the support of federal policy as much as larger businesses.
The rural micro tax credit is tailor made to encourage micro-enterprise investment during recession. Qualifying businesses could receive refunds on prior year returns if they are not making enough in the current year to owe taxes, which is critical during tough times or during startup when most are lucky to break even. A refund of prior years” taxes is an investment incentive that works in goods years and bad, for new or established businesses.
John Crabtree
Center for Rural Affairs
