Opinion: Micro tax credit made for small business

In order for Missouri’s rural cities and small towns to contribute fully to the nation’s economic recovery, we must enable small, Main Street businesses to build a better future for themselves, and their community, state and nation.

Reps. Ron Kind, D-Wis., and Wally Herger, R-Calif., have introduced legislation to do just that.

Their Rural Microbusiness Investment Credit Act (HR 5990) is a federal tax credit designed to meet the needs of small business 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 a recession, the reluctance of large businesses to add workers makes small businesses and self-employment even more important. During the 2000–03 recession, microenterprise employment in Missouri grew by 8 percent, while larger firms were still shedding jobs. Microenterprise led the economy out of recession. It can happen again, but entrepreneurs need and deserve the support of federal policy as much as do larger businesses.

The rural micro tax credit is tailor-made to encourage microenterprise investment during a 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 good years and bad, for new or established businesses.

—John Crabtree, Center for Rural Affairs[[In-content Ad]]