For Illinois’ 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, their community, state and nation.
Representative Ron Kind (D-Wis.) and Representative Wally Herger (R-Calif.) have introduced legislation to do just that. Their Rural Microbusiness Investment Credit Act (H.R. 5990) is the first 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 recession, the reluctance of large businesses to add workers makes small businesses and self-employment even more important. During the 2000-2003 recession, microenterprise employment in Illinois grew by 10 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 larger businesses.
The rural micro tax credit is tailor made to encourage microenterprise 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 good years and bad, for new or established businesses.
Center for Rural Affairs