Kerry-Smith Provision Would Let Small Businesses Earn Tax Credit for Helping Deployed Reservists

On Thursday, the U.S. Senate Committee on Small Business & Entrepreneurship announced that the Senate unanimously passed provisions championed by Democratic Senator John Kerry of Massachusetts and Republican Senator Gordon Smith of Oregon last night.

Under the legislation, those small businesses who have 50 or fewer workers on their payroll would receive a 20% tax credit based on the salary differential that they remit to a reservist employee who gets called up for active duty. The tax credit would be capped at $4000.

Reservist all too often have to take a substantial pay cut when they leave their job, given that the military does not pay as well as most citilizan jobs. This fact often causes great hardships for the reservists and their families. This provision was adopted from Senator Kerry's Military Family Bill of Rights.

"Small businesses working to ensure that our brave reservists don't suffer deep pay cuts when they serve overseas should be rewarded, not penalized," said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship.

There are nearly 1.5 million military reservists in the United States, and they often have to leave good paying jobs to receive far less pay from the military during the time that they serve in times of war. At the same time, many have to take steep pay cuts and even lose benefits when they come home and try to go back to their former jobs. If they own their own businesses they may actually lose them.

Sears was one of the first high-profile employers to volunteer to give returning reservists all of the pay they would have received if they had not been called to serve on active duty.

The new bill comes on the heels of Arkansas Democratic Senator Blanche Lincoln and Represent Vic Snyder spearheading attempts to improve National Guard and military reservist benefits with an introduced bill that would permit drilling reservists who have been mobilized to make use of G.I. Bill benefits for up to 10 years after leaving the military.

Present regulations limit Guard and reserve members to utilizing G.I. Bill benefits while in service only, and losing any unused benefits when they leave service.
According to Vietnam vet Snyder, the split jurisdiction between the Veterans' Administration and the Defense Department over education benefits is one of the main reasons why the value of reserve benefits have eroded over the years. Snyder is a member of the House Armed Services Committee. His and Lincoln's legislation would also include a provision for a Pentagon and DoD study to determine who should be the one overseer and administer of veterans' education benefits.

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