WASHINGTON -- A report released by the Congressional Budget Office (CBO) today found that small businesses are more likely to suffer when a Guard or Reserve employee in a key position is called to active duty -- a problem addressed in Sen. John Kerry's Small Business Military Reservist Tax Credit Act, S.240.

“This CBO report is proof that the lengthy and repeated deployment of our Guard and Reserve troops has created a tremendous strain on many of our country's small businesses, their employees and their employees' families,” said Kerry. “Congress needs to enact my legislation to provide an immediate tax credit to these patriotic small business people. By helping our reservists and the small businesses that employ them, we can help ensure America's great tradition of citizen soldiers will continue strong.”

The CBO report, released this month, estimated that 55,000 reservists are self-employed and that 8,000 to 30,000 reservists are key employees in a small business, making those businesses more likely to suffer when their employees are called up to active duty.

The study suggested several possible solutions to address the problems small employers face, including tax credits to affected businesses. The CBO also speculated that this solution could “increase employer’s support for reservists’ military service, which could in turn encourage more individuals to either join or remain in the reserves.”

Kerry’s legislation would provide a tax credit of up to $21,000 to any small business of 50 or fewer employees whose owner, manager or employee is a reservist who has been called up for active duty. Of that amount, $15,000 can be used to cover any reduction in salary for a reservist called up to active duty and $6,000 may be used to hire a temporary replacement. For small manufacturers with 100 or fewer employees, the bill would provide up to $30,000 in tax credits: up to $20,000 to cover the pay gap and up to $10,000 to hire a temporary replacement.

Around half a million Guard and Reserve members have been called up since President Bush issued Executive Order 13223 on Sept. 14, 2001, and currently there are about 174,475 members of the Guard and Reserve on active duty assisting in the war on terrorism. The Small Business Military Reservist Tax Credit Act was previously introduced as S.1595 during the 108th Congress. Also cosponsoring the legislation are: Sens. Patrick J. Leahy (Vt.), Patty Murray (Wash.), John D. Rockefeller IV (W.Va.), Richard J. Durbin (Ill.), Mark Pryor (Ark.), and Debbie Stabenow (Mich.).