By Kelsey Durham
U.S. Rep. Steve Israel (D-Melville) introduced new legislation this week that aims to help small businesses by encouraging them to put money into a special savings account that can be used tax-free in times of need.
After touring a group of small businesses along Hillside Avenue in Floral Park, Israel hosted a news conference at Usha Foods to announce his new bill, called the Save for Small Businesses Act, that he said would help revitalize small businesses that have experienced ups and downs over the last few years.
Israel said that more than 170,000 small businesses were lost after the economic downturn of 2008 and many that survived are still having trouble obtaining loans and credit to help them stay open.
“In 2008, we experienced an absolute economic and credit meltdown,” Israel said. “A lot of the banks recovered, but small businesses have not and many have challenges accessing credit that would help them pay their bills and expand their businesses.”
The Save for Smalls Businesses Act would allow businesses with fewer than 50 full-time employees to create a savings account that Israel said is similar to a 401(k) or an individual retirement account, also known as an IRA, where up to 10 percent of the company’s gross profits could be deposited tax-free.
Business owners could then withdraw money to be used for job retention or creation that would also be tax-free so long as it met one of the bill’s three stipulations.
If the country’s gross domestic product declines for two straight quarters, the U.S. Small Business Administration declares a credit emergency or if a business is situated within a neighborhood declared a disaster area by the federal government after a natural disaster, such as Superstorm Sandy, the bill would allow businesses to withdraw money free from taxation as long as at least one stipulation is met.
“This is something that I think both sides of the aisle should agree upon immediately,” Israel said. “It lowers taxes, it creates jobs and most importantly it’s a way to keep small businesses in business. This is something everyone should love.”
The bill was drafted in partnership with an organization called Vision Long Island, which advocates for economic advancement, and the organization’s executive director, Eric Alexander, said he strongly believes in the measure and its ability to help revitalize small businesses.
“I think this is fantastic legislation,” he said. “Small businesses are the rock of our local communities and there are folks who are living off of credit cards right now. This bill will cut into that.”
Abhi Mathur, one of the owners of the 15-year-old Usha Foods market at 255-03 Hillside Ave. that hosted the conference, thanked Israel for his commitment to helping small businesses thrive. He said the bill would go a long way toward bolstering family-owned companies like his in times of need.
“Any time the government creates an environment for small businesses that is conducive for growth, it’s good for us,” he said. “This is a step in the right direction.”
Reach reporter Kelsey Durham at 718-260-4573 or by e-mail at [email protected].