Peters, Ernst push for military tax credit extension

David Shepardson and Melissa Nann Burke
The Detroit News

Washington — Two senators unveiled legislation to extend a tax credit for small businesses that provide differential pay for military reservists and National Guard members called to serve on active duty.

U.S. Sens. Gary Peters, D-Bloomfield Township, and Joni Ernst, R-Iowa, introduced the Military Reserve Small Business Jobs Act of 2015 to extend the tax credit for five years — which would would help 824,000 reservists and their families while on active duty. Peters is a former lieutenant commander in the Navy Reserve and Ernst serves as a lieutenant colonel in the Iowa Army National Guard.

The credit expired last year, but Congress may opt to retroactively extend it.

"Reservists in Michigan and across the country put their lives on the line and stand ready to protect our country," Peters said. "Our reservists should not have to worry about whether they will be able to provide for their families when called to serve our nation on active duty. This bipartisan, commonsense legislation will ensure American stands by our commitment to support our men and women in uniform as well as their families and support the small businesses that go above and beyond by providing differential pay to activated reservists."

Originally enacted in 2008 as part of the Heroes Earnings Assistance and Relief Tax Act, the employer wage credit for military reservists on active duty helps small businesses that provide differential pay to employees who have been called to active duty. The provision provides a tax credit for 20 percent of the differential salary payment for small businesses with fewer than 50 employees.

The senators said if an employee's pay at their small business employer is $3,000 per month but he or she makes $2,000 while called up, an eligible small business would receive a $200 credit for paying the $1,000 difference.

"Our military reservists and National Guard members in Iowa and throughout our nation stand ready to serve and deserve the peace of mind and financial security to provide for their families once they have activated," Ernst said. "This important bipartisan legislation provides a tax credit for small businesses to provide differential pay for our military reservists and National Guard members on active duty. We must support these brave men and women in uniform — and their families — who sacrifice for our nation."

Peters previously introduced the legislation as a member of the U.S. House.

Earlier Wednesday, a Senate panel approved the first bill Peters sponsored in the Senate. The measure seeks to reduce the nearly $1 billion in annual federal vehicle repair costs by encouraging the use of remanufactured auto parts.

Peters and Sen. James Lankford, R-Okla., introduced the proposal last year when they were both in the U.S. House.

"Upkeep on federal vehicles is a nearly $1 billion annual expense, and remanufactured auto parts are not only less expensive, they help save energy and reduce waste and pollution," Peters said. "I'm proud that the first bill I'm introducing in the Senate is a bipartisan, commonsense measure that will help save taxpayers money, promote conservation by remanufacturing parts and support remanufacturing suppliers in Michigan and across the country."

Remanufactured parts are often less expensive than new parts and have been returned to same-as-new condition. The parts including engines, transmissions, alternators and starters, are under full warranty. The bill requires all heads of federal agencies to encourage the use of remanufactured parts when doing so lowers costs, maintains quality and performance and does not compromise safety. The Motor and Equipment manufacturers Association endorsed the measure.