To amend the Internal Revenue Code of 1986 to expand the work oppportunity tax credit for small business jobs creation.

June 24, 2004

Mrs. CLINTON introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to expand the work opportunity tax credit for small business jobs creation.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Small Business Jobs Tax Credit Act of 2004'.

SEC. 2. FINDINGS.

Congress finds the following:

(1) In many parts of the United States, segments of large cities, smaller cities, and rural areas are experiencing population loss and low job growth that hurt the surrounding communities.

(2) In areas hurt by low job growth, people are forced to leave the communities they have lived in their whole life to secure a job.

(3) A small business tax credit to promote jobs in areas suffering from low job growth and population loss would spur economic growth and would provide incentives for businesses to take advantage of an often underutilized, well-educated workforce.

(4) By promoting economic growth, such a tax credit would revitalize these areas that are less likely to receive other Federal investments.

SEC. 3. EXPANSION OF WORK OPPORTUNITY TAX CREDIT.

(a) IN GENERAL- Section 51(d)(1) of the Internal Revenue Code of 1986 (relating to members of targeted groups) is amended by striking `or' at the end of subparagraph (G), by striking the period at the end of subparagraph (H) and inserting `, or', and by adding at the end the following:

`(I) a qualified small business employee.'.

(b) QUALIFIED SMALL BUSINESS EMPLOYEE- Section 51(d) of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (10) through (12) as paragraphs (11) through (13), respectively, and by inserting after paragraph (9) the following:

`(10) QUALIFIED SMALL BUSINESS EMPLOYEE-

`(A) IN GENERAL- The term `qualified small business employee' means any individual--

`(i) hired by a qualified small business located in a development zone, or

`(ii) hired by a qualified small business and who is certified by the designated local agency as residing in such a development zone.

`(B) QUALIFIED SMALL BUSINESS- The term `qualified small business' has the meaning given the term `small employer' by section 4980D(d)(2).

`(C) DEVELOPMENT ZONE- For purposes of this section--

`(i) IN GENERAL- The term `development zone' means any area--

`(I) which is nominated under the procedures defined in sections 1400E(a)(1)(A) and 1400E(a)(4) for renewal communities;

`(II) which the Secretary of Housing and Urban Development designates as a development zone, after consultation with the Secretary of Commerce;

`(III) which has a population of not less than 5,000 and not more than 150,000;

`(IV) which has a poverty rate not less than 20 percent (within the meaning of section 1400E(c)(3)(C));

`(V) which has an average annual rate of job growth of less than 2 percent during any 3 years of the preceding 5-year period; and

`(VI) which, during the period beginning January 1, 1990 and ending with the date of the enactment of this Act, has a net out-migration of inhabitants, or other population loss, from the area of at least 2 percent of the population of the area during such period.

`(ii) NUMBER OF DESIGNATIONS- The Secretary of Housing and Urban Development may not designate more than 100 development zones.

`(D) SPECIAL RULES FOR DETERMINING AMOUNT OF CREDIT- For purposes of applying this subpart to wages paid or incurred to any qualified small business employee--

`(i) subsection (a) shall be applied by substituting `20 percent of the qualified first, second, third, fourth, or fifth year wages' for `40 percent of the qualified first year wages', and

`(ii) in lieu of paragraphs (2) and (3) of subsection (b), the following definitions and special rule shall apply:

`(I) QUALIFIED FIRST-YEAR WAGES- The term `qualified first-year wages' means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning with the day the individual begins work for the employer.

`(II) QUALIFIED SECOND-YEAR WAGES- The term `qualified second-year wages' means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subclause (I).

`(III) QUALIFIED THIRD-YEAR WAGES- The term `qualified third-year wages' means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subclause (II).

`(IV) QUALIFIED FOURTH-YEAR WAGES- The term `qualified fourth-year wages' means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subclause (III).

`(V) QUALIFIED FIFTH-YEAR WAGES- The term `qualified fifth-year wages' means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subclause (IV).

`(VI) ONLY FIRST $15,000 OF WAGES PER YEAR TAKEN INTO ACCOUNT- The amount of the qualified first, second, third, fourth, and fifth year wages which may be taken into account with respect to any individual shall not exceed $15,000 per year.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to individuals who begin work for the employer after the date of the enactment of this Act.

END