With the Obama administration’s renewed emphasis on job creation, a number of lawmakers have introduced bills that focus on employer incentives. On Wednesday, Senators Chuck Schumer (D-NY) and Orrin Hatch (R-Utah) released details about the Hire Now Tax Cut Act of 2010 (S. 2983), legislation that would exempt any employer that hires a worker who has been without full-time work for at least 60 days from paying the employer’s share of Social Security taxes on that worker for 2010. According to its sponsors, the advantage of structuring a tax incentive in this fashion is that it would provide businesses with an immediate benefit, instead of rewarding them with a tax credit in 2011. Additionally, the benefits to an employer would increase the longer it retains and the more it pays the employee, up to the maximum Social Security wage of $106,800.
As outlined in a Washington Post article:
for any qualifying worker hired under this incentive that the employer keeps on payroll for a continuous 52 weeks, that employer is eligible for an additional $1,000 tax credit after the 52-week threshold is reached, to be taken on their 2011 tax return. In order to be eligible, the employee’s pay in the second 26-week period must be at least 80 percent of the pay in the first 26-week period. Workers hired after the date of introduction (February 2) are eligible for the payroll tax forgiveness and the retention bonus, but only wages paid after the date of enactment receive the exemption from payroll taxes.
Unlike President Obama’s proposal to provide tax incentive to employers that increase hiring, the Hire Now Tax Cut Act would not redirect funds repaid through the Troubled Asset Relief Program (TARP). The relative simplicity and bipartisan nature of this bill increases its chances that it could receive serious consideration in the coming weeks.
Meanwhile, Senators Senator Bob Casey (D-PA), Kirsten Gillibrand (D-NY), Carl Levin (D-MI) and Mark Begich (D-AK) have also introduced a measure to encourage hiring. The Small Business Job Creation Tax Act of 2010 (S. 2973), would provide employers that increase their payroll by a certain percentage a one-time tax credit of 20 percent for small employers and 15 percent for large employers (those with more than 100 full-time employees.) The credit would only apply to an employee’s wages up to the Social Security wage base of $106,800. A companion bill (H.R. 4585), has been introduced in the House of Representatives by Rep. Carolyn Maloney (D-NY). These bills are similar to a number of other job creation bills that have been introduced in recent weeks.
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