Two key Senators proposed bipartisan draft legislation designed to address the nation's high unemployment rate by providing hiring incentives to employers. The proposal was introduced Thursday by Sens. Max Baucus (D-MT), chairman of the Senate Finance Committee, and Charles Grassley (R-IA), the committee's top-ranking Republican. But Senate Majority Leader Harry Reid (D-NV) almost immediately threw cold water on portions of the bill designed to attract Republican support.
A key provision of the bill is a payroll tax exemption for employers that hire previously unemployed workers. The brainchild of Sens. Charles Schumer (D-NY) and Orrin Hatch (R-UT), the provision would exempt qualified employers from paying Social Security payroll taxes for certain qualified individuals. The maximum value of the exemption would be equal to 6.2% of wages up to a cap of $106,800.
A "qualified individual" is defined in the proposal as a person who begins employment with a qualified employer after Feb. 3 and before Jan. 1, 2011, and who signs an affidavit certifying that he or she had not been employed for more than 40 hours in the 60-day period immediately prior to beginning employment, is not being employed to replace another employee of the employer except one who has quit or been fired for cause, and is not "related" to the employer under rules set forth in the U.S. tax code.
The exemption applies to wages paid during the period beginning the day after the legislation is enacted and ending Dec. 31 for "services performed in a trade or business" of a "qualified employer," which is defined as any private (nongovernment) employer.
The payroll tax credit would be coordinated with the Work Opportunity Tax Credit so that an employer could not claim both credits.
In addition to the payroll tax credit, employers would be entitled to an additional $1,000 income tax credit for every new employee hired in 2010 who is employed for 52 consecutive weeks. Such credit would be taken on the employer's 2011 income tax return.
The draft does not include a proposal made by President Obama that would provide employers with a $5,000 tax credit for each net new job created in 2010.
The Baucus–Grassley proposal includes additional provisions designed to appeal to Republicans, such as extensions of expiring tax provisions and pension funding relief. Reid objected to these provisions, saying they went beyond the goal of job creation.
Reid is promoting his own streamlined jobs bill that will include key elements of the Baucus–Grassley provisions, including extension of a tax code provision allowing small businesses to expense certain capital expenditures, and the payroll tax and employee retention tax credits proposed by Schumer and Hatch. But it is unclear whether a scaled-back bill would have enough Republican support to pass.
Reid said the Senate likely will take up the bill this week after the senators come back from their Presidents Day recess.
Ed Lenz
It seems to me that this will hurt anyone who is doing part time work just to survive, as part of the criteria will be "he or she had not been employed for more than 40 hours in the 60-day period"
ReplyDeleteEven if you are more qualified, but you are a part timer, you will still not be considered because you will not gain the tax benefits to the employer