Shortly after jobless claims numbers were released, Sen. Russ Feingold issued a statement announcing the introduction of a jobs tax credit bill:
“Today’s jobs report clearly shows we need to do more to help people get back to work. With the unemployment rate at 10.2 percent, the highest since the early 1980s, Congress should consider a range of job creation policies including a jobs tax credit bill I plan to introduce. While a jobs tax credit wouldn’t fix all the challenges businesses face, it would be an effective tool in helping some firms hire more workers. Job creation must be a top priority for Congress and I will continue to look for ways to help get Americans back to work.”
Not only does Sen. Feingold think a tax credit for jobs creation is a good idea, but so does the Milwaukee Journal Sentinel’s editorial board:
The federal government has no choice: It must attack joblessness. And one of the best ideas we’ve seen is a tax credit program for companies that create jobs. Sen. Russ Feingold (D-Wis.) is writing a bill that would create such a credit; it deserves broad support.
Feingold’s bill, which will likely be introduced in early December, will be modeled on an idea championed by the Economic Policy Institute, a liberal think tank. The senator’s legislation would create a temporary credit over the next two years for companies that hire new workers, expand hours or raise worker pay. The credit would be 15% of eligible payroll for 2010 and decline to 10% in 2011, when, presumably, conditions will have improved. The credit could only be taken on company payroll subject to Social Security taxes (wages less than $106,800 this year).
Feingold intends to include several safeguards to discourage gaming of the credit, including calculating the tax break by comparing wages at a company over an entire quarter with wages for the same quarter a year earlier. The government would be required to do other checks to ensure that companies don’t simply lay off workers only to hire them back to claim the credit.
We favor this and other measures to create jobs – including direct public-service employment. Feingold’s concept is solid. Sensible government action like this can make a difference.
Here’s a few key points from Sen. Feingold’s jobs tax credit bill:
- Senator Feingold’s bill would create a jobs tax credit over the next two years for businesses that hire new employees, expand work hours for their current workforce, or simply raise worker pay.
- The credit would be 15 percent of eligible payroll for 2010 and 10 percent of eligible payroll in 2011.
- Eligible payroll includes that portion of a firm’s wages subject to Social Security taxes. (Note: For 2009, those are wages under $106,800.) Thus, pay hikes for very highly salaried workers would not be eligible for the tax credit.
- As noted above, the credit would be based on a firm’s total eligible payroll so it would reward firms that expand work hours or raise pay as well as hiring more workers.
- To avoid seasonal employment spikes the credit is calculated on a quarter over-year-ago-quarter basis. For example, wages for the first quarter of 2010 are compared with wages for the first quarter of 2009; wages for the third quarter of 2010 are compared with wages for the third quarter of 2009.
- To avoid possible gaming of the credit the last quarter of 2010 would be measured against the last quarter of 2008, rather than 2009. This means a firm could not lay off workers this December and then hire them back in 2010 to capture the jobs credit.
- The wages of firm owners and their family members would not be eligible.
- Senator Feingold wants the cost of the tax credit to be fully offset so it will not increase the deficit.