Feingold introduces jobs tax credit bill to boost employment

From my emailbox:

U.S. Senator Russ Feingold introduced legislation today to help businesses hire workers and bring down unemployment through the creation of a jobs tax credit. The legislation creates a temporary 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. In a January 12th letter to President Obama, Feingold urged the president to support a jobs tax credit in his State of the Union address.

“While there’s no single way to address the challenges facing businesses, a jobs tax credit would help some firms hire workers they otherwise couldn’t,” Feingold said. “I am pleased President Obama has indicated support for a jobs tax credit as part of his overall strategy to create jobs. With the nation facing double digit unemployment, we cannot wait to act.”

The tax credit would:

• Amount to 15 percent of the increase in eligible payroll for 2010 and 10 percent of the increase in 2011.
• Make pay hikes for high-salary workers ineligible.
• 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.
• Be calculated on a quarter over year-ago-quarter basis to avoid seasonal employment spikes. For example, wages for the first quarter of 2010 are compared with wages for the first quarter of 2009.
• Not be eligible for the wages of firm owners and their family members.
• Be offset so as to not increase the deficit.

The Congressional Budget Office recently released a report which said that a tax break along the lines of Feingold’s proposal would be among the most efficient and effective ways to spur employment. The CBO report estimated a similar jobs tax credit would boost gross domestic product by as much as $1.30 for every dollar spent, and would increase employment by as much as 18 net full-time equivalent jobs for every million dollars invested through the credit. And in laying out the jobs tax credit proposal on which this measure is based, the Economic Policy Institute projected an increase of more than five million jobs over the next two years