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Compliance January 28, 2010
Senator Proposes Tax Cut for Employers Who Increase Pay
January 28, 2010
(PLANSPONSOR.com) - U.S. Senator Russ Feingold (D-Wisconsin) has introduced
legislation creating a temporary jobs tax credit over the next two years for
businesses that hire new employees, expand work hours for their current
workforce, or raise worker pay.
Reported by Rebecca Moore
According to a Feingold press release, the tax credit would equal 15% of the increase in eligible payroll for 2010 and 10% of the increase in 2011. Calculation of 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, and it would be calculated on a quarter over year-ago-quarter basis to avoid seasonal employment spikes.
Under the proposal, pay hikes for high-salary workers ineligible, as are wages of firm owners and their family members.
The press release said the Congressional Budget Office recently released a report indicating that a tax break such as 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, according to the announcement.
Feingold said the tax credit would be offset so as not to increase the deficit.
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