Schumer’s Proposal Would Give Businesses Tax Cut to Hire Workers
U.S. Senator Charles E. Schumer (D – N.Y.), along with Senator Orrin Hatch (R – Utah), said Tuesday that a business tax cut bill is slated to pass the Senate soon. The bill called the “Hire Now Tax Cut” would offer businesses a tax cut for hiring unemployed workers that have been out of work for at least 60 days.
The businesses will be exempt from paying the employer’s share of Social Security taxes on those unemployed workers throughout 2010, according to a statement Tuesday.
Schumer pitched this proposal to unemployed workers in Ithaca Tuesday. “Congress must focus like a laser on job creation, and that’s what this proposal does,” said Schumer in the statement. “The plan is targeted, cost efficient for the taxpayer and highly effective for workers seeking employment. This bipartisan proposal will put people back to work right away and help create the only thing that will finally bring us out of this recession: job growth.”
The proposal has received support from both Republican and Democrat senators, as well as from the White House. According to Schumer, the proposal has many more advantages and benefits than previous tax cut ideas, including:
- employers will only need to eliminate the 6.2 percent payroll tax per eligible worker
- focus of the proposal narrows in solely on the unemployed
- no bias toward low- or high-wage workers
- immediacy -the employers will not need to wait until 2011 to receive tax credit, but rather will not have to pay the tax in the first place
- affordability – “If three million unemployed workers are hired this year under this plan, and they all work an average of six months (some more, some less) at an average salary of $50,000, and every single one stays on payroll for 52 consecutive weeks, the gross cost to taxpayers would be only $7.6 billion over two years – and that’s before considering the offsets from income and payroll taxes paid by these workers,” Schumer says.
The proposal, which is now in the hands of the finance committee, also offers the incentive of a greater tax benefit if unemployed workers are hired earlier rather than later. A $60,000 worker hired on February 1 will save an employer about $3,400 in taxes, while a $60,000 worker hired on May 1 will save about $2,500.
“This is a win-win-win,” said Schumer.“It is a win for businesses, a win for the economy, and a win for job creation.”