Two senators propose tax cuts for hiring
February 1, 2010 by Jim GiulianoPosted in: Hiring, In this week's e-newsletter, Latest News & Views
There’s almost nothing new about a recent proposal to offer a tax cut to businesses that hire the unemployed, except that the latest plan has the support of leading Democrats and Republicans.
The details of the proposal were laid out in a New York Times article by U.S. Senators Charles Schumer (D-NY) and Orrin Hatch (R-UT). Besides bipartisan support for the plan, it has something else going for it: It’s simple.
Here’s how it would work: Starting this year, any employer that hires a worker who had been unemployed for at least 60 days will not have to pay the 6.2% Social Security payroll tax on that employee for the rest of the year. The tax exemption would be prorated for the year, depending on when the person was hired. That means the sooner someone is hired, the more the employer saves in taxes.
And it means businesses would save on taxes immediately, instead of waiting for a tax credit, which is the basis of many other similar plans.
Another bennie: There would be no cap on the plan. Theoretically, a company could hire thousands of workers and get the tax break for each one of them
Hatch and Schumer also want to add a bonus clause to the proposal: If an employer keeps one of those new hires on payroll for at least one year, the employer would receive an additional $1,000 credit on its 2011 tax return.
Tags: hatch, payroll tax, Schumer, social security
February 2nd, 2010 at 12:43 pm
This sounds like a great idea. I know our company would really support such a plan.
February 8th, 2010 at 11:55 am
Does the employee still pay their 6.2%? Our payroll service (ADP) might have a hard time setting this up. They are still struggling with vacation accrual.
February 8th, 2010 at 12:08 pm
What about the employers who do not pay into Social Security? There are thousands of employers who pay into a state retirement plan. Our company pay 14% of gross for each employee (employees pay 10% of gross instead of having Social Security withheld). What is their incentive to hire people? Government can always make these plans sound simple until you start looking at the paperwork and tracking that is involved.
February 8th, 2010 at 1:51 pm
This is exactly why our government ends up in the predicaments that we are in. We are already going to be in a Social Security crisis within the next 20 years and we give a credit to employers so that we can short the fund even more…way to go senators, way to go!
February 9th, 2010 at 11:22 am
I like the idea. But until sales start coming through the door, I’m not hiring anyone when there is no work for them to do.
February 9th, 2010 at 4:43 pm
LOL Jeanette – we have the same trouble with ADP. From what I have read this would only apply to the employer portion of the social security payroll tax. BTW, we are considering a switch to Ceridian for our payroll services. Does anyone use them, and if so, how do you like their services?