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.
