Today in Baltimore, President Obama will announce details of the Small Business Jobs and Wages Tax Cut, one of his new proposals to create good jobs in America. In his State of the Union Address Wednesday, President Obama outlined a series of ways he will fight to create good paying jobs and continue our economic recovery.
According to a press release from the White House, one of these proposals, the Small Business Jobs and Wages Tax Cut, will put more Americans back to work by giving businesses – particularly small business – a tax cut for new hiring. The new proposal will also provide tax incentives for businesses to expand wages for their employees.
Through the "Small Business Jobs and Wages Tax Cut":
• Businesses will receive a $5,000 tax credit for every net new employee that they employ in 2010. The "net new employee" number will be the key. A business that fires 10 workers and then hires 10 new workers would not receive a credit. Also the net pay of the new workers will be scrutinized. A business that fires 10 employees making $50,000 each and then hires 20 employees making $25,000 each will not receive a credit.
The total amount of the credit for any one firm will be capped at $500,000, to ensure that the majority of the benefit is targeted at small businesses.
Start–ups (new businesses) will be eligible for half of the tax credit.
• Small businesses that increase wages or hours for their existing employees will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. This bonus would be based on Social Security payrolls, so it would not apply to wage increases above the current taxable maximum of $106,800.
• Firms will be able to claim the credit on a quarterly basis, which gets money out to businesses quickly and provides and early incentive to hire and increase payrolls.
