Senate passes tax holiday bill
WASHINGTON — Companies that hire unemployed workers will get a temporary payroll tax holiday under a bill that easily won congressional approval Wednesday in what Democrats hope is just the first of several election-year measures aimed at boosting hiring.
The 68-29 bipartisan vote in the Senate sent the legislation to the White House, where President Barack Obama was expected to sign it into law Thursday. Eleven Republicans voted for the legislation, an impressive tally considering the politically charged atmosphere on Capitol Hill.
It was the first of several jobs bills promised by Democrats, though there’s plenty of skepticism that the measure will do much to actually create jobs. Optimistic estimates predict the tax break could generate perhaps 250,000 jobs through the end of the year, but that would be just a tiny fraction of the 8.4 million jobs lost since the start of the recession.
The measure is part of a campaign by Democrats to show that they are addressing the nation’s unemployment problem, but that message was overshadowed by Congress’ feverish final push to pass health care overhaul legislation by this weekend.
“It is the first of what I hope will be a series of jobs packages that help to continue to put people back to work,” Obama said after the vote.
The bill contains about $18 billion in tax breaks and a $20 billion infusion of cash into highway and transit programs. Among other things, it exempts businesses that hire people who have been unemployed for at least 60 days from paying the 6.2 percent Social Security payroll tax through December and gives employers an additional $1,000 credit if new workers stay on the job a full year. Taxpayers will have to reimburse Social Security for the lost revenue.
“This is just the first, certainly not the last, piece of legislation that we will put forward in relation to jobs,” said its sponsor, Sen. Chuck Schumer, D-N.Y. “If we don’t create jobs, the economy will not move forward.”
It also extends highway and mass transit programs through the end of the year and pumps in $20 billion in time for the spring construction season. That money would make up for lower-than-expected gasoline tax revenues.
The measure is modest compared with last year’s $862 billion economic stimulus bill, and the bulk of the hiring tax breaks would probably go to companies that were likely to hire new workers anyway.
“Until business picks up for small business owners, there’s not going to be a huge incentive to add new workers,” said Bill Rys of the National Federation of Independent Business, which lobbies for small business.
The bill is financed in part over the coming decade by cracking down on offshore tax havens, though it would add $13 billion to the debt in the coming three years.
“When are we going to stop spending money around here as if there’s no tomorrow?” said Sen. Judd Gregg, R-N.H. “Because pretty soon there’s going to be no tomorrow for our children as we add this debt to their backs.”
In addition to the hiring tax incentives and highway funding, the bill extends a tax break for small businesses buying new equipment and modestly expands an initiative that helps state and local governments finance infrastructure projects.
A far larger measure that would extend health insurance subsidies and jobless checks for the unemployed is in the works but has hit slow going. That measure has passed both House and Senate but is hung up as the rival chambers wrangle over how to partially finance the legislation, which also would extend a variety of tax breaks for individuals and businesses.
As a result, it may require a third temporary extension of unemployment benefits, which would otherwise expire at the end of this month. The House on Wednesday approved a one-month extension of jobless benefits and several other soon-to-expire programs by voice vote.
The Senate vote came as the House Ways and Means Committee approved a bill that lawmakers hope will generate jobs through infrastructure spending and tax cuts for investing in some small businesses. The bill would exempt long-term investments in certain small businesses from capital gains taxes, and would expand the Build America Bonds program, which subsidizes interest costs paid by local governments when they borrow for construction projects.
The bond program would be extended through June 2013, at a cost of $7.6 billion. The entire bill would cost about $17 billion over the next decade.
Much of the bill would be paid for by limiting the ability of multinational corporations to avoid U.S. withholding taxes by shifting assets among foreign countries. The bill would also make it easier for the federal government to withhold payments from government contractors that owe back taxes.
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