The President’s $447 billion jobs bill includes a number of provisions that would benefit small businesses. This legislation, which was sent to Congress on Monday, would:
•Provide a 50-percent reduction in payroll taxes for the first $5 million in wages. Approximately 98 percent of all businesses pay out less than $5 million in wages.
•Eliminate employer payroll taxes for small businesses that create jobs or give a wage increase from the prior year. An employer that increases an employee’s wages would not have to pay payroll tax on the increase; also, an employer that hires a new worker would not have to pay payroll tax on that worker.
•Extend the section 179 deduction through 2012 (100-percent write-off for up to $500,000 of qualifying purchases) for small businesses that invest in machinery and equipment. Long-supported by CompTIA, this provision provides incentives for investment in equipment, including IT systems.
•Establish a tax credit for hiring unemployed veterans or the long-term unemployed. The legislation provides tax credits from $5,600 to $9,600 to encourage the hiring of unemployed veterans and a $4,000 tax credit to employers that hire long-term unemployed workers.
Some members of Congress have indicated that it might be possible to compromise on portions of the announced plan. However, push back began immediately when the Administration announced that the legislation would be paid for mostly through a reduction in itemized deductions for individuals earning more than $200,000 and families earning more than $250,000 (only 28 percent of the total itemized deductions would be allowed as a deduction).
While the President has asked for quick passage of this legislation, this is a very optimistic request. As everyone knows, Congress has experienced great difficulty in working together during the last year, and the factors causing this stalemate continue to be present.