BCA

By John Riley

 While today’s political environment is cause for frustration and uncertainty for companies, a new jobs idea being advanced by Senator Charles Schumer (D-NY) and Senator Orrin Hatch

(R-UT) could recharge their business strategies while creating new job opportunities.  In one of those rare bipartisan efforts, the two senators have come up with a proposal so simple and easy to understand, you wonder why no one came up with it sooner.

  If a public-sector employer hires an employee that has been unemployed for more than 60 days, the employer would not have to pay the 6.2 percent Social Security payroll tax for the balance of 2010. The benefit is immediate and the longer an employer waits to hire, the less dollars he or she would receive. It is unbiased in that the 6.2 percent remains constant. A company would save money on an employee who earns $30,000 as well as someone who earns $60,000. There is no cap.

 Whatever losses the Social Security trust fund would incur would be made up from spending cuts in other programs between now and 2015.

 Business Strategies Boosted by Immediate Hiring

 While many companies are understaffed due to severe personnel cutbacks over the past couple of years, this idea provides the opportunity to minimize the cost of staffing up as the economy starts to strengthen. This is more appealing than adding an employee now and then having to wait until 2011 to get a tax credit. Furthermore, the payroll tax stays in the employer’s pocket since the tax is never collected.

 But there’s more. For any worker hired in 2010 and who was retained on the company’s payroll for 52 weeks or longer, the company would receive an additional $1,000 credit on its 2011 tax return. According to the Senators, “Imagine that three million unemployed workers were to be hired this year under the plan. If they all worked an average of six months in 2010 at a salary of $50,000 and every single one of them stayed on payroll for 52 consecutive weeks into 2011, the gross cost of the Social Security tax cut and the additional credit would be only $7.6 billion.”

That would be before the payroll taxes and offsets paid by these workers.

 Additional Rules Needed

 To help ensure long term business growth, additional rules will be necessary:

 1)     Family members of the employer would not be eligible to participate.

2)     Workers would need to work a minimum of 30 hours a week.

3)     The payroll tax plan is limited to the  private-sector

4)     New jobs created by tax dollars cannot be included

5)     Employers with a lower total payroll in 2010 than it had in 2009

cannot participate…businesses cannot cut jobs and still be eligible Unfortunately, there are no rules prohibiting senators and house members from adding amendments or earmarks thereby ensuring what is now a simple and easy to understand idea will eventually become incomprehensible. Nevertheless, it is encouraging to see a promising new idea that can benefit business when it needs it most.