President Obama held a press conference today to continue his fight for Congress to pass the
American Jobs Act. He explained what needs to happen to boost
economic growth in the United States. One of the key proposals are tax
cuts for small businesses. The President’s plan includes new tax cuts to
businesses that provide immediate incentives for firms to hire and invest.
These tax cuts would be available to all businesses, regardless of size, but
are designed to target their impact towards the smallest businesses.
Key elements of his proposal are:
payroll tax cut to businesses, with a focus on small employers ($65 billion in
combination with the payroll tax holiday for new wages)A
complete payroll tax holiday for new jobs or wage increasesExtend
100 percent business expensing through 2012 ($5 billion)Help
entrepreneurs and small businesses access capital and grow
A payroll tax cut to businesses, with a focus on small employers ($65
billion in combination with the payroll tax holiday for new wages)
The President’s plan will extend the payroll
tax cut to firms by cutting in half their payroll tax on the first $5 million
in payroll. Next year, instead of paying 6.2 percent on their payroll expenses,
firms would pay only 3.1 percent. The President’s plan would provide tax cuts
for all firms, with focused relief on the 98 percent with less than $5 million
How It Would Work for a Typical Firm: A construction firm with 50 workers earning an average
of $50,000 a year – for a total payroll of $2.5 million – would receive a payroll tax cut of 3.1% of
its total payroll, or about $80,000. The firm’s workers would
receive an average tax cut of about $1,500 a year from the employee side
payroll tax cut in the President’s plan.
For some reason, many people are surprised to see a drop in their first paycheck of the year. Yet, everyone should have known the payroll tax deduction was supposed end January 1, 2013.
Perhaps people put faith in the notion that when it comes to politics, "temporary" typically means permanent. Of course, some people were likely oblivious to the whole thing, simply not paying attention to the original proposal and when it was set to expire.
David Beckworth submits: There is a lot of chatter right now about whether a payroll tax holiday would provide an effective stimulus to the slumbering U.S. economy. The motivation for this chatter is the news that the White House is considering, among other things, some kind of payroll tax cut.
Political maneuvering has taken on the theater of the absurd. Republican House Speaker John Boehner openly sings the praises of President Obama, as both want to extend tax cuts and unemployment benefits. That is odd enough in and of itself.
Moreover, the Senate has already passed a bill, yet the measure died in the House.