Below are the tax provisions found in the President’s proposed “American Jobs Act,” or as most people are calling it, “That thing that almost interrupted football.”
I wish I could add some insightful and poignant commentary along the lines of “The payroll tax incentives are a red herring meant to distract small business owners from the fact that the banking institution continues to show an unwillingness to lend,” but frankly, I would have no idea what the hell I’m talking about. Everything I know about politics and the inner workings of the government I learned from Chris Rock and Bernie Mac in “Head of State.”
So to keep things simple, I’ll let the readers digest the tax proposals and provide the bipartisan bluster.
first things first, the President is proposing three tax cuts to provide immediate incentives to hire and invest:
Cutting the Payroll Tax Cut in Half for the First $5 Million in Wages: This provision would cut the payroll tax in half to 3.1% for employers on the first $5 million in wages, providing broad tax relief to all businesses but targeting it to the 98 percent of firms with wages below this level.
Temporarily Eliminating Employer Payroll Taxes on Wages for New Workers or Raises for Existing Workers: The President is proposing a full holiday on the 6.2% payroll tax firms pay for any growth in their payroll up to $50 million above the prior year, whether driven by new hires, increased wages or both. .
Extending 100% Expensing into 2012: The President is proposing to extend 100 percent expensing, the largest temporary investment incentive in history, allowing all firms – large and small – to take an immediate deduction on investments in new plants and equipment. (Ed note: unfortunately the whole point of the bonus depreciation rules back in 2001 was to make taxpayers go “Oooh, I better buy all this equipment this year before the tax break expires, thereby stiumulating the economy. After ten years of the same incentive, I would argue that taxpayers have grown numb to the idea of bonus depreciation and won’t feel overwhelmingly compelled to go spend money on capital improvements.)
There’s also some hiring incentives in the plan…
Tax Credits and Career Readiness Efforts to Support Veterans’ Hiring:The President is proposing a Returning Heroes Tax Credit of up to $5,600 for hiring unemployed veterans who have been looking for a job for more than six months, and a Wounded Warriors Tax Credit of up to $9,600 for hiring unemployed workers with service-connected disabilities who have been looking for a job for more than six months, while creating a new task force to maximize career readiness of service members.