Tax incentives to hire are piling pretty high
Obama will propose a federal tax credit today in Baltimore for businesses that hire employees this year, following up on his focus on jobs in this week's state-of-the-union speech, according to The Sun's Paul West. Companies that hire people this year could get credits of up to $5,000 per job. That's a credit -- $5,000 subtracted directly from what a company owes in payroll tax. Since it's a payroll-tax credit even companies that don't have taxable income would benefit.
Add in Maryland's incentives to hire and you could get a pretty good inducement to add employees this year. Gov. Martin O'Malley is proposing a $3,000 tax credit for hiring businesses. That's on top of Maryland's existing job-creation tax credit of up to $1,500. Companies are not going to hire without assurance that the added employees will help them make money. If they're on the fence the incentives could make a difference. But we need a general pickup in consumer spending and consumer confidence to combine with the hiring incentives to really make a difference in the jobs picture.
Comments
sadly the people are not buying because we are broke.
Let's do away with the FICA tax for 6 months.
Posted by: Carole | January 29, 2010 10:46 AM
The payroll and employer-portion payroll taxes of a full time employee earning $10 an hour equal about $26500, depending on the state.
So who would create a job for a $5000 tax credit?
1. someone creating a job anyway and free riding the tax credit
2. someone who flunked managerial accounting
Posted by: save_the_rustbelt | January 29, 2010 1:06 PM
"Let's do away with the FICA tax for 6 months". No, let's remove the cap on earnings that are subject to FICA taxes. It's completely unfair to only tax income up to $106,000. So, if you make a million dollars a year, that means 90% of your income is not subject to FICA taxes.
Posted by: PK | January 29, 2010 2:53 PM
>>>
These are headlines from the Sun tonight. Now, immediately, I am no economist, but doesn't one pretty much cancel out the other?
How does the economy grow if people aren't getting increased wages (or any wages at all for that matter) to make purchases?
Sounds like more Obamaspeak, smoke and mirrors to placate the public.
Posted by: Cosmos Girl I>--I | January 29, 2010 8:03 PM
Assuming the strings attached to these credits aren't too severe, an $8000 tax credit amounts to a one-to-two month head start on a salary for a new employee, so that's actually very good.
Congrats on all sides for the proposals - as a small business owner, I hope to have a chance to take advantage of it.
Posted by: Donald Patti | February 11, 2010 12:08 PM