FOR IMMEDIATE RELEASE: February 22, 2010
SCHUMER: NEW BIPARTISAN PROPOSAL SLATED TO PASS SENATE NEXT WEEK COULD EMPLOY THOUSANDS OF NOW UNEMPLOYED HUDSON VALLEY WORKERS - FOCUSES ON SMALL BUSINESS AND MIDDLE CLASS
Bipartisan Measure, Sponsored By Schumer And Orrin Hatch (R-Utah) Is Proposed Tax Cut For Businesses That Hire People Who Have Been Unemployed More Than 60 Days
Proposal Has Been Met With Approval By Both Sides Of The Aisle, The White House And Businesses Throughout The State And Country
Schumer: Low Cost, Highly Effective Jobs Proposal Will Be a Win for New York and the Country
Today, U.S. Senator Charles E. Schumer met with local businesses and unemployed workers to discuss his new bipartisan “Hire Now Tax Cut” proposal to provide businesses that hire unemployed workers with a tax cut. Schumer has joined with Orrin Hatch (R-Utah) to offer a tax cut to businesses that hire a worker that had been without work for at least 60 days prior to employment. The businesses will avoid paying the employer’s share of Social Security taxes on that worker for the duration of 2010. The more a business pays a worker (up to the maximum Social Security wage of $106,800), and the longer a business has a worker on its payroll, the greater the tax benefit – so there is an incentive to hire people sooner, and pay them more. The benefits go immediately into a business’ cash flow – no waiting until 2011 to receive a tax credit.
Schumer today presented this proposal to unemployed workers in Rockland County as well as executives of Star Kay White, Ron Hicks of the Rockland County Economic Development Corporation, Al Samuels of the Rockland Business Association, and several other business and community leaders in the region.
Star Kay White, Inc. was founded in 1890, and is a fourth generation family-owned company that specializes in manufacturing a wide range of products including syrups, candies, panned-items and extracts and flavors. Their heritage is in the ice cream industry; however they have recently broadened their customer focus to include new opportunities.
“Congress must focus like a laser on job creation, and that’s what this proposal does,” said Schumer. “The plan is targeted, cost efficient for the taxpayer and highly effective for workers seeking employment. This bipartisan proposal will put people back to work right away and help create the only thing that will finally bring us out of this recession: Job growth.”
Schumer said that the Schumer-Hatch proposal has many advantages over previously suggested hiring related tax cut ideas, and has therefore received an overwhelmingly positive reaction from law makers on both sides of the aisle, as well as the white house. Schumer said the plan had the following advantages and benefits:
· Simple. The Schumer-Hatch idea is easy to explain and administer: “No employer payroll taxes on unemployed workers hired in 2010.” Since the proposal is for a complete elimination of the 6.2 percent payroll tax for eligible workers, rather than a fixed or capped dollar amount, employers will know to simply zero out the tax for eligible workers.
· Focused. Given our budgetary constraints and the nagging problem of long-term unemployment, any employment incentive should be focused on the hiring of workers who are currently unemployed. Only by focusing on the unemployed can we get people off the unemployment rolls at an affordable cost to taxpayers. Plus, unlike some versions of a payroll tax holiday, this proposal is not biased towards either low-wage or high-wage workers. Under the Schumer-Hatch plan, a business saves 6.2 percent on both a $40,000 worker and a $90,000 worker.
· Front-Loaded. The credit provides an incentive for businesses to hire workers earlier in the year, because the tax benefit will be greater. A $60,000 worker hired on February 1 will save a business about $3,400 in taxes, while that same hire delayed until May 1 will save about $2,500.
· Immediate. In the current environment, no business wants to wait until 2011 to receive a tax credit. Our proposal puts money into a business' pockets immediately, since the tax is simply not collected in the first place.
· Affordable. If three million unemployed workers are hired this year under this plan, and they all work an average of six months (some more, some less) at an average salary of $50,000, and every single one stays on payroll for 52 consecutive weeks, the gross cost to taxpayers would be only $7.6 billion over two years – and that’s before considering the offsets from income and payroll taxes paid by these workers.
There are some additional rules that would have to be put in place. For example, eligible workers would have to be hired for a minimum of 30 hours per week, and workers who are family members of the employer would not be eligible. The payroll tax reduction would be for private-sector jobs only; new jobs that are created by tax dollars in the first place would not be eligible. And any employer with a lower total payroll in 2010 than it had in 2009 would have to forfeit the benefit — businesses shouldn’t be allowed to shed jobs and still receive a tax benefit.
To promote long term employment, the plan also adds the following bonus: For any eligible employee kept on payroll for a continuous 52 weeks, the employer would receive an additional $1,000 credit on its 2011 tax return
Schumer offered the following examples of savings that businesses would receive under this proposal:
· Hire a $35,000 worker in March, save $1,808.
· Hire an $80,000 worker in April, save $3,720.
· Hire a $70,000 worker in May, save $2,893.
Senator Schumer has been leading the fight for middle class families in the United States Senate. Last year, he supported the American Recovery and Reinvestment Act (ARRA) which saved and created thousands of jobs across New York. Recently, he took an innovative program that began in Ulster County and took it statewide in order to provide credit to successful small businesses that have been seen their access to capital limited during this current recession.
Schumer added, “This is a win-win-win: it is a win for businesses, a win for the economy, and a win for job creation.”