Here’s the plan: Hire a new employee, get a $5,000 tax credit. Hire another, the same applies. But don’t count on making bank; the offer tops out at $500,000 per firm.
At least, that’s what the president wants.
Obama unveiled his plan for extending a hiring tax credit to businesses Friday. The plan has a few major parts, according to the White House press office.
- Businesses will receive a $5,000 tax credit for every net new employee that they employ in 2010. The total amount of the credit for any one firm will be capped at $500,000, to ensure that the majority of the benefit is targeted at small businesses.
- Small businesses that increase wages or hours for their existing employees will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. This bonus would be based on Social Security payrolls, so it would not apply to wage increases above the current taxable maximum of $106,800.
- Firms will be able to claim the credit on a quarterly basis, which gets money out to businesses quickly and provides and early incentive to hire and increase payrolls.
A few other key points in the plan: Non profits would be eligible for the same credits, and start-ups could cash in on half of the benefit. Good luck trying to cash in without actually increasing your employee base; “gaming” is made pretty hard based on how the proposal is worded. Here’s a fact sheet from the White House with more info.
Business could also get tax credits for pay increases — enough to cover the Social Security taxes on those increases.
Know a small business you think we should write about? Contact Herald writer Amy Rolph at arolph@heraldnet.com.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
