Senate Democratic Leaders: (L-R) Senators Dick Durbin, Harry Reid, and Chuck Schumer. / Image: DonkeyHotey/Flickr
On Tuesday, Democrats in the Senate introduced a new bill, the Small Business Jobs and Tax Relief Act, which could generate almost a million jobs nationwide, with over 630 thousand jobs for small businesses alone, through tax credits for those small businesses designed to help them expand their payrolls or increase salaries for existing employees, and in a report from Regional Economic Models, Inc. (REMI), a private economic forecasting firm, they estimate the bill would add $87 billion to the GDP and increase personal incomes by $73 billion. The bill is estimated to cost $28 billion.
The bill would give small businesses a 10% tax break for hiring new employees or raising the wages of their current employees, and caps the benefit at $500,000, which would specifically target small business employers. It also extends the 100% depreciation deduction, which allows business owners to write off large purchases, such as equipment, in their entirety for the tax year in which they were purchased, rather than having to depreciate those purchases over several years. So, say Suzi Q goes out and buys $50,000 worth of kitchen equipment for her café, instead of having to write that off over a depreciation period of ten years, she can write off the entire $50,000 for credit on her taxes for 2012.
Not bad, huh?
Jobs created by industry/sector. (click to enlarge in new window)
And on the jobs front, the report from REMI shows that nearly one million jobs would be created by this bill in sectors and professions across the board. These are their projections for just a few sectors:
- Construction: 93,231
- Manufacturing: 60,620
- Wholesale Trade: 39,151
- Retail Trade: 111,428
- Finance and Insurance: 69,685
- Real Estate and Rental and Leasing: 36,593
- Professional and Technical Services: 69,421
- Administrative and Waste Services: 63,781
- Health Care and Social Assistance: 115,641
- Accommodation and Food Services: 57,489
This is a no-brainer, for heaven’s sake, as Sen. Chuck Schumer (D-N.Y.) pointed out:
“Creating close to one million jobs would put a meaningful dent in the unemployment problem. This tax cut is not a cure-all, but it could be a difference-maker for small firms on the fence about adding payroll. After last month’s sluggish jobs numbers, we may be on the verge of a rare moment of agreement on how to help the economy.”
It’s not perfect, obviously, but at least it’s something, which is more than can be said for Republican efforts – of which there have been none.
Of course, now we’re all waiting to hear what the Republican excuse will be for blocking the bill…
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About Beth
These are some of the reasons that I think the Republicans will use not to vote for this bill: 1) REMI was giving an “estimated economic impact” they will say that you can not be sure. 2) The bill will cost $28 billion and they will ask how to pay for it. 3) The report from REMI listed in Provision 1 that the tax credit for Increased Payroll is “temporary” which means a one time thing. They will say that it will be too risky for employers to increase payroll because if the economy dips again they would have to lay off employees. 4) The cap is set for $500,000. This would include a portion of the wage earners that Pres Obama wants to increase taxes on and that would curb their benefits from the Small Business Jobs and Tax Relief Act. Now I may be wrong about the Republicans saying this but I just about guarantee they would want to insert something.
I wouldn’t doubt that your first three arguments could be used by the GOP in trying to strike the bill, but the one item that you’re wrong on is item #4. The $500K cap is not about income, it is a payroll expense line item. What they’re saying is, we’ll give you a 10% tax break on your employer payroll taxes, because you’ve increased your payroll up to $500K, which includes all employees. The $500K figure is not an individual income line item.
Once again the focus is on using taxpayer money, either through taxation or debt, to prop up the economy without broadening private, individual ownership in future economic growth. This measure continues to put the political focus on job creation and redistribution of wealth rather than on full production and broader capital ownership accumulation. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. It is another redistribution measure that does not address the core problem: the opportunity to produce needs to be adjusted, not the redistribution of income after it is produced.
See my post “There Will Never Be Enough Jobs In America Again” (http://foreconomicjustice.org/3558/there-will-never-be-enough-jobs-in-america-again/)
For continued reading please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary
I like the bill and agree it is a step in the right direction but the bill is dated from March of this year. Why are they only now bringing it to the floor? Did they do it before and the GOP blocked it or has it taken this long to get there?