WASHINGTON, DC - U.S. Senators Bob Casey (D-PA) and Kirsten Gillibrand (D-NY) today introduced legislation to create jobs and spur economic growth. The Small Business Job Creation Tax Credit Act would encourage businesses to add jobs and to reverse cuts in salaries and worker hours.
“We have taken important strides toward an economic recovery, but far too many Americans remain unemployed or underemployed,” said Senator Casey. “This legislation would help businesses hire workers, the most effective way to quicken the recovery and return prosperity to our communities that have suffered through the recession.”
“The best way to cut the deficit is to put people back to work,” Senator Gillibrand said. “We can’t afford tax breaks for the wealthiest few Americans who are doing just fine in this tough economy. We need to put the middle class first with smart tax policy that can actually benefit this country – by creating jobs and putting Americans back to work.”
The legislation creates a one-year, quarterly payroll tax credit for small businesses that is equal to 20 percent of the total increase in employee wages, either from new employment or an increase in payroll.
Because a firm’s benefit is based on its increased payroll, businesses will have an incentive not only to hire new workers, but also to increase the hours of workers whose hours were cut or who were asked to take reduced pay as their company navigated difficult economic times.
Studies conducted by the nonpartisan Congressional Budget Office and the Economic Policy Institute confirm that among all payroll tax proposals, a tax credit linked to an overall increase in payroll offers the greatest economic impact and will create the most jobs for our nation’s economy.