The Economic Policy Institute has proposed a tax credit to businesses that the authors estimate would create 2.8 million new jobs in 2010 and an additional 2.3 million in 2011. Here is how it would work:
- The tax credit would equal 15% of additions to taxable payroll in 2010 and 10% in 2011.
- The tax credit would target businesses, non-profits, and even governments that add to payroll over the next two years;
- It would target a wide range of jobs across economic sectors and across all kinds of firms, regardless of size or current profitability;
- The credit would be based on the portion of wages subject to Social Security payroll taxes ($106,800 in 2009) and would not credit very high wage earners, including CEOs; and
- The credit would be temporary, only to be used when the labor market is weakest.
- Any firm receiving the credit would need to be in a trade or business. This requirement means that families who directly employ nannies, tutors, housekeepers, and gardeners would not be eligible, but companies that provide landscaping, cooking, child care, and home health services would be
- The credit could be implemented quickly since almost all U.S. employers currently file Form 941 to report their liabilities for Social Security and Medicare taxes and income taxes withheld for their employees. Adding a few lines to the form would allow a wage credit to be implemented relatively simply and quickly.
For more on this good idea, see:http://www.epi.org/publications/entry/bp248/