Seeking to address the 10 percent national unemployment rate, Senators Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah, wrote an op-ed piece for the New York Times Monday in which they called for a Social Security tax break for employers in orders to boost job creation.
The Senators said that, under their plan, "any private-sector employer that hires a worker who had been unemployed for at least 60 days will not have to pay its 6.2% Social Security payroll tax on that employee for the duration of 2010."
"The Social Security trust fund will then be made whole with spending cuts elsewhere in the budget between now and 2015," they added.
According to the lawmakers, unlike a jobs tax credit of a specific dollar amount, "this credit is 'front-loaded' in that it provides an incentive for businesses to hire workers earlier in the year — because the tax benefit will be greater."
For example, a $60,000 worker hired on February 1 will save a business about $3,400 in taxes, while that same worker hired on May 1 will save it about $2,500.
"Unlike some versions of a payroll-tax holiday, which provide a much bigger benefit for higher-paid workers," the senators continued, "this proposal is not biased toward either low-wage or high-wage workers."
They said that, under the plan, "if you pay people more, you save more in taxes — but the savings as a percentage of pay remains constant. Under this plan, a business saves 6.2 percent on both a $40,000 worker and a $90,000 worker."
In an effort to promote long-term employment, the plan would include a provision that 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.
The lawmakers noted that some additional rules would have to be put into place, such as eligible workers having to have been hired for at least 30 hours per week. In addition, workers who are family members of the employer would not be eligible.
Schumer and Hatch closed their piece by urging President Barack Obama to "consider this idea to help jumpstart hiring and turn our focus back on jobs."
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