President Obama released his jobs bill, known as the American Jobs Act, to Congress on Monday, with tax credits for new hires and an expansion of the payroll tax cut.
Obama had unveiled the basic outlines of the bill last Thursday evening during an address to a joint session of Congress (see Obama Calls for Tax Credits for Hiring in Jobs Bill). The document sent to Congress on Monday evening came with a section-by-section analysis of the legislation. The bill includes tax breaks for companies to hire unemployed workers and veterans, and for small businesses to raise wages. It also would provide an extension of the payroll tax cut and unemployment benefits, along with money to fund infrastructure and school construction projects.
“This bill cuts taxes for small businesses that hire new employees and for small businesses that raise salaries for current employees,” said Obama in a speech Monday. “It cuts your payroll tax in half. And all businesses can write off investments they make this year and next year. Instead of just talking about America’s job creators, let’s actually do something for America’s job creators. We can do that by passing this bill.”
The plan would expand the payroll tax cut passed last December in order to cut workers’ payroll taxes in half in 2012, providing a $1,500 tax cut to the typical American family. For businesses, the bill would cut in half the taxes paid by businesses on their first $5 million in payroll.
The bill would also completely eliminate payroll taxes for companies that increased their payrolls by either adding new workers or increasing the wages of their current workers. That benefit would be capped at the first $50 million in payroll increases.
In addition, the bill would extend 100 percent expensing into 2012 to encourage businesses to make further investments in plant and equipment.
The bill would also create a National Infrastructure Bank to modernize roads, railroads, waterways and airports. Another program would leverage private capital to rehabilitate homes, businesses and communities.
The bill would also extend unemployment insurance benefits for another year for 5 million Americans, as well as create a “Bridge to Work” program that encourages the unemployed to take temporary, voluntary work or pursue on-the-job training.
A $4,000 tax credit would be available to employers for hiring long-term unemployed workers. A “Returning Heroes” hiring tax credit of $5,600 to $9,600 also would be available to employers to encourage the hiring of unemployed veterans.
The tax breaks would be offset in part with increases on taxes on carried interest income from investment partnerships, treating it as ordinary income instead of capital gains. Other offsets would include a 28 percent limitation on certain deductions and exclusions for married taxpayers earning over $250,000 in adjusted gross income (or $200,000 for single taxpayers), and the repeal of tax subsidies for oil and gas companies, including the percentage depletion for oil and gas wells.
The bill would also close a tax loophole for corporate jet depreciation, treating general aviation aircraft as seven-year property. The bill would also modify the foreign tax credit rules applicable to dual-capacity taxpayers and increase taxes on foreign oil and gas income. In addition, the bill would increase the targets and triggers for the congressional "super committtee" that has begun meeting to decide on deficit reduction as part of the debt ceiling deal.
During his speech, Obama urged people to contact their representatives in Congress to demand they pass the bill. “I want you to pick up the phone,” he said. “I want you to send an email. Use one of those airplane skywriters. Dust off the fax machine. Or you can just, like, write a letter. So long as you get the message to Congress: Send me the American Jobs Act so I can sign it into law. Let’s get something done. Let’s put this country back to work.”
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