The House and Senate have separately passed various versions of the jobs bill with tax breaks for businesses, but they keep going back and forth adding provisions not found in the other chambers version.
The House passed the $75 billion Jobs for Main Street Act last December (see House Approves Jobs Bill). But that was essentially a non-starter in the Senate, which first proposed an $85 billion that combined job creation measures with a set of tax breaks for businesses that hired and retained workers, along with the extension of a large number of business tax breaks that expired last year. Senate Majority Leader Harry Reid, D-Nev., quickly scaled down the bill to $15 billion and split off the tax extenders part from the job creation part. The Senate managed to pass the $15 billion jobs bill in late February (see Senate Passes Job Creation Bill).
That put the ball back in the Houses court, and it managed to pass a version of the Senate bill, the Hiring Incentives to Restore Employment (HIRE) Act, last Thursday by a 217-201 margin. However, the House added several amendments to help make sure the bill was fully paid for, largely by cracking down on offshore tax havens, and to allow more small businesses to take advantage of the payroll tax exemption.
The bill provides businesses with an exemption from Social Security payroll taxes for every worker hired in 2010 who has been unemployed for at least 60 days, according to the House Ways and Means Committee. (The maximum value of this incentive is $6,621, which equals to 6.2 percent of wages paid in 2010 up to the FICA wage cap of $106,800.) The longer that a business has a new qualified worker on its payroll, the greater the tax benefit. The House amendments incorporate an IRS fix to make sure that small businesses can take advantage of the payroll tax holiday.
Like the Senate bill, the House bill provides an additional $1,000 income tax credit for every new employee retained for 52 weeks. Also like the Senate bill, the House bill extends Recovery Act provisions that double the amount small businesses can immediately write off their taxes for capital investments and purchases of new equipment made in 2010 from $125,000 to $250,000.
The House bill, however, increases the Build America Bond subsidy for states, and continues requirements ensuring that a portion of the highway and transit funding goes to minority-owned businesses. The House bill also makes technical corrections to improve the effectiveness and "administrability" of incentives for hiring and retaining new employees, and extends these benefits to businesses in U.S. territories and possessions. It also restores the full value of the direct payment option for certain tax credit bond programs; and delays the effective date of the worldwide allocation of interest provision for an additional year (through 2020) to ensure that the cost of the bill is fully offset.
However, with all the amendments, the bill must now go back again to the Senate for passage. The Senate managed to pass an extension in unemployment benefits and a COBRA subsidy last week after convincing Sen. Jim Bunning, R-Ken., to drop his opposition, but the measures have only been extended for a month. The Senate and the House will need to work together more closely to pass the various moving parts of the bills, including the tax extenders, in the weeks ahead. But as the health care reform debate rages on, and threatens to take a turn toward further partisan wrangling over a reconciliation maneuver that would be needed to pass the health legislation, the prospects for bipartisan cooperation on the jobs bill could be in trouble.