From – www.accountingtoday.com
President Obama addressed a joint session of Congress on Thursday evening to present a jobs bill containing an expansion of the payroll tax cut, tax breaks for new hires and salary raises, and other tax reform measures.
The $447 billion bill, known as the American Jobs Act, contains provisions for creating new jobs to build and repair infrastructure such as highway and roads, along with school construction and an extension of unemployment benefits. In addition, Obama outlined a series of measures, including tax breaks to encourage companies to hire the long-term unemployed, along with veterans. He also called for an extension of the payroll tax cut for employees and an expansion of the tax cut to small business employers. Obama repeatedly emphasized that the bill contained many tax proposals that had originated with Republicans.
“It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business,” he said.
Obama is battling persistent unemployment that his administration has admitted is likely to remain above 9 percent through next year. He called on lawmakers to put aside partisan politics and work to fix the economy before the next election.
“You should pass this jobs plan right away,” he repeatedly urged. “Everyone here knows that small businesses are where most new jobs begin. And you know that while corporate profits have come roaring back, smaller companies haven’t. So for everyone who speaks so passionately about making life easier for ‘job creators,’ this plan is for you. Pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or if they raise workers’ wages. Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year. If you have 50 employees making an average salary, that’s an $80,000 tax cut. And all businesses will be able to continue writing off the investments they make in 2012. It’s not just Democrats who have supported this kind of proposal. Fifty House Republicans have proposed the same payroll tax cut that’s in this plan. You should pass it right away.”
Obama said the bill would provide funds to repair decaying roads and bridges across the country, and repair and modernize at least 35,000 schools. He promised to cut the red tape that has prevented some of the projects from getting started in the past. He also pledged to set up an independent fund to attract funds from the private sector and issue loans based on how badly a construction project is needed and how much good it would do for the economy.
Funds would also be used to prevent teacher layoffs and rehire teachers who had lost their jobs due to budget cuts, and provide summer jobs to disadvantaged young people.
Obama also said the bill would provide tax credits to hire veterans. “We ask these men and women to leave their careers, leave their families, risk their lives to fight for our country,” he said, drawing applause from both sides of the aisle. “The last thing they should have to do is fight for a job when they come home.”
The bill would also provide companies with a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job. “We have to do more to help the long-term unemployed in their search for work,” said Obama. “This jobs plan builds on a program in Georgia that several Republican leaders have highlighted, where people who collect unemployment insurance participate in temporary work as a way to build their skills while they look for a permanent job.”
The plan would also extend unemployment insurance for another year. “If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy,” said Obama. “Democrats and Republicans in this chamber have supported unemployment insurance plenty of times in the past. And in this time of prolonged hardship, you should pass it again—right away.”
Obama also called for extending the payroll tax cut in last December’s tax legislation, which reduced Social Security taxes from 6.2 percent to 4.2 percent this year. In urging the extension, Obama referred to the pledge not to raise taxes that many Republican lawmakers signed at the behest of Grover Norquist’s group, Americans for Tax Reform. However, the 6.2 percent rate would be cut to 3.1 percent under the new bill, according to Vice President Joe Biden in an interview Friday on the Today Show.
“Pass this jobs bill, and the typical working family will get a $1,500 tax cut next year,” said Obama. “Fifteen hundred dollars that would have been taken out of your pocket will go into your pocket. This expands on the tax cut that Democrats and Republicans already passed for this year. If we allow that tax cut to expire—if we refuse to act—middle-class families will get hit with a tax increase at the worst possible time. We can’t let that happen. I know that some of you have sworn oaths to never raise any taxes on anyone for as long as you live. Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away.”
Obama said the cost of the bill would be paid for with a new, more ambitious deficit reduction plan he plans to release a week from Monday. In addition to spending cuts, the deficit reduction plan would make what he called “modest adjustments” to Medicare and Medicaid, and reform the Tax Code to encourage “the wealthiest Americans and biggest corporations to pay their fair share.”
“I’m also well aware that there are many Republicans who don’t believe we should raise taxes on those who are most fortunate and can best afford it,” said Obama. “But here is what every American knows: While most people in this country struggle to make ends meet, a few of the most affluent citizens and most profitable corporations enjoy tax breaks and loopholes that nobody else gets. Right now, Warren Buffett pays a lower tax rate than his secretary—an outrage he has asked us to fix. We need a tax code where everyone gets a fair shake and where everybody pays their fair share. And by the way, I believe the vast majority of wealthy Americans and CEOs are willing to do just that if it helps the economy grow and gets our fiscal house in order.”
Obama also said he would work on corporate tax reform as well, calling the corporate tax code “a monument to special interest influence in Washington.”
“By eliminating pages of loopholes and deductions, we can lower one of the highest corporate tax rates in the world,” he added. “Our tax code should not give an advantage to companies that can afford the best-connected lobbyists. It should give an advantage to companies that invest and create jobs right here in the United States of America.”
Obama contrasted tax breaks for large oil companies with those for small businesses.
“Should we keep tax loopholes for oil companies?” he asked. “Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? Right now, we can’t afford to do both. This isn’t political grandstanding. This isn’t class warfare. This is simple math. These are real choices that we’ve got to make. And I’m pretty sure I know what most Americans would choose. It’s not even close. And it’s time for us to do what’s right for our future.”
In response to the speech, House Speaker John Boehner, R-Ohio, indicated that he was ready to work on a jobs package with Obama, but he also asked for consideration of the Republican alternative.
“American families and small businesses are hurting, and they are looking for the White House and Congress to seek common ground and work together to help get our economy back on track,” Boehner said in a statement. “Republicans have laid out a blueprint for economic growth and job creation—our Plan for America’s Job Creators—that focuses on one thing: removing government barriers to private-sector job growth. The proposals the President outlined tonight merit consideration. We hope he gives serious consideration to our ideas as well. It’s my hope that we can work together to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth and private-sector job creation.”
Ahead of the jobs speech, Senate Minority Leader Mitch McConnell, R-Ken., struck a more confrontational tone in remarks on the Senate floor Thursday. “This isn’t a jobs plan,” he said. “It’s a re-election plan. That’s why Republicans will continue to press for policies that empower job creators, not Washington.” For details, visit Obama Calls for Tax Credits for Hiring in Jobs Bill on the Accounting Today website, www.accountingtoday.com.