Payroll Tax Break Helps Job Creation

In his State of the Union Address tonight, President Obama is expected to speak about incentives to stimulate job creation. The 10% unemployment rate is a big drag on the economy and everyone knows that small businesses do most of the hiring in the US. Numerous ideas have been discussed to encourage small businesses to hire but most are either not worthwhile for business owners or are too costly for tax payers. However, one great idea is a payroll tax break. Find out how you can benefit.

Job creation is a priority for everyone, especially those in Washington wanting to be re-elected, and the idea of a jobs tax credit has surfaced. A similar idea was tried unsuccessfully in the 1970s because it was very complicated and very difficult to enforce. Learning from these mistakes, others have justed a payroll tax break for all newly hired workers who have been unemployed for 60 days or more. This idea is great for many reasons:

• First, it is very easy to explain and there are no complicated auditing procedures. If you hire an unemployed worker then you do not have to pay the 6.2% payroll tax on their salary for the remainder of 2010
• Second, it gives small businesses cash right now instead of waiting until 2011 to get their tax refund or tax credit. The money you are saving on payroll tax is real money that can be spent elsewhere today
• Third, the payroll tax break does not cost tax payers as much as other plans. For instance, the New York Times has estimated that a reasonable case scenario would only cost $7.6B to get 3 million people back to work. That sounds much better than the $787B stimulus package, 100 times more expensive, that still has not saved that many jobs

The strength of the payroll tax break is in its simplicity and is something very easy for your payroll processing provider to handle.

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You can read the original NY Times article here.