President Barack Obama will call for tax credit for businesses who hire new workers or increase wages Friday, starting his push to enact the job creation measures featured in his State of the Union address.
Firms hiring a net number of new workers or increasing their payroll through raising worker pay will be able to offset as much as $500,000 in payroll taxes, a senior administration official said. The proposal will cost $33 billion, which the administration said it would seek to have the cost offset by bailout money paid back by banks to the Treasury.
Obama in his State of the Union speech Wednesday called on the Senate to pass a jobs bill "without delay." The House passed a $154 billion bill last month with infrastructure spending, fiscal aid to state and local governments and extensions of unemployment and COBRA benefits.
The president said Wednesday that he also supports infrastructure projects, increased small business loans, ending the capital gains tax for small firms and tax incentives to get small businesses to invest.
Under the jobs tax credit Obama will propose Friday, firms will get a $5,000 tax credit to offset payroll taxes for each new worker they hire, the administration official said. Firms that increase total payroll by through new hires, raises for current employees or increasing employee hours will get tax credits to offset the cost of new taxes due to that payroll increase, the official said.
"It's an idea that will cut taxes from more than 1 million in small businesses, [and] not just create jobs, but raise wages, extend work hours," the official said.
Sens. Orrin Hatch (R-Utah) and Chuck Schumer (D-N.Y.) are working together on a similar proposal, as are Sens. Russ Feingold (D-Wis.) and Bob Casey (D-Pa.).
With Democrats set to lose their Senate supermajority once Scott Brown (Mass.) is sworn in as the 41st Republican senator, bipartisanship will be needed to advance much of Obama's jobs agenda.
Hatch told The Hill that he's "very interested" in hearing about Obama's version of the tax credit, which he expects to be very similar to his and Schumer's. One difference is that Hatch wants to pay for it from funds yet to be spent in the $787 billion stimulus instead of using returned bailout money.
Hatch said he doesn't want to see the credit as part of a bill "loaded up with a bunch of stuff that doesn't work."