Tej Kohli Business blog keep tabs on the latest business and financial news in the U.S and the rest of the world. The Senate is likey to pass the $35 billion jobs bill today, here’s a report by Tej Kohli -
An employment promoting bill which is expected to pass the senate today will give new tax breaks to companies that hire the unemployed people.
First of the several job bills committed by the democrats, this bill would give a much-sought victory to president Barack Obama and majority leader Harry Reid, D-Nev. But according to the economists, the measure’s impact on hiring is likely to be relatively modest.
The bill under consideration will exempt the companies hiring the unemployed from 6.2 % social security payroll tax through December and would give them an extra $1000 credit if the hired worker continues working for an year. Besides this, the bill would also offer federal highway programs through the year end and will deposit $20 Billion cash into the highway trust to compensate for deficit from lower-than-expected tax revenues from gasoline.
It cleared a major hurdle on Monday when Scott Brown, the newest Republican of the Senate and four other Republicans broke party ranks to beat a filibuster. Reid has used strong-arm tactics in bringing the measure to the floor, says Republican leaders.
As compared to the $862 billion economic stimulus passed a year ago, Reid’s $35 billion proposal which includes $15 billion in tax cuts and subsidies for infrastructure bonds issued by local governments and $20 billion in highway money is a much smaller measure.
Many House Democrats think that the pending Senate measure is too puny as compared to the $174 billion jobs bill they passed in December, but still they will simply pass it in order to get the win.
According to a reputed economist the new hiring tax credit could generate around 250,000 new jobs.
Aside from the hiring tax incentives and highway funding, the bill would offer a tax break for small companies purchasing new equipment while modestly expanding an initiative that would help state and local governments finance infrastructure projects.
On Tuesday, Reid separately announced that he wants upcoming legislation to extent unemployment benefits and health insurance subsidies for the unemployed through December and aid cash strapped states with their Medicaid budgets. All these proposals taken together would cost around $100 billion.
Reid introduced the jobs bill after abruptly discarding the $70 billion worth of tax breaks for businesses and individuals, help for the jobless and extra medicare payments to doctors that had been brought earlier this month by Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, the chairman and ranking Republican on the Finance Committee.
It is expected that most of these ideas will make a comeback in the subsequent legislation.
Although lawmakers in both the parties are committed to focus on jobs-producing legislation, their choices are restrained by the cost considerations and rules that need new initiatives to ‘paid for’ so that they don’t inflate the deficit. However, the other measures like a passel of expired tax breaks for businesses and individuals are vying for the available money.
Courtesy : Associated Press
Tej Kohli is a notable business entrepreneur and philanthropist based in Costa Rica. In his free time Tej Kohli likes to write blogs and other informative content.