Companies can get tax holiday

March 18, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Companies that hire unemployed workers will get a temporary payroll-tax holiday under a bill that easily won congressional approval Wednesday in what Democrats hope is just the first of several election-year measures aimed at boosting hiring.

The 68-29 bipartisan vote in the Senate sent the legislation to the White House, where President Barack Obama was expected to sign it into law today. Eleven Republicans voted for the legislation, an impressive tally considering the politically charged atmosphere on Capitol Hill.

It was the first of several jobs bills promised by Democrats, though there’s plenty of skepticism that the measure will do much to actually create jobs. Optimistic estimates predict the tax break could generate perhaps 250,000 jobs through the end of the year, but that would be just a tiny fraction of the 8.4 million jobs lost since the start of the recession.

The measure is part of a campaign by Democrats to show that they are addressing the nation’s unemployment problem, but that message was overshadowed by Congress’ feverish final push to pass health- care overhaul legislation by this weekend.

“It is the first of what I hope will be a series of jobs packages that help to continue to put people back to work,” Obama said after the vote.

The bill contains about $18 billion in tax breaks and a $20 billion infusion of cash into highway and transit programs. Among other things, it exempts businesses that hire people who have been unemployed for at least 60 days from paying the 6.2 percent Social Security payroll tax through December and gives employers an additional $1,000 credit if new workers stay on the job a full year. Taxpayers will have to reimburse Social Security for the lost revenue.

The bill also extends highway and mass-transit programs through the end of the year and pumps in $20 billion in time for the spring construction season. That money would make up for lower-than-expected gasoline tax revenues.

The bill is financed in part over the coming decade by cracking down on offshore tax havens, though it would add $13 billion to the debt in the coming three years.

“When are we going to stop spending money around here as if there’s no tomorrow?” said Sen. Judd Gregg, R-N.H. “Because pretty soon, there’s going to be no tomorrow for our children as we add this debt to their backs.”

In addition to the hiring tax incentives and highway funding, the bill extends a tax break for small businesses buying new equipment and modestly expands an initiative that helps state and local governments finance infrastructure projects.