Create a $3,000 tax credit for companies that add jobs

Jobs tax credit promise gets new rating

Updated: Thursday, February 4th, 2010 | By Angie Drobnic Holan

With his first year in office under his belt and unemployment still high, President Barack Obama called for additional help for the economy through a tax credit for businesses that add jobs.

This was actually an idea from the 2008 campaign that didn't make it into the economic stimulus bill that Congress approved in February 2009. After the stimulus passed without it, we rated it Promise Broken.

But Obama has dusted off the idea and is promoting it again. The White House has released a detailed proposal on how it should work, with mechanisms in place make sure the tax breaks go to new jobs, and especially jobs created by small business. So that the deficit doesn't go up, the federal government would tap unused money for bank bailouts to pay for the tax credit, according to the White House.

The tax credit would be $5,000 for every new worker employed in 2010. It would be capped at $500,000 per firm.

Obama has been promoting this tax credit since first announcing it during his State of the Union speech on Jan. 27, 2010. Congress, meanwhile, is actively working on a jobs bill, and it seems likely this proposal or something like it could end up in a final bill.

Because of these new developments, the Obameter has sprung to life and moved from Promise Broken back to In the Works.

Sources:The White House, Factsheet: Small Business Jobs and Wages Tax Cut, Jan. 29, 2010

Congressional Budget Office, Policies for Increasing Economic Growth and Employment in 2010 and 2011, January 2010

The New York Times, Senate Jobs Bill to Include Tax Credit, Feb. 2, 2010

The White House Web site, Remarks by the President in Town Hall Meeting in Nashua, New Hampshire, Feb. 2, 2010

$3,000 tax credit not in stimulus bill, no future action seen

Updated: Tuesday, February 17th, 2009 | By Angie Drobnic Holan

President Obama first proposed a $3,000 tax credit for businesses that add to their payroll when he was campaigning for president and the U.S. economy had taken a serious nosedive. After winning the election and taking office, he began working on a stimulus bill with Congress. But this idea soon stalled and appears to be dead.

It never got any significant support in Congress, even from Democrats. Lawmakers said they were concerned the credit wasn't enough of an incentive to get companies to hire additional workers. Tax policy analysts said the credit would be an administrative nightmare to implement. Companies might eliminate a job and then create it again later in hopes of getting the tax credit.

Sen. Charles Schumer, D-N.Y., said at a news conference on Jan. 14, 2009, that both Democrats and Republicans had problems with the measure. 

"If you have a company and you're selling fewer shingles, $3,000 isn't going to get you to hire somebody when your sales are shrinking," Schumer said.

The credit was never part of the stimulus legislation as far as we saw, and it was not included in the American Recovery and Reinvestment Act of 2009, which Obama signed into law on Feb. 17, 2009. Likewise, we see no indication that this idea might re-emerge. So for now, we rate it Promise Broken.

Sources: Thomas, The American Recovery and Reinvestment Act of 2009 , accessed Feb. 17, 2009 The Tax Policy Center, Obama's $300 Billion Tax Cut: Lots of Buck, Not Much Bang, Jan. 5, 2009

Congress balks at $3,000 tax credit per worker

Updated: Sunday, January 18th, 2009 | By Angie Drobnic Holan

During the final stages of the campaign, Barack Obama proposed a number of economic measures intended to jump-start a sputtering economy. Among those was a tax credit for businesses to hire new workers; Obama proposed a $3,000 credit for every worker hired.

"We've already lost three-quarters of a million jobs this year, and some experts say that unemployment may rise to 8 percent by the end of next year," Obama said at a rally in Toledo, Ohio, on Oct. 13, 2008. "We can't wait until then to start creating new jobs. That's why I'm proposing to give our businesses a new American jobs tax credit for each new employee they hire here in the United States over the next two years."

But Congress didn't like the idea when it came time to write a stimulus bill in January 2009.

"If you have a company and you're selling fewer shingles, $3,000 isn't going to get you to hire somebody when your sales are shrinking," said Sen. Charles Schumer, D-N.Y., at a news conference on Jan. 14, 2009.

"So the basic view was, we need to do things to stimulate jobs on the tax cut side and on the business side, but that probably is not the best way to go. You don't get the most bang for the buck," he said, adding that the opposition was in the House and the Senate from both Democrats and Republicans.

When the House Appropriations Committee released its plans for the stimulus bill a few days later on Jan. 16, the measure was not included. So we rate this promise Stalled. (If nothing changes before passage of the final bill, we expect we'll be moving this to Promise Broken.)

Sources:Barack Obama campaign Web site, " A Rescue Plan for the Middle Class ," speech, Oct. 13, 2008 Federal News Service, Press conference with Sen. Charles Schumer and others, Jan. 14, 2009, accessed via Nexis U.S. House of Representatives, Committee on Ways and Means, " The American Economic Recovery and Reinvestment Plan ,"  Jan. 16, 2009, accessed Jan. 18, 2009