A new legislation has been passed by the Congress that will offer tax breaks to companies hiring the unemployed. $18 billion has been budgeted for this and other initiatives and it comes from the series of efforts to boost employment in the country.
The Congress passed the bill with a 68- 29 vote following which it has been sent to the president for his signature. President Obama thanked the 11 Republicans who voted in favor of the bill. The lawmakers are believed to be making extra efforts to please the voters ahead of the November elections.
While the Democrats, with the exception of Senator Ben Nelson of Nebraska, were all in favor of the bill, many Republicans voiced concerns about the heavy costs that the exchequer will have to bear if the bill comes into force.
The Republicans also said that payroll tax break to the tune of $13 billion payroll-tax holiday would prove costly to the government in the long run. Some other voiced concerns about the excessive bond subsidies. About 234,000 jobs are expected to be created by the provisions of the new bill.
Besides the benefits for the employers of unemployed people, the bill also makes provision for the extension of federal subsidies for municipal bonds, heightened spending on highways, and increased allowance for write offs of investments by small businesses. Economists however believe that the bill will alleviate unemployment issues only to a modest level.
The bill will bring in a year long exemption for employers from the 6.2% social security payroll tax for new recruits who have remained unemployed for 60 days. In addition to the Build America Bonds program, four other bonds will now qualify for subsidies. 100% interest cost subsidies will also make school construction bonds and qualified zone academy bonds attractive, while energy conservation bonds will attract a 70% subsidy.
In an earlier bill, the subsidy limit approved was 45% for the renewable energy bonds. The highway fund will also benefit from the bill as $20 billion from tax revenues would be transferred to the fund.
Another bill proposing extension of benefits for the unemployed is also up for approval in the House. This bill was introduced by a Michigan Democrat, Sander Levin, and aims to cover unemployed Americans who will be left unprotected at the end of the year. Levin is also the moving force behind a $17 billion measure extending the Build America Bonds program, created as part of the last year’s stimulus package.