Last week President Obama unveiled The American Jobs Act, a multi-faceted plan to boost the nation’s employment. Here are the tax provisions included in the proposal:
Employer Payroll Tax Cut
For 2012, the American Jobs Act would cut the employer Social Security tax rate from 6.2% to 3.1% on wages up to $5 million. Additionally, any increase in wages from 2011 (up to a maximum of $50 million) would be completely exempt from Social Security taxes.
Employee Payroll Tax Cut
The employee Social Security tax rate, typically 6.2%, is currently 4.2%. The American Jobs Act would further reduce this percentage to 3.1% for 2012.
Bonus Expensing Extension
100% expensing of qualifying business equipment purchases is scheduled to expire at the end of 2011. The American Jobs Act would extend this provision until the end of 2012.
Targeted Employer Credits
$4,000 for hiring long-time unemployed workers
$5,600 for hiring long-time unemployed veterans
$9,600 for hiring long-time unemployed veterans with service-related disabilities
Additionally, the proposal includes non-tax provisions that include infrastructure modernization, wireless internet expansion, and unemployment insurance expansion. The Obama Administration estimates the price tag to be $447 billion. This will add to the $1.5 trillion in deficit reductions that the Congressional “super committee” is tasked with identifying. Obama’s stated intent is for this proposal to be paid by big business and high income individuals.