President Obama held a press conference today to continue his fight for Congress to pass the American Jobs Act. He explained what needs to happen to boost economic growth in the United States. One of the key proposals are tax cuts for small businesses. The president’s plan includes new tax cuts to businesses that provide immediate incentives for firms to hire and invest. These tax cuts would be available to all businesses, regardless of size, but are designed to target their impact towards the smallest businesses.
- A payroll tax cut to businesses, with a focus on small employers ($65 billion in combination with the payroll tax holiday for new wages)
- A complete payroll tax holiday for new jobs or wage increases
- Extend 100 percent business expensing through 2012 ($5 billion)
- Help entrepreneurs and small businesses access capital and grow
A payroll tax cut to businesses, with a focus on small employers ($65 billion in combination with the payroll tax holiday for new wages)
The president’s plan will extend the payroll tax cut to firms by cutting in half their payroll tax on the first $5 million in payroll. Next year, instead of paying 6.2 percent on their payroll expenses, firms would pay only 3.1 percent. The president’s plan would provide tax cuts for all firms, with focused relief on the 98 percent with less than $5 million in payroll.
How It Would Work for a Typical Firm: A construction firm with 50 workers earning an average of $50,000 a year–for a total payroll of $2.5 million–would receive a payroll tax cut of 3.1 percent of its total payroll, or about $80,000. The firm’s workers would receive an average tax cut of about $1,500 a year from the employee side payroll tax cut in the president’s plan.