Senate Jobs Bill: Tax Incentives to Hire Unemployed, but no COBRA Subsidy Extension
Yesterday the U.S. Senate voted 70-28 to approve the Hiring Incentives to Restore Employment (HIRE) Act, a $15 billion bill aimed at creating jobs, helping small businesses, and rebuilding public infrastructure. However, the bill does not include a further extension of the current COBRA subsides for unemployed workers, nor does it increase funding for state unemployment insurance programs. Click here to read the New York Times' coverage of the HIRE Act's passage. Click here to read the full text of the HIRE Act.
The key features of the HIRE Act include:
- An exemption from Social Security payroll taxes for private employers for each worker hired in 2010 who previously had been unemployed for at least 60 days;
- A $1,000 income tax credit for private employers for each new employee hired in 2010 and retained for at least 52 weeks and claimed on the employer's 2011 income tax return;
- An extension of the small business “expensing” tax break for one year, allowing small businesses to continue writing off up to $250,000 of certain capital expenditures instead of depreciating them over time;
- A $2 billion Build America Bonds program, which would provide an optional direct subsidy payment in lieu of a tax credit for tax credit bonds issued for certain school and energy projects; and
- Expanded federal aid for highway programs.
The HIRE Act now goes to the House of Representatives. Although some House Democrats have grumbled that the bill does not do enough, it is still expected to quickly pass and become law.
While the HIRE Act does not extend the COBRA subsidy or unemployment insurance, extensions of those programs are not off the table. Both of those programs are set to expire on February 28, but yesterday Senate Majority Leader Harry Reid proposed language that would extend the unemployment benefits program to April 5, 2010 and COBRA benefits to March 28, 2010. Click here to read the text of Senator Reid's proposed COBRA extension. We expect to see quick debate on Senator Reid's proposal, either as an amendment to an existing bill or a stand-alone bill, so stay tuned to the World of Work Blog to see if it passes.
New Bicycle Tax Credit Takes Effect in 2009
Here's another new employment law that goes into effect on January 1, 2009: the Bicycle Tax Credit (BTC). Passed as part of that $700 billion bailout plan we've all heard so much about, the BTC allows employers to reimburse employees up to $20 per month for bicycle-commuting related expenses; the employer can then claim a tax deduction for the reimbursements. Click here for an informative article on the tax credit from the San Francisco Chronicle. (Even though he eventually voted against the bailout bill that contained the BTC, the tax credit is the brainchild of Oregon Congressman Earl Blumenauer, a long-time bicycle advocate who just happens to be this author's congressman.)
If you are interested in starting a bike commuting reimbursement program at your workplace, you might want to consult a tax lawyer to make sure you follow all legal requirements. Want more information on bike commuting? Here's our favorite bike blog, bikeportland.org.
