The three top Democrats in the Senate—Harry Reid of Nevada, Richard Durbin of Illinois and Charles Schumer of New York—introduced legislation on Monday that provides a 10% tax credit for employers who increase their payrolls this year and extends a tax break that lets businesses write off 100% of capital investments.
Reid told reporters on a press call to announce the legislation that the two “bipartisan measures” included in the bill that are targeted at helping small businesses, “not large corporations,” should not cause a “fight” across the aisle.
The hiring tax break proposal would make companies eligible for a 10% income tax credit for the first $5 million of payroll expansion in 2012, either through hiring or wage increases.
The Democratc proposal extends the tax credit for investment costs through “bonus depreciation.” Senate Democrats propose extending 100% first-year depreciation for one year, effective for qualified property acquired and placed in service before January 1, 2013 (or January 1, 2014 for certain longer-lived and transportation property).
Schumer said on the call that the Senate hoped to pass the proposal “in the next few weeks” and that the senators “hope to work with the House” to get it passed. “As the economy is showing signs of turning a corner, Congress should be doing more to spur hiring,” Schumer said.
House Majority Leader Eric Cantor, R-Va., introduced on March 21 H.R. 9, the Small Business Tax Cut Act of 2012, that would allow small businesses with fewer than 500 employees to take a tax deduction equal to 20% of their active business income, irrespective of how the small business is organized.
Schumer argued on the call that the House Republicans’ proposal “is not focused on small business and is not focused on small business hiring.” The proposal gives a “20% across-the-board tax cut to larger businesses even if they don’t grow their workforce.”