Five constellations of policy issues are likely to dominate Washington’s 2011-2012 calendar: health care reform implementation, targeted jobs creation measures, tax policy, retirement security and immigration. Overshadowing all of these, of course, will be the compelling question of reducing the federal budget deficit and government debt as a percent of GDP.

Now, let’s examine the second constellation…

Targeted Jobs Creation

Jobs will continue to be the main focus of congressional and voter concern. Unlike most other measures that Congress approved, the HIRE Act employer tax holiday enjoyed bipartisan support in 2010. Meanwhile, unemployment remains stubbornly in the 10% range with upfront hiring costs a big obstacle, especially for smaller employers.

As of this writing it looks like President Obama and Congress have agreed on a partial payroll tax holiday for all employees. The overall agreement temporarily to extend Bush-era tax rate cuts includes a 2 percentage point reduction in the employee share of Social Security taxes—i.e., a cut for the year 2011 from 6.2% to 4.2%. The payroll tax cut would, for example, reduce the taxes of an individual earning $50,000 per year by $1,000. This would shoot a big hole in Social Security revenues for 2011, which would have to be made up by transfers of general revenue to the trust fund, but would give a short term boost to disposable income. Read more.

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Employer Compliance: Uncertainty Continues… Targeted Jobs Creation

Tue Dec 7, 2010

Five constellations of policy issues are likely to dominate Washington’s 2011-2012 calendar: health care reform implementation, targeted jobs creation measures, tax policy, retirement security and immigration. Overshadowing all of these, of course, will be the compelling question of reducing the federal budget deficit and government debt as a percent of GDP.

Now, let’s examine the second constellation…

Targeted Jobs Creation

Jobs will continue to be the main focus of congressional and voter concern. Unlike most other measures that Congress approved, the HIRE Act employer tax holiday enjoyed bipartisan support in 2010. Meanwhile, unemployment remains stubbornly in the 10% range with upfront hiring costs a big obstacle, especially for smaller employers.

As of this writing it looks like President Obama and Congress have agreed on a partial payroll tax holiday for all employees. The overall agreement temporarily to extend Bush-era tax rate cuts includes a 2 percentage point reduction in the employee share of Social Security taxes—i.e., a cut for the year 2011 from 6.2% to 4.2%. The payroll tax cut would, for example, reduce the taxes of an individual earning $50,000 per year by $1,000. This would shoot a big hole in Social Security revenues for 2011, which would have to be made up by transfers of general revenue to the trust fund, but would give a short term boost to disposable income.