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The House Ways and Means Committee will tackle the second phase of an economic recovery plan today by focusing on a jobs tax credit for employers who expand their work force, according to Rep. Sander Levin.
A high-ranking Democrat on the committee, Levin said no details have been hammered out, but a tax credit to reward hiring, plus more federal funding for roads and bridges will be the hot topics discussed by the panel. Those two economic recovery proposals will also be at the top of the agenda at President Barack Obama's December "Jobs Summit," he said.
"Those are the two biggest nuts to crack," Levin said in an interview with Macomb Daily editors and a reporter. "Rather than having a second, overall stimulus program, we'll have a pinpointed effort."
Any legislation is not likely to promise a dollar amount per worker hired — the approach proposed by candidate Obama last year — but instead may be based on a percentage expansion of a firm's payroll.
While Levin concedes that congressional Democrats haven't come up with a means to pay for the new, two-pronged program, he continues to defend the president's ongoing $787 billion stimulus plan as an effective investment.
About one-third of the stimulus money is financing income tax cuts and tax breaks, such as the homebuyer's tax credit that has been expanded, he said. Another third is paying for direct payments, such as extended unemployment benefits and food stamps.
The final third, Levin said, will eventually fund $275 billion in projects and programs designed to prop up the economy. Only about half of that amount has been authorized thus far, with much of it going to schools and other government agencies to prevent layoffs and cutbacks.
The congressman points to an economic estimate by Mark Zandi of Moody's Economy.com that said the recession would have caused another 1 million job losses without the stimulus package.
Democratic defenses of the stimulus plan come amidst a growing number of news reports across the nation questioning the amount of jobs created or saved by the infusion of federal money. According to a state agency keeping tabs on stimulus money in Michigan, the program has created just 115 jobs in Macomb County.
Levin said those are partial figures that don't reflect the overall "bang for the buck" from $321 million flowing into the Macomb economy.
"I'll be the first to insist that we have to do much more about the jobs issue," said Levin, a Royal Oak Democrat who represents most of Macomb County. "The ... job losses have been going down, but we need to do much more."
The proposed jobs tax credit could take the form of a plan put forward by Sen. Russ Feingold, D-Wisconsin, which would establish a tax credit over the next two years for businesses that hire new employees, expand work hours for current workers, or raise pay.
Those companies that meet the threshold would receive a credit equal to 15 percent of eligible payroll for 2010 and 10 percent in 2011. The legislation would reportedly exclude pay increases for very highly salaried workers, as well as the wages of firm owners or family members.
In 2008, Obama campaigned for a $3,000-per-worker tax credit to boost new hiring, but that plan was quickly shot down by Congress last February. Critics on Capitol Hill said $3,000 wasn't enough to stimulate hiring and the proposal was vulnerable to manipulation by employers.
The Feingold credit would be calculated on a year-on-year comparison to avoid being triggered by seasonal employment spikes. It would also include safeguards against having firms lay off workers now and trigger the credit by hiring them back in 2010.
Now that the sputtering economy has produced a 10.2 percent jobless rate, the highest since 1983, employment has moved front and center in Washington, as evidenced by the Jobs Summit scheduled at the White House.
The meeting among CEOs, small business owners, economists and labor officials is designed to close the gap between economic growth and a lack of jobs.
At the same time, Obama is pushing for congressional approval of a health care reform bill, even as fellow Democrats in the House and Senate remain divided over the issue.
Levin's Macomb County counterpart, Rep. Candice Miller, a Harrison Township Republican, has become a high-profile opponent of the House reform bill. Miller warns that the legislation contains "job-killing" tax increases that would hit small business owners.
The tax provision Miller opposes would finance nearly half of the 10-year, $1 trillion cost of the bill by imposing a surcharge on wealthy taxpayers. That new tax would range from 1 percent for families with incomes exceeding $350,000 to 5.4 percent for families earning more than $1 million. The tax would be levied on the amount of income above the threshold. For example, the surcharge for a household with a $1.1 million annual income would be $5,400, or 5.4 percent of the amount earned above $1 million.
The nonpartisan congressional Joint Committee on Taxation's research has concluded that only 1 percent of small business owners would pay the surcharge. Most of those are in the $3 million income category.
"'Job killing'? You can throw these terms around," Levin said, "but it's not true."
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