Obama signs Jobs bill

On Thursday afternoon, President Barack Obama signed the $17.6 billion jobs stimulus bill passed by the Senate the day before. Officially known as the Hiring Incentives to Restore Employment (HIRE) Act, the bill is meant to encourage private sector hiring, in part, through a series of tax incentives.

"This tax cut will be particularly helpful to small business owners, many of them are on the fence right now about whether to bring in that extra worker or two, or whether they should hire anyone at all," the president said at a White House press conference. "And this jobs bill should help make their decision that much easier." The president also stated, "I'm signing it, mindful that, as I've said before, the solution to our economic problems will not come from government alone."

Since the recession began, the U.S. Department of Labor estimates that employers have shed 8.4 million jobs. Though the job loss rate has slowed in recent months, creating jobs still remains a puzzle for lawmakers, who foresee this bill as a first step in dealing with the nation's 9.7% unemployment rate.

The HIRE Act has three key provisions designed to encourage employers to begin hiring again. They are:

Payroll Tax Exemption
This provision implements tax cuts and a new tax credit to reward a business that aggressively hires new employees. Businesses are granted an exemption from the Social Security payroll taxes they owe for every worker hired in 2010 that has been unemployed for at least 60 days.

A qualifying individual is an employee who:
1. Begins employment after February 3, 2010, and before January 1, 2011.
2. Certifies that they have not been employed for more than 40 hours during the 60-day period ending on their hire date.
3. Is not hired to replace another employee, unless the other employee separated voluntarily, or was terminated for cause.
4. Is not related to the employer.

Tax credit for retaining new hires
Additionally, under the provisions of the Hire Act, the longer a business keeps a new qualified worker on its payroll, the greater the tax benefit. In fact, any business that hires and keeps a new worker on their payroll for 52 weeks under this program will be eligible for a tax credit of $1,000 or 6.2% of the wages paid to the worker during the 52 consecutive weeks of employment, whichever is the lesser of the two.

Internal Revenue Code (I.R.C.) Section 179 expensing
The HIRE Act provisions also extend tax cuts for small businesses, allowing them to continue to make the investments they need to grow their businesses and hire more workers. Under this provision, a small business can write off up to $250,000 of certain capital expenditures in 2010, rather than depreciating those costs over time. This will allow businesses to free up capital and invest in growth opportunities now.

These market-based programs are intended to give businesses a real incentive to hire people now. With the impending vote on Capitol Hill on the health care reform bill and the impacts it is liable to have on businesses of all sizes, only time will tell whether these tax incentives will be enough to stimulate hiring.

The final version of the Hiring Incentives to Restore Employment (HIRE) Act that President Obama signed can be read in its entirety on the Government Printing Office (GPO) website.