President Obama on Thursday night will call for cutting in half the tax on the first $5 million in payrolls for American businesses, according to talking points being circulated among policy experts and provided to The Washington Post by people outside the administration. The administration says the move would help the 98 percent of U.S. businesses that have payrolls below that threshold.
The president will also propose cutting payroll taxes in half for workers next year, expanding and extending the temporary two-percentage-point cut in the Social Security tax passed last year. The administration is telling policy experts that this will provide a $1,500 tax cut to the typical family.
President Obama addressed a joint session of Congress on Thursday to unveil his jobs plan. (Sept. 8)
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The administration will also move to allow more households to refinance their mortgages at today’s near 4 percent interest rates, which could save many homeowners more than $2,000 a year.
Obama is expected to call on the joint congressional committee seeking deficit reduction measures to come up with additional savings to pay for his new jobs package and still meet 10-year deficit targets. The administration talking points say that the president will propose ways to stabilize the level of national debt as a percentage of gross domestic product, but not during his speech on Thursday.
Other key points in Obama’s address will include a payroll tax holiday for added workers or increased wages. His plan will eliminate payroll taxes for firms that add workers or increase the wages of their current workers, but the benefit will apply only to the first $50 million in payroll increases. He will propose a $4,000 tax credit for employers who hire long-term unemployed workers.
Obama will also propose: regulatory reforms to help entrepreneurs and small businesses gain access to capital; a “returning heroes” tax credit of $5,600 to $9,600 for companies that hire unemployed veterans; measures the administration says will prevent the layoff of up to 280,000 teachers; and modernizing at least 35,000 public schools nationwide, providing new science labs, Internet-ready classrooms and renovations.
He will also propose ways to bolster the nation’s infrastructure, including a bipartisan National Infrastructure Bank and a “Project Rebuild,” which would put people to work rehabilitating homes, businesses and communities.
In addition, Obama will ask Congress to extend unemployment insurance to prevent 5 million Americans from losing their benefits. He will propose that this be done as part of a reform effort that would give states greater flexibility in how they use unemployment insurance funds.