Certain businesses have been able to take advantage of a tax credit given for hiring workers who were previously unemployed for more than 60 days. The Hiring Incentives to Restore Employment Act has been said to be a piece of legislation that has actually benefited the small business sector and should be a standard with which job creation policies are set to follow.
This new tax incentives for businesses who hire these unemployed workers will exempt employers from their share of paying Social Security taxes on employee wages and an employer who keeps a newly hired worker for over a year may receive a tax credit of up to $1000 per worker. This has prompted many business owners to hire more individuals as the worry over hiring costs is something that has slowed many businesses from adding to their workforce.
Typically, an employer simply adds hours to their current employees’ schedule, allowing for overtime, before they will hire new workers. With the economy slowing and spending weak, many small businesses are hesitant to take on debt or add new workers to their business. While this is understandable, there has been debate as to whether more incentives for hiring should be offered or access to capital from sources like small business loans be offered.
A small business bill that is still working its way through Congress is hoped to provide access to small business loans from community banks to businesses who are looking to borrow. However, there are many who make the argument that until companies start earning more money they will be unwilling to acquire debt and will not hire more workers. While small business loans can be used to, for instance, buy equipment which may allow them to take on more clients or jobs, until spending increases there is a low likelihood that jobs will be created.
However, for economic spending from consumers to increase more individuals will need a job, so many who believe that tax credits like those provided by the HIRE Act need to be offered to more business owners rather than providing access to debt, like that which comes from small business loans. Yet, currently employers can take advantage of this tax credit on new employees who have been hired through the end of 2010.