The United States Treasury Department has released a report on the number
of newly-hired workers who are eligible for tax credits under the Hiring Incentives
to Restore Employment (HIRE) Act, passed in March this year.
The HIRE Act offers an exemption from Social Security payroll taxes for every
worker hired after February 3, 2010, and before January 1, 2011, who has been
unemployed for 60 days or longer. The maximum value of the credit is equal
to 6.2% of wages up to USD106,800, which is the Federal Insurance Contributions
Act wage cap. There is also an additional USD1,000 income tax credit for
every new employee retained for 52 weeks, to be taken on the employer’s
2011 income tax return.
Comprehensive data from the Internal Revenue Service on the use of the HIRE
Act will not be available until after employers file tax returns in 2011. In
the interim, the Treasury Department’s Office of Economic Policy has,
however, provided estimates of the number of newly-hired workers whose employers
potentially qualify for the HIRE Act tax exemption.
It is estimated that, nationally, from February to July this
year, 6.9m workers have been hired by employers who are eligible for the HIRE
Act payroll tax exemption. This estimate includes 1.3m workers who were hired
between June and July 2010.
Newly-hired workers whose employers are eligible for the HIRE Act payroll tax
exemption constitute 11.8% of all workers who were unemployed for eight weeks
or longer since the law took effect in February 2010. In other words, the Treasury
Department reports that about one in eight workers who have been unemployed
for eight weeks or longer are hired in the subsequent month.
The report also indicates that the ten states with the largest number of workers
whose employers potentially qualify for HIRE Act tax exemptions are California
(almost 950,000 hires), Texas (over 460,000), New York (405,000), Florida, Illinois,
Pennsylvania, Ohio, Georgia, Michigan and New Jersey (206,932).
In addition to these findings, the demographic characteristics of the newly
hired, eligible workers are provided. About one fifth of newly-hired exemption-eligible
workers were previously employed in the construction industry. Similarly, employers
in the construction industry have hired the largest share of exemption-eligible
workers since February 2010.
The HIRE Act expires at the end of this year, so employers have a stronger
incentive to increase their hiring sooner rather than later.
Alan B. Krueger, chief economist and assistant secretary for economic policy
at the Treasury Department said: “The HIRE Act supports the hiring of
workers who have faced the greatest difficulty in the job market, and gives
employers more of an incentive not only to hire them but also to keep them on
the payroll. The program encourages private sector job growth, which is essential
to get the economy back on track.”
LAWANDTAX-NEWS.COM
