FACTBOX-Obama plans $33 bln job and wage tax credit

WASHINGTON, Jan 28 (BestGrowthStock) – U.S. President Barack Obama
plans a $33 billion tax credit to encourage small businesses to
hire workers and boost wages. Details of the plan, which will
be laid out on Friday when the president visits a small
business in Baltimore en route to speak to Republican lawmakers
holding a retreat there, include:

* Businesses will receive a $5,000 tax credit for every net
new employee they employ in 2010. The total amount of the
credit for any one firm will be capped at $500,000, to ensure
the majority of the benefit is targeted at small businesses.
Start-ups will be eligible for half of the tax credit.

* Businesses that increase wages or hours for their
existing employees will be reimbursed for the Social Security
payroll taxes they pay on real increases in their payrolls.
This bonus would be based on Social Security payrolls, so it
would not apply to wage increases above the current taxable
maximum of $106,800.

* Firms will be able to claim the credit on a quarterly
basis, which the White House hopes will get money out to
businesses quickly and provide an early incentive to hire and
increase payrolls.

* $33 billion cost, estimated by the U.S. Treasury and
based on tax-change simulations run on its economic models.

* Proposal envisages being paid for out of savings from
TARP bank bailout

* Retro-actively effective for the whole of calendar 2010.

* Anti-abuse provisions to ensure that employers do not
game the system. Businesses that reduce employment or payrolls
in 2010 would not be eligible for both the $5,000 credit and
the wage bonus.

* The credit would also include anti-abuse provisions
designed to deny or limit the credit to employers that seek to
game the system by, for example, replacing full-time employees
with part-time employees. This will include limiting the
maximum jobs credit amount to 25 percent of the increase in a
firm’s Social Security payroll wage base.

* Rules would also prevent businesses from renaming
themselves or merging in order to claim the credit.

Investing Research
(Reporting by Alister Bull; Editing by Eric Walsh)

FACTBOX-Obama plans $33 bln job and wage tax credit