Tax Provisions of President Obama’s “American Jobs Act” Proposal

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In a much anticipated speech, President Barack Obama on Thursday asked the U.S. Congress to approve a $447 billion package of tax cuts and new spending in the hope of heading off what could become a new recession early next year.

The $447 billion price tax of the proposal includes payroll tax cut proposals totaling $240 billion,  extensions of unemployment benefits totaling $62 billion, and $140 billion in spending on public works.

The President appears to be “betting” that money spent (borrowed) now on carefully targeted tax breaks and public spending plans will pay off in new job creation and economic stimulus for our economy.  To quote the blog of the Economist:

“Its provisions were carefully chosen to stimulate job growth immediately while maximising the political price Republicans will pay to obstruct it.”

The tax provisions of the proposed “American Jobs Act” are as follows:

  • – Not only extending the employee 2% payroll tax cut scheduled to expire in December, but increasing it to 3.1% (half of an employee’s normal contribution to social security.)
  • – An equivalent cut of 3.1% in the employer’s portion of payroll taxes for the first $5M of payroll.
  • – Elimination of the entire 6.2% tax on the wages of new hires or pay raises for current employees.
  • – Maintaining extended unemployment insurance benefits currently scheduled to expire in December.
  • – Extending through 2012 the 100% bonus depreciation provision on new equipment purchases, currently set to expire in December.

Should you want more information about the proposal, we have compiled a list of links to detailed stories about the proposal:

The Economist

The White House Blog

Politico

The Wall Street Journal

Los Angeles Times

The Christian Science Monitor

We will be monitoring the progress of this bill as it makes its way through congress, and will update on our blog here frequently.

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