As reported by Jamie Dupree Washington Insider, Senate Majority Leader Harry Read’s office has released a summary of elements included in the Senate’s version of the tax compromise between President Obama and Congressional Republicans. The list is long and may include other provision of interest to you. For my purposes, however, this post focuses on employment-based tax incentives (and the much prized R&D credit).
The bad news (or maybe the good news, depending on your perspective and ability to read the future) is the House Democratic leadership seems to be digging in their heels against bringing a House version of the bill to the floor for a vote.
I read through the Senate bill’s summary twice and bring you the follow excerpts:
R&D credit. The bill reinstates for two years (through 2011) the research credit.
Indian employment credit. The bill extends for two years (through 2011) the business tax credit for employers of qualified employees that work and live on or near an Indian reservation. The amount of the credit is 20 percent of the excess of wages and health insurance costs paid to qualified employees (up to $20,000 per employee) in the current year over the amount paid in 1993.
Empowerment Zones. The bill extends for two years (through 2011) the designation of certain economically depressed census tracts as Empowerment Zones. Businesses and individual residents within Empowerment Zones are eligible for special tax incentives.
District of Columbia Enterprise Zone. The bill extends for two years (through 2011) the designation of certain economically depressed census tracts within the District of Columbia as the District of Columbia Enterprise Zone. Businesses and individual residents within this enterprise zone are eligible for special tax incentives. The bill also extends for two years (through 2011) the $5,000 first-time homebuyer credit for the District of Columbia.
Work opportunity tax credit (WOTC). Under current law, businesses are allowed to claim a work opportunity tax credit equal to 40 percent of the first $6,000 of wages paid to new hires of one of nine targeted groups. These groups include members of families receiving benefits under the Temporary Assistance to Needy Families (TANF) program, qualified veterans, designated community residents, and others. The WOTC program is currently set to expire August 31, 2011. The bill extends this provision through December 31, 2011 and would be effective for employees hired after date of enactment.
Noticeably missing from the summary are extensions for a number of WOTC program target groups. Current WOTC provisions provide for at least 12 targeted groups (A through K plus Hurrican Katrina employees), not merely the 9 mentioned in the summary. Specifically, missing from the summary are Hurricane Katrina Victims, Disconnected Youth, and Unemployed Veterans. HOWEVER, I have not read the actual text of the bill. These specific issues might be addressed there.
Also, I see no mention of extending the HIRE Act’s employer payroll tax exemption into 2011. I do, however, see a new Payroll Tax Holiday provision, which provides an automatic 2% reduction of the employee portion of the social security tax for all employees and self-employed individuals.
Keeping our fingers crossed . . ..