Queens, NY – Standing in a small business center located at LaGuardia Community College in Queens, U.S. Senator Kirsten Gillibrand, Congresswoman Carolyn Maloney and New York City Comptroller John Liu were joined today by business owners to announce new federal legislation to help Main Street by cutting taxes for businesses that create new jobs. Senator Gillibrand is working to include the legislation as part of an upcoming jobs bill the Senate is expected to consider.
With the U.S. now two years into the worst economic downturn since the Great Depression and nearly 850,000 New Yorkers out of work, including 105,600 Queens residents, the Economic Policy Institute estimates that a tax cut similar to the one Senator Gillibrand is proposing could help create several million jobs within the next year.
“While some sectors of the economy are doing better, middle class families and small businesses across New York are struggling in this economic crisis.” Senator Gillibrand said. “We need to take aggressive action to help businesses create good-paying jobs and get New Yorkers back to work. The job creation tax cut would encourage businesses to begin hiring now instead of waiting for the economy to stabilize months or years down the road. It would create millions of new jobs at a time when unemployment is continuing to rise and nearly 850,000 New Yorkers are out work. Giving small businesses an incentive to create jobs is the right way to continue this economic recovery and create jobs for the thousands of New Yorkers who are ready to work.”
Congresswoman Maloney said, “Too many New Yorkers can’t find a job. By offering a tax credit for small businesses that create jobs, this proposal would directly incentivize small businesses to hire new workers. This is exactly the kind of additional effort we need to create jobs for New Yorkers and for all Americans who have been hard-hit by the recession, and I applaud Senator Gillibrand for undertaking this initiative.”
“New York’s road to economic recovery must be paved by common sense policies that put people back to work,” said New York City Comptroller John C. Liu. “Senator Gillibrand’s proposed job creation tax cut is just the kind of measure that many business owners need to begin hiring again. It will serve as an effective tool in creating new jobs, supporting struggling small businesses and restoring economic opportunity in all communities. I commend the Senator for introducing this legislation and join her call to include it in the upcoming Senate jobs bill.”
Since the recession began in December 2007, 8 million jobs have been lost in America. In New York City alone, 413,800 people are unemployed – approximately 10.4 percent of the labor force.
According a recent study by the Congressional Budget Office (CBO), a tax cut for firms that create new jobs would garner just as much economic return as spending on new infrastructure, and be more effective at creating jobs. In fact, CBO finds that a job creation tax cut would be the quickest and most effective way to get more Americans back to work now.
Senator Gillibrand’s legislation would provide businesses a tax cut worth 15 percent of the cost of a new job. Small businesses would receive an additional 5 percent, allowing them to deduct 20 percent of their increased payroll costs. The tax cut would be structured based on a firm’s quarterly payroll increase over the previous year, meaning companies would also have an incentive to expand part-time workers to full-time, or eliminate salary cuts instituted during the downturn. This would also provide protection against fraud by preventing employees from doing things like firing and re-hiring employees to claim the tax cut. The legislation would also contain additional protections against abuse by including protections such as limiting the tax cut claimed by any one firm to $350,000, and exclusions for mergers or acquisition where no new jobs are actually created.
Senator Gillibrand believes that the job creation tax cut, with appropriate safeguards, is one of the most efficient ways to create a large number of jobs quickly. It would address what is perhaps the most persistent and harmful aspect of the economic downturn: unemployment. Such a measure not only is an efficient way to create a large number of jobs quickly, but also bolster long-term economic recovery investments — from high-speed rail and health care information technology, to rural broadband and a smart energy grid.
While the American Recovery and Reinvestment Act has created or saved more than 40,000 jobs in New York already, the job market is traditionally the last part of the economy to recover from a recession.
Unemployment started rising in the spring of 2007 and has now more than doubled to 10 percent nationwide. The underemployment rate, which includes people who are working part-time but want full-time work, is 17 percent, or 26.6 million people. Right now, the U.S. is experiencing an alarming rate of long-term unemployment – 5.4 million people have been jobless for more than six months, representing 3.5 percent of the workforce.
To keep pace with the growth of our population, 127,000 jobs must be created each month just to keep unemployment from rising. To date, 10.7 million jobs must be created to get unemployment back to where it was before the recession started.
High unemployment affects those with jobs, too, since many workers are facing furloughs, reduced hours, and losses in benefits. Gallup reports that a third of workers fear their wages will be reduced and a survey by Hart Research Associated found that 44 percent of households have already experienced job loss or cuts to pay or hours.