Financial Regulatory Forum

Obama unveils $33 billion tax credit to boost jobs

By Steve Holland

BALTIMORE, Jan 29 (Reuters) – President Barack Obama on Friday proposed $33 billion in tax credits to coax small businesses into hiring workers as he underscored his commitment to pushing job creation to the top of his agenda.

With public frustration over double-digit unemployment eroding his popularity, Obama has begun rolling out initiatives aimed at backing up his jobs pledge made in his economy-focused State of the Union Address earlier this week.

The latest proposal calls for a $5,000 tax credit for every net new worker hired in 2010. The amount would be capped at $500,000 per firm to make sure that the bulk of the benefits go to small businesses.

“The economy is growing but job growth is lagging,” Obama told workers at a custom-machine plant in Baltimore.

He spoke after the release of data showing U.S. gross domestic product expanded at a faster-than-expected 5.7 percent in the fourth quarter, a trend he hailed as a “stark improvement” compared to economic decline a year ago.

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

WASHINGTON, Jan 28 (Reuters) – 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.

Obama sets plan to spur jobs, without busting budget

U.S. President Barack Obama greets workers as he tours Allentown Metal Works in Allentown, Pennsylvania, December 4, 2009.  By Patricia Zengerle

WASHINGTON, Dec 7 (Reuters) – President Barack Obama will lay out policy proposals to combat double-digit unemployment in a speech on Tuesday tackling an economic problem that has become a political drain on his young administration.