Thursday, March 25, 2010

New hiring tax credit passes both chambers

By Rachel Wells

A bill heralded as a jobs creation measure heads to Gov. Pat Quinn’s desk, following approval by the Senate this morning and the House on Wednesday.

The small business income tax credit, proposed by Quinn in his budget address, would give businesses with 50 or fewer employees a $2,500 credit for every new full-time job created in the next fiscal year. To be eligible, each new job would pay at least $13.75 per hour.

“Every new job that we create is the creation of a taxpayer, someone who is going to contribute to helping us balance our budget here in Illinois,” said bill sponsor Sen. Michael Noland, an Elgin Democrat. “Balancing our budget is the one thing we can do … to attract business to Illinois.”

While SB1578 passed through both chambers without any opposing votes, not everyone thinks the measure would create that many new jobs.

“It sounds like a great idea to do this, but I really don’t believe at the end of the day businesses are going to hire people in order to get a $2,500 tax credit,” Senate Minority Leader Christine Radogno, a Lemont Republican, said last night. “What they really need are customers, and they need the businesses to do it, they need lower taxes, they need workers’ comp reform.”

The bill would cap the total credits at $50 million, which works out to 20,000 new hires. Credits would be available on a first-come, first-serve basis.

Todd Maisch, Illinois Chamber of Commerce vice president of government affairs, said he’d be surprised if the number of tax credit applications neared the cap. “While we do appreciate the attention to small business, we believe the measure ... is simply not robust enough to make a big difference in the operation of small businesses.”

He added that the tax credit wouldn’t immediately help businesses. Under the measure, businesses couldn’t claim a credit until after the new job had been maintained for at least a year.

The National Federation of Independent Business in Illinois agreed that the bill, if signed by Quinn, might not do as much as lawmakers hope. “What our members tell us is that this type of tax credit is not going to cause them to hire people,” said NFIB in Illinois director Kim Clarke Maisch. “Now, if they’re already going to hire people, then it’s a nice benefit.” She said a $2,500 tax credit isn’t much compared with the costs of salary, Social Security and unemployment insurance that come with hiring a new employee.

“Only time will tell,” Noland said. “We’ll find out about a year from now after the qualifying period ends. So this is something that is going to be measured quantitatively moving forward.” He added that the bill is one of several jobs creation measures (Click the link at the bottom of the page for the list of Senate Democrats' bills) he hopes to see approved by the General Assembly and signed into law this spring.

No comments: