Tax Cuts, Unemployment Insurance and Jobs
On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which provides vital tax relief and investments in our workers that will create jobs and accelerate economic growth.
How it impacts businesses:
- The legislation extends a set of important tax measures to encourage businesses to invest and create jobs in America. The agreement will help create jobs and investment now and expand the capital stock to support future growth.
- The largest temporary investment incentive in American history: The bill includes the proposal the President announced in September to temporarily allow businesses to expense all of their investments in 2011. According to the Treasury Department, complete expensing could put nearly $200 billion in the hands of businesses over the next two years ?with most paid back over time. The provision will provide a crucial incentive to 2 million businesses to invest and create jobs in the U.S. To encourage additional investment immediately and to avoid capital waiting on the sidelines, businesses would get the upfront deduction for their investment and give up their future annual depreciation allowances when the economy is stronger with a net cost of about $30 billion over the next ten years.
- R&D credit: The agreement also includes a 2-year extension of the R&D tax credit and other tax incentives to support business expansion. The R&D tax credit will help keep the U.S. economy at the cutting-edge of 21st century technologies, while expanding high-tech jobs, encouraging innovation, and increasing future productivity and growth. Each $1 spent on the tax credit creates $2 of benefits for the economy. Studies have shown that every $1 of R & D adds about $2 of benefit to our economy and society as a whole. The entire credit goes to research and experimentation in the United States, with additional spillover benefits for jobs.
- Extension of the ?1603? renewable production credit: The Recovery Act included a provision to provide a grant in lieu of the tax credit for renewable energy production. The 1603 program has helped encourage more than 4,000 clean energy projects and tens of thousands of new jobs. This agreement will now include a one year extension of the 1603 program.
- Promotes GDP growth by extending unemployment insurance: The Council of Economic Advisers has found that failure to act will reduce GDP by 0.6 percent by the end of next year. The legislation extended unemployment benefits at their current level for 13 months, through the end of 2011.