Keeping Bush-era tax cuts in place for the middle class and providing tax credits for employers who create new jobs – coupled with spending cuts – will go a long way in pulling the country out of its financial doldrums, a senator from Pennsylvania said Wednesday.
“We need to focus on the economy, not just a strategy to create jobs, but a proven strategy for economic growth,” U.S. Sen. Bob Casey said in a teleconference to unveil his legislation that would extend the payroll tax cut for one year and provide a tax credit for employers who hire new workers.
He urged inclusion of the provisions in any agreement reached to avert the “fiscal cliff,” a combination of expiring tax cuts and government spending cuts scheduled to take effect automatically Dec. 31.
A chart provided by Casey shows the average worker in Cambria County earns $25,066 and will lose $502 annually if the payroll tax cuts are allowed to lapse. A two-worker household will see a decline in disposable income of $1,003 a year.
A similar worker in Somerset County earns a just bit more at $25,085 and would see about the same the loss per year for a two-income household.
Casey said the figures came from the chairman’s staff of the Joint Economic Committee, who used the most current U.S. Census Bureau data to make the calculations showing probable impact should the 2 percent payroll tax cut be abandoned.
Middle income families account for about 82 percent of the nation’s consumer spending, Casey said, and less disposable income for them would equate to less consumer spending.
“We have to make sure we don’t abandon the strategies that grow the economy,” the senator said.
Casey called upon Democrats and Republican House members to step up and reach an agreement that would enable the nation to avoid falling over the fiscal cliff.
Along with maintaining the tax cuts, Casey said he has already supported more than $1 trillion in spending cuts and is prepared to support additional cuts in spending.
The Small Business Job Creation Tax Credit is an idea he lobbied for in the past, and he is convinced it will prompt businesses to move money they are holding in reserve and begin hiring new employees.
While he could provide no estimates on the cost of the tax credits, Casey said the initiative will create jobs that will result in increased payroll taxes.
Under the Casey plan, a tax credit of 10 percent – meaning $5,000 for each employee earning $50,000 annually – would be given for new employees with a cap of $500,000 per company. The tax credits also would be available for employers who increase wages for all workers.
“The worst thing for debt is not to grow. You’ve got to be growing,” Casey said.