Give companies a tax credit of up to $5,000

Obama is all set to give companies a tax credit of up to $5,000 for each new member of staff taken on the payroll in a hire and reimburse scheme if businesses will expand their payrolls.

The credit is capped at $500,000 for each employer.

“Now is the perfect time for this kind of incentive because the economy is growing, but businesses are still hesitant to start hiring again,” President Obama January 2010

Earlier this month it was concluded that reducing the payroll taxes of employers would be the most cost-effective approach — after extending unemployment benefits — to stimulating economic output and job growth.

Even so, the proposal, which would be the first federal wage subsidy since the New Jobs Tax Credit in 1977-78, met with a wary response from Republicans.

It has been said that some firms will try to buck the system to their advantage and in combining a tax credit for new workers with a wage bonus for payroll expansion, the administration’s proposal resembles elements from other recent proposals.

Companies that hired an unemployed worker would not have to pay the Social Security payroll tax on that worker for the duration of 2010. Another plan, put forward last October by a liberal research group, emphasizes expanding payrolls. It would refund 15 percent of new payroll costs in 2010 and 10 percent in 2011.

We seem to adapt most policy from the USA, some say that is why we are obese and got the banks into this mess in the first place!!

Let us all hope that a stimulus package will come our way.
Personally I would like to see a grant for all those trying self employment for the first time.