The recent election of Senator Scott Brown (R-MA) eliminated the Democrat’s hopes of a filibuster-proof majority. In his first State of the Union speech, President Obama addressed the impact of Senator Brown’s election along with such crucial topics as health care reform, the economy, and jobs. Congress will attempt to pass a jobs bill and introduce immigration reform legislation shortly, so please keep your eyes out for updates.
As noted above, the outcome of the Massachusetts special election in January stripped the Senate of the 60 votes needed to pass its version health care reform. Senator Scott Brown was sworn in on February 4, which means that the options for Democratic leadership have been limited somewhat. While some members are hoping to pass the Senate bill in the House of Representatives and then work on a later “corrections” bill to appease those wishing to make changes, Congressional leadership has not yet ironed out its differences.
With all of the confusion surrounding the issue, President Obama has called for a health care summit to be held on February 25, intended to foster a bipartisan effort to get healthcare reform moving again. Obama’s leadership team has mentioned that the administration will introduce its own version of the legislation prior to the Summit and welcomes a Republican version as well. Republicans are calling on Congress and the President to start from scratch.
Last week, Senate Majority Leader Reid unveiled the first “jobs” bill. While seen as an “abuse of power” by some Republicans and not sufficiently far-reaching my others, Leader Reid is hoping to get the 60 votes needed to invoke cloture next week. The bill includes two significant provisions affecting franchisees:
• Tax Holiday – A payroll tax holiday for employers hiring new workers and a tax credit for retaining newly hired Workers. Employers will not be required to pay the worker’s 6.2% Social Security payroll tax, up to the maximum social security taxable wage of $106,800, for the duration of 2010. There are no distinctions for company size and there is no limit on the amount of credit any one company can claim.
The bill also allows employers that retain newly hired employees for a continuous 52 weeks to claim an additional non-refundable $1,000 tax credit on their 2011 return. In order to qualify for the retention credit, the employee’s wage for the first 26 weeks of the period must equal at least 80% of the employee’s wage during the second 26 weeks.
Employers are eligible to claim these benefits for employees hired after February 3, 2010, but will still be required to pay the normal payroll taxes until the bill is enacted.
• Small Business Expensing – For 2008 and 2009, the economic stimulus bill passed by Congress increased the maximum deduction from $125,000 to $250,000 and increased the level of the deduction’s phase-out from $500,000 to $800,000. Extension of temporary increase for Section 179 small business expensing will continue through 2011.