Senate approves tax credit for hiring unemployed

Businesses would get $5,000 for each Marylander they hire

February 27, 2010|By Liz F. Kay | liz.kay@baltsun.com

The state Senate approved a plan Friday to give businesses a $5,000 tax credit for each unemployed Marylander they hire.

Lawmakers went beyond the $3,000 Gov. Martin O'Malley had proposed. The tax credits are limited to $250,000 per employer, and the state will cut off the program at $20 million.

The legislation also accounts for potential problems by requiring the new employee to be filling a new position or one that has been vacant at least six months.

O'Malley said in a statement that the plan serves two purposes: "creating jobs and protecting the small and family-owned businesses that are the backbone of our economy and the driving force for job creation."

The jobs bill was a major part of O'Malley's legislative agenda this year. He referenced the proposal in his State of the State address.

The House of Delegates must vote on the proposal, but leaders there believe it has the support to pass.

The Maryland Chamber of Commerce had supported the bill but suggested increasing the credit per hire to $5,000.

"Employers bear significant costs in hiring any new employee, even at a minimum-wage job," said Ron Wineholt, the chamber's vice president of government affairs.

He said even for a minimum-wage worker, employers would spend more than $15,000 in salary, plus benefits and employer taxes.

"We felt that $5,000 might make a better incentive to make the additional hire," he said. "We're hopeful this kind of credit would accelerate employers in making the extra hire."

Ellen Valentino, the Maryland director of the National Federation of Independent Business, a small-business organization, did not take a position on the bill because members had mixed opinions about it.

"What our members tell us is ... the focus needs to be on getting customers back," she said. "That in and of itself will unlock this frozen economy."

However, if it passes its final legislative hurdles, Valentino said the group wants it to be successful.

"The hope is, the program will reap the benefits that's anticipated," Valentino said. "Twelve months from now, we hope for a success story."

Baltimore Sun reporter Julie Bykowicz contributed to this article.

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