WASHINGTON — President Barack Obama's plan to offer tax credits to businesses that add workers is running into opposition from some rank and file Democrats in the House.
"I don't know anybody in business who hires an employee because they will get a tax break," Rep. Mike Thompson, D-Calif., said Wednesday. "They hire employees because they have work to do."
Obama proposed the tax credit as part of his plan to refocus his administration's efforts to ease unemployment in the run-up to congressional elections in November. Senate Democrats are coalescing around their own version of the tax break, but House Democrats have been slower to embrace the idea.
Rep. Charles Rangel, D-N.Y., chairman of the tax writing House Ways and Means Committee, offered this assessment: "It's controversial, it's on the table."
Obama wants to give companies a $5,000 tax credit for each net new worker they hire in 2010. Also, businesses that increase wages or hours for existing workers in 2010 would be reimbursed for the extra Social Security payroll taxes they would pay.
Senate Democrats are seeking bipartisan support on a similar plan that would exempt companies from paying the employer's share of Social Security payroll taxes for new workers hired this year, as long as those people had been unemployed at least 60 days.
Senators hope to unveil a jobs bill as early as this week. Prospects in the House, however, are less clear.
The House passed a jobs bill in December that has stalled in the Senate. Obama first said he supported a new jobs tax credit in December, but House Democrats left it out of their bill because they couldn't figure out how to make it work effectively.
Rep. Lloyd Doggett, D-Texas, said companies that have struggled to keep workers would miss out on the credit while those that got rid of workers could get it when they hire replacements.
"Surely, the Treasury can come up with a better way to promote job growth," Doggett said to Treasury Secretary Tim Geithner Wednesday at a House Ways and Means Committee hearing.
Geithner said that while increasing consumer demand is key to job growth, a new tax credit for hiring could help as demand starts to pick up.