By Sean Whaley, Nevada News Bureau: Republican state senator has proposed his own idea for job creation: A break on the modified business tax for new employees hired by employers after July 1, 2011.
Sen. James Settelmeyer, R-Gardnerville, said Senate Bill 199 would exempt new employees hired by Nevada businesses from the tax as an incentive to add workers to their payrolls. Co-sponsors include five other Republican lawmakers. The measure was introduced Monday.
“The concept is based on the payroll tax, which unfortunately unfairly burdens employers based on how many employees they have,” he said. “Only if it is a brand new additional employee – above and beyond what you currently have – the new employee will not have the payroll tax charged upon them for one year.”
Settelmeyer’s jobs proposal comes as Democratic leaders in both the Assembly and Senate are touting their own job creation initiatives, including a plan to use some existing revenues to bond to build public works projects, and another to create a bidder’s preference on such projects for companies that hire Nevada workers.
SB199 has been referred to the Senate Finance Committee but no hearing has been scheduled yet.
Settelmeyer’s bill would require employers to demonstrate that any employees hired under the tax exemption are new additions to a firm’s current workforce, but there would be no limit to the number of new hires that could be included in the exemption. The exemption would be available to existing businesses only.
Bryan Wachter, director of government affairs for the Retail Association of Nevada, said the organization typically opposes tax exemptions or abatements but believes Settelmeyer’s proposal is a positive job-creating measure.
“We do see this as a private sector jobs creation bill,” he said. “Anytime you can stimulate private sector hiring without relying on public sector dollars, that is a good thing.”
Nevada’s nearly 15 percent unemployment rate does not appear as if it will decline anytime soon, and the tax incentive in SB199 could assist in reversing that trend, Wachter said.
Randi Thompson, the local representative for the National Federation of Independent Business, said the bill is a good start to getting Nevadans back to work.
“Anything that would encourage hiring is a good thing,” she said.
Thompson said she remains concerned, however, about the Legislature’s intentions as to the current rates of the modified business tax.
Nevada’s modified business tax is based on an employer’s gross payroll, after deductions for health insurance benefits paid by the employer. The 2009 Legislature increased the tax rate from 0.63 percent to 1.17 percent for large businesses as a way to balance the current budget.
At the same time, it reduced the rate to 0.5 percent for small businesses. Both changes will expire on July 1, 2011, unless the Legislature takes action.
Gov. Brian Sandoval wants to let the increase for large businesses expire, but he wants to continue the lower rate for small businesses for the upcoming two-year budget.
Settelmeyer said he has been told by small businesses that the exemption could make the difference between hiring a new worker and waiting. Larger casino operators have made similar comments, he said.
Sen. James Settelmeyer says the payroll tax burdens employers based on the number of employees:
Settelmeyer says only new employees would be eligible for the exemption:
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