Federation for American Immigration Reform
February 17, 2010

Senate Majority Leader Harry Reid (D-NV) unveiled his jobs bill last week that proposes tax exemptions and tax credits for employers who hire and retain workers—regardless of their immigration status. Senator Reid introduced his bill, entitled the “Hiring Incentives to Restore Employment Act,”  immediately after shelving a more extensive bill authored by Senators Max Baucus (D-MT) and Chuck Grassley (R-IA), the Chair and Ranking Member of the Finance Committee.  In doing so, Reid said he wanted to focus clearly on the “jobs message” he thought the Senate should be sending to the American people. (Roll Call, Feb. 16, 2010).

[efoods]The Reid bill has two primary tax provisions that are intended to spur employment. The first would exempt employers from payroll taxes for new employees hired before January 1, 2011. (§101) A qualifying employer is virtually any employer except government bodies, although an exception is created for colleges and universities.  To be a qualifying employee, the worker must:

(1)    Begin employment with a qualified employer after February 3, 2010, but before year end;

(2)    Sign an affidavit stating that he/she was not employed for more than 40 hours during the 60-day period prior to beginning employment with the qualified employer;

(3)    Not displace another of the qualified employer’s workers; and

(4)    Not be a relative, broadly defined, of the employer. (See §101)

Nowhere in Section 101, however, is there a requirement that the individual be legal. Nor does the language require that the employer use E-Verify to verify work authorization. The language appears to allow employers to receive tax breaks for hiring illegal workers or for importing foreign workers.

The second major tax provision of the bill provides employers with a $1,000 tax credit for each “retained worker” hired in 2010. (§102)  To qualify as a “retained worker,” the individual must:

(1)    Meet the definition of a qualified employee under §101 (see above);

(2)    Be employed during the taxable year;

(3)    Be employed by the employer for no less than 52 consecutive weeks; and

(4)    Maintain wages at a certain threshold during the 52-week period.

Like Section 101, this tax credit does not require the employee to be legal or require that the employer use E-Verify to establish the employee’s work authorization.

Action on the Reid Jobs Bill is expected next week and Senate sources have told FAIR that the Senate Majority leader has already taken steps to block amendments to the bill. Stay tuned to FAIR for more information as the Reid Jobs Bill moves forward.

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