A targeted measure to boost the economy is the Hiring Incentives to Restore Employment, or HIRE, Act of 2010. In his state of the union address, President Obama called on Congress to create a tax incentive to encourage private sector employers to increase their payrolls. Congress responded with the HIRE Act, which exempts private employers from paying the employer portion of Social Security payroll taxes for newly hired workers who have been unemployed for 60 days or longer. As an added incentive, employers can receive up to an additional $1,000 tax credit for each of the newly hired workers they retain for 52 weeks.
Analysis suggests that the HIRE Act is working. According to recent data, employers hired some 6.9 million unemployed workers who are eligible for HIRE Act tax relief through July. Moreover, preliminary evidence suggests that employers have already claimed tax credits for about one in every four eligible workers hired. This reduces the payroll tax payments employers send to the federal government, leaving them with more money to expand their businesses.
The HIRE Act expires at the end of this year, so employers have a stronger incentive to increase their hiring sooner rather than later.