March 17, 2010

Jobs tax credit moving toward final House vote

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By Erich Wagner
Erich@MarylandReporter.com

Gov. Martin O’Malley’s proposal to reward companies for hiring workers off unemployment rolls emerged unscathed after attempts to alter the bill on the House floor Wednesday.

Republicans tried to resurrect changes that were rejected when the bill was in the House Ways and Means Committee. One would have required employers to use the federal E-Verify program to ensure that new hires are lawfully present, and another would have heavily altered the bill to work as a cut in the corporate income tax rate.

The bill now moves toward a final vote that could come within days, and it mirrors a Senate-passed measure, which rewards employers $5,000 for each worker hired off unemployment rolls. The measure would cost $20 million next year.

Del. Pat McDonough, R-Baltimore and Harford counties, said E-Verify has a 96 percent success rate in recognizing eligible workers. The voluntary program checks with the Social Security Administration and the Department of Homeland Security to ensure new workers are documented.

“This is actually a government system that works,” McDonough said. “In the spirit of the labor movement, this amendment ensures that American jobs are preserved.”

But House Majority Leader Kumar Barve said the amendment was unnecessary. The state Department of Labor, Licensing and Regulation already checks with those agencies when people sign up for unemployment benefits.

“All of the people getting unemployment are people already vetted through the database,” Barve said. He pointed out that a bill to require businesses to use the verification program is being separately considered by lawmakers.

“That is the better venue to arbitrate this issue,” Barve said.

House Minority Whip Chris Shank proposed another amendment, completely stripping the bill’s language and replacing it with a .5 percentage point cut in the state corporate income tax rate, from 8.25 percent to 7.75 percent.

“This would make a positive impact on the business community and will put money back in the economy” Shank said. “In Virginia the tax rate is 6 percent, and in North Carolina it’s 6.9 percent. When we’re competing for businesses like Northrop Grumman, this tax is an immediate deterrent.”

Barve again fought the amendment, pointing to staff estimates that said the amendment would cost the state $50 million, an extra $30 million more than the original tax credit.

“The $20 million is already paid for in the governor’s budget,” Barve said. “And there’s no guarantee with this amendment that anyone has to hire anyone.”