“Just like the rest of America the Northern Mariana Islands economy needs jobs,” says Congressman Gregorio Kilili Camacho Sablan. “The HIRE Act is one way to encourage potential employers to put people to work and to keep them employed.”
The bill has bounced back and forth between the House of Representatives and the Senate for weeks now. But the newest version passed by the House is thought likely to be accepted by the Senate and sent to President Obama for signature.
The HIRE Act reduces the cost of bringing on new workers by relieving employers of the 6.2 percent payroll tax. For a full year after hiring the new worker no Social Security tax would have to be paid by the employer on the worker’s wages.
In addition, the new worker would also be free of the 6.2 percent Social Security contribution for up to one year.
Anyone hired between February 3, 2010 and January 1, 2011 qualifies, if they have been unemployed or underemployed.
“The new worker has to have been out of work or working for less than 40 hours per week during the 60 days before being hired,” explains Sablan. “Because this bill is aimed at helping people who have been having trouble finding a full-time job.”
To encourage employers to keep workers, once hired, the HIRE Act also provides a $1,000 tax credit to an employer for each of the qualified new workers who remain on the job for 52 weeks.
Funds will be covered over to CNMI Treasury
“Of course, whenever Congress is considering tax provisions, we have to think about the CNMI mirror tax,” Sablan says.
“In this case, I joined together with the other territorial representatives in December to let our House leadership know that some offset would be needed for our local treasury to make up for the $1,000 credit.
“And the bill the House passed last week does specifically require that the U.S. Secretary of Treasury will pay our CNMI Treasury for any $1,000 credits our local employers are entitled to.”
This cover-over provision is the same as that for the Making Work Pay tax credit in the American Recovery and Reinvestment Act. Making Work Pay provides up to $400 for an individual CNMI taxpayer or $800 for a couple. For most people the credit is paid out paycheck-by-paycheck over the course of the year. And the CNMI Treasury has been receiving cover-over funds from the U.S. to make up for the local revenue lost because of the tax credit.
Act assures FY2010 highway funds: $4.5 million
“Another important job-creating aspect of the HIRE Act,” according to Sablan, “is the full-year provision of highway funds. We’ve been getting our highway money in small increments since the fiscal year began in October 2009 because the surface transportation act is up for reauthorization.
“The HIRE Act authorizes all the Fiscal Year 2010 money. That’s $4.5 million for the Northern Mariana Islands.
“And those funds will put people to work, or keep people at work, on construction jobs, like the Cross Island Road project.”
Senate Majority Leader Harry Reid, D-Nevada, has said he may file a motion to end debate on the HIRE Act and bring the measure to a vote this week.
In addition to adding the cover-over provision for the U.S. territories, the House also made the bill comply with the “Pay-Go” rules that require revenue offsets for any new spending.
