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Jobs Legislation

A top policy priority of the President and Congress is legislation to promote job creation. The National Council of Nonprofits and its State Association Members strongly endorse policies that promote job creation in all sectors of the economy, and insist that incentives apply equally to nonprofit employers.

Why It Matters to Nonprofits

Nonprofits employ more than 13 million individuals nationally, pay over $500 billion in wages annually, and contribute more than five percent to the Gross Domestic Product of the United States. Nonprofits collectively employ more Americans than the construction, finance, and insurance industries combined. In many states, nonprofit employment exceeds 10 percent of the workforce and represents the top two or three industries. As proven job creators, nonprofits can and should participate in the development of job growth policies at the state and local levels.

Status

Small Business Jobs and Tax Relief Act

The Senate is scheduled to consider the Small Business Jobs and Tax Relief Act, a bill that would give nonprofit and for-profit employers a direct incentive to increase the wages of existing employees or make new hires. The legislation would, among other things, allow organizations to claim a tax credit equal to 10 percent of the amount they have increased their payroll in 2012 over 2011. The tax credit, which nonprofits could claim against payroll and other federal taxes they pay, would be capped at $500,000 per employer. The July 10 vote will determine whether the Senate will proceed to the bill or whether action will be blocked by a filibuster.

American Jobs Act

According to the White House, “The President recognizes that roughly one in twelve workers in the United States are employed in the nonprofit sector, which is why he made nonprofits – both faith-based and secular – a key part of this bill.“ In his bill, President Obama is promoting a $447 billion package of tax cuts and new spending to stimulate hiring by for-profit and nonprofit employers. The American Jobs Act would

  • Reduce the payroll taxes that nonprofits pay
  • Extend the expansion of unemployment benefits through January 2, 2013
  • Eliminate the payroll taxes if a nonprofit adds new staff or increases wages
  • Provide a tax credit (applicable to nonprofit payroll taxes and withholdings) to nonprofit employers that hire veterans and long-term unemployed workers, although the value of the nonprofit credit is only 65 percent of an income tax credit that for-profit businesses would receive
  • Provide financial assistance to states or nonprofits to help unemployed and low-income individuals to find job-related opportunities or skills
  • Provide financial assistance for state and local governments, school construction and money to rebuild and refurbish homes

To pay for the package, the American Jobs Act would limit the value of the charitable and other itemized deductions claimed for upper-income taxpayers.  

Additional Resources