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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

In November, Congress enacted the VOW to Hire Heroes Act, which extends tax credits to nonprofit and for-profit employers that hire unemployed and disabled veterans. Employers would receive a tax credit of as much as $9,000 for hiring a disabled veteran or a $5,600 credit for any veteran who has been out of work for more than six months. The bill, which came in the form of an amendment by Sen. Jon Tester (D-MT), provides equal treatment of tax-exempt employers by allowing nonprofits to apply the same level of credit to payroll tax liability.

In September, President Obama proposed 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.  

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