Tax Cuts, Unemployment Insurance and Jobs

On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which provides vital tax relief and investments in our workers that will create jobs and accelerate economic growth. 

Watch the Vice President and President's remarks from the bill signing ceremony, or watch the explanation from Council of Economics Advisers Chairman Austan Goolsbee when the compromise was first announced below.

White House White Board: Tax Cuts, Unemployment Insurance & Jobs

Benefiting the Middle Class

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides vital tax relief and investments in our workers that will create jobs and accelerate economic growth. The bill has three key accomplishments:

• Working families will not lose their tax cut. A typical working family faced a tax increase of over $3,000 on January 1. That’s avoided under this bill, and working families won’t see their tax cuts go away next year.
• Focused on high impact job creation measures. The bill includes some of the best measures for jumpstarting growth and job creation, including a full year of emergency unemployment insurance benefits, a 2 percent payroll tax cut for working families and a continuation of tax credits for working families. This is on top of growth generated by extension of the middle-class income tax rates. Without action, UI benefits for at least 2 million Americans would disappear this month alone, with millions more in jeopardy in the weeks ahead.
• Does not worsen the medium- and long-term deficit.  These are responsible, temporary measures to support our economy that will not add costs by the middle of the decade.  The President does not believe it is affordable to make the high-income tax cuts permanent and will continue to make his case for why we cannot extend these measures beyond 2012.

Wins for Working Families

As the chart above demonstrates, the bipartisan agreement we’ve forged delivers several key victories – victories that will give the average American family assurance that there will be more money to pay the bills each month:

• An Employee-Side Payroll Tax Cut of Approximately 2%: The agreement includes an employee-side payroll tax cut for over 155 million workers – providing tax relief of about $112 billion next year.
• Extension of Unemployment Benefits: The agreement extends emergency unemployment benefits at their current level for 13 months, preventing an estimated 7 million workers from losing their benefits over the next year as they search for jobs.
• The Child Tax Credit: The $3,000 refundability threshold established in the Recovery Act for the Child Tax Credit will be extended under the agreement, ensuring an ongoing tax cut to 10.5 million lower-income families with 18 million children.
• The Earned Income Tax Credit: The agreement continues a Recovery Act expansion of the Earned Income Tax Credit worth, on average, $600 for families with 3 or more children, and reduces the “marriage penalty” faced by working married families. Together, these enhancements to the EITC will help 6.5 million working parents with 15 million children.
• The American Opportunity Tax Credit: The new American Opportunity Tax Credit – a partially refundable tax credit that helps more than 8 million students and their families afford the cost of college – would be continued under the agreement.
• 100 Percent Expensing: The agreement includes the President’s proposal to temporarily allow businesses to expense 100% of their investments in 2011, potentially generating more than $50 billion in additional investment in 2011, which will fuel job creation.
• 1603 Renewable Energy Grants: The agreement extends the 1603 program, which is helping to support tens of thousands of jobs in the wind and solar industries.

These victories all come on top of the extension of lower income tax rates for middle-class Americans.

Learn More About How This Agreement Impacts:

• The Economy and Jobs
• Women, Mothers and Working Families
• African American Families
• Hispanic Families
• America's Businesses
• The Clean Energy Economy
• Social Security
• Typical Families Across the Country