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Dems Want Business Tax Credit For Rehired Workers

Democratic lawmakers want tax break for businesses that rehire workers they laid off last year, a move analysts estimate could speed up return of some 10,000 people to work.

DENVER (AP) -- Democratic lawmakers want to give a tax break to businesses that rehire workers they laid off last year, a move that analysts estimate could speed up the return of some 10,000 people to work.

However, no business groups turned out to testify for the proposal during its first hearing at the Capitol on Tuesday. And Republican lawmakers, normally friendly to tax cuts to create jobs, are so far dismissing it as a "fig leaf" to cover the economic damage done by a package of tax hikes passed to balance the budget.

Sen. Rollie Heath, D-Boulder, and Sen. Chris Romer, D-Denver, dismiss that idea and say they've been working on the bill since last summer.

The proposed tax credit (Senate Bill 133) is fairly limited and couldn't be claimed until 2012. To be eligible, businesses would have to rehire workers employed for at least a year before they were laid off in 2009. They would have to keep them on the job for at least a full year after that.

The state would agree to pay a portion of the federal payroll tax for each rehired worker. The state would pick up two-thirds of the tax payments for workers hired between Jan. 1 and April 30 and a third for those hired between May 1 and Aug. 31.

Businesses would have to sign an affidavit stating the workers were hired sooner than expected because of the tax credit.

The aim is to encourage businesses to rehire workers sooner, relieving pressure on the state's unemployment fund and possibly generating more tax revenue and additional jobs because of money being spent by the rehired workers.

An estimated 330,000 people lost jobs in the private sector last year in Colorado. A legislative fiscal analysis estimated 26,400 of them will eventually be rehired regardless of the tax credit and that about 10,000 of those hires would happen marginally sooner than previously expected between January and August.

Analysts estimate 7,300 of those workers would stay on the job long enough for businesses to claim the credit, which would cost the state $5.5 million. The revenue department would also have to hire a part-time worker for a year to verify the eligibility of businesses and would have to reprogram its tax system for a total cost of $53,203.

The package of tax increases on things including candy and soda and agricultural pesticides, as well as suspending other existing tax credits, is expected to raise $133 million next year and $175 million the following year.

The money will be used to help fill a $1.5 billion budget shortfall over two years. Big businesses, such as Coca-Cola and Pepsi bottlers, as well as steel workers and wheat farmers say the package could lead to layoffs and financial losses.

Sen. Shawn Mitchell, R-Broomfield, said the benefit from the job tax credit would only undo a small portion of the damage caused by raising taxes.

"It's so laughable, it's embarrassing," he told Romer and Heath during the hearing.

Romer accused Republicans of looking out for Wall Street over "Main Street" interests.

"Heaven forbid we should put people back to work as opposed to defend corporate profits. I'm stunned," he said.

Some Republicans said they'd like to expand the credit to include businesses that hire workers laid off from other companies or those laid off as far back as 2007.

That would cause the pricetag to rise, and Heath said he wanted to get this bill passed as quickly as possible. Romer said he was willing to work with any Republicans who would be willing to name a "corporate tax break" they would end to pay for a bigger credit.

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