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American Jobs Act Sectional Analysis -- Final

American Jobs Act Sectional Analysis -- Final

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Published by Shawna Thomas
The White House's analysis of the American jobs Act.
The White House's analysis of the American jobs Act.

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Published by: Shawna Thomas on Sep 12, 2011
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09/12/2011

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- 1 -
Section-by-Section Analysis and Explanation of the"
American Jobs Act of 2011
"
Section 1 – Short Title; Table of Contents. This section provides that the bill may be cited as the“American Jobs Act of 2011” and includes a table of contents for the bill.Section 2 – References. This section specifies that generally any reference to “this Act”contained in any subtitle of the bill refers only to the provisions of that subtitle.Section 3 – Severability. This section specifies that, if any provision of the bill is held invalid,the remainder of the bill is not affected.Section 4 – Buy American – Use of American Iron, Steel, and Manufactured Goods. Thissection provides for the use of American iron, steel and manufactured goods, except in certaininstances.Section 5 – Wage Rate Requirements. This section provides for specific wage rate requirements.All laborers and mechanics employed by contractors and subcontractors on projects fundeddirectly by or assisted in whole or in part by and through the Federal government pursuant to theAmerican Jobs Act of 2011 would have to be paid not less than the wages prevailing in thelocality for similar projects as determined by the Secretary of Labor in accordance with theDavis-Bacon Act.
Title I – Tax Relief for Workers and BusinessesSubtitle A – Payroll Tax Relief 
Section 101 – Temporary Payroll Tax Cut for Employers, Employees, and the Self-Employed.This section extends and expands the existing temporary reduction in payroll taxes. For calendaryear 2012, it: (a) further reduces the Old Age, Survivors and Disability Insurance (socialsecurity) portion of the payroll tax that was paid by employees during 2011 from 4.2 percent(reflecting the existing 2 percent temporary reduction from the permanent rate) to 3.1 percent;and (b) adds a new reduction in the portion of this tax that is paid by employers from 6.2 percentto 3.1 percent. The employer reduction applies to up to $5 million of wages that are paid by theemployer. With limited exceptions, the reduction in amounts paid by employers is available toall employers, whether private businesses or tax-exempt organizations. The employer reductionis not available, however, to Federal, State and local government employers (other than Statecolleges and universities) or with respect to household workers. This section contains equivalentreductions for individuals subject to self-employment taxes. Transfers from general revenues areprovided to protect the social security trust fund.Section 102 – Temporary Tax Credit for Increased Payroll. For the last quarter of 2011 and forcalendar year 2012, the proposal provides a payroll tax credit that fully offsets the employersocial security tax that otherwise would apply to increases in wages from the correspondingperiod of the prior year. For example, if an employer paid wages subject to social security tax of 
 
- 2 -$5 million in 2011 and $6 million in 2012, the credit to which the employer would be entitledwould eliminate the employer’s portion of social security taxes on the $1 million of increasedwages. The credit would be available on up to $50 million of an employer’s increased wages.Generally, the credit is available to all employers, whether private businesses or tax-exemptorganizations, but would not be available to Federal, State and local government employers(other than State colleges and universities) or with respect to household workers. Transfers fromgeneral revenues are provided to protect the social security trust fund.
Subtitle B – Other Relief for Businesses
Section 111 – Extension of Temporary 100 Percent Bonus Depreciation for Certain BusinessAssets
.
Under current law, businesses generally are allowed to immediately deduct 100 percentof the cost of qualified property placed in service in 2011 and 50 percent of the cost of suchproperty placed in service in 2012. To encourage additional capital investment, this sectionextends the ability of businesses to deduct 100 percent of the cost of qualified property throughthe end of 2012.Section 112 – Surety Bonds. Subsection (a) temporarily increases the size of contract suretybond that the Small Business Administration (SBA) can guarantee from $2,000,000 to$5,000,000. This will make it easier for small businesses to take advantage of contractingopportunities generated by the American Jobs Act’s proposed infrastructure investments.Subsection (b) amends the section of the Small Business Investment Act that limits liability forsurety bond guarantees in situations when the guarantee was obtained by fraud or materialmisrepresentation, the surety has breached a material item of the guarantee agreement, or thesurety has violated SBA’s surety bond regulations, in order to make that section consistent withthe higher surety bond guarantee limit. Subsection (c) provides that the increased surety loansize will sunset at the end of fiscal year 2012. Subsection (d) provides $3,000,000 in mandatoryfunding to the Surety Bond Guarantees Revolving Fund to cover the estimated cost of thissection.Section 113 – Delay in Application of Withholding on Government Contractors. This sectionwould delay the effective date of the requirement that governmental entities withhold at a 3percent rate from payments to persons providing certain property or services. Under thissection, this withholding requirement would apply to payments made after December 31, 2013.
 Title II – Putting Workers Back on the Job While Rebuilding and Modernizing AmericaSubtitle A – Veterans Hiring Preferences
Section 201 – Returning Heroes and Wounded Warriors Work Opportunity Tax Credits. Undercurrent law, employers that hire veterans who have been unemployed for at least 6 months andhave a service-connected disability are eligible for a maximum tax credit of $4,800. This sectionincreases the amount of that credit to $9,600. This section also creates two new hiring credits forveterans. The first is a credit of $2,400 for employers that hire veterans who have beenunemployed for at least 4 weeks. The second is credit of $5,600 for veterans who have beenunemployed for at least 6 months. Under this section, these credits are also available to tax-
 
- 3 -exempt entities and public universities. Finally, this section authorizes the Secretary of thetreasury to provide alternative methods for certifying a veteran’s unemployed status.
 
Subtitle B – Teacher Stabilization
Section 202 – Purpose. This section establishes the purpose of this subtitle as the prevention of teacher layoffs and creation of additional jobs in public early childhood, elementary, andsecondary education.Section 203 – Grants for the Outlying Areas and the Secretary of the Interior; Availability of Funds. This section reserves, from the amount provided in section 212, up to one-half of onepercent for outlying areas and up to one-half of one percent for Bureau of Indian Education(BIE) schools, and allow the Secretary to reserve up to $2,000,000 for administration andoversight. Under subsection (b), funds provided in section 212 would be made available to theSecretary until September 30, 2012.Section 204 – State Allocation. This section allocates the remaining funds to the States based onpopulation, through a grant to the Governor of each State who submits an approvableapplication. Under subsection (c), if a Governor does not submit an approvable application, theSecretary of Education would distribute those funds to other entities in the State, provided theGovernor assures maintenance of effort for fiscal years 2012 and 2013. Under subsection (d),the Secretary would reallocate funds to the remaining States if a State does not receive fundingor receives only 50 percent of its allocation.Section 205 – State Application. This section allows Governors 30 days from the enactment of the Act to submit an application for a grant.Section 206 – State Reservation and Responsibilities. This section authorizes States to reserve 10percent of their grants for State-funded preschool programs and to reserve 2 percent foradministrative costs. Subsection (b) would require States to support early, elementary, andsecondary education by distributing the remaining grant funds to local educational agencies(LEAs) no later than 100 days after receiving a grant. Subsection (c) prohibits a State from usingthe funds to support a rainy-day fund or reduce debt obligations.Section 207 – Local Educational Agencies. This section limits the use of funds by localeducational agencies to those necessary to retain existing employees, rehire former employees, orhire new employees to provide early, elementary, or secondary educational and related servicesand excludes the use of funds for general administrative expenses. It also requires the funds to beobligated by September 30, 2013.Section 208 – Early Learning. This section limits the use of funds by State-funded preschoolprograms to those necessary to retain early childhood educators, recall or rehire former earlychildhood educators, or hire new early childhood educators to provide early learning services,and requires the funds to be obligated by September 30, 2013.

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