Federal Relations

President Obama’s American Jobs Act Would Carry Slight Impact for UW

The American Jobs Act introduced by President Obama last week and delivered to congress in full bill form this week, looks like it may carry some tax implications for UW.

  • If passed, the bill would expand and extend the existing payroll tax reduction for employees from the already reduced rate of 4.2% to 3.1%.
  • Would reduce the payroll tax cut for employers to 3.1% – half of what it is now – for the first $5 Million of payroll. This applies to institutions of higher education, but is designed to primarily benefit small businesses – it will have a minimal impact on UW.
  • A couple of tax credits for hiring veterans and long-term unemployed workers may carry a small financial benefit for UW.
  • $30 billion for state aid, which would not apply to institutions of higher education, but the provision does contain a Maintenance of Effort provision designed to protect higher ed funding at the state level.

Portions of the bill have already drawn opposition from both parties, and it is unlikely that it will pass completely in its current form. We are more likely to see the tax credits enacted, while the state aid will be more contentious.