October 26, 2009

Extending tax credit makes sense

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Extending tax credit makes sense

Job creation is welcome anytime, but in a struggling economy job preservation is enormously important as well. Efforts to help keep existing jobs are critical in times of high unemployment.

That reality makes the extension of a federal tax credit that has helped preserve jobs in our area and elsewhere in the country a most sensible idea. The credit is due to expire at the end of the year. Congress should not let that happen.

An area company, American Apparel Inc., could be the poster child for this program. The company makes uniforms for the nation's military forces at plants in Fort Deposit and Selma. It employs more than 600 people.

In an interview with the Birmingham News, the company's secretary-treasurer, Carl Barranco, said the tax credit has allowed it to keep jobs at the two plants. Because Fort Deposit and Selma lie within a designated "renewal community" under the law, the company can claim a tax credit of 15 percent of the first $10,000 it pays in wages for each employee who lives within the designated area. About three-quarters of its workers qualify, Barranco said.

"That is a real inducement for us to leave those jobs in Fort Deposit and Selma, and we need that to continue in the law," he told the News. "It is a very key economic factor in considering retaining jobs in those communities."

According to figures from the federal Department of Housing and Urban Development, about 480,000 jobs qualified for the tax credit last year. That's significant, and all the more so in a time of rising unemployment.

The tax credit comes at a cost to the federal treasury, of course, but the broader impact of sustained employment surely outweighs that. At a minimum, Congress should support the Obama administration's proposal for a one-year extension, which the White House has said is an important element in economic recovery.

Better yet would be Alabama Rep. Artur Davis' legislation for a five-year extension. Investing in job preservation simply makes sense.

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