By  on February 25, 2010

WASHINGTON — Apparel and retail groups said the $15 billion jobs bill passed by the Senate Wednesday is a step in the right direction, but criticized the legislation for failing to meet the immediate needs of their member companies to create new jobs.

The bill would give a package of tax breaks to businesses that hire new workers and invest in new equipment. Democrats were able to break through the partisan morass on Capitol Hill and secure votes from Republicans to pass bipartisan legislation they hope will create tens of thousands of jobs and help revive the weakened economy. The vote was 70 to 28.

The centerpiece of the legislation is a $13 billion provision that would offer an exemption from Social Security taxes to companies this year that hire new workers that have been unemployed for at least 60 days. Companies also would receive a $1,000 tax credit for each new worker that is retained for a full year. Employers would receive the credit in their 2011 income tax returns.

Another provision in the bill would allow small businesses to immediately write off equipment purchases up to $250,000 as business expenses, as opposed to depreciating those costs over time.

“For apparel, footwear and textile companies, we don’t see this as benefiting them immediately or even over the short term,” said Nate Herman, senior director of international trade for the American Apparel & Footwear Association. “Companies are not just going to hire because they will receive tax credits for Social Security on new employees. They need a reason to hire and that means needing capital to expand businesses through Small Business Administration loan guarantees.”

Herman said apparel companies are pressing Senate leaders to extend provisions that expire at the end of this month that expand the percentages and size of loans the SBA can guarantee.

“If they really want to do something direct and immediate, they should do things like renew the [miscellaneous tariff bill], expiring tax provisions that hurt the textile industry dramatically, as well as chemical and footwear companies,” said Herman. “The longer that takes, tariffs will build up and people won’t be able to hold on much longer.”

Rachelle Bernstein, vice president and tax counsel for the National Retail Federation, said retailers think “more needs to be done” than what the bill offers.

“We were disappointed that Majority Leader [Harry] Reid dropped other elements from the bipartisan Senate Finance Committee bill, including the extension of expiring tax provisions, particularly shortened depreciation rules for remodeling stores,” Bernstein said.

A 15-year depreciation period for retail improvements expired at the end of the year and has now reverted to a depreciation period of 39 years. Retailers are pressing for the reinstatement of the 15-year depreciation period because they typically remodel stores every five to seven years.

The House passed a much broader package of tax breaks in a $154 billion jobs bill in December, and House leaders are weighing whether to pass the narrower Senate bill or go to conference to reconcile the two measures.

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