A provision of the Build Back Better Act is being slammed by the wingnuts on Facebook as a “tax break” for news media companies to reward them for their “loyalty to the Democratic Party”. It is also described as a “tax break for corporations” — and offered as evidence of Democratic “hypocrisy”.
Although the Redhats never refer to it directly, the provision is section 138517 of HR 5376 — “Payroll Credit for Compensation of Local News Journalists”. The original legislation is HR 3940, The Local Journalism Sustainability Act (LJSA).
I searched, and found news reports that do claim that the credit would pay $25,000 of a reporter’s salary in the year after it passes, and $15,000 for four years after that.
UPDATE: The comments steered me toward a different parsing of the legalese in the legislation. I have redacted my subsequent blather about how the credit is only worth $2000 per employee... and my impertinent remarks about lazy journalists.
Please continue to the comments, they’re interesting and informative.
I read the legislation, and I believe that this is off by a factor of ten correct, but easy to misinterpret.
The claim was reported on Fox News (of course) but has also appeared in a WSJ opinion, the CNN Business website, and the Marketwatch website. I suspect that they are all quoting reports from sketchier news sites — Deadline and Punchbowl.
The claim was published (but not substantiated) back in August by a group that supports the LJSA, called the Rebuild Local News Coalition. It also appeared in an online article from the Nieman Journalism Lab at Harvard. That one is troubling, because it’s well written — but it smells like a naive reporter called up some editor and told them that “The new legislation will pay half a reporter’s salary!”. The editor innocently replied, “Does it? That’s great! We could add four new positions with that!”… and there’s the quote.
It looks like a case of of lie traveling halfway around the world before the truth pulls its pants on. Some hasty writer misunderstood the legislative language, and put their erroneous version interpretation on web… to be parroted by other lazy writers.
I have looked at both pieces of legislation and I don’t think it says that the IRS will “pay half the salary” of a local news reporter. I think it says that the IRS will issue a credit to defray the employer's share of payroll taxes for an employee hired specifically to cover local community news.
During the first year, the credit would refund payroll taxes on one-half the employee's salary (or $50,000, whichever is greater). For the next four years, the credit would be for payroll taxes on one-third of the salary.
The employer’s share of payroll tax is 6.2% We're talking about a credit of less than $2,000
$3,100 in the first year... not $25,000.
The wingnuts also claim that the credit is available to “big media companies” with 1,500 employees. In fact, the credit is restricted to news organizations with no more than 750 employees. A local Gannett newspaper with 200 employees could qualify for this. The Los Angeles Times, which employs about 4,200 people, would not.
Here are the pertinent excerpts from the BBB version (HR 5376).
Page 2327
SEC. 138517. PAYROLL CREDIT FOR COMPENSATION OF
13 LOCAL NEWS JOURNALISTS.
14 (a) IN GENERAL.—In the case of an eligible local
15 newspaper publisher, there shall be allowed as a credit
16 against applicable employment taxes for each calendar
17 quarter an amount equal to the applicable percentage of
18 wages paid by such publisher to local news journalists for
19 such calendar quarter.
20 (b) LIMITATIONS AND REFUNDABILITY.—
21 (1) WAGES TAKEN INTO ACCOUNT.—The
22 amount of wages paid with respect to any individual
23 which may be taken into account under subsection
24 (a) during any calendar quarter by the eligible local
25 newspaper publisher shall not exceed $12,500.
Page 2328
1 (2) CREDIT LIMITED TO EMPLOYMENT
2 TAXES.—The credit allowed by subsection (a) with
3 respect to any calendar quarter shall not exceed the
4 applicable employment taxes (reduced by any credits
5 allowed under sections 3131, 3132, 3134, and 6432
6 of the Internal Revenue Code of 1986) on the wages
7 paid with respect to the employment of all the
8 enployees of the eligible local newspaper publisher for
9 such calendar quarter.
Page 2329
1 (1) APPLICABLE PERCENTAGE.
2 —The term “applicable percentage” means
3 (A) in the case of each of the first
4 calendar quarters to which this section applies,
5 50 percent, and
6 (B) in the case of each calendar quarter
7 thereafter, 30 percent.
8 (2) APPLICABLE EMPLOYMENT TAXES.
9 The term “applicable employment taxes” means the taxes
10 imposed under section 3111(b) of the Internal
11 Revenue Code of 1986.
Page 2330
6 (D) the publisher of such publication
7 employs no more than 750 employees during the
8 calendar quarter with respect to which a credit
9 is allowed under this section.