I'm reading here via Memeorandum, via the NYT that Washington is floating the idea of a tax credit for companies that create jobs. Although certainly not the worst idea to come out of Washington and/or the Obamanation, I haved a mixed opinion personally on such an idea. I mean after all, why not merely streamline red-tape from Washington, cut tax rates for all companies small and large and foster growth for the long term? Why not take the opportunity here to strengthen our market-economy from here on? Answer - there is no power in that. A tax-credit is an easily manipulated form of carrot-stickery from the Capitol, plain and simple. From the Times -
In other words folks, just a simple band-aid approach that adds yet more to the national debt. No more debt, no more deficit spending. We are bankrupting our children's children......The idea of a tax credit for companies that create new jobs, something
the federal government has not tried since the 1970s, is
gaining support among economists and Washington officials grappling with the
highest unemployment in a generation.One version of the approach, to be unveiled next week by the Economic Policy Institute, a
labor-oriented research organization,(read liberal), would give employers a two-year tax credit if they increased the size of
their work force or added significant hours of work (for example, making a
part-time worker full time). Employers would receive a credit worth twice the
first-year payroll tax for each new hire, amounting to several thousand dollars,
depending on the new worker’s salary.Supporters say that improvements upon the 1970s policy would increase its
potency. These include better publicizing the credit; making it available even
to concerns that are not making money, in the form of a direct payout to
nonprofits and companies in the red; and distributing the credit quarterly so
that companies see it sooner.Deficit hawks still worry about the cost of the proposal, and
whether it would be politically feasible for Congress to phase it out once businesses have grown used to it.
4 comments:
financial disaster in the making my friend!.. PLEASE SAVE U.S. FROM OURSELVES
Ha ha ha ha. The delicious irony of this is that by floating such a proposal, the Democrats have just conceded our view that it is the private sector and emphatically NOT the Government that creates jobs and therefore a real tax base and revenue stream. Keynsian dipturds are pathetic.
@ Woman - Indeed, we are in a heaping pile of trouble.
@ Libertarian Adv - Isn't great point friend, oh the irony.
Congratulations on pouring cold water on the tax credit for extra jobs idea (sometimes known as a marginal employment subsidy). This idea has been around for decades and always gets "re-invented" at times of high unemployment. I have done a detailed demolition of the idea here: http://margemsub.blogspot.com/
Re your worries about the national debt: stop worrying. The bulk of the increase in the UK's national debt in 2009 (and much the same goes for the US, I imagine) is not really debt at all. It is money owed by government to the central bank. Both institutions are owned by the people. This "debt" is just a ludicrously complex way of saying "we've printed some extra money which hopefully people will spend, which will create jobs". That is the right thing to do. Of course there is a danger: inflation. But if you boost an economy by any other means (e.g. interest rate reductions) there is also a risk that the authorities get it wrong, and cause inflation.
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