CNN Money/Fortune have an interesting article on the jobs bill, where they directly compare Obama’s plan with that of Jimmy Carter, which by now many of us remember with a sense of deja vu,
Obama’s disco-era jobs bill
The article points out
– the potential for waste,
It’s estimated that of the companies that claimed the tax credit under Carter’s plan, two-thirds would have hired those employees regardless of the tax break.
“It’s a windfall for companies that want to expand anyway,” says Rea Hederman, a senior policy analyst at the Heritage Foundation. Should the bill pass, Hederman says the big beneficiaries of the tax credit this time around would be companies in the big-growth areas of health care and education.
– lack of useful information for businesses who may not know about the tax credit, particularly small businesses
– the bill won’t do much,
Bartik estimates that with its $13 billion price tag, the law would create 350,000 jobs at best — a drop in the bucket compared with the over eight million jobs lost since the end of 2007.
On this, may I point out that the government would be taking tax money from businesses to come up with 350,000 jobs at best, at a cost of at least $37,143 each, so the business can deduct how much? from their taxes. It’s a scam with the government at the center.
– in order to qualify for the tax break, an employer has to hire someone who has been out of work for at least 60 days. What became of hiring the best qualified candidate?
And, the article doesn’t mention it directly, but any business that can wait to hire would not hire them immediately but rather postpone until the tax credit goes into effect.
Why not cut taxes on businesses instead?
Larry Kudlow explains (emphasis added),
The future of the U.S. economy — including jobs, growth and the stock market — hangs in the balance. Government-controlled health care, with Senate vote-purchasing and union special-interest loopholes, is not the answer. Nor is a $2 trillion tax hike on banks, multinational corporations, capital gains, inheritance and successful upper-income earners. Nor is a doubling of the publicly held federal debt to $19 trillion, or nearly 80 percent of gross domestic product. Nor is a federal spending ratio of 25 percent of the economy. Nor is a budget deficit at a 10 percent share of GDP for as far as the eye can see.
Again, Washington doesn’t get it. Politicians are delivering a fiscal product that no one in America wants. It’s no wonder small businesses aren’t hiring. Yes, there is a cyclical recovery going on, but it is incomplete without the jobs.
The so-called $85 billion jobs program is not a jobs program at all. It is a spending bill. Temporary tax credits to hire new workers have virtually no permanent job-creating effect. In budget terms, these kinds of temporary tax credits are scored as tax expenditures — i.e., spending. Only a permanent reduction in the marginal business tax rate has the incentive effect for long-run job creation. Reducing the business tax rate makes firms more profitable after-tax. And it gives them more cash flow. Those incentives will work to expand investment and jobs.
And taxing capital is the worst idea of all. That’s why the capital-gains tax must not be increased. Plus, raising the top two income tax brackets from 33 percent to 35 percent, and then from 35 percent to 40 percent, thereby penalizing those who own about half of the small-business income, is a job-destroyer.
But, to the Obama administration, it’s back to the dying days of disco.