The Case for a Job-Creation Tax Credit

[PA Democrat]

Very interesting article in support of the job creation tax credit. I tend to be very skeptical of tax credits as a way to boost the economy, but this looks promising.


http://economix.blogs.nytimes.com/2009/11/19/the-case-for-a-job-creation-tax-credit/

<snip>

Based on Daniel Hamermesh’s thorough review of econometric research on labor demand, Dr. Bartik and I have estimated that this temporary credit would increase employment by 2.8 million by the end of 2010. We also estimate that it would cost the federal government less than $6,000 per full-time equivalent job.

Assuming these numbers are right, they make the policy an extremely cheap, efficient way to bolster the job market, especially relative to some other proposals, like public works projects.

The credit accomplishes so much so quickly because it enables the private sector to figure out which jobs make sense for the long run. Crucial decisions about whom to hire and for what kind of work are not made directly by the government. Rather, they are radically decentralized to the 6.5 million employers who would still pay 85 percent of the cost of taking on a new worker; who select, train and supervise the new hires; and whose vision defines the purpose of their firm’s expansion.

A similar two-year temporary credit – called the New Jobs Tax Credit — was established early in 1977, and studies have found it successful.

[PA Democrat]

1. I'd be interested in finding out why the negative rec (not that it hurts my feelings)

I'm curious if someone out there has research to indicate this is a bad idea.

BTW, I am on the record of criticizing the tax break for accelerated depreciation on capital expenditures. My criticism was based upon research that shows it to be a very inefficient way to boost the economy.

[ret5hd]

2. There is a cabal here that believes they can bring Skinner to his knees...

and force him to cave to their demand of removing the unrec feature if they unrec everything.

I mostly suspect the woo-woos. Their stuff doesn't make it to the greatest page much now.

[PA Democrat]

3. I don't care about people giving recs or unrecs. I am merely interested in the other side

of the argument.

I argued earlier this week AGAINST tax breaks for capital expenditures based upon the research that shows they are ineffective. I just hate when people take a stand for or against something without any meaningful rationale. If there is other info out there which indicates that the job creation tax credit is a bad idea, I'd like to see it.

In my gut, I was originally AGAINST this proposal because I envisioned the break mainly going to businesses that would have hired people anyway. The article I linked shows research that supports the tax credit and I reconsidered my original opinion.

It's sad that we don't have many meaningful discussions on issues here anymore. Too many of us are so firmly entrenched in our opinions that we are unwilling to consider that maybe we are wrong.

[Mopar151]

4. K & R!