Repeat After Me: Tax Credit for Employers is a Dumb Idea When These Guys Have No Customers
by Veronique de RugyThe definition of insanity is to keep doing the same thing over and over again and expect different outcomes. The different versions of the jobs bills circulating in Washington DC these days are perfect example of that point.
See for instance, the jobs tax credit for hiring new workers idea. What a brilliant example of bipartisan nonsense that is. Pushed by President Obama during his State of the Union address earlier this month and most recently picked up by Senators Schumer and Hatch.
Still no one seems to wonder, why would employers pay a new worker $40,000 to earn a $5,000 credit unless that worker generates at least $35,000 of revenue? Even when the advice comes from economists at the National Federation of Independent Businesses, the largest association of small business owners in the country, it is ignored by the President and Congress.
This about it this way:
If your business is slow, and your customers are not buying your goods and services, it is likely that your tax liability will be significantly reduced or nonexistent even. No tax liability, no need for a tax credit. Better yet, no customers, no need for employees, tax credit or not. (Duh)
Of course the same can be said about Obama’s proposal to use $30 billion of the repaid TARP money to prop up small business lending. There will be no demand for loans as long as the economy is doing poorly and customers are not buying goods and services produced by small businesses.
If Obama wants to help small businesses he should stop pretending to give with one hand while stealing big time from the other hand. What do I mean? Well, he gives useless tax credits on the one hand but is proposing big tax increases for those earning more than $250,000 a year on the other, including all the small business owners that report their business income as individual income. These guys aren’t going to take loans and invest in their businesses and hire new employees if they are going to be hammered with tax the following year.
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179 Comments
It's all asinine; it's to be expected from economic illiterates that never so much as ran a lemonade stand and have spent their lives living off taxpayers. No employer in his right mind is going to hire an employee solely based on a tax credit of $3-5,000. The fact that this is what pases for emergency legislation to stem the downward economic spiral should leave us all mortified. I'm starting to understand why these morons work in DC, they're too stupid to work in the private sector.
We don't have to reinvent the wheel, we have to get rid of the democrats and institute economic policies that benefit working American citizens not the parasitic elitist scum in DC and their handmaidens.
America, you have now seen liberalism on parade. Want more? Neither do I; smash the leftwing filth in Nov.
And creating govt jobs that become an added burden on the taxpayer is the absolute backward thing to do; we need private sector jobs that contribute via taxes not public sector jobs that are now paid for by taxpayers. You'd think we elected marxist bums.
here's the scam:
Fire all of your workers save for a few. Give 'em some spending cash and tell them to file for unemployment.
When sixty days are up, hire them back. Pass 'Go'. Collect tax credit.
Repeat…
So what's your solution? Only giving tax credits to major corporations? Most small businesses have "no customers" for the first 6 months – 2 years, which is when they would need the tax credit the most.
About time someone pointed out the BS in this jobs bill.
People will hire when business picks up which happens when the economy gets going, which happens after people start spending money, which is directly affected by the amount of money being stolen out of my paycheck each month.
Toss a "I'm gonna raise your taxes" on that and you have a recipe for not hiring nobody, nohow, noway.
i guess if he actually had a business or brought home a paycheck that he earned, he'd understand the relationship between spending and taxes.
I am so thankful for my non-Harvard degree and decent parents that taught me that income should be bigger than outgo. Wish he had the same kind of influence.
how about a tax credit for every politician we vote out of office? tell you what, skip the credit, i'll just vote them out!
when will this madness end. lies day and nite. wake up sheep before its to late
Don't raise taxes. Don't add any new taxes. Give people across the board tax cuts. Screw giving business and corporations tax cuts. They won't pass on the savings and it doesn't spur economic growth.
People need money in order to spend it. Unless your the federal government.
The proposed tax credit amounts to very little, and once again, you have to spend a bunch of money to get just a little in return, and it doesn't solve the problem, just prolongs it.
You would think that with so many simple minded people in Washington they could understand a simple concept.
When employers need more workers, they hire them. Giving them an artificial reason to hire people is not going to help the economy.
Putting more money in their pocket(by means of tax cuts) gives them the option of using it in the way that best helps their business. They may use the money for inventory, delivery truck, advertising or any other number of things. But they are in the position of knowing how best to use capital, not some bureaucrat in Washington.
Any money spent will help boost the economy, thus the hiring might not come from the business owner directly, but at the place the money is spent.
It would be like the DC folks telling Billings, Mt. how to handle a snow storm.
My friend who owned a small business for many years said the same thing. What good does the credit do tp hire someone when there is no business? We are doomed with the morons we have in office now. I mean Democrats and Republicans. One can only hope for a disease to wipe them all out so we can start over.
"I am so thankful for my non-Harvard degree and decent parents that taught me that income should be bigger than outgo."
/sarcasm
What… you mean you *can't* spend your way out of debt?!
/sarcasm off
This isn't stupidity at all. It's much darker than that. The economy could be restarted tomorrow if the right things were done. They KNOW what those things are but refuse to do them. Collapse the system, get us all on the Federal tit and then rule with an iron fist. What are those right things? We're printing money alway, so why not declare 2010 a federal tax holiday for all individuals and business. The government would make it up in spades in 2011. The markets would gain 500 points overnight. Get rid of the nanny state regulations that make business too expensive to compete. I'm not an economist, so why can I think of these things and not the vaunted thinkers in DC? Because it deprives them of their precious social engineering, that's why.
Unfortunately this is the reality, which is why I say they should be hanged.
And Team Obama knows what about running a business, meeting a payroll, or paying taxes…?
Numbers are funny lil' buggas. They don't lie.
Kubrick meets David Lynch.
The best way to fix this problem (not the greatest since the great depression but since 1980-82) is to repeat the success we saw in the 80's. We doubled our revenue. True, we triple spending so we must remember to SPEND LESS!. If you increase productive revenue you don't need to tax. Increase tax you decrease revenue. THATS A FACT!!! Unless of cause your taxing is to redistribute wealth! 10 people paying 2 dollars in tax is better ten 2 people paying 8 dollars. Like it or not Regeanonmics work if you don't spend more then your earn.
I got the rope where's the tree
It's even worse. The "jobs" bill as it was being proposed would have offered a $5,000 tax credit ONLY to those who hired someone unemployed more than 60 days, AND the "job" would have to pay $104,000/ year. Then if they kept that employee for one year, they'd be eligible for another $1,000 in tax relief.
Oh wow, a $6,000 incentive to hire an employee at $104,000 in an economy that can't support the employees you already have. Who wouldn't jump at that opportunity?
Was this a business-only credit, or could local governments (Surprise!) file for it too?
I like it!
AND the "job" would have to pay $104,000/ year.
My God, I underestimated their madness. I was going to post a comment earlier along the line of yours but using a salary example of $30,000.
$104,000?!?……….Liberal idiots [redundancy], that money tree you think comes with every business is a myth. How can we deal with people who have no economic understanding and believe the breath they exhale is a pollutant. This admin reminds me of a commercial where a guy working in an office is surrounded by monkeys and his boss is a monkey. That's what I feel like.
So you think we should give tax cuts to individuals only, and not business owners? You can’t be serious
Find out who is looking to hire people out of work more than 60 days that they want top pay over $104,000. Obama's advisers already know. This is a kickback to them, and has nothing to do with creating jobs in the economy at large.
This Progressive Oba-mao knows exactly what he is doing when he perpetuates lies to the dumb-a$$ people that know no different – especially the ones that voted for him. It’s amazing how transparent his propaganda is now that he has been exposed. Do you think that is what he meant by “more transparency”?
You can’t imply hanging with a half black president. How about crucifixion?
All the above solutions do not touch the major fundamental issues with our current tax and spend system. The biggest is no consistency of long termpolicy on which to base business decisions. The second is we tax achievment and savings and investing when we should tax spending. Third we need to repael the 16th Amenmment and return to paying just for the limited Federal government envisioned when we we founde, and that by dividing the revenue necessary by population in each state. Or we coul, after repeal put the FairTax in place, and then get to reducing the Federal governments reach on spending to lower the Fairtax rate we initialy will pay.
And yet to all of ObowMao's peeps, with their vast knowledge and understanding of practical business theory, this arithmetic makes perfect sense.
Remember, Obozo said that business would hire if they could take out loans to meet payroll.
How's that for being an economic imbecile? He publically embarrassed himself with that, but he's so arrogant, he probably doesn't realize it.
I've never been much of a fan of crucifixion, but I'm very fond of flogging. I would also add more whites have been hanged throughout history than blacks. But to show how reasonable I am I'll give them the option of the guillotine.
[...] businesses and hire new employees if they are going to be hammered with tax the following year. Email this to a friend | Print | Share on Facebook | Tweet this | [...]
Pay only $35,000 to breakeven? That better be at least $20,000 more just to cover overhead, taxes, etc…
He now wants to make business owners the “bad guys” just like he has made the banks, insurance companies, and Conservatives that oppose his Progressive agenda. He knows that employers are laughing at this preposterous proposal, but Oba-mao makes this dumb-a$$ tax-cut offer, and it’s like throwing a nickel and saying to go buy a nice prime steak. Then he will say that the business owners are all greedy, while raising their taxes.
I want to see the awesome party that will follow when we put a super-majority of Conservatives in congress.
I'm a big fan of the Fair Tax, but I think we'd need to reduce government's reach on spending first if we ever wanted to gain popular support for the Fair Tax. Imagine all those people who pay no income tax now having to help support an overly bloated federal government.
Psssst! Hey Barrack!
Take a lil friendly advice from someone who started his professional career as a ditch digger, and shoveling horse poop: WHEN YOU ARE IN A HOLE, STOP DIGGING!
Idiot.
Slightly off topic but Obozo being an economic imbecile reminded me he is no literary genius either…. ie:
Marine Corpsman…. we now know he has no economic fundamentals and we now know he knows zilch about the Marines. I'm also tired of hearing about his ability to speak…. crapola is crapola no matter how you speak.
Welcome to the revolution!
Nonsense. The US has the second-highest business taxes in the world (highest in states like CA and NY), and that's one reason employers are running for the exits.
WTF do you mean 'they ydon't pass on the savings?' Do you think that they build Scrooge McDuck money vaults that the CEO swims in from time to time?
Hayek described the process over 60 years ago.
we'll let you know when we're hiring…
We have a small chain of brewpubs here in California. We are opening a new store in the next month or so. As I understand it, you would not have to pay the contribution to Social Seurity if you hire someone that has been on unemployment for a couple of months. That would make for an interesting job interview…"So you haven't been unemployed for 50 days? Sorry we can't hire you" Real smart, try to make people hire unemployed people, instead of trying to find the best person for the job. Great economic minds at work! Not.
The 50% not paying taxes already dopay taxes embedded in the products they purchase and their paychecks with Social Security etc. For every person or family at the poverty level for each group all Americans would get back the 23% Fairtax paid on the poverty level income associated with them. This leaves a tiny minority not paying to have to now start paying, everyone has to have a dog in the hunt of the running of our country… land of the free yes! Free ride no! Salaries would go up prices for products go down. I am willing to go in reducing if reducing looks like it could happen, or I could go with the Fairtax if it looks like it could happen. Put them both out there and work on them at the same time.
ObowMao & Co used a Siberian tree ring to make these numbers jive.
No, no, IRS workers are as eligible for the $5K new employee tax credit as they were for the 1st Time Homeowner's Credit.
http://www.politicsdaily.com/2009/10/22/four-year...
This is all true. And I thought I'd add a link for those who wanted to learn more about the Fair Tax.
http://www.fairtax.org/site/PageServer
6 months to two years?????????????????
If you're in business you pretty much need customers……………
My wife's business is closing after thirteen years. It suffered the huge implosion caused by the new construction freeze. She is devastated as we went through her savings trying to make it out the other end of this recession. Obama made sure it would outlast us. Now she finds her skill set is unwanted in a nation where there is no discretionary spending left for most households outside the upper elite. She will have to learn a new skill set, go back to school and maybe never recover financially. And then there is Tim Geithner and his buddies cashing in…
Is this our future?
Don't confuse tax credits with tax cuts. A tax credit only reduces yor tax liability at the end of the year when you file. A tax cut reduces the tax liability immediatley. There should be a tax cut to all, personal and corprate.
Well, I haven't actually tried, but common sense would seem to dictate otherwise.
Obama said banks need to lend to businesses so they can make payroll.
If you need a loan to make payroll, you have a bad business,
You are hanging by your fingernails. A bank would be crazy to give you money because you are about to be forced to close the doors.
Why dos ANYONE even bother to respond to this maniac ObamaPOS ? The man is insane, incompetent and personified evil towards the citizens of the United States. Simply deball the bastard in November by taking control of the House (purse strings). Silence from this point drives them further off the cliff….. Shhhhh. Action…NOT words !
Point of humor…. As ObamaPOS may be now be listening to cell confabs I end each call with a hearty " Fuch you Obama and have a nice evening" (grin)
I was meaning on a federal level. However, state taxes should be reduced for businesses also, but typically when there is a reduction in business taxes, property taxes go up. At least in my backward ass state. They both need to go down.
And you're right, cutting business tax does help promote new expansion and therefore job opportunities.
I do not believe the trickle down from business stimulates growth like the trickle up from consumers however.
"The definition of insanity is to keep doing the same thing over and over again and expect different outcomes.."
While that is true to some extent, it is also true about gambling. Obama's crapshoot is costing us dearly as he continues to hawk US T-Bills to buy more chips.
Nice DuckTales reference. I can totally see Jeffrey Immelt swimming in a vault of coins.
Seems like when my business owning friend bitches about taxes, he always refers to state taxes. Maybe I'm wrong. Economics lost me when I found out credits were debits and debits were credit.
I was simply referring to federal level taxes.
I just hope there are enough conservatives with an "R" after their name. Indie Cons are still going to be a tough sell for a while.
I fear we’re all alone as business people, Keynesians at the helm!
So the tax credit will not encourage hiring employees over hiring temps/contractors?
Also, I just got done doing my taxes and its funny, I paid the same for my car last year as I did in total for the maintenance of the roadways, police and firemen to protect me and my family, national defense, public schools, and a whole lot more. Yeah, taxes, I am such a sheep, I really should fight for my right to have it all and pay nothing. I am owed the good life. I, I, I, I,…
Amen! The usual business trick to meet an emergency payroll, is to “ factor “ the accounts, sell your receivables for a high fee, and then it must be a company with perfect credit, to get the bank to do it, and buyer and seller must agree…that’s not a good idea either.
Everything is aimed at keeping power in Washington, not in the hands of the people.
So the tax credit will not encourage hiring employees over hiring temps/contractors?
No, it won't. Obviously you've never owned a business. There are greater financial obligations with employees than with temps/contractors.
Breathtaking stupidity! Absolutely will not create a job, it’s obvious these clowns have no clue…or is it intentional…Cloward-Piven?
Amazing how dumb a Harvard education can make you…
I am not an economist but common sense tell you that unless there is a demand for goods, businesses will not expand/hire.
People are not spending money. Even our local grocer is hurting. And when business hurt, they cut back, not hire!! And these geniuses are giving tax credits to employers.! They have no clue!! I agree with you in that they are morons an cannot run a lemonade stand!
But they are good at sleazy tactics such as voter fraud and voter intimidation. We need to be aware and keep a close eye and spotlight suspicious activities.
Let's smash these watermelons in November…(Green on the outside red on the inside. )
Crucifixion’s not so bad; at least it gets you out in the sun.
What does a shakedown artist know about running a business? Obama is a blackmailer not a businessman.
Sounds like a good deal for a (example) Starbucks employee! Pour coffee for $104,000.Not so good for the Starbucks franchisee!
Dumbo in the White House!!
Brilliant! This is a business concept I’ve never even thought of before. I can get a loan and use it to pay employees. These employees don’t even need to do anything to bring in revenues, because I can keep getting loans to pay them.
Oh wait, someone already runs a business like that. It’s the federal governments welfare system racking up our deficit.
Who's going to pay for this? ,,,,,,,,,,,,,,,,,,,,,Hanzo
Jobs bill? Who's going to pay for it, people who already have jobs? ,,,,,,,,,,,,,,,,,,,,,,,,,,,Hanzo
Why not wait and see whether it works?
Teabaggers denounced the Stimulus last year, too- and yet the Dow Jones is + 50% since then.
I suppose that having the highest corporate tax rate in the world doesn't have any impact at all on the number of corporations doing business here and the amount of business those who are here do?
There's a point at which other countries like Switzerland or Ireland start to look much more attractive and business friendly, and oops! there go those jobs overseas.
Try it like this:
The more cost effective it is to do business here, the more likely businesses are to do business here and the more of it they will do. The more business a company does, the more workers, goods and services they need to invest in in order to expand. Anyone who gets hired on because the business climate is good enough to entice a business to expand, is receiving the benefits of trickle down. They will have a salary where they previously had none. If they have a salary where they previously had none, they are now able to buy things they could not before and those purchases will stimulate other businesses stimulating the cycle to repeat …
Trickle down does not necessarily translate into lowered prices of goods or services. That comes through healthy competition between businesses.
How about keel-hauling … on a ship well-grown over with barnacles.
And the government shouldn't be able to pass this bill anyhow. It's disciminatory against anyone not unemployed for at least 60 days. Isn't it wrong for equal opportunity employers to pass up perfectly qualified folks because they haven't been unemployed long enough?
When every one of the 48% of Americans who play by the rules, work to succeed, and pay taxes get fed up with the idiots warming seats in DC here is my idea to get their undivided attention. Change your with holding to maximum deduction, if every one does it we will have their undivided attention in about two weeks, no more MONEY coming in! Of course it only works if practically everyone plays. Need more motivation, when they bankrupt this country, who would you rather have with your money, them or you? Do not think for one minute they will jump to help you, no they will give help to the same people who get better medical treatment, free cell phones, free cars. Yep redistribution O style!
…..Blah Blah. the idiots we have in Wonderland (Washington DC) don't wanna help us!!!!!!!! They know these tax credits won't work common sense and history both make that obvious. They don't wanna help us they have there own progressive agenda. The simple solutions to all of these problems are common sense and talked about every day. Cut taxes for small businesses who happen to employ about 70% of the workforce. In no way are they gonna help the very people they are trying to defeat. I for one will never acknowledge anything passed such as forced heath care. I am free I will live free
Salad Tosser!
how does trickle up even work ? first the money has to be earned . trickle up envolves the money being given .
So even with some of the lowest personal taxes (still too high for me), businesses still move overseas, hire locals at their tax rate and send us back high priced goods which we can now afford?
No wonder I flunked economics.
There's something I could spend my way out of debt for…
Couple the fair tax with a provision removing the vote from those who do not pay any federal tax. When people realize that they are almost guaranteed to pay something under a fair tax system, I wonder how much more attractive it would be?
Bravo! My first thoughts also.
Actually, yes they do. There is a difference between the revenue/income of the corporation and the revenue/income of all of its employees, even the CEOs. The profits of a corporation do not go to any one individual as a personal income like they sometimes do in a small business where the business owner reports profits as personal income.
The corporation is a taxed as an entity just as every individual employee is taxed as a person. The corporation has to both pay taxes out its revenue/income and pay all its employees out of the same while at the same time balancing the cost of its goods to consumers against the costs of production (which includes but is not limited to individual compensation).
When a corporation can make and keep more of its own profits, enough to outweigh any other perceived benefits of doing business in any country, they will move their operations there regardless of the individual tax rates on their employees.
It would be extremely popular with those paying the way, not so much with the small minority who actually will have to pay something for the first time. By the way the website http://www.contractfromAmerica.com is going to send to Congress the top ten ideas they capture. The FairTax, at my last viewing, was leading substantially. It really is time to bring back States Rights and the Constitution.
More convoluted economic jibberish from a man who whose real-life business experience is surpassed by any 7 year old kid who has had a lemonade stand.
I like your thinking!!!
Obama with his Obama Money?
Er… Oops. Am I helping the trolls with ideas again? *slaps her own hand*
Everytime my state cuts business taxes, personal taxes go up, and vice versa. I guess both need to be reduced to really jumpstart things.
I like it, but you have to promise he won't come back again in three days!
Schizophrenic economics? Apparently Obama's cabinet is like something out of a Stanley Kubrick film.
Okay, so now the banks are supposed to loan to businesses who can't make payroll…isn't that the same brilliant idea that caused the housing bubble that started this whole mess in the first place? "You must loan to people who can't pay you back! " What could go wrong?
"Governmant is a giant geejy bird. It soars ever upward, in gradually tightening circles, until it slowly disappears up it's own a**hole."
–Allan Sherman, THE RAPE OF THE A*P*E
Quote,"The definition of insanity is to keep doing the same thing over and over again and expect different outcomes."Looks like we need to put some kind of phych drug in the capital building drinking water…Also, the only outfits that will take the governments job tax credics will be non-profits such as Acorn…hope I'm wrong, but will not be surprised at all.
I have to sober up….
Hey bartender give another drink.
Nut Sack
jac are you even old enough to buy alchohol? major corps are the only ones that will get this credit . maybe you didn`t understand what you read , but if a business has no customers they won`t be hiring to get the tax credit.
Those who have never run a business telling those who have been in business for years how they should run their business is worse than the blind leading the blind, it is a huge truck being driven by the blind dragging those who can see clearly but are powerless to do much in a short amount of time to yank on the chain that is tied around their waist to stop the blind from driving over the edge of a cliff that they are headed for at full throttle forcing those who can see to go with them.
A. Private sector reasoning – as demand for our business increases we will be able to hire more people expanding our business.
B. Government sector reasoning – we need to hire more people now so that some day if we get more business we will have the people we need to do the job.
That should read the "Dow Jones is +50% DESPITE the Stimulus"
How about we abolish the volumes of CFR's, repeal the 16th and 17th amendments to the Constitution, refund all money paid into Medicare, Medicaide, and Social Security and abolish them, abolish all government pensions, cut the salaries and benefits of all Congressional members, reduce the number of days they meet to two months out of the year, get rid of the IRS, EPA, OSHA, FDA, DOL, HUD, DOE, DOT and all the other useless federal government agencies not chartered in the Constitution, and start having a little personal responsibility for everything. Everyone wants to do something in your state, then fund it yourselves. Don't like what's happening in your state, move.
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