Wednesday, October 7, 2009
Support Builds for Tax Credit to Help Hiring
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. The proposal is aimed to help smaller businesses develop when unemployment is hovering around 10%. Additionally, the tax credit is expected to help create 2 million jobs within its first year. However, there are worries that the unemployed and larger companies will try to exploit the new policy. Also, people argue that the tax credit will be a waste of money because companies do not need more workers because there will be no work for them if demand for their products/services continues to remain low.
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The idea of a tax credit for companies that creates new jobs seems appealing to both sides of the story. In one case, the new tax credit for companies would give employers a two-year credit if they increased the size of their work force or added significant hours of work. Because of this, employers would receive a credit worth twice the first-year payroll tax for each new hire. However, some politicians believe that this new idea will just provide incentives to companies that probably aren't going to make it in the end anyway. It will be interesting to see how the government actually decides to deal with this situation.
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