Friday, January 29, 2010
Obama: Here's $5,000. Go hire someone.
This article explains Obama's proposed tax break as an incentive for hiring new workers. During his Wednesday State of the Union Address, Obama listed jobs as his number one priority. Last month, Obama mentioned a tax break to spur job creation, and has now elaborated to explain that employers would get a $5000 tax credit for each net new employee they hire this year. Obama hopes that the recent news about an increase in GDP will increase consumer consumption and give businesses even more of an incentive to hire new employees. He went on to explain that the tax credit would be available to any size firm and would be retroactive to the beginning of 2010. The most money any one firm could receive would be $500,000. Some smaller firms are complaining because they need the money before they hire new employees, not after. But the idea is gaining some momentum in Congress because it is outlined to avoid the abuses that could have occurred with other plans (like employers hiring more employees at lower salaries or employers firing 20 people just to receive the break for hiring 20 more).
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4 comments:
Overall, I think that this idea has the potential to be very effective because hiring more people will produce higher consumer confidence which will lead to economic growth if all goes as planned. I do think that a lot could go wrong with this though because firms have the incentive to hire to get a tax break but they could also cheat the system fairly easily it seems. However, even if a firm were to hire for lower salaries, consumer confidence could still go up because more people would be getting an income which is better than no income at all.
I think this is a good idea because in my opinion most firms would not abuse the system because they do not want that on their hands after the recession we just had. I think that this will work because the economic gain made from the amount of jobs given out will trump the amount of loss from firms cheating the system.
I think that there will be firms which cheat the system, which sadly is inevitable. But I think there are more people right now cheating the unemployment funds from the government than the amount of firm owners who would be that immoral. I think incentives to hire are better than unemployment which seems like a incentive to either be content without a job, or to collect while working "under the table". this seems like the lesser of to evils.
I agree with Tara. Firms may try and take advantage of this just to try and receive some money. However, it shows how determined Obama is to lower the unemployment rate.
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