Yesterday, the Senate was giddy about passing a "jobs creation bill." The media has been proclaiming how even Republicans are jumping on board with this bill. They are making a big deal out of Scott Brown, R-MA, voting yes since he just got to Congress. But, let's slow down. What is this bill about?
This bill is supposed to be a $15 Billion job creation package. First, let's remind our good friends in Washington that the only jobs Congress can create are Government jobs. Congress cannot create jobs in the private sector. Their policies can hinder or encourage job growth in the private sector, but they are not the ones responsible for any new jobs. Now, Congress wants the credit for jobs creation because then Obama can take credit for it as well.
One of the focal points of this bill is that it frees any company that hires the unemployed from paying their 6.2% social security tax for 2010. If the company retains the employee for at least a year, they get a $1,000 tax break.
So, with less money going into Social Security, Congress will have to go after it somewhere else. And, that somewhere else will be from those who are already employed. Secondly, a $1,000 tax break?! Is that per new hire? And, by the way, companies don't pay taxes anyway - we pay them through their prices they set for their goods and/or services. So, giving a company a "tax break" would actually be giving us a tax break. But, a $1,000 tax break isn't a tax break. That's like letting the couch cushions fund your kid's allowance. If you want to encourage more corporate participation in the hiring game, then do something big. How about eliminate a lot of the taxes and regulations that are imposed upon them and that stifle their ability to be able to afford to hire additional help. Why not suspend and even eliminate the federal income tax - give people more of their money to spend in the economy. This is the real issue, folks. Giving companies "tax breaks" is only a symptom of the problem.
Jobs are created based on two simple things: Supply and Demand. If demand is higher than supply, then companies need to hire more workers to get supply back even with demand. If we had more of our own money to spend, demand would start to increase, companies would begin to hire more to meet the demand with more supply and two things ultimately happen: the economy is back on its feet and unemployment falls. Companies do not just arbitrarily decrease their work force. This bill suggests they do by virtue of it focusing on the corporations and their hiring practices. Jobs exist for one reason - a company needs to make money and they need workers to make supply to meet demand. If the demand isn't there, then the need for employees decreases. Companies are not going to keep an employee on the books at 20k/year or 30k/year just to get a 1k tax break. That's like the common practice of hanging on to a mortgage because of the tax write off. So, you send 10k to the bank in interest so you don't have to send 3k to the IRS in taxes?! (By the way, if your CPA suggests that you do that, then fire their sorry carcass and get one that can actually do math.) Frankly, this bill is insulting to private business.
The Government that has given us this economy and this deficit are now the ones who are going to fix it?! The Government that hates the private sector now are seen as their savior? Don't fall for it - these people want one thing only and that is full government control over business industry - and you take that to the bank...well, don't take it to the bank because they will be taxed more for the TARP money they've already paid back.