Jobs Tax Cut

[Edsel]

All of the tax cuts over the years, proposed or actual, claim to be a "jobs tax cut."  Usually, immediately upon revelation and claim that the bill will "create jobs" there ensue claims by one group or another that the bill will NOT create jobs.

Here is a plan - has it ever been tried?  Instead of cutting tax rates, what about creating a CREDIT for employers to increase their payroll?  Take a three-year increasing total of W-3s reported at year-end, using the same mentality of the increasing R&D credit.  Allow a 50% credit applied to the amount of the increase, to be recaptured if employer slashes jobs in a succeeding year.  Limit W-3 amounts to those employees whose compensation exceeds 20X the median of salary rates so the credit would not apply to absurd executive pay sucking up the benefit.

3-yr average of W-3s is $260,000.  In year 4, W-3 totals are $280,000.  Employer is entitled to a $10,000 tax credit (50% X $20,000).

Ah yes, I'm aware we have a "targeted" jobs credit, for chronically unemployed, disabled, prison record, i.e. people who are not going to get hired.  But has anyone ever proposed a general jobs credit such as I've described above?  This would be a REAL credit for companies who create jobs, not just some presumed ethereal "help the economy and create jobs as a result" plan, which only increases bottom-line tax savings for companies who slash jobs or move the jobs overseas.  This way the "jobs tax cut" goes to those companies who really do create jobs.  Also curtails criticism that the bill will "not really help jobs."

Has any taxing authority ever tried this?  Federal or otherwise?

p.s. this is NOT submitted as a political post.  Please don't try to attach connotations otherwise.

 

[taxxcpa]

To simplify taxes make it a one page document

 

[SaraEA]

I am puzzled by all the recent proposals to encourage companies to create jobs here in the US.  The unemployment rate is so low right now that the nation is about at "full employment." It will do no good to encourage companies to make more jobs available if there aren't enough workers to fill them.  The movement to repatriate jobs to the US was pretty strong for awhile, for logistical not political reasons, but will have to slow if those jobs can't be filled.  How about a credit to create better paying jobs?  Maybe that will boost wages that have stagnated for so long.

[Edsel]

Well-noted Miss Sara.  But there are virtually no more full-time jobs in the country than there were in 2007, in spite of the plunging unemployment rate, and you are right that the jobs are paying no more now than 10 years ago.  The unemployment rate has had their calculation change to depress the rate and give the impression that workers are now fully-employed. 

If you read my plan, the credit rewards companies who increase wages as well as increase jobs.  The credit is based on W-3 totals, and it doesn't matter what causes the increase:  more jobs, or higher paying jobs.  Or both.  Plus if the workers are given a raise, the eligible executive pay increases by 20X the wage.

[Randall]

I never understood the incentive.  Does a business hire someone to get a tax credit?  Or does a business hire someone because they need the additional person to get the work done?

 

[Edsel]

Ideally, the incentive should always be need-driven, and gimmick-related such as pressure from social agencies, special political interests, and yes, tax credits/deductions.  However, there are impediments which stop companies from hiring needed personnel.  Fear of being sued by employees, requirements for medical coverage, available space to accommodate workers, etc.  To the extent that these impediments can be quantified with dollars, the credit helps offset as much as 50% of the compensation.