How Can Government Create Jobs??

That seems to be the desperately “big” question these days, and rightly so.  There is a great deal of pain in the country because of unemployment.  The politicians are trying to create jobs but so far nothing has worked to reduce the pain of unemployment.  Here is one way to look at it:

1.  The Democrats seem to favor using tax dollars to “create jobs.”  That is somewhat of a misnomer since the dollars don’t really create jobs but rather provide funds for projects intended to create or “save” jobs.  The “prime the pump” approach.

2.  The Republicans prefer to just cut taxes and assume the private sector will use those savings to “create jobs.”  Problem with that is that the jobs may not be created in America.

3.  Consider this:  Change the tax code to provide that a taxpayer gets a tax CREDIT for $60,000 for every job created in America with a salary of $40,000 and benefits (health insurance and pension).  Now, a company or individually who is staring at his or its tax return which shows a tax obligation of, let’s say, $150,000 would need to say to himself “Well, I can either send a check to Washington or I can create two new jobs and only send Washington $30,000.”  Wonder what will happen?  I think new jobs will get created.  And remember the $40,000 salary generates withholding tax to the state and federal government along with withholding for social security and unemployment benefits.  (There would need to be severe penalties for those jokers who turn to their pal and say you hire me, I’ll do nothing and I’ll hire you and you do nothing and we both save tax dollars.  But the smart guys on capitol hill can write tough regulations that make this hard to do.)

With one tax bill the government could well “create” lots of jobs.  Well, actually, the private sector would be creating the jobs assuming they would rather have the productive services of an employee as opposed to sending money to Washington.  (The credit could be even higher if the state authorizes the same credit.)

This might just work.  Nothing else seems to have so far.

 

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