After years of insisting that tax cuts actually hurt the economy, the Democrats are now proposing a tax cut to stimulate the economy.
Amongst all the tax hikes scheduled to impact small businesses on Jan 1, the Democrat’s most likely proposal is a payroll tax “holiday”. Will saving a week’s worth, or a month’s worth of payroll taxes, incentivize small businesses to go on a hiring binge? Will this provide the economic certainty needed by corporate America to begin hiring again?
Apparently Congress has already approved (but I don’t think Obama has signed) a payroll tax break for hiring someone who has been unemployed 60 days or more. Of course, this also serves to add more paperwork burden to the small business. The burden will be on the employer to prove the new employee’s prior unemployment status, which requires additional work, and adds yet more cost.
When hiring at the professional level, what is more attractive to an employer? Someone they can get a 6.2% temporary tax break on, or someone currently employed, or someone unemployed only briefly? As a professional in the staffing industry I can tell you, the longer someone has been unemployed, the more difficult it is for them to get hired. A 6.2% tax break won’t help much, if at all.
Will this 6.2% temporary tax break be enough to incentivize more hiring, when the end consumer is not buying products/services?
I think not. Businesses are not hiring because of all the uncertainty in the economy, and the uncertainty of future tax burdens.
