Obama’s Business “Tax Breaks” Aren’t Good Policy
With the election looming, and Democrats suffering from an utter lack of trust with the electorate when it comes to economic issues, the White House is scheming for an “October surprise” of sorts in the form what they’re calling tax breaks for businesses.
Except, I don’t think that “tax breaks” is the right term given that we’re talking about temporary tax credits that only kick in when businesses meet specific criteria.
With just two months until the November elections, the White House is seriously weighing a package of business tax breaks – potentially worth hundreds of billions of dollars – to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations.
Among the options under consideration are a temporary payroll-tax holiday and a permanent extension of the now-expired research-and-development tax credit, which rewards companies that conduct research into new technologies within the United States.
First, isn’t it Democrats who tell us that any attempt to let Americans keep more of their own money through tax relief creates budget deficits? If that’s true (and it is true as far as it goes, though I’d argue that our deficit problem lays with spending not taxes) then how can they justify a payroll tax holiday that takes billions in revenues from gigantic entitlement programs like Social Security and Medicare?
We have a big budget problem here in America, and the most acute areas of that budget problem lay in the funding of Social Security and Medicare. If fiscal responsibility is really what Democrats want, how can they justify cutting revenues for those programs while simultaneously opposing any attempt to cut expenditures in those programs as well?
Even setting that aside, the idea that this is going to lead to any short term or long term economic stimulus is the stuff of fairy tales. If you suppose that businesses would hire workers, or begin research and development, to get a tax (and that’s a bit of a stretch), if that hiring or that research is dependent upon government tax credits the jobs/research will only last as long as the tax credits do.
Hardly the stuff of long-term, substantial economic growth.
What Obama is proposing is an economic policy gimmick motivated more by politics than a desire to foment prosperity.
Tags: Barack Obama, Economy, jobs, medicare, payroll taxes, social security, tax relief
