Wednesday, March 17, 2010
Tax breaks for hiring the unemployed
With the national unemployment rate remaining high and showing no sign of declining in the near future, it is absolutely necessary that the government gives business owners financial incentives to hire more workers. A $17.6 billion jobs bill has recently been approved by the Congress. According to the bill, employers will be given two tax breaks for qualifying new workers hired in 2010. Moreover, the legislation extends the provision to that allows small businesses to write off as much as $250,000 of the capital expenditure in 2010. Despite the measures being quite costly and hence significantly worsening the budget deficit, they will almost certainly create a great boost for many businesses. That being said, several small business owners still doubt the helpfulness of the stimulus package since they believe that, with their businesses severely devastated by the recession, they are in no position to create new jobs. Perhaps such firms would need help rebuilding first.
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According to the news, the government will spend 17.6 billion dollars on jobs bill, which is exciting for people who want to find a job. Meanwhile, this sum of money will also encourage people to consume more, because the public will expect that the unemployment rate is dropping down after the money is assigned to the economy. However, when we take a closer look at the government’s situation, it is not actually that optimistic. The substantial sum of money which will be put into the jobs bill will worsen the government’s deficits, which will decrease the public saving. And the decreased saving will further impact the consumption in the future. Therefore, there are two effects of this action. One is to boost the economy by adding more job positions and the other is to increase government’s deficit.
ReplyDeleteIt is encouraging to read that the government are providing incentives to employers to hire more people. I read an article discussing how the economic recovery hinges on the performance of small businesses. Yes, I agree that many small businesses are in no position to create new jobs, but as the economy begins to recovery more jobs will be created. On the other hand, this may increase government deficit, but the democratic congressional leaders did unveil a $940 billion health care plan and that bill will have an even more severe impact on the government's deficit.
ReplyDeleteI think that even though, the bill will worsen the government deficit in a short run, it will be beneficial in the long term. Because more people will be employed and therefore they will have income and therefore consumption will increase, because people will be able to spend more, since they work and have an income. Plus the more working people means more production which will also boost GDP later.
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