In the midst of President Obama’s push to hike taxes on the most successful job-creating Americans, the President proposed a new “stimulus” of $25 billion to offer tax breaks to businesses for hiring new employees or paying workers higher salaries.
Sound like déjà vu? That’s because Congress and the Obama Administration passed similar hiring tax credits back in 2010—to no avail.
Obama’s latest version of the botched policy is intended to target small businesses by offering to refund 10 percent of new payroll costs incurred by companies next year. If enacted, this recycled hiring tax credit will most certainly fail, just as its 2010 predecessor did.
Just like the original, this remake of an old policy would fail to create long-lasting jobs because it doesn’t affect the core question businesses ask themselves before hiring a new employee: Does the new worker increase the business’s profitability over the long term? Businesses don’t usually hire workers for just one year, so the credit won’t change their decision-making process one bit.