October 17, 2008

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While I'm Thinking About It

About Obama's Employer Tax Break Plan

Brief detail here. Further details seem unavailable, even at the official campaign site.

So, a $3,000 tax credit for two years for small businesses who hire someone. There may be some fantasy world somewhere where this is a good idea, but here, in the real world, it will never work. Companies (or rather, owners and management) hire people for a rather small number of reasons:

  • The applicant can do something the company currently cannot, and will more than pay for him- or herself in doing so.
  • The company needs to fill a vacancy.
  • The company has too much business than it can handle with the current staff. This may or may not be a temporary or seasonal situation.
  • The company is expecting an increase in business, above and beyond the capabilities of the current staff. This may be because of planned expansion, a careful study of current trends, or wishful thinking.

Yeah, there's a story in that last one. No, I'm not going to tell it here.

Let's look at some numbers. The minimum wage in Oregon is going to be $8.40 an hour starting January 1, 2009. Somebody hired half-time at that rate will be earning approximately $680 a month. That's $8,160 a year, and doesn't count what the company spends in things like training or their portion of Social Security and unemployment taxes, or the wear and tear on the current staff as they get used to the new guy and vice versa.. Three thousand dollars cannot cover the cost of hiring someone the company doesn't need. It won't create a single job.

Either Obama does not know this, in which case he really is too inexperienced for the job, or he does know it but thinks the American people are too dumb to figure it out, in which case he doesn't deserve it.



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