Changing tax code to spur job creation?

A calculator and a tax guide.

TEXT OF STORY

BILL RADKE: The government has tried trillions of dollars in stimulus, the Federal Reserve has lowered interest rates, and still the economy sputters.

John Dimsdale reports Congress could look next at the tax code.


JOHN DIMSDALE: A presidential Advisory Board has suggested some tax changes that could help the economy. The board didn't make any recommendations, but the head of the review committee -- former Reagan economic adviser Martin Feldstein -- was clear about what he thought is wrong.

MARTIN FELDSTEIN: The United States has a very high corporate tax rate. Higher than any other industrial country than Japan.

Are corporate taxes keeping businesses from creating jobs? Stephen Entin heads a think-tank on the Economics of Taxation. He says everything else the government's tried has been a waste.

STEPHEN ENTIN: If instead of spending all that money they had cut the corporate income tax, renewed the Bush tax cuts -- particularly the two top rates that fall on the people who are doing the bulk of small business investment -- then you would have seen more investment by the private sector.

Resulting, he says, in more jobs. But economist Mark Zandi of Moody's Analytics says there's a faster way -- keep and expand a tax credit for businesses that hire the unemployed.

MARK ZANDI: Make it more lucrative, bigger and publicize it more better than they have the current one.

Zandi says the recovery is too fragile to allow the Bush income tax cuts to expire. He'd extend the cuts, even for the wealthy, until the economy gets going again.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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