Tax credits play major part in new Obama plan
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Steve Chiotakis: Let’s get a little more perspective on the president’s jobs plan, and tackle all those tax credits that make up more than
half of the proposal, as we mentioned.
Jill Schlesinger is editor-at-large at CBS/MoneyWatch, and she’s with us live, as she is every Friday morning from New York. Good morning Jill.
Jill Schlesinger: Good morning.
Chiotakis: Is any of this gonna help? I mean, do tax credits like these create jobs?
Schlesinger: Well let’s look at the employee portion of the payroll taxes. The idea behind those kind of cuts is that workers spend the extra money in the economy — so that’s kind of generally good. The problem is that there’s really been a fundamental shift since the recession. For the past year, even though Americans got that cut, they used the extra money to pay down debt and beef up savings — so there’s really not any great reason to think they’re going to do something different with an extra 20 bucks per pay period next year.
Chiotakis: So we have these incentives, Jill, for the employers to hire. Is that enough for a company to pull the trigger on adding jobs?
Schlesinger: You know, I think business owners only hire when they see an increase in demand for their goods and services. Without that, why would they add new workers, even if it’s a slightly cheaper cost? I think this part of the plan is almost like cash for clunkers — you’re basically paying people to buy a car that they would have already purchased. There’s actually a recent study that looked at a similar employer tax credit plan from the late 70s, and it found that 70 percent of those tax credits were claimed for hiring workers who would have been hired anyway. So, this could be just throwing a little bit of money at some company that doesn’t really need it.
Chiotakis: Jill Schlesinger from CBS/MoneyWatch. Jill, thanks.
Schlesinger: Thank you.
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