This week on the Tax Policy Podcast, I interview our very own Tax Foundation economist David S. Logan. David discusses President Obama’s proposed American Jobs Act and his new study analyzing its likely impact. In response to a question about the track record of tax credits for companies who hire new workers, David responded: The track record [for job creation tax credits], honestly, doesn’t look too good, no matter whom you’re looking at or whose research you’re surveying. Really what it shows is that the more targeted a tax credit is, or hiring incentive credit is, as these are, the less likely they are to succeed. Second, the big problem with these tax and hiring incentive credits, is that nowhere in the bill does it say that an employer can’t fire someone and in same day hire someone, and gain the $4,000 to $9,600 credit, depending on whom the company hires. So what we’re talking about is a system under which, hypothetically, you could see absolutely no decrease in unemployment, and yet companies reaping these huge government checks because of each new additional hire, if they’ve been unemployed for longer than six months. We go on the talk about the payroll tax cut for existing workers, the economic impact of the stimulus parts of the bill being temporary and the impact of the tax hikes being permanent. Listen to the whole episode here.
