Spring Break
Detroit, to bailout or not to bailout?
Dean Galaro
Issue date: 11/19/08 Section: Opinion
As President-Elect Barack Obama sees it, the financial crisis we have found ourselves in-stemming all the way back to the beginnings of the Bush administration-needs to be spearheaded as soon as he is in office. On top of his agenda is the creation of jobs and the propping up of the sagging US labor markets, which has led to increased unemployment (Obama issues the estimate of 8% by next year). While there is no doubt that the recession is a big issue, the bigger issue might be the idea of the federal government stepping in and trying to create millions of jobs to assist the struggling average American through several methods, some good and some bad.
As listed on his new website change.gov, Obama has listed out plans for renewing economic vitality, and first on the list is jump starting the creation of good jobs, broken up into five parts. The first plan of attack is a tax credit given out to businesses that add on employees. If this were put in place, businesses would get a check for $3000 for every new employee they hire (in the US) over the next two years in order to help offset the payroll tax. While this sounds like a step in the right direction, it begs the question as to why not simply lower the payroll tax? Instead of chipping away at the amount of money being paid into the government, money is being taken from the great, big tax pool and being given to these employers. Every taxpayer, therefore, is giving money to cover the payroll tax of companies hiring new employees, whether they want to or not.
The second two parts of the plan are actually solid ideas because they allow for businesses to act on their own and do not involve taxpayer dollars. The first action is to renew part of the Economic Stimulus Package that was put in place this year which raised the amount of money small businesses can write off as business expenses to $250,000, thus lowering the amount of money they can be taxed on. The second action is to cut capital gains taxes from small and startup businesses, meaning they would no longer have to pay taxes on earnings through investments. Both plans move in the direction of more lenient tax codes for businesses, allowing for them to put their money where they deem it best for their growth.
As listed on his new website change.gov, Obama has listed out plans for renewing economic vitality, and first on the list is jump starting the creation of good jobs, broken up into five parts. The first plan of attack is a tax credit given out to businesses that add on employees. If this were put in place, businesses would get a check for $3000 for every new employee they hire (in the US) over the next two years in order to help offset the payroll tax. While this sounds like a step in the right direction, it begs the question as to why not simply lower the payroll tax? Instead of chipping away at the amount of money being paid into the government, money is being taken from the great, big tax pool and being given to these employers. Every taxpayer, therefore, is giving money to cover the payroll tax of companies hiring new employees, whether they want to or not.
The second two parts of the plan are actually solid ideas because they allow for businesses to act on their own and do not involve taxpayer dollars. The first action is to renew part of the Economic Stimulus Package that was put in place this year which raised the amount of money small businesses can write off as business expenses to $250,000, thus lowering the amount of money they can be taxed on. The second action is to cut capital gains taxes from small and startup businesses, meaning they would no longer have to pay taxes on earnings through investments. Both plans move in the direction of more lenient tax codes for businesses, allowing for them to put their money where they deem it best for their growth.
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