Tax-Credit-for-Hire: Another Failed Stimulus Policy in the Pipeline

John Ligon / February 04, 2010

As President Obama continues campaigning for yet another round of stimulus it appears now that even democrats are beginning to question the soundness of this strategy.  This new focus includes a $5,000 tax credit—among other items— for any business that hires a new worker—effective the year the legislation is passed.  Of course, the intended effect of this new policy may win some political points for the President and legislators, yet this effect does not override the fact that this maneuver is simply bad economic policy.

Creating a tax credit for hiring new workers will not create an incentive for already-struggling companies to begin hiring—which is the overall intent of this policy. This could even result in some currently unemployed individuals remaining unemployed until the tax credit is passed into law, or similarly, some companies firing some workers and then re-hiring once the tax credit is passed into law. (more…)