tag:blogger.com,1999:blog-4900303239154048192.post1958531704256076632..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Dean's Big Idea (once again)Unknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4900303239154048192.post-44045570807290771542009-10-07T13:13:59.611-04:002009-10-07T13:13:59.611-04:00October 06, 2009
The Easy Way to Game the New Hir...October 06, 2009<br /><br />The Easy Way to Game the New Hire Tax Credit: Hire Your Contractors<br /><br />The NYT reported on discussions in the Obama administration to implement a tax credit of $3,000 for companies that hire additional workers. The hope of course is that this will be a spur to job growth.<br /><br />Most studies show that labor demand is highly inelastic (this is why increases in the minimum wage have little effect on employment), so a tax credit that modestly decreases the cost of labor is unlikely to have much effect on employment. On the other hand, there would be many opportunities for employers to game this tax credit.<br /><br />The most obvious is simply bringing some jobs on payroll that are currently contracted out. For example, if a company currently contracts out its custodial services it can instead hire people on its payroll to do this work and get the $3,000 tax credit. This would lead to no net gain in jobs. It would have been helpful if this piece had included some analysis of this tax proposal.<br /><br />The article also discusses the possible extension of the $8,000 first-time homebuyers tax credit. It would have been worth noting that this tax credit is likely to temporarily inflate house prices ($8,000 is approximately 4.7 percent of the median house price). That means that people who buy homes when the credit is in effect can expect to sell them at a lower price (inflation adjusted) assuming that the credit does not remain in place indefinitely.<br /><br />There was an enormous amount of misinformation about home prices distributed by the housing industry and the media during the bubble years. It would be helpful if the media tried to do a better job informing the public about predictable movements in house prices now.<br /><br />--Dean Baker<br />Posted at 05:53 AMS Brennannoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-56355241775895040192009-10-06T18:35:24.775-04:002009-10-06T18:35:24.775-04:00Health care reform that decouples health care from...Health care reform that decouples health care from employment (so that employers don't have this administrative overhead associated with hiring workers) would do more to make employers receptive to reduced work time than this tax credit.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-76800564510186503372009-10-06T04:56:34.198-04:002009-10-06T04:56:34.198-04:00This comment has been removed by a blog administrator.開拓王https://www.blogger.com/profile/03625930102498622858noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-84173126195508155992009-10-06T02:21:36.952-04:002009-10-06T02:21:36.952-04:00So what will happen is that the employers will put...So what will happen is that the employers will put the money in their pocket and say thank you. They will cut the hours of the current employees and hire a bunch of bums for $1 an hour while taking the tax credit to the bottom line. No production needed. "There will be some gaming"? There will be nothing but gaming. A valiant attempt. But no cigar.<br /><br />The best thing to do is to give away money in unemployment checks and free medical care. Make it to where people don't want no stinkin jobs. That will make wages rise and solve the demand problem. Lets see the employers "game" that one. It also devalues the dollar and stops the offshoring and the Chinese imports. All done, thank you.TheTruckerhttps://www.blogger.com/profile/10346127768102862741noreply@blogger.com