I nearly dropped my sugar bowl in my Froot Loops this morning when I saw that Senator Sheldon Whitehouse (D-RI) had introduced a bill to provide a temporary tax credit to firms hiring previously unemployed workers.
IANAE (I am not an economist), but even I know that if you drop the cost of hiring workers, you will get a few more workers hired until the cost of employing them rises again. The net result, after the tax credit expires, would be a return to unemployment for an equivalent number of workers.
Sure, letting businesses keep a bit more of the money they earn would provide a small stimulative effect, but that too would expire, and it’s nothing like the strengthening you’d get from a permanent tax reduction under which planning and investment could be based on lower tax rates/cost of labor.
It all left me headache-y and listless, or maybe that was the after-effect of my sugar-laden breakfast. Come to think of it, a temporary tax break and sugar cereals are similar. For whatever short burst of energy they produce, it’s followed by listless unease. Healthy food and lower taxes build strong people and economies.