Thursday, September 8, 2011

Tax Cuts to Small Businesses Don't Lead to Jobs

Brief one here, but Mr. President, you're simply missing the point.

If my business is doing ok--say making $100,000 net profit in a year on a million in revenue, but because of weak demand my revenue has been that way for 2 years, and demand isn't increasing, I'm not going to hire someone with a tax credit.

There are only two reasons I'd hire: to invest in a new initiative with the belief in future demand, or in response to demand.

Tax credits for hiring don't create demand, and they aren't enough to make it worth my while to take the risk.

Instead, you need to give incentive to companies already sitting on a huge pile of cash, like Apple, for instance, to build new facilities here, hire people, and most importantly, to buy from small businesses.

Promote investment and new initiatives from the largest companies, directed to small companies, and you'll see a big spike in employment.

Unfortunately I don't think he's basing policy on how the real world works.

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