Some Observations on the American Jobs Act

[Bill07073]

This is an article published by a financial adviser that I liked.

Some Observations on the American Jobs Act


Here are some of my unexpurgated observations on the Americans Jobs Act provisions. In general, I’m perplexed at how spending $450 billion creates jobs. I’m also perplexed that if we can easily find $450 billion more in spending cuts, why aren’t we using them now? So, don’t be offended, but here are my thoughts, [[in approximate order from good to bad) for what they’re worth:

· Cutting Corporate Loopholes: Great idea! Let’s have a fair corporate system. No arguments, complaints or comments. The oil companies can pay taxes like you and I.
· Hiring Veterans: Good idea. They earned it, and in my experience, vets make great employees. {I think you endear yourself to people more – especially with some of the language in this piece –if you expound a bit on vets and “why” they make great employees.
· Reemployment Now: I kind of like this; it a hybrid between working and unemployment that lets someone work and collect some unemployment, then get trained for a job. It actually seems to be a program that may create jobs – a goal of this act, I presume.
· School modernization: Decent idea, but does a building make for better students, or does better teachers and better parent/student communications? Again – I think more of your valued opinion here would be beneficial. More on the parent/student interaction.
· Infrastructure spending: I thought we were complaining about bridges to nowhere before. I think getting money moving is a better idea.
· Infrastructure loans: Set up a new ‘bank’ to loan money for infrastructure lending. Last time I looked, we had a bunch of banks: how about getting them to loan money by making it easier for them to do it? And, maybe a real loan might be repaid, and then we wouldn’t really be using taxpayer money.
· Subsidized employment: ‘Pathways Back to Work’: This is a fund to provide subsidized work opportunities for youth, low income and unemployed low-income adults. I like this better than unemployment – I’d rather have my tax dollars allowing people to actually work. Besides, youth ought to learn the value of work ethic, and be given a call to action. Maybe, we’ll have more productive citizens with that approach.
· 100% bonus depreciation: I think this is kind of funny, because we want to close corporate loopholes, but this opens [[actually continues) one. Yes, I’ll use it. It will make me buy stuff sooner rather than later, so it will probably be stimulative.
· Long Term Unemployed hiring preference: This is a $4,000 credit to hire someone who has been unemployed for at least 6 months. I see problems in this: It may lead employers to avoid hiring recently unemployed people, why hire someone today when you can wait a couple months, hire that person and get a tax credit; and second, in my experience as an employer, the longer a person is unemployed, the harder it is for them to get back into the work force – indeed, statistics show that the longer a person is unemployed, the less incentive they have to find a job, a bit scary to be sure, and how much do I really want to hire someone who is not as incentivized?
· Reducing the payroll tax for another year: I thought we were trying to get rid of a deficit? Isn’t Social Security one of the biggest items in the budget? Can someone explain to me how cutting the tax rate on the employee by over 30% helps save Social Security? In addition, can anyone explain how an extra $20-25 a week in someone’s check adds jobs?
· Employer Credit for increased payroll. This provides a credit to offset the employer social security tax for increased payroll. I think it was declared as a credit to give raises. Now, I’d like a raise, and Congress likes raises [[they gave themselves one), but I’m again missing how this gets me to hire. I’m a business person, and I hire because I need someone, not because I get a credit. On the other hand hmmm, maybe if I give myself a raise, and hire my family, I can get a credit…
· Extension of Unemployment. I’m going to sound crass. If I were unemployed, and getting $360 a week; I would look for a job. Suppose I was offered one at $10 an hour, which is an OK job. $10 an hour is $400 a week. I’ll have to pay federal income taxes, FICA taxes, Medicare taxes and Michigan taxes on that, plus get to and from work. Probably when all is said and done, I may be netting $300 a week. Why would I take the job? Now if the blended reemployment plan worked, that’s a totally different story.

Bottom Line: I’m skeptical whenever government announces they are going to spend money but cut other spending to make up the difference. I clearly am in favor of some of the provisions, like equalizing corporate tax rates, and trying to give people a transition to working from unemployment. Here is my take as a businessman and an advisor to businesses: Small businesses don’t hire because of tax credits: they hire because they need people. Give us a simple system with low waste and simple taxes; cut out excessive bureaucracy. Maybe show a bit of civility and decorum for the people you work for. We’ll make new goods and services and hire people to help us. They’ll make money and pay more taxes.

[Scottathew]

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