Business Tax Breaks NOT a Jobs Bill

It doesn’t take even an Associate’s Degree in economics to understand that offering tax break incentives to businesses if they hire new employees (and retain those new employees for at least 52 weeks under the terms of the proposal) is clearly not something that can reasonably be called a Jobs’ Bill Stimulus package. That type of arrangement is what has historically been known as a “tax break,” just like I wrote above.

Tax breaks can come in many forms, whether it’s lessening the tax burden on businesses for the purchase of new office equipment, or cutting the capital gains’ tax in view of profits made from real estate sales and the sale of stock. All manner of any one of a number of various tax breaks have been coming and going in this society for about a hundred years or so.

But who do you know that’s out there finding buyers for new homes enough to offset the millions of people who have already lost – and are concurrently faced with losing – their original homes, which could equate to a capital gains’ taxation equation? How many common people do you know who are out there buying and selling stocks for a profit that in turn would require them to pay capital gains’ tax?

There is virtually no one doing any of these things. More jobs are still being lost than are being created. There is no "new money" being created out there enough to offset the billions of dollars in "old money" that has already been lost and continues to be lost in the economy (e.g., depreciating home values and lost stock values).

On the morning news here yesterday, the official national unemployment figures were released for February where it was indicated that, “initial claims for unemployment are DOWN to 457 thousand claims.” So what’s the big deal there? The inflective tone in the commentator’s voice was obviously “trained” to make it sound like it was a good thing. Another half-million jobs LOST in February!

Good gravy, but what a joke that is; and the number works out to a rough average of 10,000 lost jobs per state of the 50 states. That doesn’t sound like something to be bragging about under any circumstances; and particularly not to brag about it when weighed against what has been happening in the national economy for about the past two (2) years now. However, it was interesting to note where the news’ commentator failed to explain the distinction of “down” when he said that initial jobless claims were down.

Down to 457 thousand from what number, man – 458 thousand perhaps? What a real joke.

Anyway, back to the ideal of what amounts to “elementary school level” economics: If businesses had new business coming in, and therefore were earning money, they would not have laid off some 25% of the nation’s work force in the first place. And offering tax break incentives to businesses that simply don’t have the resources to hire any new employees is the exact same as telling a homeowner with no money in his pocket that he can save his home from foreclosure if he comes up with 50% of his mortgage payment instead of 100%. No money means NO MONEY!

Credit card companies are scrambling around all over the country offering 20% or more in reduced buyout rates on delinquent and defaulting consumer credit accounts, but most of those efforts are failing right now. People simply don’t have 80% cash lump sums to pay off bad debts, or to even resume normal payments on those delinquent accounts, because they are out of work.

The point here is that these credit issuers offering reduced buyout rates to delinquent borrowers is – in principle – the exact same type of incentive that the Obama Administration is proposing for businesses who hire – and retain – new employees in consideration of a future tax break. It’s like saying, “Okay, were going to make the cost of labor less for you over the course of the tax year,” which is tantamount to offering a provision for a buyout incentive on the current, higher tax rates.

The only businesses who would be taking advantage of such a tax-break hiring incentive are going to be those businesses that are already financially capable of hiring new employees in the first place. And in view of any need for business expansion where a profit can be assumed, many of those same businesses would plan on hiring new employees either with or without a tax break.

If the idea (which is not an idea) was to simply hand over cash money to businesses and then say, “Okay, now use this money to hire new employees,” then that would obviously be an entirely different story. That scenario would again be – in principle – the exact same as if the government were handing over cash money to delinquent home buyers and delinquent consumer credit borrowers and then saying, “Okay, now use this money to pay off your home mortgage and to pay off all your other debts.”

Seeing the government handing over cash money to businesses and then telling them to use the money to hire new employees would also be the equivalent of buying jobs for the people. But that idea is a real moot point, since buying jobs for people in general is not part of any government stimulus plan.

The only cash monies being handed out like this are being handed to the likes of billionaire bankers and their failing multi-billion dollar banking institutions. Then, even after these institutions are effectively bailed out from going bankrupt, the down line borrowers who were defaulting on their obligations in the first place -- are still expected to pay off those debts if they want to keep their homes, to keep their cars and to avoid having to live in a cardboard box.

The other very obvious and looming fact to all of this nonsense when it comes to trying to paint a picture of business tax breaks as being a “jobs’ bill stimulus package,” is that none of these provisions are designed to free up business credit lending on the part of the banks who have been responsible for cutting off lending to much of the business base around the country and also around the world. Business credit lines continue to effectively remain just as frozen as they were last year.

In other words, and again, if a business doesn’t already have the financial resources to expand, then a tax break to supposedly create a viable incentive for expansion is not going to make any difference. It’s just as simple as that.