This past March the Hiring Incentives to Restore Employment (HIRE) Act was put into law. This law gives employers tax breaks such as a tax credit of $1,000 each for every new employee they put on the payroll. Since then the unemployment rate has remained near 10%.
So, in 8 months this Obama law to help the economy hasn’t helped the unemployment situation, and the reason why is simple if one has an understanding of business economics.
The important thing to realize is that a business does not exist to employ people!
Businesses are created to make a profit first and foremost They hire the numbers of employees necessary to efficiently operate the business at a profit The more products or services a business sells will determine the amount of employees they need to still maintain optimum efficiency in operating the business.
That’s the way it works!
But, President Obama, who never took an economics course in his life, who made his career demonizing Big Business as a community organizer, and he still continues to bash them as president, has offered up a law that had no chance of making an impact on the economy.
So it’s a complete surprise to Obama that his law had no effect. But, had he been a business owner he’d understand that a tax credit to hire an employee totally misses the most basic thinking on how businesses run.
Why would an employer take on an additional cost for a measly $1,000 dollar tax credit when it wouldn’t even come close to covering the cost of insurance, workman’s comp, and other costs associated with hiring that new employee?
HIRE was DOA in the “real” world and President Obama is still scratching his head as to why.
If Obama really wanted to help the economy, he'd cut the corporate tax rate from 35%, which is the highest in the world, to 0% and watch the economy boom. But, that would interfere with is corporation bashing rhetoric.
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