AP: New “Jobs Bill” Doesn’t Create Jobs

Yeah, it’s gonna suck to be this AP reporter for the next cou­ple weeks.  Not only did he just lost his gig and be forced to cover dog shows in Hobo­ken, New Jer­sey for the next six years, but Talk­ing Points Memo will be dis­sect­ing his tax returns by week’s end.

Your courage and sac­ri­fice for the truth shall not be in vain.

It’s a bipar­ti­san jobs bill that would hand Pres­i­dent Barack Obama a badly needed polit­i­cal vic­tory and pla­cate Repub­li­cans with tax cuts at the same time. But it has a prob­lem: It won’t cre­ate many jobs.

Even the Obama admin­is­tra­tion acknowl­edges the legislation’s cen­ter­piece — a tax cut for busi­nesses that hire unem­ployed work­ers — would work only on the margins.

As for the bill’s effec­tive­ness, tax experts and busi­ness lead­ers said com­pa­nies are unlikely to hire work­ers just to receive a tax break. Before busi­nesses start hir­ing, they need increased demand for their prod­ucts, more work for their employ­ees and more rev­enue to pay those workers.

We’re skep­ti­cal that it’s going to be a big job cre­ator,” said Bill Rys, tax coun­sel for the National Fed­er­a­tion of Inde­pen­dent Busi­ness. “There’s cer­tainly noth­ing wrong with giv­ing a tax break to a busi­ness that’s hired a new worker, espe­cially in these tough times. But in terms of being an incen­tive to hire a lot of work­ers, we’re skeptical.”

Rick Klah­sen, a tax expert at the account­ing firm RSM McGladrey, said his clients need to see busi­ness pick up before they can hire more workers.

If demand were increased, they are say­ing it will take care of itself because I will then have the moti­va­tion to go out and hire new employ­ees,” Klah­sen said.

A num­ber of enti­ties have been say­ing for the past few weeks — when Democ­rats first pro­posed the tax credit for hir­ing — that the eco­nom­ics behind it just don’t pan out.  You can read a Her­itage Foun­da­tion post on it here, but I found what the National Asso­ci­a­tion of Man­u­fac­tur­ers (NAM) had to say much more compelling.

NAM is actu­ally in the busi­ness of hir­ing peo­ple after all.

There’s only one prob­lem: Busi­ness groups say the credit won’t do much to boost hiring.

I really don’t think it’s going to be much of an incen­tive,” says Bill Rys, tax coun­sel for the National Fed­er­a­tion of Inde­pen­dent Busi­ness. “Mostly it is going to be used by busi­nesses that would have been hir­ing anyway.”

The National Asso­ci­a­tion of Man­u­fac­tur­ers is pro­mot­ing its own job-creation pack­age, fea­tur­ing a cut in cor­po­rate income tax rates and a more gen­er­ous tax credit for research and devel­op­ment. The group con­sid­ers those changes more impor­tant than the $5,000 tax credit.

For those man­u­fac­tur­ers who are look­ing to hire, this will help,” says spokes­woman Erin Streeter. “We don’t antic­i­pate this tax credit being a rea­son for them to hire. Our mem­bers are going to hire if there is a long-term need.”

Busi­nesses hired because they need some­one to do work for them, not because they’re get­ting a tax credit.  As I said pre­vi­ously when this topic was brought up:

It’s not real eco­nomic devel­op­ment and any busi­ness that builds itself based solely on manip­u­lat­ing the tax code is play­ing with fire in the long-run.

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