The state Senate Democrats released a job creation plan today. It mainly focuses on aiding small businesses.
The most tangible proposal in the package was an idea that Gov. Chris Gregoire pitched in her State of the State speech two weeks ago—a tax break for small businesses (under 10 employees) that hire a new worker, including health care coverage.
Eastside Seattle suburban Rep. Ross Hunter (D-48), chair of the House Finance Committee, has been skeptical of the tax break ever since Gregoire announced it. (Employers would get a $4,000 break on the B&O tax for a new hire who makes more than $40,000.)
“When we design tax credits to incent new job creation, it’s important to make sure that the credit works at the margin,” Hunter says. “We don’t just give money to people who were going to create jobs anyway.”
It’s hardly an FDR-style investment plan—the only appropriation I found among the seven bills (including a worker retraining program, a weatherization program, and allowing local districts to create special taxing zones to fund infrasturcture projects) was $500,000 for Covington-area Sen. Claudia Kauffman’s (D-47) bill to help small businesses get tech grants and efficiency consulting.
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Ideas for nourishing entrepreneurs
Put together a package for start-ups (70% of new jobs) that will allow laid-off mid-career people to take the leap. This includes 1) non-profit incubator buildings; 2) incentive zoning; 3) a bond-based fund to subsidize locally owned small business and non-profits to occupy all those empty store fronts required by our zoning for five years, declining; 4) free consulting from retired executives (SCORE); 5) training on Excel and making a business plan; 6) regional conferences to help start-ups, followed by linkages—community organizing; 7) raise B&O threshold; and most important
a State Bank of Washington or other means of pumping small business loans into the economy. Lack of HELOC equity and lower credit card limits means traditional means of funding start-ups aren’t available.
This is a ridiculous proposal with regard to both the politics and the policy. First of all, tax policy is an ineffective and narrow-minded way to pretend to create jobs. To imply that taxes are one of the key things slowing job creation is to cede the entire debate to the Right. Business & jobs are down because of lower demand, housing prices, and the credit squeeze. It’s not about taxes. Right wing economists don’t even pretend this is the case.
More importantly, taxes are not the only thing government does or can do to affect jobs. They’re not even a particularly important way to affect jobs numbers. The way to create jobs is to create jobs. There’s work to be done, no? Build rail. Restore the Sound. Invest in energy. Improve the parks. You know, by creating work. Not by dangling useless “incentives” that will have nearly zero effect while costing real dollars. And certainly not by implying with your every move that the Right has been correct all along in their depiction of taxes vs. jobs as oppositional forces locked in an either/or debate.
At this point, how much more ground can the Democrats give up to the Republicans? The worst part is that the Dems implement Republican ideas more effectively than the Republicans do, since when the R’s try this BS, the Dems at least pretend to oppose it.
Just ghastly what our politics has become in the past few years. Seems Rossi won after all.
You’re right Fat-Tailed; more taxes results in inflation (to an extent) since those costs get passed right on through, which means less earning power (disposable income) to the consumer, which means less free cash for investment (any kind, startup, ballgames, etc) which leads to the people with cash hoarding it (and they’ve already paid tax on their hoard) so now tax receipts fall and must be made up somehow….more taxes…repeat cycle. Sort of like Washington State now….your fundamental reasons are right, it’ll just take longer for all those things to come back with higher taxes. Now isn’t the time to raise taxes, wait until the economy gets better, then they can be raised.
This is a gift to those that don’t need it, from a source that is 2.6b in the hole. If the net is fewer people off unemployment, and not musical chairs, then maybe.
I am skeptical of this proposal, though I have not seen the specifics of the bill. I’ll withhold judgment until I do.
Not all tax incentives are bad. We’ve done some studies on our R&D tax credits that show that they actually generate revenue for the state. Sometimes they work.
However, sometimes they don’t. We need to be able to eliminate the ones that don’t – something that 960 makes it very difficult to do. If you believe either end of the debate on this you get stuck in a mental trap and can’t get out. It’s incredibly important to get the details and the design right on tax incentives or they are a waste of money.
I’ll pay attention to this proposal when I see it, presumably tomorrow. And yes Josh, I’ll return your call in the morning.
Ross
You're right Fat-Tailed; more taxes results in inflation (to an extent) since those costs get passed right on through, which means less earning power (disposable income) to the consumer, which means less free cash for investment (any kind, startup, ballgames, etc) which leads to the people with cash hoarding it (and they've already paid tax on their hoard) so now tax receipts fall and must be made up somehow….more taxes…repeat cycle. Sort of like Washington State now….your fundamental reasons are right, it'll just take longer for all those things to come back with higher taxes. Now isn't the time to raise taxes, wait until the economy gets better, then they can be raised.