A possible new tool

I haven't always been completely on board with the concept of utilizing tax credits to encourage the hiring of workers, but, given that unemployment is going to hover around 10 percent in the foreseeable future, I'd like to see if this might work ...

One version of the approach, to be unveiled next week by the Economic Policy Institute, a labor-oriented research organization, would give employers a two-year tax credit if they increased the size of their work force or added significant hours of work (for example, making a part-time worker full time). Employers would receive a credit worth twice the first-year payroll tax for each new hire, amounting to several thousand dollars, depending on the new worker’s salary.

Georgia proposed a similar measure, though it was bogged down by a host of other awful policies like a capital gains tax break which resulted in a veto from the governor.

Now, one of the primary reasons I opposed the Georgia version of a jobs tax credit - aside from the reckless capital gains tax cut - was its direct impact on the state's budget. Georgia must have a balanced budget, and this policy could take away $600 million from an already cramped fiscal situation. Likewise, in the absence of a complimentary program at the national level to maximize the potential benefit, I was skeptical about how effective such a program would be.

The national proposal appears to be more effective. For starters, it would provide a benefit to the hiring of part-time workers and the credit would be valued at twice the employee's tax liability. In addition, the federal budget doesn't have to be balanced and is the most effective in combatting economic downturns given its size and scale.

If Georgia legislators can find a way to pass a complimentary tax credit at the state level next session - one free from nonsensical tacked-on policy gimmicks like the capital gains tax break - this might be an effective tool to keep in the policy toolbox.