To the editor:
Tomorrow night we will, at long last, hear President Obama set forth his latest plan to create jobs for American workers.
The administration has been floating "trial balloons" to see how Obama's plans are received. One includes stimulating the private sector to create jobs by offering a $5,000 tax credit and 5 percent payroll tax reduction for every new hire.
The United States has the fourth highest corporate income tax rate in the 30-nation Organization for Economic Co-operation and Development. The combined U.S. federal and state rate of 40 percent is almost 9 percentage points higher than the average OECD top corporate rate of 31.4 percent. If an employer hires a $40,000 a year worker (more like $48,000 after payroll taxes and benefits paid are added in,) this tax credit will result in a savings of only $2,000.
Along with the tax credit, it is proposed that a five percentage point reduction in payroll taxes be granted the employer for all new hire wages. Huh? What payroll taxes does the employer pay other than Social Security (6.2 percent) and Medicare (1.45 percent)? That's a brilliant proposal given the trouble Social Security and Medi-care already are in! (Remember that Obama reduced the employee contribution rate by 2 points to 4.2 percent for 2011 at an estimated cost of $120 billion for the year and wants to extend it, so that means a total reduction of some $240 billion going into Social Security coffers.)
This stimulus for businesses is estimated to create 900,000 new jobs but one economist at MIT forecasts 5.1 million new jobs will be created even without it, so those new hires will be eligible for the same tax credit and tax break. It is estimated the final cost to taxpayers for each of the 900,000 new jobs would be $35,000. That's $31.5 billion dollars!
But wait! If all this sounds familiar to you, that's because last year Obama offered the same sort of incentives in his HIRE Act, even eliminating the entire 6.2 percent employer Social Security contribution. Fewer than 900,000 new jobs total were created during the incentive period (according to the Bureau of Labor and Statistics) and fewer than 400,000 new jobs total were created if you discount the 500,000 temporary Census jobs included in this number. Employers, worried about increased taxes and burdensome and costly regulations including Obamacare, didn't come out in droves to take the president up on his offer.
With Liberals using scare tactics to frighten Social Security recipients into believing the Republicans want to do away with their benefits and Medicare, seniors need to know that Obama has no problem depriving those two programs of desperately needed hundreds of billions of dollars of revenue. And if you think a cash-strapped Medicare program won't result in denial of care and services, you've got another think coming!
St. James City