Boost job creation with tax write-offs
February 8thThis Op/Ed appeared in the Delaware County Daily Times.
By Pat Meehan
There is a famous saying in policy circles that the best social program is a sustainable job. In December, rosy administration talking points were contradicted when forecasts of additional jobs being created proved a pipe dream and 85,000 more American joined the unemployment line instead. Regardless of political affiliation, it is time for Washington politicians to make jobs their top priority.
Americans are rightfully angry but they are not naïve. There are no easy short-term solutions, but there are some things that must be part of a road back to sustainable economic recovery. As a candidate for Congress, let me set forth my views and some steps I believe we can take to get the economy back on track.
Like all sectors of the economy, small business has been losing jobs. But that doesn’t tell the whole story. Small businesses that are just starting up or are growing are also hiring far fewer people than they have in the past. Yet over the last 35 years, small businesses have accounted for the creation of two-thirds of the net new jobs in the country. This makes small businesses a critical element of any recovery plan.
A recent study by the National Federation of Independent Businesses cited spending weakness and lack of sales as the major economic problem confronting small business and inhibiting job creation. When you consider that consumer spending constitutes 70 percent of our gross domestic product, it is no surprise that declines in spending are hitting small businesses hard. If we want to grow our economy, reduce unemployment, and create jobs, we need to put more money in the hands of average consumers – not the big banks that have been giving huge bonuses to their corporate executives.
One option we should consider is eliminating the payroll tax (FICA) for a set period to help jumpstart the economy. This will put money directly into the hands of taxpayers and help drive local spending, providing needed sales for small businesses, and promoting economic growth.
Let’s start growing our economy from the bottom up. The bailouts of large banks are clearly not trickling down to consumers, many of whom are struggling to refinance mortgages, have been receiving notices about double-digit hikes in credit card interest rates. Rather than picking particular favored businesses for bailouts, as has been past practice of Congress and the administration, a suspension of the payroll tax will have broad impacts benefiting all workers and businesses.
I am less encouraged by proposals to implement a broadly defined jobs tax credit to employers. In talking with the small business community, these tax credits tend to mostly benefit larger employers who are already expanding anyway, and tend to benefit companies that have not been as hard hit by the recession. Instead, I support a targeted job creation tax credit of 25 percent for a business hiring their first or second employee. This will enable many solo business owners to increase their efficiency and output.
Consider the plumber who would fix more broken pipes if an office worker was handling the phone calls, the billing, the supplies and so forth. This type of targeted tax credit may be just the push to enable solo practitioners to put hundreds of thousands of Americans into new jobs.
A third policy we should pursue is increasing the tax write-offs a new business can take in the first year. The current economic troubles of the nation have resulted in a large number of experienced, knowledgeable, and skilled individuals being laid off in their 40s, 50s, and 60s. Some of these individuals will channel their entrepreneurial spirit and try something new.
Remember, Disney, Burger King, Fed Ex, CNN and Microsoft were all started during periods of economic downturns. Increasing tax write-offs for new businesses will help to spur new business creation and new jobs.
This is especially important when you consider that most employees are generated in the first few years of a firm’s existence. Encouraging the formation of new businesses must be a major focus of our efforts.
There is also a perception among small business owners that the climate for small business expansion is poor due to the current Washington political climate. Uncertainty about how government mandates will affect the cost of an employee is discouraging a number of small business owners from expanding and creating jobs.
From my perspective, getting our economy back on track, putting people back to work, and encouraging the creation of new jobs must be the number one priority of Congress. Until we do so, local, state, and federal budgets will continue to encounter problems funding needed programs due to decreased tax revenues. Families will continue to struggle to make ends meet and pay their bills.
The ripple effects are being felt throughout our society. Congress needs to get back to basics and focus its time and energy on the most important problem facing our country: the economy.
Pat Meehan, the former U.S. Attorney for the Eastern District of Pennsylvania, is a Republican candidate for Congress in Pennsylvania 7th Congressional District, which includes portions of Delaware, Chester, and Montgomery counties.



