According to CNN the U.S. lost 2.6 million jobs in 2008. Coincidentally there are, per the U.S. Census Bureau, 4.4 million small businesses with fewer than 20 employees in the U.S. I think the math is straight forward and as such we propose The Small Business Tax Credit Act of 2009.
The federal government should offer each small business a tax credit, equal to the average salary in the U.S., if they hire one full time employee and keep them employed through the time that the company files their 2009 tax return.
Several news stories list the average salary in U.S as $39,026. Therefore the total “cost” of this program is just over $101 billion (given 2.6 million new hires). That number of course does not include the income and SSI taxes that the federal government would receive from these employees/employers for salaries earned in 2009. Some back of the napkin calculations will show that with an average tax rate of around 32% (includes SSI and Medicare taxes) the government would take in $32 billion in taxes. Therefore the ENTIRE program would “cost” the federal government only $68 billion.
The actual cost of the program could end up even less as each of the 2.6 million people hired would engage in business activities, such as purchasing gasoline to drive to work, that would generate federal tax revenue. You can also include savings from the federal government not paying out welfare and other benefits to the unemployed. At the end of the day anyone can see that this proposal clearly provides the U.S. economy with incentive to hire millions of new employees, or re-hire ones laid off, and yet costs us only a fraction compared to current stimulus packages.
I would ask that everyone that agrees with this idea to please contact their congressional representative and senator.
Links:
CNN unemployment story