Unemployment And The Economy: Jobless Rate Up, Tax Free Holiday Helps

By William Finch on September 3, 2010, 5:21 pm Posted in Finance News

The unemployment rate is now at 9.6%. Economists fear that an unemployment rate of around ten percent may become the baseline for the American economy. The current recession has lasted longer than any other economic downturn since the 1930s and Americans do not believe that an economic turnaround will occur anytime soon. There are some solutions that could allow for a temporary turnaround that encourages small businesses to hire new employees.

Tax-Free Holiday: A Temporary Solution

The Obama administration’s current plan involves making it easier to get loans for small businesses. While this addresses the credit crunch in part, loans will not address the issue of the Obama administration passing a health care bill that makes it more expensive to hire new workers. Add to that the plans to let the small business tax cuts lapse and things do look even grimmer. Declaring a tax holiday will have a beneficial effect for a short time. It can encourage new spending and free up more money in the hands of consumers and employers. Unfortunately, a tax holiday will not result in a long-term solution to unemployment.

 

What Will Work To Solve Unemployment

A brief vacation from taxes will not fix the core issue. Businesses are afraid of Obama’s economic policies and his most recent announcement has not inspired confidence. In order to increase the employment numbers again and prevent businesses from laying people off, the White House should consider rescinding its health care plan and extending and increasing the Bush-era tax cuts. Putting money in the hands of consumers is a good thing, but they must put more money in the hands of employees and not introduce more measures that increase the amount an employer pays to hire new employees. The President, sadly, does not understand even the most basic lessons that his economic teachers tried to convey in college

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