Tuesday, December 02, 2008

Will a job creation subsidy put Americans to work?

The argument is that a job creation tax credit will just be free money to Big Business and will result in no more U.S. jobs.

But really, what we're talking about now is the size of such a tax credit, and to whom it goes. Let's look at, say, HP. If the tax credit is significant enough to make it cheaper to hire workers in the United States than to hire workers in Shanghai, where is HP going to hire workers? Yep, in the USA!

In other words, if the tax credit is sufficiently large to make it cheaper for companies outsourcing elsewhere to hire here in the USA instead, *and* if the tax code is changed in order to punish outsourcing, then those companies currently outsourcing elsewhere will bring those jobs back to the USA. So yeah, a tax credit is not magic. But in a world where companies do not stop at national borders, a tax credit definitely has the ability to shift where labor is hired. I'd much rather see Americans working than Chinese working, simply because I'm an American and that money goes into my local economy and makes my own life better. Which is what is supposed to be the job of my government -- to make my own life better, not the lives of Chinamen who, well, aren't even American.

-- Badtux the Economics Penguin

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