I was having an e-mail discussion with some friends on methods that would quickly provide more jobs. There were a number of suggestions but one struck a cord—waive some taxes.
Now this would seem to have some “unintended consequences. (Where have we seen that!?)” But let’s consider this a moment. What would be the effect if some taxes were waived for a period of time. Obama thinks it’s workable. He’s agreed to waive, i. e., don’t raise income taxes for another two years. Would this help turn around our economy.
Consensus is that, while it’s unknown yet if extending the Bush tax rates for another two year will improve the business climate, at least it won’t hurt. Most of those knowledgeable think business will just hunker down and wait to see what happens in 2012. The consensus is that all this extension does is forestall business decisions while they wait to see what the “permanent” tax rates will be.
What about the state level? The majority of business is small business—the plumber who cleans that stopped up drain, your corner dry-cleaners, the Mom ‘n Pop diners, your local mechanic. These business often live on the margin of success or failure. Small business employs more people that the mega-corps. Small businesses, too, are at the forefront of growth. Anything that keeps them in business, that keeps them employing people, is a good thing.
A tactic some states are considering to help these small businesses is a corporate tax holiday—waive corporate income tax for a year, two years, longer perhaps to cushion the damage done by the FedGov and give these business some respite and allow them to continue. A waiver would keep these businesses in operation and keep people employed—perhaps allow these businesses enough margin to grow, to expand and hire more people.
A man once said, I forget who at the moment, that growth occurs at the bottom. Perhaps it’s time to put that thought into action.