Remember last week when we told you about House Bill 17, a Republican proposal to provide tax credits for businesses that hire the unemployed? The lawmaker-controlled Legislative Services Commission estimated that the credit, once fully implemented, could add nearly $1.4 billion to the state’s budget problems. And it’s bad tax policy. Giving a business $2400 to hire someone, limiting them to a pool of people who have been unemployed for at least 60 days, and requiring them to remain on the payroll for two years before a credit can be claimed is a lot of hoops to jump through.
Past experiences suggest that tax credits to encourage employers to hire disadvantaged workers usually elicit little employer interest, and have little effect upon employer behavior. Employers are happy to claim such credits if they happen to meet the credit’s rules, but they are reluctant to change their behavior in response to such targeted tax credits.
Targeting particular groups of the unemployed is more effectively done through the workforce training system.
But that’s just the word of a pointy-headed intellectual “tax policy expert.” What happens if you ask an actual small business owner? Well, that’s just what Candice Lee at NBC4 did. And here’s what she heard from the business manager of a Reynoldsburg auto service center:
“We would never hire somebody because of a tax credit. That doesn’t make sense. That’s not good business sense. We need the best technicians. We need the best front desk person. We need the best service writer,” she said.
When asked what lawmakers could do to help small business owners, Foulks said business owners need help cutting fuel surcharges from vendors and lowering their property taxes.
Update: If you still don’t believe a small business owner, let’s hear from the Ohio Society of CPAs, a Republican-leaning, pro-business group if there ever was one:
Asked about the ideas yesterday, J. Matthew Yuskewich, former chairman of the Ohio Society of CPAs, said, “It looks like there is a lot of grasping at straws.
“You can put all those things out there, but at the end of the day, I still have to have confidence that my business is going to grow,” he said. “I’m not going to hire someone because I am getting a tax credit.”
NBC’s Lee further points out that the State frequently fails to get its money’s worth with targeted tax credits like these:
A report issued in January by former Attorney General Richard Cordray before he left office found that the state often fails to take action when companies don’t create jobs in return for tax credits and other benefits
The bill has been referred to the House Ways & Means committee. We hope that when a hearing is finally scheduled, the handful of Democrats that remain will ask some tough questions about whether this is the best way to spend $1.4 billion, when dramatic across-the-board cuts will be required as a result.